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10 top stocks for FY 2018

As a share market investor it’s important to remember that markets are forward looking and as such focus will now be turning to how certain companies can perform in FY 2018 or the period from July 1 2017 to 30 June 2018.

Of course identifying how companies will perform that far out is no easy task. However, those on reasonable valuations that beat current expectations are likely to deliver share price growth over a 12 to 24-month period. Investors then need to look to company’s with decent balance sheets and the ability to deliver solid revenue, profit, and dividend growth in FY 2018.

Below I name 10 companies that I expect might do well due to a mix of factors including their market opportunities, expected growth rates, competitive positions and current valuations. Please note though some of these companies are of a speculative nature and therefore may be best left on the watch list for FY 2018, rather than as part of an investment portfolio.

  1. Corporate Travel Management Ltd (ASX: CTD) recently reported a strong profit report with its CEO flagging a potentially strong FY 2018 ahead. I’d have to agree with the CEO and think this stock looks a buy at $19.30 given its growth rates and outlook.
  2. Mitula Group Ltd (ASX: MUA) is the online classified advertising website aggregator. It has been growing earnings strongly with a decent outlook. The shares sell for 90 cents today and it may be a bargain opportunity.
  3. Ramsay Health Care Limited (ASX: RHC) is the private hospital operator that has defensive earnings streams and a decent outlook thanks to growing demand for its hospital beds. It also has expansion opportunities via new hospitals overseas and looks a good long-term bet with shares selling for $68.76.
  4. Rural Funds Group (ASX: RFF) is a good bet for income seekers with its 5.2% yield and defensive earnings streams based on its extensive portfolio of land assets. The stock sells for $1.74 and could enjoy a good FY 2018 and beyond.
  5. Superloop Ltd (ASX: SLC) is a very speculative play in the small-cap space, but given it’s led by the experienced tech entrepreneur Bevan Slattery it may have a bright future. It’s building dark fibre high-speed internet traffic networks (or loops) under the streets of Hong Kong and Singapore and may become a takeover target in the years ahead.
  6. Megaport Ltd (ASX: MP1) is an adjustable bandwidth business also founded by Bevan Slattery that has been investing heavily in its overseas growth opportunities. The stock has fallen to $2.25 on the back of some disappointing results, but may enjoy a decent FY 2018. However, it should be noted it is also a speculative play.
  7. TPG Telecom Ltd (ASX: TPM) is Australia’s second-largest telco provider that has seen its shares slammed in FY 2017 due to concerns over the impact of the NBN. Today the shares sell for $6.25 and may be set to rise if some of the company’s capital investments start to pay off in FY 2018.
  8. XERO FPO NZ (ASX: XRO) is the cloud-accounting business that is growing especially strongly in Australia, New Zealand and the UK. If it can move towards operating profitability in its FY 2018 the shares are likely to enjoy strong support.
  9. SEEK Limited (ASX: SEK) is another business investing heavily for the future that has faced a few international headwinds recently. Its Australian business continues to perform well though and it could deliver a positive FY 2018 with a the opportunity for plenty more strong growth beyond. At $15.31 the stock looks good value for investors prepared to take a long-term view.
  10. Trade Me Group Ltd (ASX: TME) is the website operator that maintains a dominant position in its home market of New Zealand. It offers classified advertising and eBay style marketplaces with a solid moat, decent dividend yield, and reasonable valuation. It should enjoy a solid if not spectacular FY 2018.

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Motley Fool contributor Tom Richardson owns shares of Corporate Travel Management Limited, SEEK Limited, TPG Telecom Limited, and Xero.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia owns shares of Corporate Travel Management Limited and Xero. 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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