For investors struggling to come up with ideas in today's expensive-looking market, I've put together a list of three companies I'd buy right now with $5,000. These are businesses that I feel offer a good opportunity, for one reason or another, and certainly a better shot at success than the market on average. Here's why:
Vocus Group Ltd (ASX: VOC)
Vocus is a telecommunications company that looks oversold. Investors have ascribed too great a negative impact to the costs of migration to the NBN and recent departure of board members, while overlooking the company's continued investments in growth via its cable networks, its growing market share of NBN subscribers, and the potential for higher dividends over time.
With long-term assets, the tailwind of growing data requirements, and modest debt relative to peers like Telstra Corporation Ltd (ASX: TLS), I would invest up to $2,000 in Vocus today.
Retail Food Group Limited (ASX: RFG)
Master franchisor Retail Food Group is less well known than some of its brands, which include Gloria Jean's, Donut King, Brumby's, and Crust Pizza among others. The company hitched its wagon to the coffee trend several years ago and the rewards for shareholders have been exemplary. Looking forward, the opportunity in Retail Food Group shares is increasingly about the expansion of its franchises overseas, as well as the possible organic growth via a brand refresh and the recent acquisition of an industrial bakery here in Australia.
With focused management and a clear plan for growth – not to mention an attractive dividend – I would invest a further $2,000 in Retail Food Group today.
A2 Milk Company Ltd (Australia) (ASX: A2M)
Last but not least – although perhaps more risky – is healthy milk and baby formula company a2 Milk. A2's unique selling point is that its milk contains only a2 proteins, instead of a1 and a2 proteins like regular milk. This theoretically makes it easier to digest and healthier. There is also a small but growing body of scientific evidence to validate this theory. So far, a2 has been able to build an impressive business in the ANZ region, with expansions into the UK, USA, and China providing the growth opportunities.
Chinese demand for baby formula has been one of the big drivers of the company's share price recently, and although the price tag appears rich, the opportunity is enough to compensate for this. I would invest a further $1,000 in a2 Milk today.
