It seemed almost impossible just two weeks ago, but its looks like Australian equity investors will finish 2015 in positive territory. The S&P/ASX 200 (Index:^AXJO) (ASX:XJO) is currently down around 1.9% for the year but once dividends are included, this return is likely to be in the black by around 2%.
Over the past nine trading sessions, the index has managed to regain around 8% and calmed the nerves of many investors who might have been anxious moving into 2016. Although trading volumes have been light, investors will still be pleased with the results.
Interestingly, 2015 has delivered spectacular returns for a number of individual stocks, in contrast to the lacklustre return of the broader market. In essence, 2015 was a stock-pickers’ market and many analysts are forecasting more of the same in 2016.
With that in mind, here are four of 2015’s top performers and my thoughts about their prospects for 2016:
1. Blackmores Limited (ASX: BKL) – Few people would have predicted the 525% return delivered by the vitamin maker at the start of 2015. Growing demand from Asia, especially China, is fuelling much of the excitement surrounding the company and at this point it is nearly impossible to determine where the share price might go next. The company is now worth $3.7 billion and in my opinion, much of the future growth over the next couple of years is already priced in. Investors must note that any problems that may arise in the supply chain could see investors rush to the exits at the same time.
2. RCG Corporation Limited (ASX: RCG) – Some investors may be unfamiliar with the name, but RCG owns and operates The Athlete’s Foot and a number of other footwear and active lifestyle clothing stores. The share price has increased by more than 170% over the past year and by more than 740% over the past 10 years. Much of the company’s success has been delivered through its ability to drive like-for-like sales growth as well as through strategic acquisitions. At the company’s most recent AGM, management said it expected earnings per share (EPS) growth of between 25-30% for FY16. Despite this, the shares appear fully priced and are trading on a forward price-to-earnings ratio of more than 25x.
3. Freelancer Ltd (ASX: FLN) – Freelancer’s share price has increased my more than 160% in 2015 and the company is now sitting on a market capitalisation of close to $800 million. The company is yet to deliver a profit but it has, importantly, turned cash flow positive during the course of the year. There is a huge amount of blue sky potential for Freelancer as it looks to digitally connect individuals seeking work with those needing jobs completed. The potential market is huge and the company already has nearly 17 million registered users. Despite the lack of profitability at the moment, the company is consistently generating record cash receipts and if this continues, there is the potential for further share price gains in 2016.
4. BT Investment Management Ltd (ASX: BTT) – BT has been the best performing ASX listed fund managers in 2015, delivering a total shareholder return of more than 97%. Since hitting a low of $1.12 during the GFC, the company’s share price has increased by more than 1,040% – far better than any fund it manages. Much of BT’s success has resulted from record fund inflows with funds under management now worth more than $78.4 billion. If equity markets have a reasonable year in 2016, investors shouldn’t be surprised to see BT’s share price higher as it earns a sizeable amount of profits through improved performance fees.