Rear-view investing can be a dangerous investment strategy, especially when investors assume that a particular share price trend will continue indefinitely.
You only have to look at some recent examples such as Bellamy’s Australia Ltd (ASX: BAL), TPG Telecom Ltd (ASX: TPM) and Blackmores Limited (ASX: BKL) to realise that rear view investing is far from a fool-proof investment strategy.
With that said, I still believe it is a worthwhile exercise to reflect on the best (and worst) performing shares of the year as this can provide investors with some really valuable information.
However, instead of listing the 12 highest returning shares of 2016 (mainly mining companies), I have decided to list 12 top performing shares that I believe will continue to enjoy strong tailwinds over the coming year or so.
|Company||Market Capitalisation||2016 Return||P/E Ratio||Dividend Yield|
|Mineral Resources Limited (ASX: MIN)||$2,246 million||210%||20.4||3.1%|
|CogState Limited (ASX: CGS)||$140 million||110%||53.9||–|
|Compumedics Limited (ASX: CMP)||$147 million||110%||42.8||–|
|Webjet Limited (ASX: WEB)||$1,013 million||94.5%||31.3||1.7%|
|Monadelphous Group Limited (ASX: MND)||$1,069 million||86.5%||16.6||5.1%|
|Credit Corp Group Limited (ASX: CCP)||$844 million||77.9%||17.0||3.0%|
|Altium Limited (ASX: ALU)||$1,049 million||77.4%||28.9||3.7%|
|Skydive the Beach Group Ltd (ASX:SKB)||$267 million||75.1%||30.5||1.6%|
|zipMoney Ltd (ASX: ZML)||$110 million||74.1%||–||–|
|Appen Ltd (ASX: APX)||$267 million||70.8%||24.7||1.8%|
|Emerchants Ltd (ASX: EML)||$439 million||70.5%||–||–|
|Nearmap Ltd (ASX: NEA)||$253 million||67.9%||–|
Although many of the top 20 ASX shares have enjoyed a nice rally over the last month or so, the table above is still clearly dominated by smaller companies that are generating quite strong positive earnings momentum.
While many of the shares above might be priced to perfection, if I had to choose three shares to buy right now, I would have to select Webjet, Compumedics and Altium. All three companies enjoy particularly strong market positioning and continue to win large numbers of new customers and contracts.
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Motley Fool contributor Christopher Georges owns shares of Blackmores Limited and TPG Telecom Limited. The Motley Fool Australia owns shares of Altium, Appen Ltd, and Bellamy's Australia. 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.