I believe a well-balanced portfolio includes a large proportion of superstar all-weather performers, a smaller amount of mid-to-large cap growth stocks, and a small collection of profitable and growing small caps.
I've mentioned my favourite small caps before; so I thought now would be as good a time as any to highlight my favourite blue chip superstars that I'm constantly looking to add to my portfolio.
Flight Centre Travel Group Ltd (ASX: FLT) has returned an amazing 969% for investors since its GFC low of $3.70 in March of 2009. The group's shares reached an all-time high of $55.72 in early 2014, but have since pulled back to around $46. Flight Centre's management is predicting 5% to 8% underlying earnings growth for the 12 months to 30 June 2015, down slightly from the 9.7% realised last financial year.
Flight Centre's major growth over the next five years will come from overseas investments, including the purchase of Topdeck tour group and ongoing rollout of travel stores in the US, Europe and Asia. Analysts are somewhat undecided about the group's short-term prospects, but most agree that over the longer term the company's current share price is attractive.
Amcor Limited (ASX: AMC) is the global leader in the manufacture and distribution of rigid plastic packaging. Amcor has been a great performer for long-term investors and is aiming to continue growing its global presence through acquisitions. Analysts estimate that Amcor could comfortably make around $1 billion in purchases over the next year, which could boost earnings well above the 7% to 9% expected by the market. Amcor looks expensive relative to the rest of the ASX 200, but the price appears justified based on strong growth assumptions.
The other big name that should be considered is Telstra Corporation Ltd (ASX: TLS). While it's had a spectacular run over the last two years, it still packs a 5.6% fully franked dividend yield. It also should see growth over the short term from the new iPhone and long term from the NBN and investments in Asian technology groups. I believe we will see Telstra moving more and more into Asia and technology as a way of diversifying the group's income streams to achieve profit growth well beyond what's expected.
