There's nothing more succulent to an investor than profits. Yet to achieve them, a company needs good margins and increasing revenues to really drive earnings.
Money-spinning stocks keep the portfolio returns coming in and there always seems to be more to come. Be it a special market niche or a high growth story, they are wonderful. However, investors need to balance the current price with the potential growth and value of the company in the next five or ten years.
Here are three stocks that up to now have shown they are money spinners, yet still have much more to offer.
1) Domino's Pizza Enterprises Ltd (ASX: DMP)
Every Domino's pizza you bought in the last five years may have been a stock tip to climb aboard a stock that has gone up over four times in price within that time. It has about 600 stores in Australia and New Zealand and same store sales were up 5.6% in the half year.
Last year, it acquired a 75% stake in Domino's Pizza Japan, which had about 260 stores in mid-2013 and was the third largest pizza chain in Japan. Domino's Pizza Enterprises projects it could grow the network to about 600 – about 340 extra stores and more than double current numbers.
That's a lot more pizzas and potentially a lot more dough for the company and shareholders.
2) SEEK Limited (ASX: SEK)
The job classifieds website estimates it is involved with about 25% of all Australian job placements. The percentage of people who go looking for employment on its website would be a very large number, too.
In the half year, its smashed results with a 29% gain in net profit and continued its record of strong earnings growth over the past five years. To keep this pace up, it is also expanding into Asian jobs markets in Singapore, Malaysia, Indonesia and China – all highly populated regions.
3) CSL Limited (ASX: CSL)
The $32.9 billion biopharmaceutical company develops medical products to treat bacterial and viral diseases as well as blood disorders. Over the past five years, it has grown revenue and earnings at compounded annual rates of 10.1% and 15.6% respectively.
Its biggest market is the US, but it operates in Europe as well. Specialised healthcare products can attract premiums and the company's return on equity is usually over 25%. In an industry that has steadily growing demand, CSL can continue expanding as populations get larger and people on average get older – both reasons for rising healthcare needs.
