Trying to predict where stocks will be next year or next month is something you shouldn't worry too much about. Even Warren Buffett, the world famous investor and billionaire said:
We have long felt that the only value of stock forecasters is to make fortune-tellers look good.
You'll hear many analysts giving price targets, which is alright to have a rough idea where a stock may be headed towards. Yet as soon as new information comes in, all the targets are quickly adjusted. It makes you think they weren't that valuable to know in the first place.
We always recommend to Foolish investors that they should do their homework on where a company is going with its business, not its stock price. The stock price is actually one of the last things to consider once you have sized up the prospects of a company.
Here are two stocks with solid businesses and good prospects that could be good additions to your portfolio.
— ResMed Inc. (CHESS) (ASX: RMD)
The developer and manufacturer of respiratory devices and breathing aids had a strong FY 2014, reporting a 12% increase in net profit. Over the past ten years its earnings per share have steadily risen and in the past two years it has begun paying a dividend, so now shareholders have one more reason to like this growing business. It gets a majority of its revenue from overseas markets like the US. The stock has a 2.0% dividend yield and is forecast to possibly raise earnings by an average 12% annually over the next two years.
— Brambles Limited (ASX: BXB)
This supply-chain logistics service provider is well known for its CHEP brand pallets and containers. It services companies all over the world for their shipping and warehousing needs. It recently demerged from Orora Ltd (ASX: ORA), an information management solutions company, to focus on its core business. Full year results from its continuing operations showed a 5% increase in underlying net profit. The company is growing in a number of regions organically and through acquisition. It offers a 2.9% yield partially franked. Earnings are forecast to grow an average 10% annually for the next two years.
Finding out what a stock has to offer as a business should be the goal of every investor. We shouldn't be gambling with our future wealth, but grow it carefully and intelligently.
For example, there is one stock, a small-cap company, that is not widely followed, yet The Motley Fool's analysts have called it "The Top Stock of 2014". It recently reported impressive results and this may be just the beginning. It has a reliable record for growth plus boasts a pathway for further earnings growth.
The Motley Fool's top analyst team has written a free report to share with all interested investors.
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