2015 has undoubtedly been a tough year for the ASX. It started with a relatively modest degree of optimism after a 2014 calendar year which saw the ASX rise by just 1%. And, while the first few months of the year saw gains of over 10%, the last six months have been nothing short of disastrous.
In fact, the ASX has fallen by 15% since March 2015 and, with commodity prices continuing to slide and the outlook for the Aussie economy being rather pessimistic, further falls cannot be ruled out.
However, a number of stocks have beaten the ASX during that period and, while their investors may be sitting on losses in the last six months, companies such as CSL Limited (ASX: CSL) are not all that far off their March level.
In CSL's case, it is down just 4% in the last six months and a key reason for this is its lack of correlation with the Aussie economy. That's at least partly because the bulk of the company's earnings are derived from abroad, but also because demand for drugs and treatments tends to be relatively resilient even during economic crises. As such, CSL's earnings are due to rise at an annualised rate of 16% over the next two years, which would be an impressive performance given that the company released a profit warning earlier this year.
Of course, vastly superior profitability does not come cheap and, with CSL having a price to book value (P/B) ratio of almost 12, many investors may be put off investing in it. However, CSL is a relatively reliable performer and is financially sound, as evidenced by its increase in cash flow per share of 13% per annum during the last five years. And, with it having a price to earnings growth (PEG) ratio of 1.43, now seems to be the right time to buy a slice of it.
Similarly, Wesfarmers Ltd (ASX: WES) has also beaten the ASX in the last six months, with its shares being down 11%. This may seem surprising to many investors since Wesfarmers is a major supermarket player; a sector which has been hit hard by a weak Aussie economy. However, Wesfarmers' conglomerate status should allow it to weather the economic storm better than many of its index peers with, for example, its earnings rising by over 12% in its most recent financial year.
In addition, Wesfarmers remains a top notch income stock, with a yield of 5.2% being 50 basis points ahead of the ASX's yield. Certainly, dividends may come under pressure but, with a beta of 0.64, Wesfarmers remains a hugely enticing defensive and income option ahead of what could be a challenging period for the ASX.
Meanwhile, property specialist Goodman Group (ASX: GMG) also has considerable investment appeal, with its yield of 4% set to grow in the next two years. The reason for that is a forecast increase in earnings of over 6% per annum during the period, which should allow Goodman Group to increase shareholder payouts at over 5% per year in the next two financial years.
The key to this is a high occupancy rate which stood at 96% in Goodman Group's most recent financial year and, with $1.9bn of property having been sold, it now has reduced capital needs. Furthermore, with $7.6bn in undrawn debt, equity and cash, Goodman Group has the financial firepower to take advantage of potentially weaker asset prices and position itself for strong long-term growth.
