ResMed Inc. and Flight Centre Travel Group Ltd: Fast growers to juice your portfolio

The best investing strategy is buy and hold for the long-term, but stock selection is not a “fire and forget” action. Getting that right mix of stocks in your portfolio can take time. The former Fidelity Investments fund manager and well-known investment book writer Peter Lynch once wrote:

In the long run, a portfolio of poorly chosen stocks won’t outperform the money left under the mattress.

So what do you need? Dividend stocks may provide steady income, but you also need at least a couple fast growers to make the most of bull markets as they occur. Their potentially high gains can bring up the average return. Here are two companies that are in diversified industries and have produced very pleasing earnings increases.

The first one, ResMed Inc. (CHESS) (ASX: RMD), may be a frequent pick for growth amongst Foolish investors, but not everyone may know of it. The maker of medical respiratory devices to treat breathing disorders has been a steady grower over the past 10 years.

These specialised products always have regular demand in hospitals and now even in households of people who have sleep-related breathing conditions like apnea. Their specialisation also attracts a premium in price that drives sales and keeps profit margins up.

The company is now an $8 billion business and its net profit has more than doubled in the past five years. Its forecast earnings growth over the next several years is an average 13% annually.

Another high gainer is Flight Centre Travel Group Ltd (ASX: FLT). It is a household brand when it comes to holiday and travel reservations. It has revitalised its domestic store format and business, successfully seeing off online competitors like Webjet Limited (ASX: WEB) and maintaining its market-leading position.

It has expanded its international franchise network in the US, Europe and Asia. The corporate travel market is particularly profitable for its FCm Travel Solutions subsidiary. Net profit margins of about 10% -13% annually are regular for the company and dividends have increased steadily. It is a great combination of dividend income and share price growth that sends portfolio returns upward.

An even better ASX stock...

As strongly as I am recommending these two stocks for your portfolio, there is another stock I can't seem to look past. The company's share price has fallen marginally over the last month or so and, given its excellent long-term potential and fantastic fully franked dividend, I can't help but think it is better than ResMed and Flight Centre.

The stock was actually identified by The Motley Fool's TOP analysts and has become their #1 stock pick for 2014. And better yet, it's yours absolutely FREE. Simply click here for your copy of "The Motley Fool's Top Stock for 2014." 

Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

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