2016 was the year of the resources company as the prices of many of Australia’s big commodity exports (i.e. iron ore, gold & coal) shot through the roof, powering gigantic increases in forward earnings for many of our biggest and best resources companies.
Of course, the biggest gains were seen in smaller capitalised companies that sit near, or on the border of profitability at lower commodity prices.
Are Winners Still Grinners?
The beginnings of fortunes were made from 2016’s gains, but so often we see that one year’s winners are the next year’s losers, so how have 2016’s stars performed so far?
|Stock||2016 Gain (%)||2017 Performance (%)|
|Resolute Mining Limited
|Galaxy Resources Limited (ASX: GXY)||357||-17|
|Whitehaven Coal Ltd (ASX: WHC)||273||1|
|Fortescue Metals Group Limited (ASX: FMG)||215||-9|
|Mineral Resources Limited (ASX: MIN)||202||-13|
|South32 Ltd (ASX: S32)||158||-2|
|Worleyparsons Limited (ASX: WOR)||110||15|
|BlueScope Steel Limited (ASX: BSL)||109||30|
Compared to the S&P/ASX 200 (Index: ^AJXO) (ASX: XJO), which has increased a mere 2% so far in 2017, the top stocks of 2016 have returned on average precisely 0%. Despite the clear boost to performance from Bluescope and Worleyparsons.
Where to from here?
This year we’ve seen the iron ore price fall, the gold price and aluminium price rise moderately, and the oil, copper, lead and nickel prices move essentially sideways.
Consequently resources stocks have generally struggled, but quality companies such as a2 Milk Company Ltd (Australia) (ASX: A2M) and XERO FPO NZX (ASX: XRO) with sustainable advantages over peers have outperformed. This may be the time to latch onto mid-cap growth stories.
For many, blue chip stocks means stability, profitability and regular dividends, often fully franked..
But knowing which blue chips to buy, and when, can be fraught with danger.
The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2017."
Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.
If you’re expecting to see the likes of Commonwealth Bank, Telstra and Wesfarmers shares on this list, you’ll be sorely disappointed. Not only are their dividends growing at a snail’s pace, their profits are under pressure too due to the increasing competitive environment.
The contrast to these “new breed” blue chips couldn’t be greater… especially the very real prospect of significant share price gains, something that’s looking less likely from the usual blue chip suspects.
The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.
Click here to claim your free report.
Motley Fool contributor Andrew Mudie has no position in any stocks mentioned. The Motley Fool Australia owns shares of A2 Milk 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.