Being a long-term investor, I have a number of advantages over professional fund managers and day traders. Perhaps the most important of all is the advantage of compounding returns. That is, the ability to make my money grow for itself year-in year-out.
By finding growth stocks with strong business models and solid balance sheets, I buy to hold the stocks I choose. If I had $10,000 to invest, here’s four companies I’d buy (or top-up on) today.
1. Telecommunications: Vocus Communications Limited (ASX: VOC) took a hit yesterday on the back of an announcement regarding changes to a contract with Vodafone New Zealand. Despite this short-term hiccup, I’m expecting big things from Vocus in the ultra-long term as demand for high speed and high reliability fibre-optic networks takes off.
2. Retail: Cash Converters International Ltd (ASX: CCV) continues to stand out to me as one of the best long-term buy to hold investments in the S&P/ASX 300 (ASX: XKO) (INDEX: ^XJO). It is forecast to pay a 3.5% fully franked dividend in the next 12 months and I expect earnings to rise strongly in the next five years. This should be as a result of revenue growth across a number of its businesses and its international expansion.
3. Biotechnology: ADMEDUS FPO (ASX: AHZ) is a small-cap diversified healthcare company with its lead tissue regeneration technology Cardiocel now available for sale in the U.S. and Europe. The company also has a DNA vaccine program being undertaken by preeminent immunologist Professor Ian Frazer. I think Admedus is an outstanding high-risk ‘Buy’ and would not be surprised to see its share price around $0.25 in a year or two from now (currently it trades for $0.127 per share).
4. Diversified Resources: Independence Group NL (ASX: IGO) is a diversified miner with operations focused on nickel, copper, gold and zinc. With a number of its key commodities rising in value over the past six months, coupled with increased production, I’m expecting big things from the miner in the years ahead.
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All of these companies are worthy of a spot in savvy long-term investors’ portfolios. My high-risk pick of the bunch is Admedus, but for those more risk-averse investors Cash Converters stands out as a compelling long-term buy at its current price.
However, whilst I think each of these stocks have promising growth prospects, there one small-cap ASX stock with a 7% grossed-up dividend yield I’m strongly considering buying today, before any of the above companies! Our top analyst recently dubbed it, “The Motley Fool’s Top Dividend Stock For 2014 – 2015”. Best of all: You can get its name and code of this ultra-promising stock for FREE! Just click here to download your free copy of "The Motley Fool's Top Dividend Stock for 2014-2015" today.
Motley Fool Contributor Owen Raszkiewicz owns shares in Cash Converters International Ltd, Independence Group NL and Admedus FPO.