Most investors should commit some part of their available investment funds to growth stocks. The longer your investment horizon the more weighted your portfolio should be to growth stocks.
Indeed right up towards retirement age I would suggest investors should orientate at least two thirds of their available funds into growth stocks before gradually transitioning into a greater income focus for retirement. The younger you are the more heavily weighted to growth your portfolio should be.
But that doesn’t mean buying speculative small caps, penny stocks, or any other number of companies lacking the credentials to deliver consistent profit growth and capital gains over the long term.
However, some mid-cap investments should offer genuine growth potential with brokers recently recommending the three below.
Freelancer Ltd (ASX: FLN) ($1.68) is an online marketplace where businesses or individuals can hire freelancers to complete any number of common services tasks on their behalf. Broker Canaccord Genuity reportedly has a $1.75 valuation on the business and in my opinion this continues to remain one of the ASX’s most promising digital disruptors for long-term growth.
Sirtex Medical Limited (ASX: SRX) ($38.50) recently updated the market at its AGM that it expects another strong year of sales growth and brokers Goldman Sachs and Macquarie Group reacted by slapping 12-month price targets of $40 and $42 respectively on the stock. In Australia, Mac Bank’s healthcare research function in particular has a strong reputation for quality of research and getting the big calls right as to company performance and share price directions.
Slater & Gordon Limited (ASX: SGH) ($2.90) may surprise some as an entrant on this list given concerns that it spent too much on its latest UK acquisition. However, several research teams remain bullish including Morgans, while another research house Edison Investment Research has a fair value of $7.60 on the stock. Some doubts remain over the actual value of the law firm’s Quindell acquisition and cash-generating abilities of the business, although the stock may yet offer substantial upside from today’s prices.
Sirtex and Freelancer are high-risk bets with some great expectations priced into their valuations, although both have promising futures and could yet outperform over the long term. Slater & Gordon looks cheap on conventional metrics, although remains a high-risk play given the concerns outlined.
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Motley Fool contributor Tom Richardson owns shares of Sirtex Medical Limited and Slater & Gordon Limited. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below.
You can find Tom on Twitter @tommyr345
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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