5 stocks I think you should buy this Christmas

Westpac Banking Corp (ASX: WBC) pays its final, fully franked dividend of $0.94 per share today. All Big 4 banks will then have paid their final dividends for 2017 and while I believe they are highly profitable businesses and great for income, I would rather reinvest their distributions elsewhere right now.

Below I’ve highlighted five ASX-listed companies I believe investors should consider when deciding where to allocate their bank dividends.

Challenger Ltd (ASX: CGF) shares are trading near all-time highs, as the company continues to enjoy strong growth in assets under management (AUM). Challenger is an Australian market-leader in annuity investments, benefitting from baby boomers entering retirement and desiring the reliable returns of annuities.

FY2018 looks set to be another strong period for Challenger with AUM up 5% in the first quarter. Increased Japanese exposure with MS&AD Insurance Group and in Australia through relationships with some of our biggest financial services firms should continue to drive Challenger’s sales and earnings higher.

Aristocrat Leisure Limited (ASX: ALL) has been one of the best performing growth stocks on the ASX over the last five years, and the company has recently made large acquisitions in online social gaming.

In November, Aristocrat announced it had entered into a binding agreement to acquire 100% of Big Fish Games Inc for USD$990 million. The move comes soon after Aristocrat finalised the purchase of Israeli-based social gaming company Plarium Global Limited.

While these substantial acquisitions represent a significant business risk in terms of integration, the move appears to make sense given Aristocrat’s existing digital business has been its highest growth segment. For FY2017, digital revenue and earnings grew by 41.2% and 38.8% respectively.

Webjet Limited (ASX: WEB) shares have rebounded in December after the market was initially disappointed by earnings guidance provided at the company’s AGM on 22 November. Then, management stated FY2018 EBITDA is expected to be 14% higher than the previous year, which would be a decent result for a company currently trading at 20x FY2017 earnings.

In the medium-term, Webjet believes it can grow sales at a much higher rate than the overall industry in both the Business-to-Consumer and Business-to-Business segments over the next three years. Additionally, the company was operating from a very strong financial position at the end of FY2017 with plenty of cash and very little interest-bearing debt.

WAM MICRO FPO (ASX: WMI) is a new Listed Investment Company (LIC) from Wilson Asset Management with a mandate to invest in undervalued growth companies with a market capitalisation of less than $300 million.

Since inception in June 2017, WAM Microcap has returned 23.1% to 30 November, before expenses fees and taxes. That performance is 8.1% higher than the benchmark ALL ORDINARIES (Index: ^AXJO) (ASX: XAO) index and has driven the LIC’s share price up 24% since listing.

Automotive parts and services provider Bapcor Ltd (ASX: BAP) believes it will grow NPAT by 30% in FY2018, which would be another strong result for a company whose share price has increased almost 180% since listing in 2014.

Bapcor shares have traded sideways in 2017, with market sentiment perhaps dampened by the so-called “Amazon effect”. I believe the company will be largely unaffected by the retail giant’s arrival in Australia given Bapcor generates 80% of group revenue from its trade and wholesale segments. This area of business requires high levels of product knowledge and customer service as well as strong business relationships that Amazon is less likely to provide.

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Motley Fool contributor Ian Crane owns shares in Westpac Banking Corp. The Motley Fool Australia owns shares of and has recommended Bapcor and Challenger Limited. The Motley Fool Australia has recommended 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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