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Top stock picks for September

Credit: Simon Cunningham

Regan Pearson: GBST Holdings Limited (ASX: GBT)

As demand for financial services continues to grow, so too will demand for the specialised software which support operations. GBST is growing its presence in this niche market and quickly, but sustainably, to take advantage.

Revenue grew by 16% in the last 12 months and the company offers valuable exposure to international earnings against the low Aussie dollar. Management observe “very significant” growth opportunities going forward and the recent market volatility has trimmed GBST’s share price back to a level that looks attractive in my mind given the company’s long-term growth prospects.

Motley Fool contributor Regan Pearson does not own shares in any of the companies mentioned.

John Hopkins: Australia and New Zealand Banking Group (ASX: ANZ)

Due to the crash this month, I think ANZ’s shares have been oversold. ANZ’s strategy is to become a super-regional bank in Asia, with an objective to source 25% to 30% of revenue from outside of Australia and New Zealand by the end of fiscal 2017. This differentiates ANZ Bank from domestic peers, none of which has an Asia-centric strategy.

ANZ is well placed to take advantage of Australia’s links with Asia, the fast-growing emerging market region, if you’re prepared to be patient. Other things to like about ANZ include excellent earnings per share over the past five years, return on equity has been outstanding and it provides a fully franked dividend yield of 6.7%.

Motley Fool contributor John Hopkins does not own any shares in Australia and New Zealand Banking Group.

Ry Padarath: iCar Asia Ltd (ASX: ICQ)

There was a lot to like about the recently reported results of iCar Asia. It helps to think of this business as an earlier stage, Asia-focussed Carsales.com. iCar Asia has completed the most difficult step towards profitability, by creating the dominant number one advertising network in Malaysia and Thailand.

It’s now monetising its user base, which is much larger than Australia. The heavy investment in IT systems is largely complete, and future revenues will now fall to the profit line. The company is forecasting a breakeven position by 2017, and from there the sky is the limit.

Motley Fool contributor Ry Padarath does not own shares in iCar Asia.

Christopher Georges: Lifehealthcare Group Ltd (ASX: LHC)

LifeHealthcare is a micro-cap healthcare company that is quickly becoming one of Australia’s leading independent distributors of high-end medical equipment. The company is well placed to benefit from the long-term tailwinds in the healthcare sector and its FY15 result has shown that the company has a growth strategy that is working. Core earnings per share increased by an impressive 17.3% and this was driven through a combination of organic growth and accretive acquisitions. LifeHealthcare is trading at a significant discount to the broader healthcare sector and also provides investors with a dividend yield of around 4.5%.

Motley Fool contributor Christopher Georges owns shares in Lifehealthcare Group Ltd

Mitch Sonogan: LaserBond Limited  (ASX: LBL)

The general consensus says the Australian manufacturing industry is dead, but there are always roses amongst the thorns. LaserBond is a provider of advanced surface engineering techniques which reduce the maintenance and operating costs for its industrial customers. The company specialises in the surface enhancement, reclamation and manufacture of components for a broad range of capital intensive industries.

The speculative investment appeal for LaserBond is the recent release of a range of surface engineered drilling tools. Initial trials have shown its drilling hammers last 3x longer than competitor products which results in significant cost savings.

Motley Fool contributor Mitch Sonogan owns shares in LaserBond.

Ryan Newman: Woolworths Limited  (ASX: WOW)

Woolworths posted its full-year earnings results on Friday, and it wasn’t pretty. Its annual profit was down 12.5%, or flat when adjusted for significant items, while sales were down for the year. But there were a number of positive takeaways which the market took note of. First, margins rose (although are expected to contract in the current financial year), while it has made solid progress in reducing its prices.

Meanwhile, the executive team appears to be getting a full makeover which should be good for long-term shareholders. Yielding 5.1%, fully franked, Woolworths seems a very reasonable buy today.

Motley Fool employee Ryan Newman does not own shares in Woolworths Limited.

Andrew Mudie: FlexiGroup Limited  (ASX: FXL)

When I nominated FlexiGroup as my top stock last month I noted that it looked to me that the shares had been oversold. Since then the ASX 200 has fallen by 7% and Flexigroup’s shares by around the same amount, making it even more attractive now. The reporting season showed that Australian retailers had a strong second half, which should flow through to Flexigroup in greater revenue over the next 12 months and the company trades on a forward price to earnings ratio of just 9, a forward dividend yield of over 6%, and profit is forecast to be 7% higher this year than last.

Motley Fool contributor Andrew Mudie owns shares in FlexiGroup Limited.

Tim McArthur: Reece Australia Limited (ASX: REH)

The just released full year results from Australia’s leading supplier of plumbing and bathroom products show that Reece Australia has achieved record sales and record profits. In response to the record results the share price has soared to a record high and is currently trading around $36.

At this price level the stock might not appear cheap given it equates to a trailing price-to-earnings ratio of around 22x. Arguably this multiple is well deserved as the company has a 10-year total shareholder return of 13.6% per annum, an impressive management team and a positive long-term growth outlook.

Motley Fool contributor Tim McArthur does not own any shares in Reece Australia Ltd.

Joshua Anderson: Wesfarmers Ltd (ASX: WES)

The investment conglomerate best known for its retail companies such as Coles, Bunnings, K-Mart and Target recently reported a $2.4 billion annual profit. Excluding the effects of the sale of its insurance division and a write down in the value of Target, this represents an 8% rise on the previous year. The continued strong performance of Coles and Bunnings are the company’s key strengths.

Although the industrial division struggled with a lower coal price, it is still profitable and could rebound with any recovery in global commodity prices. The share price has fallen 14% from the high reached in February and now, with a dividend yield of almost 5% it represents good value.

Motley Fool contributor Joshua Anderson does not own shares in Wesfarmers Ltd.

Owen Raskiewicz: Reffind Ltd (ASX: RFN)

It’s speculative season! Reffind Ltd is a recently listed mobile application developer specialising in the human resources (HR) sector. Despite making just $20,941 of revenue in its 2015 financial year, the company ‘reported’ a profit thanks to loan forgiveness from its incubator, Digital4ge. However, CEO Jamie Pride believes the core business can become profitable within two years. Essentially, Reffind has developed a novel mobile app which is downloaded by every employee in a company, who can then job ‘cards’ to fellow employees or friends and receive ‘points’ which go towards a prize.

Motley Fool Contributor Owen Raszkiewicz owns shares of Reffind.

Tom Richardson: Vocus Communications Limited (ASX: VOC)

This fibre-optic internet and data centre business recently posted an impressive set of full year results, although it’s the future that counts and Vocus appears to be expertly positioned by its founder and CEO. Its recent merger with rival Amcom will give it scale and I expect 2016 will see a focus on synergy extraction and cost savings. The group has leverage to the major themes of increasing data usage, internet demand and cloud computing, while the recent result suggests Vocus has the capacity to rapidly grow revenues and profits into 2016 and beyond. At $5.81 this is a growth stock to own.

Motley Fool contributor Tom Richardson owns shares in Vocus Communications.

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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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