The month of March brings to an end the profit reporting season for Australian companies with many pundits tipping what companies are likely to shine or not in the year ahead as a result of recent profit results or the changing macro-economic environment.
For investors that want to get ahead though it's best to consider what won't change, rather than what may change, as the fundamentals of doing well in the share market never really change. You need to find great companies on attractive valuations that are likely to consistently grow profits over the long term.
At the end of the day share prices will follow dividends and profits either higher or lower and the companies able to deliver the most consistent growth will deliver the best returns to investors.
Below are five companies I expect can keep growing over 2017 and beyond, while currently trading on reasonable valuations.
The CSL Limited (ASX: CSL) share price looks reasonable value at $117.52 as this business is expecting to report full year profit growth in the region of 18%-20% for FY 2017. It's also in the middle of a $500 million share buyback and as a leading provider of critical healthcare products to public and private hospitals it's arguable that no business on the ASX has a brighter long-term outlook. Even if national governments around the world were to all double their healthcare budgets tomorrow there would still be public pressure for far more spending. This is a sweet spot for CSL investors and bodes well for the long term.
The Iress Ltd (ASX: IRE) share price looks reasonable value at $11.73 given this is a market leader that could have several years of double-digit growth ahead of it on the back of recent acquisitions and its sticky recurring revenues. It also pays a handy trailing divided in the region of 4% and I expect could produce decent total returns for today's investors.
The MNF Group Ltd (ASX: MNF) share price at $4.68 looks ok value if you assume it can lift profit margins across its global voice services business over the years ahead. This alongside the ability to cross-sell its security, billing and software products mean this founder-led group looks an attractive prospect for investors looking to take on a little more risk. MNF carries little debt and given it has been investing for the future the results may pay off over the long term.
The Wesfarmers Ltd (ASX: WES) share price at $42.63 looks reasonable value given the Coles supermarkets operator's same-store sales growth and dominant Bunnings business. The home improvement business is also entering the UK with some profit margin expanding potential. The shares look to offer a reasonable mix of value and income with a yield of 4.8%.
The Westfield Corp Ltd (ASX: WFD) share price at $8.72 is starting to look much more attractive as this is a quality family run business with a laser like focus on providing long-term returns to shareholders. It offers defensive earnings, exposure to the strong U.S. economy and a handy dividend yield of 3.9%. For conservative investors it's a business that looks hard to go past at current valuations.
