Woolworths Limited and McMillan Shakespeare Limited: 2 stocks to deliver in 2015

The ASX tanked on Tuesday, with iron ore and oil companies sagging even more. The S&P/ASX 200 (ASX: XJO) (Index: ^AXJO) was down 1.68% as big names like BHP Billiton Limited (ASX: BHP) and Santos Ltd (ASX: STO) hit new multi-year lows.

The hurt may not be done with, but Foolish investors are making a shopping list of stocks at low, low prices. In particular, there are two companies I am watching that could be offering good value.

1)  McMillan Shakespeare Limited (ASX: MMS) is the largest provider of salary packaging and novated leasing, as well as a leader in fleet management. It hasn’t completely recovered from its sudden fall in mid-July when the previous Labor government tried to change the Fringe Benefit Tax calculation and scared investors dropped it like a hotcake.

Revenue and profit took a hit, but now analysts are looking for double-digit earnings growth in the next couple of years. When investors see better earnings, they will flock back to this good quality company, so it is better to pick up the stock now. You can also collect the big 5.0% yield fully franked in the meantime.

2) Woolworths Limited (ASX: WOW)

The retail giant was hitting new all-time highs earlier this year, but now it is near 52-week lows and the supermarket and general retail businesses still can’t find firm footing. Pricing competition may pick up as economists are predicting an “income recession” in 2015. Its Masters hardware DIY stores are still not turning a profit and not expected to for another 2-3 years. Not much except its Dan Murphy’s liquor outlets is going well.

Not rosy at all. And that’s why it’s attractive to me. The stock has bounced up slightly off $30 a share and yields a nice 4.6% fully franked. It is looking into entering the financial services market similar to the UK’s Tesco supermarket company for new income streams. Also, Woolworths is taking its first step outside of Australia by its acquisition of Chinese liquor distributor Summergate. Imported wine is projected to grow much faster than GDP in China in the long term, so Woolworths could transplant its liquor distribution success and grow a substantial store chain there. Build up a position in this skilled retailer.

Picking up quality companies when they are in some short-term distress is one way to achieve above average gains when they recover. Another way is to grab onto strong growth stocks like the company our top analysts said was their hands-down favourite bet for 2015.

The Motley Fool's top stock for 2015 is a sexy ASX tech company with a stunning track record and plenty of room to run. Simply click here to grab your copy of this brand-new FREE report

Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 


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