Some investors may not yet be familiar with the $200 million listed investment company (LIC) QVE Equities Ltd (ASX: QVE) however they may be more familiar with the fund manager Investors Mutual and star stock picker Anton Tagliaferro who is behind QVE.
Listed in August 2014, and focussed on investing in ASX stocks outside of the Top 20, QVE has produced an after tax portfolio return since listing of 5.5% compared with a 0.6% decline in its benchmark.
The investment manager Investors Mutual, states that its investment philosophy is to focus on quality business and aims to buy and own “companies with a competitive advantage, with recurring earnings, run by capable management, that can grow, at a reasonable price.”
Here are three stocks which fit that philosophy and been added to the QVE portfolio since its initial public offering (IPO).
- AGL Energy Ltd (ASX: AGL) – The investment manager has a positive view on Australia’s lowest cost electricity generator. As an incumbent gas and electricity retailer with a strong brand, a new CEO and revamped management team and growth through significant cost-out opportunities AGL appears to have met a range of qualitative checks. Add in a price-to-earnings (PE) ratio of around 15x and a yield around 4% and AGL has met the quantitative check too.
- Pact Group Holdings Ltd (ASX: PGH) – Boasting a 50% market share, Pact is a leading provider of packaging to the fast moving consumer goods (FMCG) industry which contribute around 75% of revenues. Pact can also point to a long-term blue chip customer base and being the largest manufacturer of rigid plastics in Australasia. Investors Mutual sees growth via bolt-on acquisitions and a PE of 15x and yield approaching 5%.
- Shopping Cntrs Austrls Pprty Gp Re Ltd (ASX: SCP) – As a significant owner of shopping centres tenanted by Woolworths Limited (ASX: WOW), the group enjoys a reliable rent stream (60% from Woolworths) and long-term leases averaging around 15 years. Shopping Cntrs Austrls Pprty Gp Re Ltd has a strong balance sheet with gearing of 33% and trades on a PE of around 14.5x with a yield over 6%.
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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. 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.