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2 shares to get rich: National Australia Bank Ltd. and Macquarie Group Ltd

With the ASX kicking 2016 off by demonstrating a huge amount of volatility, it is all too easy for investors to focus on the short run. After all, with share prices seemingly coming under attack from fears surrounding China and a continued fall in commodity prices, it is natural to concentrate on the here and now rather than consider how businesses will be performing a number of years down the line.

However, by focusing on the long-term prospects of companies and buying during volatile periods, it is possible to provide the best possible opportunity for portfolio gains. Certainly, it will mean the potential for short-term paper losses, but so long as investments come good in the months and years ahead, such happenings are likely to quickly be forgotten.

One stock which appears to be worth buying at the present time is Macquarie Group Ltd (ASX: MQG), with the diversified financial company taking advantage of appealing asset prices to conduct an acquisition spree. This has included an aircraft leasing opportunity as well as the Esanda Dealer Finance unit; both of which provide Macquarie with long term profit growth potential.

And in the short run, Macquarie is forecast to increase its earnings by over 10% per annum during the next two years. This could act as a positive catalyst on a share price which has beaten the ASX by almost 40% in the last year. With Macquarie trading on a price to earnings (P/E) ratio of 13.5 versus 15.7 for the ASX, there remains a significant amount of upward rerating potential.

Moreover, Macquarie’s portfolio of assets is increasingly becoming more annuity-like in profile. With uncertainty across the global economy being relatively high, a degree of stability alongside profit growth should prove to be beneficial in 2016 and beyond. Furthermore, with Macquarie having a large international exposure, it could gain a boost from a weak Aussie dollar, while a yield of 4.6% alongside double-digit dividend growth in the next two years means that it also holds huge income appeal.

Meanwhile, National Australia Bank Ltd. (ASX: NAB) also has top notch income prospects, with its yield standing at 7.1%. This is 230 basis points higher than the ASX’s yield and although dividends are forecast to rise only marginally during the next two years, NAB’s dividend cover remains sufficient for dividend growth further down the line, with it currently standing at 1.3.

Additionally, NAB’s financial position is now much healthier than a year ago, with asset disposals and a capital raising making notable improvements to the bank’s financial health. In fact, NAB sits in the top quartile among its international peers regarding its common equity tier 1 (CET1) ratio which, given the challenging outlook for the economy over the medium term, should provide the market with a degree of confidence in NAB’s future prospects.

Looking ahead, the disposal of additional non-core assets also has the scope to improve investor sentiment in NAB, with UK-based Clydesdale Bank being relatively problematic in recent years. With NAB trading on a P/E ratio of 12, an upward rerating is on the cards – especially since the wider banking sector has a P/E ratio of 13.

Despite this, there are 3 other ASX stocks that I believe could outperform NAB and Macquarie.

In fact, they have recently been named as The Motley Fool's 3 Top Blue-Chips For 2016 and could make a real impact on your bottom line as we move through the year. As a result, it's well worth finding out more about them.

Click here to do so – it's completely free and comes without any obligation.

Motley Fool contributor Peter Stephens 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.

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