Top stock picks for January

Credit: Simon Cunningham

We asked our Foolish writers to pick some of their favourite shares to buy in the month of January.

Ryan Newman: REA Group Limited (ASX: REA)

Although its shares recently hit a fresh all-time high, REA Group could still be an excellent pick for investors. The company owns and operates Australia’s leading residential and commercial property website,, and has a significant interest in similar websites around the world.

The company has minimal debt, a reasonable cash balance and plenty of room left to grow. There are also numerous ways it can innovate to enhance its offering to users. Although the shares mightn’t be cheap by traditional metrics, the opportunity is certainly there and investors who get in today could be well rewarded in the long run.

Motley Fool contributor Ryan Newman does not own shares in REA Group Limited.

Regan Pearson: QBE Insurance Group Ltd (ASX: QBE)

QBE Insurance Group is in great shape heading into 2016, yet the share price is still lagging in my view. The company has now ditched several of the businesses that were dragging down financial performance and is expecting a strong increase in free cash flow for the year ahead.

Combine this with the increase in the U.S. Federal Reserve cash rate, which over time will boost returns on the billions of dollars the company conservatively invests, and there could be a sharp rise in dividend, rounding out a positive outlook for the year ahead.

Motley Fool contributor Regan Pearson owns shares in QBE Insurance Group Ltd.

Tim McArthur: Australian Agricultural Company Ltd (ASX: AAC)

2015 could well be described as the year Australian manufactured baby formula met China! For some years now the potential for Australia to be a prime beneficiary of growing Chinese consumption and demand for high quality, high protein foods has been touted.

Arguably 2015 was the year that this hope began to become a reality!

Australia’s largest beef producer is Australian Agricultural Company (AACo). The stock lost around 10% over the course of 2015 and trades roughly in line with its net tangible asset backing. While the weather will always play a factor in AACo’s profitability, the now vertically integrated group appears well positioned to be a long-term beneficiary of rising Chinese demand.

Motley Fool contributor Tim McArthur does not own any shares in AACo.

Rachit Dudhwala: Suncorp Group Ltd (ASX: SUN)

Queensland-based bank and general insurer Suncorp shocked the market with a profit downgrade in December. Whilst the announcement revealed a trifecta of larger than forecast losses in its Commercial Insurance Division, an increase to its natural hazards allowance, and insurance margin pressures, Suncorp remains determined to mitigate insurance risks and increase earnings. With its strong capital position, Suncorp should navigate its current problems successfully and continue to provide a generous yield to patient investors. This makes Suncorp my top pick at current prices.

Motley Fool contributor Rachit Dudhwala does not own shares in Suncorp Group Ltd.

Andrew Mudie: FlexiGroup Limited (ASX: FXL)

I believe Australian investors need to make some portfolio adjustments heading into 2016. The adjustments should be based on the macro outlook for the Australian (and more broadly the world) economy. Locally, I think 2016 will see a recovery in jobs and wage growth as the government gains greater control to make policy changes that promote growth.

A big beneficiary of this trend should be FlexiGroup. Flexigroup operates a consumer financing business through brands that readers might know: FlexiRent, Certegy Ezi-Pay and Blink (among others). I see more upside than downside from here assuming the new CEO doesn’t make any drastic changes and the economy rebuilds as I expect.

Motley Fool contributor Andrew Mudie owns shares in FlexiGroup Limited.

Qaiser Malik: Ainsworth Game Technology Limited  (ASX: AGI)

The gaming industry has been downbeat for the last few years as global economic issues hamper the sector. But a recovering US economy and recent interest rate hike will likely prove beneficial for the gambling sector. One Australian company that is set to benefit is Ainsworth.

Ainsworth will open a new American head office in Las Vegas in 2016. In November it acquired a US gaming and software development firm. The share price is trading at a low price to earnings (P/E) ratio of 10.2. A low P/E and good future growth prospects, make this share a strong buy in my opinion.

Motley Fool contributor Qaiser Malik does not own shares in Ainsworth Game Technology.

Christopher Georges: Corporate Travel Management Ltd (ASX: CTD)

Corporate Travel recently announced another international acquisition and at the same time upgraded its FY16 earnings guidance. The company has a proven track record of successfully integrating acquisitions and the latest purchase will expand the company’s brand awareness and scale in the important and large US travel market.

This is yet another example of how Corporate Travel continues to kick goals for shareholders and although the shares are trading at 31x forward earnings, there remains significant opportunities for growth in international markets. Investors shouldn’t be surprised to see a higher share price over the next year.

Motley Fool contributor Christopher Georges does not own shares in Corporate Travel Management Ltd.

Tom Richardson: Macquarie Group Ltd (ASX: MQG)

The bank ticks the boxes as an investment prospect in the year ahead with overseas earnings, exposure to a stronger US dollar, an attractive 4.5% yield, reasonable valuation and leverage to stronger capital markets globally. Macquarie should also benefit from its shift towards more annuity style earnings streams as demonstrated by several large earnings accretive acquisitions in 2015.

At $82.90 it trades on less than 13x estimated annualised earnings per share of $6.50, when using H1 FY16’s result of $3.25 per share. Macquarie expects the second half to be slightly lower than the first half due to timing differences, but with a decent outlook, I would not bet against capital gains in the year ahead.

 Motley Fool contributor Tom Richardson owns shares in Macquarie Group.

Owen Raszkiewicz: Flight Centre Travel Group Ltd (ASX: FLT)

Flight Centre shares appear compelling value leading into 2016. The company is a proven growth story and has loads of cash on its balance sheet. It is very well run and has a promising international expansion underway. And despite a lower Australian dollar, we Aussies continue to cherish our four weeks’ annual leave per year by jetting off abroad, or even exploring our own backyard. At slightly over $40 per share, investors should look to build a long-term position in Flight Centre at these prices.

Motley Fool writer/analyst Owen Raszkiewicz has a financial interest in Flight Centre.

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