It is a common misconception amongst investors that it takes a large capital outlay to start building a stock portfolio. As a result, many choose to put it off until later in life when they have paid off the mortgage or until the kids have left home.
In reality, a large deposit isn’t necessary, and those investors procrastinating about making their move into the market are missing out on some enormous opportunities. In fact, making what would be considered a small investment today of $5,000 or even $10,000 could be truly life changing.
Let’s say you kickstarted your investing journey with $10,000, and were then able to inject another $1,000 per month thereafter. By achieving the market’s average annual return of 12%, you could have turned that initial $10k into a massive $961,092 in just 20 years.
But get this: It can get a whole lot better than that…
By exposing yourself to high quality growth stocks, like the five I’ve listed below, you could potentially beat the market’s returns in that timeframe. By buying now and taking advantage of their growing earnings and dividends paid along the way, you could be looking at a portfolio worth much more than that if you beat the market’s average return.
Right now, I believe these five stocks are quite capable of delivering market-smashing returns in the coming years…
- Veda Group Ltd (ASX: VED): Followers of the Fool thread will know that I’m quite bullish on Veda Group and personally own the shares, which I bought at $2.09. Although the stock is not necessarily in ‘bargain’ territory, trading on a projected P/E multiple of 24, I believe the group’s high quality nature and strong growth prospects make it a very reasonable buy today.
- Yellow Brick Road Holdings Ltd (ASX: YBR) is a wealth management business very early in its growth days – so much so that it is not expecting to recognise its first profit until FY15. Regardless, the company is in safe hands under Executive Chairman Mark Bouris (who founded Wizard Home Loans, back in the day), while low interest rates should continue to drive demand for its services well into the future.
- Slater & Gordon Ltd (ASX: SGH) stunned the market yesterday with its outstanding full year results, which were highlighted by a massive 47.2% increase in net profit after tax (NPAT). Don’t make the mistake of thinking it’s too late to buy however – the law firm, which specialises in Personal Injury cases, is expanding into other practice areas as well as into international markets like the UK.
- G8 Education Ltd (ASX: GEM) also flexed its muscles when it announced a 48% increase in NPAT for its first half ending 30 June 2014. The company currently controls an estimated 5% of Australia’s childcare services market but will continue to acquire smaller businesses to extend its dominance. Better yet, it also increased its full year dividend to 20 cents per share, putting it on a fully franked yield of 3.9%.
- Nearmap Limited (ASX: NEA) is another stock I am excited about for the coming decade. The company soared more than 800% in 2013 but has since pulled back to give investors like you and me a solid opportunity to buy. Nearmap provides ultra-high resolution aerial photographs which have proven to be incredibly useful across various industries, including construction and even real estate. Boasting strong growth prospects in Australia, it has also begun conducting test flights across the US.
Smashing the market’s returns
It is the goal of every investor to beat the market’s returns in the long run. While it’s not an easy task to consistently achieve, it becomes increasingly possible by buying strong growth stocks like those mentioned above. However, there is another stock which is also posing as a great buy today. It offers just as much growth potential as well as a juicy, fully franked dividend yield.
5 stocks under $5
We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
Motley Fool contributor Ryan Newman owns shares in Nearmap Limited, Veda Group Ltd and Yellow Brick Road Holdings Ltd.
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