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10 top shares for 2018

At the start of 2017 I put forward 10 shares that investors should consider buying due to certain qualities they offered including value, growth and income.

In total returns these 10 shares returned around 20% in a good result, so now it’s time to consider 10 more shares that could beat the market in 2018.

Investing successfully is a relatively simple business in identifying high-quality companies on reasonable valuations relative to their potential to grow.

Ideally you want to buy companies you can imagine holding 10 years from now as this should, inter alia, allow you to enjoy the benefits of compounding returns and help you avoid any of the return-denting losers.

Below I name 10 businesses that may offer good returns over 2018 and beyond.

Australia & New Zealand Banking Group (ASX: ANZ) may be able to ride out any fallout from the Royal Commission into the banks and deliver some earnings growth. ANZ is also buying back $1.5 billion worth of shares and from $29.05 today it may offer decent total returns going forward.

Webjet Limited (ASX: WEB) is the online travel bookings business that offer consumers and travel agents booking services across its multiple global websites. Its business-to-business operations are growing strongly with room to keep delivering. Webjet also has a decent track record and seemingly strong management team, with the shares selling for $10.40.

Class Ltd (ASX: CL1) is the online superannuation platform provider that is growing rapidly as a market leader with the transition to online platforms in the SMSF management space having plenty of room to run. The stock sells for $2.70 today and more strong growth could translate into strong returns for investors.

ResMed Inc. (CHESS) (ASX: RMD) you can’t go past the healthcare space as a long-term investor and ResMed remains a market leader across the sleep treatment and home health space. Its software-as-a-service business Brightree is also performing well and if the group’s margins hold up shares could go above $11.18 today.

Sydney Airport Holdings Ltd (ASX: SYD) may seem an odd pick given the potential for rising risk-free debt and cash rates in the US. However, I’m prepared to cut this asset some slack given its quality and potential for organic growth to help support dividends. At $7.38 the market may send shares higher in 2018.

Reliance Worldwide Corporation (ASX: RWC) is a founder-led plumbing and bathroom parts supply business with global growth horizons that gets recommended again. Today it sells for $3.88 and has potential to deliver consistent profit growth over the years ahead.

Bapcor Ltd (ASX: BAP) looks good value with shares at $5.55 and the auto-parts distributor and repair garage aggregator is forecasting FY 2018 should deliver EBITDA growth of “at least” 30%. If the group can deliver even halfway towards this kind of growth in FY 2019 then the stock could enjoy a strong run.

TPG Telecom Ltd (ASX: TPM) faces a substantial headwind due to the NBN mess, but that may be priced into its current valuation of $6.57. This looks an extremely well run company that is working towards its next growth leg in the mobile space. It comes with some risk, but could offer excellent long-term returns from here.

Macquarie Group Ltd (ASX: MQG) is an asset manager, bank, and capital markets advisory business that continues to offer a decent mix of yield, value, and growth. It recently acquired the Green Investment Bank and is in the midst of a $1.5 billion share buyback. Barring a significant capital markets downturn in 2018 Macquarie could deliver another strong year of earnings and dividend growth. The stock sells for $99.90 today.

CSL Limited (ASX: CSL) is the blood products and vaccine healthcare giant that enjoys a dominant competitive position protected by high barriers to entry. CSL may benefit from a weaker Australian dollar in 2018 and is likely to deliver more growth in FY 2019. As such despite the seemingly high valuation shares may continue to print new highs over the years ahead. Today they change hands for $141.51.

A lot of the above businesses come from the digital, tech, or healthcare sectors as these look some of the best positioned to deliver consistent growth over the years ahead.

While companies like Reliance Worldwide (plumbing) and Bapcor (spare car parts) are also surprisingly defensive in nature. All of them pay a dividend have consistent track records of meeting or beating earnings forecasts.

You can also discover 3 Blue Chips hand-picked by The Motley Fool for 2018 that fit the bill....

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Motley Fool contributor Tom Richardson owns shares of Bapcor, CSL Ltd., Macquarie Group Limited, ResMed Inc., TPG Telecom Limited, and Webjet Ltd.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia owns shares of and has recommended Bapcor, Sydney Airport Holdings Limited, and TPG Telecom Limited. The Motley Fool Australia has recommended Class Limited, ResMed Inc., and Webjet Ltd. 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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