Top stock picks for March

Credit: Simon Cunningham

Andrew Mudie: QBE Insurance Group Ltd (ASX: QBE)

It is with little to no apprehension that I again put QBE down as my top stock for March. I believe it remains one of the few ASX blue chips with significant upside remaining. It reported results last week that hit targets and initially saw the share price rise by over 12%, however the excitement quickly faded and it’s now back to around the $10.50 mark.

QBE is expected to see earnings per share rise by around 10% in 2016 and the dividend per share increase by over 20% as management gets more confident about the group’s balance sheet. At today’s price QBE is forecast to yield a dividend of 6% fully franked, or 8.6% grossed up.

Motley Fool contributor Andrew Mudie owns shares in QBE Insurance.

Ry Padarath: Macquarie Group Ltd (ASX: MQG)

The New Year’s hangover has lasted an unusually long time for the Australian share market, and the financial sector is one of the worst affected. However, the factors that drove the Macquarie Group share price to over $85 last year remain largely intact. The business now earns the majority of its revenue from stable, annuity style businesses, is less exposed to equity markets and has favourable exposure to a strengthening US dollar.

Growing annuity style earnings also bode well for future dividend stability, and management has also shown recently it can be disciplined with acquisitions.

Motley Fool contributor Ry Padarath has no financial interest in Macquarie Group Ltd.

Rachit Dudhwala: Retail Food Group (ASX: RFG)

Retail Food Group reported a strong first-half to 2016, with underlying profit growth of 27.1% and an increased fully-franked interim dividend of 13 cents per share. The company generated 17% of its earnings from international operations, demonstrating its offshore business is starting to reap rewards.

With the company commissioning three international roasting facilities this year, and forecasting underlying profit growth of 20% for the full year, I believe Retail Food Group’s strong track record, growth plans and acquisitive business model should see its share price move higher in the medium term.

Motley Fool contributor Rachit Dudhwala owns shares in Retail Food Group.

James Mickleboro: Bendigo and Adelaide Bank Ltd (ASX: BEN)

The shares of Bendigo and Adelaide Bank have dropped by over 28% in 2016. This means they trade at an estimated forward PE ratio of just 9.2, compared to the financial industry average of 12.8 times estimated forward earnings. As the volatility in the market calms, I feel the banks may start to find their legs and retrace some of the vast losses we have seen. This could make it an opportune time to buy Bendigo and Adelaide Bank shares.

Motley Fool contributor James Mickleboro has no financial interest in Bendigo and Adelaide Bank Ltd.

Tim McArthur: Ansell Limited (ASX: ANN)

The share price of Ansell Limited crashed from $20 at the beginning of last month to a near three-year low of $14.76 in the wake of the release of the group’s interim financial results in February. Those results showed flat sales and a 10% decline in profits in constant currency terms with management also downgrading earnings expectations for the full year.

While the share price has since regained some ground to trade around the $17.20 mark, this level arguably still represents a good buying opportunity for long term investors looking to own a leading global fast-moving consumer goods company with exposure into regions such as China.

Motley Fool contributor Tim McArthur has no financial interest in Ansell Ltd.

Matt Bugden: Challenger Ltd (ASX: CGF)

Challenger is a fund manager and Australia’s largest annuity provider. It recently announced record profits from solid growth in both of these areas. With an ageing population in Australia, demand for retirement income products looks set to continue growing.

Challenger has favourable economics, with a cost-to-income ratio below 34%. The combination of attractive margins and a demographic tailwind makes for a great long-term investment. Shares have pulled back over 13% year to date. Challenger has a P/E ratio of around 11, with a fully franked dividend of 4%.

Motley Fool contributor Matt Bugden has no financial interest in Challenger Ltd.

Christopher Georges : Retail Food Group Limited (ASX: RFG)

‪Shares of Retail Food Group have been trading in a narrow range for the past six months, but its recent half year results could be the catalyst needed to get the share price moving in the right direction. Underlying earnings per share grew at 15.3% and investors were rewarded with an increased interim dividend of 13 cents per share. Retail Food Group also re-affirmed its full year outlook and remains on track to deliver earnings growth of around 20%.

Motley Fool contributor Christopher Georges owns shares in Retail Food Group Limited

Sean O’Neill: Retail Food Group Limited (ASX: RFG)

I recently identified Retail Food Group (“RFG”) as my top stock pick back in October and February, and share prices haven’t moved since then. In addition to guidance for around 20% growth in profit this year, RFG has opportunities overseas, including in China through its Gloria Jean’s joint venture.

RFG looks particularly good value when compared to similar business Domino’s, which is loved by the market but has a price to earnings ratio of around five times RFG’s. With growing scale in coffee roasting operations as well as a nascent international division, Retail Food Group appears to be great value.

Motley Fool contributor Sean O’Neill owns shares in Retail Food Group Limited.

Ryan Newman: Burson Group Ltd (ASX: BAP)

Burson Group operates in the automotive aftermarket parts industry, supplying the parts to mechanics and service shops to use when repairing older vehicles.

Led by a quality management team, Burson runs a highly scalable operation and should continue to benefit as it consolidates the industry and expands its store count. Arguably, it’s also pretty defensive in that if the economy does take a turn for the worse, individuals will tend to hang onto their older vehicles for longer, creating more business for Burson. Shares of Burson Group aren’t cheap, per se, but sometimes you have to pay up for quality.

Motley Fool contributor Ryan Newman owns shares in Burson Group.

Regan Pearson: Gentrack Group Ltd (ASX:GTK)

I picked airport and utility software company Gentrack as my top company for February 2015. Since then the company has delivered smartly on its growth plans, lifting revenue by 9%, winning new contracts and paying out an attractive 5% dividend yield. Revenue for the 2016 financial year is expected to again grow by more than 10%, while increased investment in staff and computer systems will position the company to continue its long-term growth.

In spite of this, Gentrack’s share price is at almost the same place as last year, currently for sale at an economical price to earnings ratio of 17.

Motley Fool contributor Regan Pearson owns shares in Gentrack.

Tom Richardson: MNF Group Ltd (ASX: MNF)

I’d be surprised if the founder-led online voice communications and technology business formerly known as My Net Fone does not thump the market’s returns over the next 3-5 years. The group has looked to New Zealand as a growth lever in a similar way to fast-growing rival Vocus Communications and MNF’s global horizons and solid domestic business suggest a strong outlook.

The shares trade ex-dividend today and can be volatile due to a limited free float. However, earnings per share have grown like clockwork and with some powerful tailwinds I expect the shares will perform well into the future.

Motley Fool contributor Tom Richardson owns shares in MNF Group Ltd.

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The Motley Fool Australia owns shares of Burson and Retail Food Group Limited. 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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