We've all had this problem before- portfolio duds.
There's always one or two stocks that drag the whole portfolio performance down. Why hold onto them when you could own solid companies like SEEK Limited (ASX: SEK), REA Group Limited (ASX: REA) or even Woodside Petroleum Limited (ASX: WPL)? (see why below)
Sometimes emotions and investing don't work well together. Two emotions especially can keep us in losing positions or make us avoid stocks from past disappointment.
Hope can keep us from selling a poorly performing or loss-making stock – we hope it will turn around if we hold it a little longer. The first loss can be the best loss if we stop it from getting bigger.
Regret may stop us from buying a stock that we've bought before. Like avoiding an old lover, we don't want to lose again- even if the stock is making solid gains. If you sold a stock at $10, it is hard to buy it again when it's now $15. For investors, it should make no difference as long as the stock has improved and there is upside gain to be had.
Here are three stocks that could make a big difference for your portfolio in 2015 and ultimately your long-term wealth creation.
1) SEEK Limited
Many investors may have missed out on this stock even though they knew seek.com.au is the firm market leader of job search websites. While the mining companies are dragging the market index down, SEEK's stock is up 33% over the past twelve months.
It's expected to have another several years of earnings growth over 20% like it had in the recent past. It's also growing into Asia to keep up its high-growth profile. Kick out the duds and make way for this stock in your portfolio.
2) REA Group Limited
Talk about regret, when I first bought this stock, it was $0.77 a share. I sold it later a little over $1.00 because it wasn't rising as much as I expected- in 2004. When it rose to a lofty $6 in 2007, I couldn't get myself to buy it because I sold it for a dollar and change.
It's $44.67 a share now. Doh! Double Doh! The operator of realestate.com.au has maintained high growth for over ten years now and completely dominates the property search website market. Next, it is expanding into the US market by acquiring the number three property website company move.com in a partnership with News Corp (NASDAQ: NWS). It could have some good growth in what is a highly fragmented property advertising market there.
3) Woodside Petroleum Limited (ASX: WPL)
This energy producer's stock may have slid down like all the other oil and gas companies due to world oil prices falling off a cliff. However, as a cashed-up market leader with a solid balance sheet, it is already making acquisitions and buying up oil and gas assets.
It has good cash flow from its currently producing LNG projects that fund its expansion and cover a big dividend as well. The stock is paying a huge 6.2% yield fully franked. Previously, analysts were concerned it would not have much new production and revenue would trail off. The recent oil price drop has made acquisitions potentially cheaper, which should help Woodside boost production over the long-term.
