Is your portfolio needing some “oomph” in the growth department? I have three stocks with impressive catalysts for growth that may give solid long-term returns.
Telecommunications and internet service provider M2 Group Ltd (ASX: MTU) has doubled in share price in the last 12 months on the back of recent acquisitions and the expansion of utility payment services. This month the company announced it will acquire New Zealand’s third largest broadband and fixed voice service provider Call Plus Group and a related company 2Talk for $245 million. This could help offset slower subscriber growth in Australia. Annual earnings rose strongly in financial year 2014, but analysts forecast growth going forward in the mid to high-single digits.
The stock is trading at the high end of its past price/earnings ratio range. I would hold off for a better entry price since the stock may need to settle down for a while after such a strong run-up in share price.
REA Group Limited (ASX: REA) recently made a big acquisition together with News Corp for the third largest property listing website in the US. The stock has been trading sideways for the last twelve months and could be consolidating for the next leg up. Investors should be looking for updates on how REA Group plans to expand into the US real estate market.
Earnings are expected to rise in the high-double digits. The company has a long record of high growth and this next stage of business in the US could set up REA Group for long-term profit expansion. I would take advantage of the lull in share price movement and add to positions.
Ansell Limited (ASX: ANN) is following up its 2014 acquisition of US-based BarrierSafe Solutions International (which has sales of about $290 million) by buying Microgard, a UK-based chemical protective clothing maker. Ansell is a leading producer of protective wear and gloves used in homes, industries and medical facilities. These two acquisitions will expand its exposure in the company’s two major overseas markets.
Similar to M2 Group, the stock has climbed to new highs thanks to strong organic growth and acquisitions, so the stock could take a breather. The company is a quality performer, so owning the stock is a good move over the long term. Still, the stock could come down and give you a cheaper buying price. Wait for that pullback and review company progress before buying.