Over the past year falls in the share prices of the big four banks, the supermarkets and the big miners have seen the S&P/ASX 20 index crash down more than 10%.
What might be astonishing to readers is that over the same period, the S&P/ASX MidCap50 (Index: ^AXMD) (ASX: XMD) has soared 14%. This index represents the bottom 50 stocks in the S&P/ASX 100, with market caps ranging from $1.4 billion to $12.4 billion.
Here’s my top 10 picks out of those 50 stocks…
|Company||Market Cap||Last Price||12 Month move|
|ResMed Inc. (CHESS) (ASX: RMD)||11,869.9||8.83||16%|
|TPG Telecom Ltd (ASX: TPM)||10,062.9||12.28||33%|
|REA Group Limited (ASX: REA)||8,099.1||64.58||49%|
|Cochlear Limited (ASX: COH)||6,954.1||128.94||44%|
|Vocus Communications Limited (ASX: VOC)||4,474.2||8.58||45%|
|Challenger Ltd (ASX: CGF)||4,100.0||9.10||28%|
|Magellan Financial Group Ltd (ASX: MFG)||3,370.6||22.24||19%|
|Flight Centre Travel Group Ltd (ASX: FLT)||3,091.5||32.51||-9%|
|Carsales.Com Ltd (ASX: CAR)||2,961.0||12.45||17%|
|Sirtex Medical Limited (ASX: SRX)||1,458.2||31.20||-1%|
Source: S&P Global Market intelligence
Interestingly, many of those companies also appeared on my top 10 superstar blue chip companies on the ASX, thanks to their high returns on equity and strong earnings per share growth over both 5 and 10 years.
The strong performance of the mid-cap index also suggests many of those companies – including some of those stocks above – could grow into Australia’s top 50 largest companies over the next few years.
The results also show that strong companies generate high returns and high growth – and in most cases, shareholders are rewarded with higher share prices and capital gains.
Investors could do worse than to dig deeper into the 10 companies above. Not all are cheap at current prices, but any pullback could be an opportunity to jump in.
Motley Fool contributor Mike King owns shares of Cochlear Ltd., Flight Centre Travel Group Limited, ResMed Inc., Sirtex Medical Limited, TPG Telecom Limited, and Vocus Communications Limited. You can follow Mike on Twitter @TMFKinga
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.