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Do you own the ASX’s 2 most explosive growth stocks?

Every quarter there is a rebalancing of the S&P/ASX Indices. Before discussing two stellar performers that will be included on September 19, let’s consider the relevance of their inclusion for existing shareholders and potential buyers.

The S&P/ASX 200 Index (INDEXASX: XJO) is the main benchmark for the Australian equity market. While there are approximately 2,000 stocks listed on the ASX, the top 200 stocks make up almost 80% of the total value of the market. Inclusion in the index is regarded as being very positive as institutional managers are governed by their mandates, which often restrict them to investing in either the top 200 or 300 stocks.

So before and after the inclusion date, the weight of institutional money potentially drives the share prices higher independent of company fundamentals. While this is relevant for the short term it is also relevant for the long term so let’s look at two stocks to be added.

Liquefied Natural Gas Limited (ASX: LNG)

The Perth-based company owns a technology called Optimised Single Mixed Refrigerant (OSMR) used to improve LNG plant performance. This includes significant improvements in LNG output and overall process efficiency. The company employs a relatively simple tolling model, by processing a customer’s gas and charging for the liquefaction process. This technology is to be used in the company’s Magnolia and Bear Head LNG projects in the United States as well as the Fisherman’s Landing project located in the Port of Gladstone in Queensland. A prior article when the share price was $2.65 (currently $4.35) listed six near-term catalysts for further upside.

TFS Corporation (ASX: TFC)

TFS Corporation is a Western Australian company that has become the world’s largest owner and manager of sustainable Indian Sandalwood Plantations. It also owns the distiller of sandalwood oil named Mt Romance. Sandalwood has a well-entrenched market throughout the world, particularly in the fast growing economies of India and China. Being the world’s most popular tropical hardwood, it continues to increase in price each year. It has risen at a compound rate of over 15% per annum since 1990. Recently, I penned “From little things big things grow” and revealed four ways in which the company could continue to drive the share price higher.

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Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

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Motley Fool contributor Mark Woodruff does not own shares in any of the companies mentioned in this article.

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