One of the oldest investing mantras is ‘buy low, sell high’, which is a very simple piece of advice. But how are you supposed to know what the right price to buy is?
One of the simplest ways is to compare the price to previous levels over the past weeks and months. If you can buy shares at good prices in strong businesses then you’re onto a winner.
Below are two shares on my watch list that I think are worth a buy today:
Rural Funds Group (ASX: RFF)
Rural Funds Group is Australia’s only listed agricultural real estate investment trust (REIT) with a market capitalisation of $352 million.
It owns a number of different farm types such as cotton, cattle, poultry, vineyards, almonds and macadamias. The farms are also diverse across a number of climactic conditions by being located in the states of South Australia, Victoria, New South Wales and Queensland.
Rural Funds Group also owns a large amount of water entitlements which provides some water security to its tenants, which is recorded in its accounts at cost, but may be worth reasonably more.
I think it’s one of the best REITs on the ASX and one of my favourite income stocks. It’s trading with a forward dividend yield of 5.67%.
Vocus Communications Limited (ASX: VOC)
Vocus is one of the largest telecommunications players on the ASX with a market capitalisation of $2.57 billion. It’s the operator of a number of brands like Dodo, Commander and iPrimus. The share price is down a staggering 56% since its all-time high in May, which I think makes the current price very attractive.
The change to NBN is a net positive to Vocus so far, its churn rate is lower with NBN customers than its traditional copper network. Vocus picked up around 10% of new NBN customers which translated into growing its market share from 6.4% to 7.1% of total NBN customers.
However, the best reason for investing in Vocus in my opinion is its infrastructure. It owns a large and growing network of cables throughout Australia and cables that connect to other countries. The network could generate significant cashflow for Vocus over the coming years.
Vocus is trading at 22x FY16’s earnings with a grossed up dividend yield of 6.05%.
Both of these businesses would make great additions to an income-seeking Foolish portfolio in my opinion thanks to their good yields, growing dividends and defensive characteristics. I think Rural Funds Group is the better business, but Vocus is trading at a more attractive price.
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Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED. 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.