The Motley Fool

3 companies I’m watching like a hawk

The bumpiness of share prices in reporting season can occasionally throw up a few bargains. Here are 3 companies I’m keeping a close eye on:

CSL Limited (ASX: CSL)

CSL reported bumper profits this year and forecast further robust growth in financial year 2018. While the current growth is promising, the main reasons I like CSL are for its focus on research & development and its long pipeline of potential new products. There’s no getting past the price tag, which is pretty hefty, but CSL is still one of the best healthcare opportunities on the ASX, in my opinion.

Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)

Fisher & Paykel is a manufacturer of oxygen masks and other breathing equipment, and enjoys long-term tailwinds from ageing and obese populations. Revenue growth is strong and profitability is also expected to improve in the near term, due to the relocation of manufacturing to Mexico.

Like CSL, the market is well aware of Fisher & Paykel’s potential and is pricing it richly. Still, this is a company with a proven process for developing and selling new products, and in my opinion is an attractive purchase for long-term shareholders.

CBL CORP FPO NZX (ASX: CBL)

Insurer CBL is a promising specialty insurer from New Zealand that I’ve written about before. It announced this morning that it was increasing its provisions (reserves for possible future losses) on its insurance policies and that profit would fall from $35.1 million to $22.5 million despite strong growth in revenues.

This does raise the question of whether the company has been under-provisioning, or perhaps it reflects benign losses over the past decade that are unlikely to continue. Still, I think the news may be misunderstood by investors and I’d consider its shares an opportunity if they get sold off today.

Plus, there's one more company that could prove an even better bet than CBL or Fisher & Paykel. You might not know this market leader, but it’s making waves in Asia and already boasts a term-deposit-crushing dividend of almost 5%. A debt free balance sheet and dominant market position at home and abroad mean this company offers investors income and some real-deal growth potential.

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Motley Fool contributor Sean O'Neill owns shares of CBL Limited. 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.

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