Gloomy clouds are getting darker in the financial news recently. Market pundits are saying 2015 may be a more volatile year for stocks.
The fact that the US bull market is now in its sixth year makes some investors nervous – especially since most bull markets only last around 4 or 5 years. It also doesn’t help in Australia that iron ore, copper, coal and gold (the country’s four major mineral exports) are all under pressure from low prices.
My reply to all of this?
What the heck does all of that have to do with the earnings of Domino’s Pizza Enterprises Ltd (ASX: DMP)?
People will still buy lots of pizza, Domino’s will still make money and its earnings will rise appropriately. With stocks, you can pick your fights. Why struggle with troubled industries when there are great companies making good profits out there?
— Pet lovers will still treat their beloved cats and dogs like cherished family members, so they’ll continue going to PetBarn pet supplies stores and Greencross veterinary offices, which are now both operated by Greencross Limited (ASX: GXL). Is the Swiss Franc turmoil in the forex markets going to affect Greencross’ 18% annual earnings growth forecast over the next two years? Not one whit!
The stock was heading down, yet has recovered about 18% since mid-December. For the expected growth, it is reasonably priced at 24 times earnings, so having Greencross in your portfolio could be a good way to fight off market gloom.
— Another bearish sentiment buster is Carsales.Com Ltd (ASX: CRZ), the operator of the number one car sales search website carsales.com. People are always selling used cars and the website operator makes money from the advertising, and other auto-related services like vehicle data history checks and financing.
Carsales.com has very thick profit margins, a high 51% return on equity and earnings over the next two years are forecast to grow around 14% annually. So while you’re waiting for the iron ore miners to finally hit absolute rock bottom, Carsales.Com shares in your portfolio may offer a good return.