My 3 market-beating share picks for 2017

After a very slow start the benchmark S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) looks set to finish the year with a gain of around 6% thanks largely to its strong run since the U.S. election.

Because of this strong finish the three shares below look very unlikely to beat the market this year. But in 2017 I believe it will be a different story. So much so I’m tipping them to bounce back and beat the market next year. Here’s why:

Blackmores Limited (ASX: BKL)

This health supplements company has fallen from grace this year and now finds itself trading 53% lower than its 52-week high. A weak first quarter due to destocking left many investors nervous, especially considering the plight of Bellamy’s Australia Ltd (ASX: BAL). But management is confident that its second-half performance will be much stronger. At the current price and offering a generous dividend yield, I believe Blackmores will move significantly higher in 2017.

Capilano Honey Ltd (ASX: CZZ)

Year to date the share price of this leading honey producer has fallen around 25%. As a result its shares can be snapped up for just under 15x trailing earnings, which I believe puts them in bargain territory. Following a strong FY 2016 which saw net profit after tax jump 20.9% to $9.5 million, I believe the company is positioned for further growth in FY 2017. The launch of its health and wellness Beeotic range and the commencement of distribution into China through the pharmacy channel should all be a boost.

Mayne Pharma Group Ltd (ASX: MYX)

Although this growing pharmaceutical company has rallied strongly this week, it is still down slightly year to date. This decline is the result of Mayne Pharma being named in a U.S. lawsuit for alleged price-fixing of generic drugs. I think the sell-off has been a massive overreaction, especially considering management has constantly reiterated that any penalties imposed will not be material. With such a lucrative pipeline of generic drugs due for release over the next 12 months, I think Mayne Pharma has a great chance of beating the market next year.

Beating the market is the goal of many investors, not least Warren Buffett. The legendary investor has beaten the market countless times thanks to investments in companies like this. Is it in your portfolio?

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia owns shares of Bellamy's Australia and Capilano Honey 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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