First-half results released this week by Cochlear Limited (ASX: COH) showed an increase in profit of 240% versus last year, although the company’s share price did not perhaps react as strongly as you may have expected – closing down 1% on the day of release.
That’s because the first quarter of last year was a challenging period for the business, with delays in getting regulatory approvals for various products causing profitability to be hit hard. As such, the 240% gain is perhaps less impressive when compared to a relatively weak first half of last year.
Still, Cochlear seems to be performing well as a business and it is forecast to increase its bottom line at an annualised rate of 35.8% over the next two years. That’s an impressive rate of growth and could lead to improved market sentiment, thereby making now a prudent time to add Cochlear to your portfolio.
Fortescue Metals Group
With Fortescue Metals Group Limited (ASX: FMG) due to release an update in the next few days, its share price could be somewhat volatile in the short run. That’s because its numbers are set to be down on last year, owing to a declining iron ore price.
However, looking at the longer term, Fortescue could prove to be a sound investment. That’s because, as well as being a bid target, it offers investors a surprisingly strong yield of 4.6% (using next year’s forecast dividends per share). This not only indicates its income potential, but also highlights that Fortescue is very cheap at the present time and, with a relatively low cost curve, could come out of the current period of depressed iron ore prices in a stronger relative position than when it entered.
As such, it could be worth adding a slice of Fortescue to your portfolio.
Although AMP Limited (ASX: AMP) has a relatively poor track record when it comes to growth, it could be a surprisingly strong performer moving forward. For example, although its bottom line has fallen at an annualised rate of 8.4% during the last 10 years, AMP is expected to post earnings growth of around 11.5% in the current year. That’s ahead of the ASX’s forecast growth rate and could cause investors to bid up the price of AMP’s shares.
And, with AMP trading on the same price to book (P/B) ratio as the wider insurance sector of 2.2, it could be argued that a premium is deserved. This could send AMP’s rating higher, thereby making the present time a great opportunity to buy in to it.
Of course, finding the best stocks for the long term is a tough ask – especially when work and other commitments limit the amount of time you can spend trawling through the index for them.
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Motley Fool contributor Peter Stephens does not own shares in any of the companies mentioned.
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