It's a no-brainer. The higher the market goes, the more difficult it becomes to unearth attractive investment ideas. Anyone who suggests otherwise probably doesn't have your best interests at heart (hint: check their disclosure!).
Knowing what to buy, hold or sell is never easy. Convoluted industry jargon doesn't help either! So here are three stock ideas many would-be Australian investors are likely familiar with and would consider buying. To help you out, I've also provided my own rating on them.
- Telstra Corporation Ltd (ASX: TLS) is a fantastic dividend stock to hold in your portfolio. It's also become known for providing shareholders with substantial capital gains, with the share price rising over 80% in the past three years. However, despite its recent track record and promising characteristics, I believe Telstra shares are a hold at current prices given the growth outlook and current macroeconomic environment.
- Cover-More Group Ltd (ASX: CVO) has only recently listed on the ASX and shares currently trade at a premium to the market's average. As a long-term investor, one thing I try to find is a competitive advantage and Cover-More has just that. A great service and excellent reputation in the travel insurance market. Since a friend brought the company to my attention, less than three months ago, its share price has shot up 26% and whilst I think it's a good long-term prospect, no stock is a buy at any price. Consequently, I feel it's edging closer to a hold. I'm waiting for a shift in momentum before buying shares because patience doesn't lose money.
- Westpac Banking Corp (ASX: WBC) has been a fantastic buy and hold investment over the past two decades, rewarding shareholders with both dividends and capital gains. If you've held the stock for many years and have an adequate buffer on the current share price, you'll likely disagree with what I'm going to say next. At current prices Westpac is not a buy and given the growth forecasts provided by most analysts, the opportunity cost (i.e. the opportunity you lose by keeping your money tied up in the stock) could outweigh the benefits of holding onto it.
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As I noted in the first line of this article, investors – like you and I – have to work harder to find well-priced stocks as the market climbs higher. Whilst I believe Cover-More Group is a good long-term investment, personally I haven't bought shares because there is momentum surrounding the stock and quite frankly, I'd rather wait for it to reverse.
