You're going to have to play your cards right if you want market-beating returns this year. With volatility creeping back into the market in a big way, it could certainly be a bumpy ride but by picking the right stocks, you could handily outperform the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).
Invest for dividends
Some of the biggest gains in 2015 could be made by investors who focus on high-yield dividend stocks. With interest rates tipped to fall as low as 2%, investors will increasingly walk away from the safety of term deposits and instead seek superior returns in the form of reliable and growing dividend yields.
However, that doesn't mean investing in any old company which offers a decent yield. Companies like Commonwealth Bank of Australia (ASX: CBA) and Telstra Corporation Ltd (ASX: TLS) offer two of the best dividends on the ASX yet their lofty share prices make them seem like unreasonable investment prospects today.
One company that investors should consider is none other than Woolworths Limited (ASX: WOW). While you might think of it as a 'boring' investment and thus, one not worthy of your hard-earned dollars, it could actually be amongst the greatest stocks to buy right now. Not only are its shares trading at a considerable discount to their 52-week high recorded in April, they also offer a compelling 4.5% fully franked dividend.
Coca-Cola Amatil Ltd (ASX: CCL) is another dividend stock well worth your consideration. The stock has fallen heavily in price over the last two years, and for justifiable reasons, but management also appears to be making the right moves to turn the ship around. At just $9.70, investors who buy could benefit from strong capital appreciation as well as its compelling 4.2% dividend yield (franked to 75%).
A falling dollar
The Australian dollar has dropped roughly 17% since June to be sitting around US79 cents – with forecasts suggesting it will continue to slide even lower. Investing in companies which generate a significant portion of their earnings in overseas markets is a great way to profit from this trend.
With that in mind, investors could look towards companies such as Westfield Corp Ltd (ASX: WFD) and ResMed Inc. (CHESS) (ASX: RMD). While ResMed generates more than half of its earnings from North and Latin America, it continues to develop new products which should help drive growth for years to come. Meanwhile, Westfield Corp should benefit from the recovering U.S. economy with roughly 70% of its controlled assets located in the States.
Go for growth
While dividend and internationally exposed stocks should benefit in the year ahead, there are also various companies with enormous growth prospects in the local market.
Greencross Limited (ASX: GXL) is one such example. As can be seen in the chart below, the stock has delivered investors with enormous returns over the last five years, but fell away in the latter half of 2014. As it stands, the company controls 7.5% of the local veterinary services industry, yet it is targeting a total 20% market dominance in the coming years. Long-term investors should look at the recent dip in price as a prime opportunity to get invested.
Source: Google Finance
Law firm Slater & Gordon Limited (ASX: SGH) is another excellent growth prospect worth considering. The company is expanding from its successful Australian operations into the much larger UK market which should help drive earnings growth for years to come.
