Investors should always have several high-growth stocks in their portfolio to keep returns up. Dividend stocks bring in regular income, but the growth stocks can generate higher returns and extra funds that can be reinvested for further gains.
The three stocks below are some of the best performers in the ASX recently and they still have more room to run. Would they work well in your portfolios?
Corporate Travel Management Ltd (ASX: CTD) was recently added to the S&P/ASX 200 Index (ASX: XJO) (Index: ^AXJO) on the heels of a 47% increase in reported interim earnings per share. After listing in late 2010, the company which specialises in corporate travel solutions, has more than tripled revenue and quadrupled annual earnings per share.
It competes with Flight Centre Travel Group Ltd (ASX: FLT) for the business traveller and is holding its own. It has stable returns yet no long-term debt. It is forecast to double its earnings over the next two years. With a high-flying 42 price/earnings ratio, expected growth is baked into the price, so there’s not a lot of margin of safety. Good company yet priced at a premium.
Perpetual Limited (ASX: PPT) had a remarkable result in financial year 2014 from its fund management business. First-half earnings were also up in the high-double digits. Interim dividends were raised 44% as well. In addition to its domestic share investments in the ASX, the fund manager is starting several funds that cover international equities to take advantage of stronger overseas markets and undervalued securities. The stock pays a 3.7% fully franked yield and is trading at 20 times forward earnings, close to its past PE average. Perpetual is priced well for the expected growth, so it would be a good addition to your portfolio.
Sirtex Medical Limited (ASX: SRX), the producer of a specialised liver cancer treatment, is growing well in the US healthcare market where it generates the majority of its revenue. Interim sales rose around 37%, marking its 42nd quarter of growth. High demand for its treatment continues and analysts forecast earnings to double from this financial year in the next two years. Growth in Europe and Asia is also expected. The stock trades at 34 times forward earnings. That may seem dear, but if earnings forecasts hold up, it could give a good return in the long term as it becomes another Aussie healthcare success story.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned.
We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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