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The 5 best performing stocks of 2014: Are they still a buy?

Yesterday, I highlighted the 10 worst performing blue-chip ASX stocks of 2014, so far.

Six of them can be found in the mining sector and two were large retailers. Both of these sectors continue to face a number of macroeconomic headwinds moving forward.

Indeed throughout 2014 we’ve witnessed both the oil and iron ore prices fall to record lows, as fears of significant oversupply loom large. Retail sales and consumer confidence have also been patchy.

However, despite the S&P/ASX 200 (INDEX: ^AXJO) (ASX: XJO) trending largely sideways throughout the year, there have been a number of standout stocks which investors can be particularly proud of.

Here are five of the best performing stocks, with a market capitalisation greater than $500 million, throughout 2014.

Company Share price at market open, January 2 2014 Grossed-up dividends paid1 Recent share price Total Return
Liquefied Natural Gas Limited (ASX: LNG) $0.29 $3.67 1,165.5%
Sirtex Medical Limited (ASX: SRX) $11.75 $0.20 $26.31 125.6%
Transfield Services Limited (ASX: TSE) $0.90 $1.88 108.9%
Western Areas Ltd (ASX: WSA) $2.39 $0.07 $4.33 84.1%
Corporate Travel Management Ltd (ASX: CTD) $5.55 $0.17 $10.02 83.6%
S&P/ASX 200 5352.2 5361.8 0.2%

Source: Google Finance; 1source: ASX website

Are they still a buy today?

I know of many great investors who study the best performing stocks of yesteryear to populate a watchlist of great growth ideas for the future. No doubt, this is a great tactic for building a list of companies for further research, but investors should tread carefully by conducting sound analysis of a company’s growth prospects (remember hope isn’t an investment strategy). After all, what’s the point of growth potential if it’s already baked into the share price?

Potential investors should exercise patience because company profits rarely, if ever, move in a linear fashion. Indeed, the slightest hiccup in expected performance can be severely punished by the market if a stock has a lofty valuation – affording patient investors a much better buying opportunity.

Of the above five companies, I believe Sirtex Medical and Corporate Travel Management are best left on your watchlist until the market offers us a more compelling opportunity to buy in cheap. Liquefied Natural Gas Limited is also best left on your watchlist until its management can provide more progress updates on the construction schedule for both of its major LNG tolling facilities in North America. However, I believe Western Areas and Transfield Services are both worthy of closer inspection.

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Motley Fool Contributor Owen Raszkiewicz owns shares of Liquefied Natural Gas Limited.   

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