Many investors in ASX shares are after a solid mix of income and growth, below I take a look at three of investors’ favourites and how they shape up as investment prospects in the year ahead.
Carsales.Com Ltd (ASX: CAR) is without doubt the dominant force in automotive listings in Australia and the first business a consumer thinks of when buying or selling a used vehicle. The digital ascendancy it commands makes it incredibly hard for competitors to steal market share away from it. With its investments in successful operations in Mexico, Brazil, and South Korea, as well as Thailand, Indonesia, and Malaysia through its 20.2% stake in iCar Asia (ASX: ICQ) it looks attractive. All these regions reported growth year over year, and the business has exciting opportunities ahead of it in these markets with their big populations.
The average time it takes to sell a vehicle on the website continues to get shorter, providing sellers with great experiences that will undoubtedly create repeat visits and great word of mouth recommendations. For a business that is forecasted to grow earnings at 12.9% per annum for the next two years, a 3.1% fully franked dividend is a fantastic added bonus.
Sydney Airport Holdings Ltd (ASX: SYD) is another business that offers growth and a decent dividend yielding 4%. Thanks to the falling Australian dollar we are seeing a real boost in tourism numbers. The government has forecasted a 5.9% increase in international vistitors for 2015-16, a 5.6% increase in 2016-17, and then an average annual increase in visitor numbers of 4.1% through to 2025.
As Australia’s largest airport Sydney Airport is positioned to benefit greatly from the increase in visitor numbers. The enthusiasm surrounding the airport has caused it to climb to a high PE ratio of 52.98, so it isn’t cheap by any means. But with a PEG ratio of 0.47 there is an awful lot of earnings growth on the horizon that potentially supports the high valuation.
Crown Resorts Ltd (ASX: CWN) would also benefit from these increased visitor numbers. The rapid growth in China of a middle-class with an appetite to travel and gamble makes Crown an ideal candidate for investment. There is also a lot of speculation floating around that James Packer’s resignation may be part of a takeover plan with the ultimate aim being to take the business private.
Whether or not this eventuates there is still a great business here to be invested in that pays a 3.1% dividend and is forecasted to grow earnings at 8.3% per annum for the next two years.
These three shares are positioned well to benefit greatly in 2016 and should be considered as part of a well balanced portfolio. They offer investors both outstanding earnings growth, which should fuel share price gains, and good dividends that make things that little bit sweeter.
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Motley Fool contributor James Micklebore 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. 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.