Investing doesn't have to be difficult. Buying into complex companies with major problems on the basis that their share prices have been knocked down into deep value territory is certainly a legitimate strategy but it can be very hard work.
While it is always vitally important to consider the price you are paying, for many investors a better strategy is to make sure the wind is in their sails by focussing on companies which are of a high quality, have good management teams, understandable business models and solid rate growth rates.
Here are three stocks which look to fit that bill…
Platinum Asset Management Limited (ASX: PTM) is a leading Australian-based fund manager which has differentiated itself from the masses of domestically-focussed "fundies" by instead focussing on international equities. As the superannuation landscape matures, investors will increasingly demand global equity exposure due to the 'crowding-out' of the domestic stock market.
Caltex Australia Limited (ASX: CTX) is a leading provider of fuel distribution and retailing across Australia. While the potential for disruption to its business model from electric powered cars shouldn't be dismissed, Caltex is now much more protected as it is skewed towards the retailing of fuel and convenience products rather than oil refining.
Crown Resorts Ltd (ASX: CWN) has the potential to grow earnings through the expansion into the new markets of Sydney and possibly (if its tender is successful) into Brisbane. The possibility that Crown could soon operate casinos in Perth, Melbourne, Sydney and Brisbane is appealing, however the success of this growth strategy will ultimately come down to the return on investment that it achieves. Arguably, the more exciting aspect to Crown is the group's shareholding and exposure to overseas casino operations in Asia, including Macau.
Growing businesses
Platinum, Caltex and Crown should all be larger, more profitable businesses in coming years. Identifying stocks which are positioned to grow, as opposed to businesses facing strong headwinds can make for a much more profitable investment portfolio.
