MENU

Can these 3 stocks beat the ASX again next year? Macquarie Group Ltd, Commonwealth Bank of Australia and Transurban Group

There have been too few strong performers in 2014 for most Aussie investors to get excited. In fact, it’s been a rather disappointing year for stocks as a whole, with most blue-chips being pegged back by declining commodity prices, concerns about high levels of unemployment and a property market that may be a bubble in the making.

However, there have been some bright spots during the last year. In fact, here are three stocks that have beaten the ASX in 2014 and could do so again.

Macquarie Group Ltd

With shares in Macquarie Group Ltd (ASX: MQG) having risen by 4% in 2014, it’s a much stronger performance than the ASX’s fall of 3%. Certainly, there are challenges on the horizon, with Macquarie apparently growing its lending to property investors at a rate that is eight times higher than that which regulators considers prudent. As such, Macquarie may have to curb its mortgage lending moving forward, or else be the subject of additional capital charges.

Despite this, Macquarie is still forecast to grow its bottom line by 10% per annum over the next two years, which is higher than the ASX’s mid-single digit growth prospects. However, Macquarie still trades on a P/E ratio that is lower than that of the ASX (14.3 versus 14.8 for the ASX), thereby equating to a relatively higher growth/lower valuation prospect for investors. As a result, Macquarie could beat the wider market again in 2015.

Commonwealth Bank of Australia

With shares in Commonwealth Bank of Australia (ASX: CBA) also rising by 4% in 2014, they have comfortably beaten the ASX this year. That’s even more so from a total return perspective, with CBA’s fully franked 5.1% yield meaning that its total return in 2014 is approaching double digits.

Looking ahead, a similar rate of return is achievable next year. That’s because CBA is expected to grow its bottom line by 6% per annum over the next two years and trades on a P/E ratio that equals that of the wider index.

However, where CBA could outperform the ASX is in terms of its defensive characteristics. For instance, CBA has a beta of just 0.77, which means that for every 1% move in the wider index, CBA should (in theory) see its share price change by 0.77%. And, if the ASX has another tough year, this could work to CBA’s advantage in 2015.

Transurban Group

With Transurban Group (ASX: TCL) expecting to start tolling at the 95 Express Lanes Project in America by the end of the month, sentiment in the stock could get a boost. After all, investors have been hugely positive on the stock all year, with Transurban seeing its share price rise by 27% since the turn of the year.

A key reason for this is its visible earnings stream which, at a highly uncertain time, is very valuable to investors. That’s at least partly why Transurban has seen its P/E ratio bid up to 41.4 during the course of the year.

However, it could go higher – especially if the ASX continues to offer little in the way of certainty moving forward. If Transurban’s P/E ratio doesn’t change, its annualised earnings growth of 27% over the next two years means that it should be a strong performer in any case.

Despite its obvious potential for next year, there is another ASX stock that I think could outperform Transurban in 2015.

The company in question has recently been named as The Motley Fool's Top Stock For 2015 and it is worth finding out more about it. That's because it offers a potent combination of stunning growth prospects and a super-low valuation that could make a real difference to your portfolio returns next year.

Click here to find out all about it - it's completely free and without any obligation to do so.

Motley Fool contributor Peter Stephens does not own shares in any of the companies mentioned.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.