They call it "the race that stops the nation."
At 3:00pm today (AEST), 22 horses (after 2 scratchings) from eight different countries will race for the ultimate prize of winning the Emirates Melbourne Cup. In a little over three minutes, the horses will run 3,200 metres for their share of a whopping $6.2 million in prize money.
Hearts will be pounding, emotions will be running high and dreams will be both made and broken in what will seem like just an instant.
I'll admit, I'm not much of a gambler myself. In fact, it's only really on Melbourne Cup day and for the AFL Grand Final that I'll open my wallet down at the local TAB. As I was considering my bets yesterday however, I actually made a small punt on a trifecta. I know that the odds are heavily against me, but I figured I'd try my luck for once in my life.
But as I was walking away, my mind reverted back to my true passion… investing.
As I said, it's pretty rare that I take a gamble – I'd much prefer having confidence in the companies that I back rather than throwing my money at some speculative investment that could make it big at some point in the future.
So when I put my trifecta on, I wondered to myself, which ASX companies would make it in my Melbourne Cup trifecta?
My Melbourne Cup Trifecta
Given the nature of the race, they'd need to be strong and well established companies. Then, given the length of the race, they'd need to be built to last for the long haul, as opposed to bursting out of the gates early on and then dropping the tempo.
That's why none of the big four banks made it in my blue-chip trifecta. While they are all great businesses, I would suggest they've already run their race. While they could certainly gain some ground early in the sprint, I expect they'll slow significantly in the long run.
Woolworths Limited (ASX: WOW) didn't make it to my top three, either. It's trading at a reasonable price – thanks in large part to its disappointing Q1 sales release. While it might be a decent long-term bet at this price, it may struggle early on as Coles continues to dominate the supermarket sector.
Instead, the three that I decided would make it into my trifecta are Coca-Cola Amatil Ltd (ASX: CCL), Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) and, as an outside chance, Veda Group Ltd (ASX: VED).
Coca-Cola Amatil has struggled in recent years and, at just $9.26 a share, it seems most investors aren't willing to give the company a chance. But a recent update regarding its strategic review has increased my confidence that the company will be good over the long haul – particularly thanks to its plans to reinvigorate its growth in the promising Indonesian market.
Washington H. Soul Pattinson is an investing conglomerate with a proven track record. In fact, it's Australia's second-eldest listed company, meaning it has survived two World Wars, the Great Depression, the Dotcom crash and the more recent Global Financial Crisis. While it mightn't be an outright favourite amongst investors, it's certainly got excellent odds for those focused on the ultra-long term.
Veda Group only listed on the ASX late last year but has already shown an enormous level of promise. In a fast growing industry with strong tailwinds, the data analytics business has forecast strong growth for FY15 and, thanks to its incredible track record for revenue and earnings growth, I expect that will continue in the years ahead.
