Having a well-diversified portfolio is important.
Especially for new investors, or those who haven’t yet experienced significant volatility, spreading your wealth across multiple companies, industries and markets is vital.
Of course, if you are an ace stock picker, having a concentrated portfolio of 5 or 10 stocks can work wonders for your returns. However, it’s important to remember risk and reward go hand-in-hand.
One way to avoid being put off by sharemarket investing early in your career is by holding a diversified portfolio of, say, 20 to 30 stocks. Of course, that’s just a hypothetical range and personally I’d rather have 10 great stocks than 30 so-so stocks.
Unfortunately, finding 30 quality companies to buy is not easy. Then the painstaking research which comes afterwards is even more time consuming.
To help you on your way, here are five quality Australian stocks you can consider adding to your watchlist and/or portfolio today.
Washington H. Soul Pattinson & Co. Ltd (ASX: SOL) is a diversified holding company with a huge amount of cash on its balance sheet. Having been listed on the ASX for more than a century, Soul Patts has built up a stable of reputable public and private companies in which it holds major interests. These include names like TPG Telecom Ltd (ASX: TPM), Brickworks Ltd (ASX: BKW), and Ruralco Holdings Ltd (ASX: RHL) – to name just a few. At 31 January 2015, the $3 billion company had $1.3 billion in cash. Soul Patts is the type of defensive stock which should make up the bulk of investors’ portfolios.
M2 Group Ltd (ASX: MTU) is a leading retail telecommunications company. Its brand names include Dodo, Primus, Eftel and Commander. M2 Group has been extremely successful in growing its business acquisitively over the past five years and recently entered into an agreement to buy New Zealand’s Call Plus Group and 2Talk. It’s currently offering a 2.8% fully franked dividend.
ResMed Inc. (CHESS) (ASX: RMD) is a $10 billion dual-listed biotechnology company specialising in manufacturing devices for the treatment of sleep apnoea and related disorders. The company recently suffered a sharp selloff in its shares following an adverse trial result. However, despite the result, ResMed currently appears to be a great long-term investment.
Collection House Ltd (ASX: CLH) is a diversified receivables management company operating in both Australia and New Zealand. The $295 million firm has an impressive track record in regards to both earnings per share and dividends per share, having increased each metric every year since 2008.
Yowie Group Ltd (ASX: YOW) is a speculative buy. Arguably, new investors could be well served by avoiding speculative companies altogether. However, Yowie Group is one to watch. It has the exclusive patent to Yowie Chocolate in the United States and has rapidly grown its distribution network to include names such as WalMart and Safeway. I like each of these five stocks for the long term, but if I had to pick my favourite for new money, it’d be either Collection House or Soul Patts. However, whilst they’re both undoubtedly great businesses, there’s another ASX stock I think is an even better buy today.
5 stocks under $5
We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
Motley Fool contributor Owen Raskiewicz owns shares of Collection House Limited, M2 Group Ltd, ResMed Inc., and Washington H. Soul Pattinson and Company Limited. Owen welcomes your feedback on Google plus (see below), LinkedIn or you can follow him on Twitter @ASXinvest.
The Motley Fool Australia has no position in any of the stocks 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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