It's interesting to see what shares the typical Australian holds in their portfolios or self-managed super fund (SMSF).
Well, actually, I should say – they are hardly original and unlikely to significantly outperform the market over the long term. The top 10 most common shares held are typically the usual suspects and all reside in the Top 20 companies on the ASX.
Holding a wide variety of shares and diversifying beyond the S&P/ASX 20 (Index: ^AXTL) (ASX: XTL) is critical. The index has dropped more than 11% over the past year, and is up just 7% over the past 10 years – although that does include the 40% drop during the GFC and doesn't include dividends.
I would still advocate holding a core portfolio of a number of large-cap companies, but if you want superior growth and to transform your portfolio into a high achiever, you need to consider these 5 companies…
Flight Centre Travel Group Ltd (ASX: FLT)
I own shares in Flight Centre, and will likely hold them for much, much longer, adding to them when the share price appears cheap – as it does now. The bricks and mortar travel agent continues to grow strongly, and now has profitable operations in more than 10 countries. Even at prices just above $40, shares appear cheap and the 4% dividend yield is a bonus.
REA Group Ltd (ASX: REA)
The owner of realestate.com.au might look expensive with a trailing P/E of 35x according to Google Finance, but this is one company that continues to grow at high double-digit rates. The company recently reported 20% growth in revenues over the 9 months to end of March and shows little sign of slowing down. The acquisition of iProperty Group gives REA access to continue driving growth into Asia.
Ramsay Health Care Limited (ASX: RHC)
The Hospital operator has a fantastic record, delivering shareholders a return of 24% compounded annually over the last decade. With strong tailwinds in the form of an increasingly older population and a growing population, Ramsay is perfectly situated to benefit. Shares are never cheap, but you are paying up for quality.
Adacel Technologies Limited (ASX: ADA)
Adacel develops air traffic control simulation systems and is the world leader. Despite that, the company is still tiny by most comparisons with a market cap of just $184 million. The company won a small contract with the Dallas/Fort Worth International Airport in December 2015, to replace its existing driver training simulator systems with its AeroDRIVE simulator, showing that it's not all about air traffic controllers. This is one company with massive growth potential – and analysts and fund managers have yet to cotton on.
Appen Ltd (ASX: APX)
Appen is another small company with a market cap of just $191 million. Appen provides speech and search technology services – and partners with some of the largest tech stocks on the planet, including helping Microsoft improve the quality of its Bing search engine in multiple markets. The company worked on a Skype translator for Microsoft, allowing two people to talk to each other in real time in different languages.
Appen also helped a car manufacturer tune the performance of its in-vehicle speech technology. And that's just a small part of what the company can do, and it's translating into growing sales and earnings. In 2015, net profit jumped 414%, as revenues surged 62%. And yet, the company trades on a trailing P/E ratio of just 23x.
