The Motley Fool

Top stock picks for February

We asked our contributors to pick their favourite ASX stocks to buy this month. Here are their top ideas.

Mike King: iSentia Group Ltd (ASX: ISD)

iSentia Group has been around for decades but only listed on the ASX in June 2014. The company offers media monitoring services to more than 5,000 customers across the Asia Pacific region. iSentia has a number of products, all sourcing real-time data from 5,500 mainstream media outlets, 55,500 online news sources and 3.4 million user-generated content sources, delivered in up to 12 different languages.

While the company may look expensive on a 2015 forecast P/E ratio of 21x, profit growth has been outstanding – so much so I recommended the company in November and bought shares in iSentia shortly after.

Motley Fool analyst Mike King owns shares in iSentia Group.

Peter Stephens: Rio Tinto Limited (ASX: RIO)

While the present period is a challenging one for Rio Tinto it remains a high-quality company trading at a great price. For example, it has a superb track record of earnings growth, as demonstrated by annualised growth of 19.6% over the last decade, and yet trades on a price to earnings (P/E) ratio of just 12.2 – even when this year’s anticipated fall in profit is factored in.

Certainly, a weak iron ore price is unlikely to cause investor sentiment in Rio Tinto to soar, but offering a considerable margin of safety, it appears to be a strong buy right now.

Motley Fool contributor Peter Stephens owns shares of Rio Tinto.

Ryan Newman: oOh!Media Ltd (ASX: OML)

oOh!Media made its ASX debut in December last year and has shown steady gains ever since, but it’s the future that is more exciting.

The company is Australia’s largest ‘Out Of Home’ media company, offering advertising on roadside billboards and sites located at shopping centres and airports. The expanding digitalisation of these billboards offers significant growth prospects for oOh!Media as it enables the company to offer the same advertising space to numerous advertisers, whilst also allowing them to charge based on time-of-day.

At $2.03, the stock is trading on a multiple of just 13.7x forecast earnings with strong growth prospects in the years ahead.

Motley Fool contributor Ryan Newman has no financial interest in oOH! Media Ltd.

Tom Richardson: REA Group Limited (ASX: REA)

Online property business REA Group is hard to overlook given its global exposure to the online property market. It also looks a business with a decent moat, competitive advantages and high profit margins. Having achieved dominance in Australia with its realestate.com.au website the group now has a 19.9% stake in fast-growing online Asian property business iProperty Group (ASX: IPP) and a 20% holding in giant US real estate business Move Inc. REA Group itself is 61.6% owned by News Corp and looks an excellent option to cash in on the digital future.

Selling for $49.88 the business does not come cheap on around 32x estimated forward earnings. The group posts its half-year results on February 5.

Motley Fool contributor Tom Richardson has no financial interest in REA Group. 

Tim McArthur: Austbrokers Holdings Limited (ASX: AUB) 

The near 15% fall in the share price of this leading consolidator of insurance broking agencies has arguably created an opportunity for investors to purchase a high-quality company at a fair price.

The price decline is in response to a downgrade of profit growth guidance for financial year 2015 to 0%-5%. This obviously came as a shock to the market, particularly given Austbrokers’ track record as a solid performer. For the past five years the group has achieved a compound annual growth rate of 14.5% and 10.8% for adjusted net profit after tax and earnings per share, respectively.

Assuming the current setback in growth rates is temporary, the future returns for those buying at the current price look appealing.

Motley Fool contributor Tim McArthur has no financial interest in Austbrokers Holdings Limited.

Andrew Mudie: iSentia Group Ltd (ASX: ISD)

For investors looking for a company with a captive and growing market, solid market share, annuity-style revenue, and sustainable competitive advantages over peers, iSentia Group could the stock for you. iSentia offers a media monitoring and information analysis service for companies in the Asia-Pacific region. iSentia operates the dominant service in Australia and New Zealand, with a market share of up to 90%, and a growing 30% market share in Asia.

Finally, iSentia has a huge, diversified customer base and an established network of data sources, making it difficult for competitors to take market share without spending vast sums of money. This competitive advantage, and the relative difficulty in switching providers, gives iSentia a lasting edge over rivals.

Motley Fool contributor Andrew Mudie has no financial interest in iSentia Group Ltd .

Regan Pearson: Gentrack Group Ltd (ASX: GTK)

Gentrack is the type of low-profile, all-weather, growing business that Warren Buffett would love. The company provides ‘mission critical’ software to airports and gas, water and electricity utilities. This makes Gentrack a strong defensive play, while its transition towards a Software-as-a-Service (Saas) business model makes it even more attractive.

In 2015 Gentrack is forecasting revenue growth of 16%, with 63% of revenues coming from reoccurring annual fees and predictable support services. The business itself is capital light and still in the early stages of expansion into the U.K. market. An ideal fit for long term, buy-and-hold investors.

Motley Fool contributor Regan Pearson does not own shares in Gentrack.

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