MENU

S&P/ASX 200 to hit 6000 points in 2016: Which shares should you buy?

It’s been a bumpy ride for Australian share market investors in 2015, but those who held on for the journey could be well rewarded in 2016.

As reported by The Australian Financial Review, Credit Suisse thinks the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) will finally hit the 6000-point mark by December 2016. That’s almost 15% above its current level of 5223 points.

While Credit Suisse believes investors are currently pricing in a “considerable period of decline” in dividends per share, according to the AFR, it thinks that view is too bearish and that dividends per share should expand modestly even during a period of subdued growth.

That’s certainly encouraging for investors in companies like Telstra Corporation Ltd (ASX: TLS) and Commonwealth Bank of Australia (ASX: CBA). Both of these companies have come under heavy selling pressure in recent months but are typically owned by investors looking for safe and reliable dividends.

Instead of the typical blue chip companies however, Credit Suisse has named companies like Macquarie Group Ltd (ASX: MQG), Aristocrat Leisure Limited (ASX: ALL) and Carsales.Com Ltd (ASX: CAR) as those that will do well in 2016. It thinks Macquarie will do well thanks to its good track record of acquiring businesses; Carsales from its recent acquisitions; and Aristocrat Leisure from its expansion into the United States.

Personally, I think Carsales.Com is the best buy from those three businesses. The shares are trading at a very reasonable price while the company is also building a wide moat as more individuals make the carsales.com.au website the go-to platform for buying and selling their vehicles.

Some of the other companies I think could do quite well in 2016 include REA Group Limited (ASX: REA) – the owner and operator of the popular real estate portal, realestate.com.au – and SEEK Limited (ASX: SEK), which is another online classifieds business focused on employment and education.

Indeed, with the ASX 200 hovering well below its high levels from earlier this year, I think now could be an excellent time to begin buying shares in some of Australia’s best companies.

NEW REPORT!

Forget BHP and Woolworths. These 3 "new breed" top blue chips for 2016 pay fully franked dividends and offer the very real prospect of significant capital appreciation. Click here to learn more.

The report is free! No credit card required.

Motley Fool contributor Ryan Newman 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. You can follow Ryan on Twitter @ASXvalueinvest.

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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.