The extreme volatility over the past few weeks might have scared some people out of the market, but if you are looking for great returns, the sharemarket provides some great opportunities.
Here are four stocks that could make your dream of retiring early a reality!
1. Nearmap Ltd (ASX: NEA) – Although it might only have a market capitalisation of $195 million, Nearmap’s growth potential is impressive. It provides world class aerial imagery that is updated faster than any other provider. This gives Nearmap a competitive advantage and the results have been exciting so far. In a recent market update, the company confirmed that sales have increased by 29% over the past year. Although the Australian business is tracking along nicely, it is also expanding its operations in the US where it recently recorded its first commercial sales ahead of schedule. Earnings might be slim at the moment, but if sales growth continues at the same rate, investors can expect profits to catch up and the share price to closely follow.
2. Challenger Ltd (ASX: CGF) – Challenger is the market leader in the retail annuity sector in Australia. Following the GFC, many retirees have invested in annuities over equities to ensure they receive a guaranteed retirement income. As the population gets older, the demand for annuities is expected to increase and Challenger is in the best position to take advantage of this. In the short term, Challenger has looked to expand its operations overseas and recently made a $41 million acquisition that will provide the company with exposure to the fast-growing UK and European investment markets. The shares are attractively priced and are trading on a price-to-earnings ratio of around 12. Investors can also expect to receive a dividend yield just over 4%.
3. Capitol Health Ltd (ASX: CAJ) – Capitol Health is a fast growing healthcare company that provides medical diagnostic imaging services like X-Ray, MRI and CT scans. Profits have been increasing exponentially over the past five years as the company has been successful in integrating new acquisitions as well as through driving growth organically. There are a number of long-term tailwinds that will help Capitol Health maintain its earnings growth including an ageing population and a shift towards early detection and prevention of certain health conditions. Although the current valuation looks expensive, investors can be confident of high-double digit earnings growth for the next couple of years and any fall in the share price should be seen as a buying opportunity.
4. Cover-More Group Ltd (ASX: CVO) – Australia’s largest travel insurer operates a very attractive business model that generates healthy margins and high rates of return. Rather than distributing its products directly to consumers, Cover-More distributes its travel insurance products with leading travel agents such as Flight Centre Travel Group Ltd (ASX: FLT). Although earnings have primarily been driven through its Australian operations, the company is now rapidly expanding into a number of other countries including China and India. With international tourism forecast to grow by more than 6% each year over the next 10 years from the Asia Pacific region, Cover-More is positioning itself in an attractive market. The current valuation may look expensive, but if the company’s international strategy is successful, investors can expect strong earnings growth for many years to come.
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As of 2.11.2020
Motley Fool contributor Christopher Georges owns shares in Cover-More Group. 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.