Investors can often be short sighted when it comes to the sharemarket and forget that true wealth is created over a long period of time. Sure, we would all love to make a huge gain everyday but clearly the equity market does not work that way – and that is a good thing.
It is during periods of volatility and fear that investors can truly take advantage of high-quality companies that have been marked down by the market. It is also during these difficult times that investors can see which companies are less susceptible to wild market swings.
Tassal Group Limited (ASX: TGR) has been one such company that has not been susceptible to the current market downturn. Over the past three months, Tassal’s share price has outperformed the broader market by more than 20%.
Tassal has embarked on a significant investment program over the past three years and the company is now beginning to reap the benefits from this program. The company delivered an excellent FY15 result with revenues increasing by more than 16% and earnings increasing by nearly 22%.
Tassal has focused on increasing domestic per capita consumption of salmon and while this strategy has been successful so far, it is now looking to expand its operations into the much larger seafood market. With the acquisition of De Costi seafoods now finalised, Tassal has an immediate and scalable platform in this lucrative market.
Despite Tassal’s out-performance recently, the shares are still cheap and are trading at less than 11x earnings. With the dividend yield at around 4% and a positive growth outlook in place, Tassal appears to be good value at these prices.
Another company that has fared relatively well over the past three months is Challenger Ltd (ASX: CGF). Its share price has outperformed the broader market by more than 12% and is another company that produced a solid earnings report.
Challenger’s underlying earnings increased by 12% in FY15 and it remained the leading provider of retail annuities in Australia by some margin. A 15% increase in the dividend also pleased investors, and at the current share price, it is yielding nearly 4.5% fully franked.
The growth outlook for Challenger remains positive and the recent market volatility is likely to make its products even more attractive to retirees. Morningstar is forecasting for 12% annuity sales growth in FY16 and this should translate into mid-to-high-single digit earnings growth. With the shares trading at less than 12x earnings, investors could do far worse than take a stake in Challenger.
While Tassal and Challenger have been strong performers recently, Crown Resorts Ltd (ASX: CWN) has followed the broader market down and is now trading at under $11 per share. The share price has fallen more than 21% in just a matter of weeks and is now at levels not seen since 2012.
Crown’s FY15 result was clearly disappointing, but the long-term outlook still remains buoyant. There is no doubt the company faces some short term headwinds especially in its Macau operations, but the company is undertaking a massive investment program that will make it one of the leading entertainment and gaming operators worldwide.
Although a quick turn-around in Crown’s share price is unlikely in the short term, I believe investors who are prepared to invest for the long term will be rewarded at the current share price.
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Motley Fool contributor Christopher Georges owns shares in Tassal Group. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. 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.