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3 top shares to buy for 2016

As investors look out to the year ahead many will dream of owning the huge risers of 2015 such as baby formula business Bellamy’s Australia Ltd (ASX: BAL), or vitamins business Blackmores Limited (ASX: BKL). These two shares have returned around 730% and 510% respectively in 2015 to give lucky investors an early Christmas present and a half.

However, if you want to feel festive next Christmas you need to find the Blackmores of 2016, not 2015!

Unfortunately this is no easy task, although it is possible to suggest a few businesses that may be cut out for strong returns in the year ahead.

Nearmap Ltd (ASX: NEA) this aerial mapping business currently sells for 38 cents per share, with the market seemingly fixated on its US growth prospects. The Australian business is still delivering strong revenue growth with H1 FY16 expected to be up 19%-22% on H1 FY15. Notably, the business also shocked the market in mid-October by dumping its CEO, with a new boss now focused on growing sales in the US market it may now have a stronger outlook than this time last year. The business has now also put its paywall up in the US, with US$500, 000 worth of contracted sales already I would expect the share price to track higher on the first evidence that US sales are on a sustainable upward trajectory. In investing it’s better to be six months too early than six minutes too late and Nearmap’s share price is one to watch in 2016.

Freelancer Ltd (ASX: FLN) shares have nearly tripled over 2015 and the business now has a market value around $781 million, although this is a business growing strongly with a digital future and genuinely global presence. The website allows freelance workers and employers to connect to contract for common digital tasks like website development, design, SEO marketing or Mobile App creation among an almost unlimited number of other tasks. The company is operating cash flow positive in 2015, scalable and posts high margins with a fast-growing user base to create a network effect. It also has around $42.6 million of cash or cash equivalents on its balance sheet to fund growth and if it continues to grow strongly I would not be surprised to see the shares bid beyond today’s price of $1.73 in 2016.

Vocus Communication Limited (ASX: VOC) is a fibre optic internet and data centre business that has a big 2016 ahead of it including a merger with internet retailer M2 Group Ltd (ASX: MTU). Vocus also swallowed rival Amcom in 2015, while the merger with M2 Group and what synergies it can extract will be critical to the combined group’s ongoing success in 2016. Moreover, if the M2 / Vocus group combined starts to exhibit signs the merger is working and it can succeed in the battle for market share with rival TPG Telecom Ltd (ASX: TPM) then I expect shares may finish 2016 with a bang.

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Motley Fool contributor Tom Richardson owns shares of Nearmap Ltd. and Vocus Communications Limited.

You can find Tom on Twitter @tommyr345

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.

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