I'm not really expecting Santa to visit the ASX for a quick rally with only a few days left before Christmas. But are we seeing some Boxing Day sales a little early? I think there are a number of quality stocks that have either lost their puff or traders just can't be bothered.
That's just what we're looking for. Like in Warren Buffett's hamburger test, sagging prices and complacent investors are just the ticket. When you are in an "accumulation" or buying phase, you want to have your favourite stocks dirt cheap and unloved.
The S&P/ASX 200 Index (ASX: XJO) (Index: ^AXJO) is off around 6% since early September and is pretty much flat for the past 12 months. Great! Let's go Christmas bargain hunting!
TPG Telecom Ltd (ASX: TPM)
The telecommunications and high-speed broadband service provider is forecast to grow earnings around 21% per annum over the next two years and is trading at 25 times earnings. Add on a 1.6% yield fully franked and you almost have growth and income yield matching the PE ratio. That is a good sign for bargain prices. It will be expanding its internet network infrastructure and offering both wholesale and retail broadband service similar to the national broadband network (NBN). That can expand its client base, add some competitive advantages to the business and create extra income streams as the NBN is rolled out.
Slater & Gordon Limited (ASX: SGH)
The network of law practices has expanded to 70 offices in Australia and is also growing in the UK where it plans to become a leader in personal injury law there as well. Acquisitions are driving growth. Two firms, one in Victoria and one in Queensland were acquired in November, adding to the list of six other acquisitions in the UK made in FY 2014. Consensus forecasts are for a 14% and 19% annual increase in earnings and dividends, respectively, in the next couple of years. Since September, the stock has been "taking a breather" after doubling from 2013. I am looking forward to solid growth as the new acquisitions are fully integrated and synergies are produced.
