The Motley Fool

Do you own a diversified portfolio?

The share market is full of different businesses operating in different industries and some that generate revenue in different countries.

If you’re focused on just the tech industry or just on Australian earnings you may be putting too many of your eggs into one basket.

You don’t need to invest in an overseas stock exchange to get diversification. There are some great businesses listed on the ASX that would do exactly what I’m talking about. Here are three shares that have a very distinctive Kiwi theme:

Auckland International Airport Ltd (ASX: AIA)

This company is the operator of the Auckland Airport, as the name might suggest. The airport is the main point of entry into New Zealand, which is experiencing a large tourism boom.

The beautiful scenery, pleasant cities and people make it one of the most popular tourist destinations in the world. That’s why the number of tourists is growing at an impressive amount each year.

Auckland Airport reports the growth of international passengers each month. In the update for October 2017 it reported that the total number of international passengers increased by 6.6% compared to October 2016.

Auckland Airport is currently trading at 31x FY18’s estimated earnings with a dividend yield of 3.08%.

Xero FPO NZX (ASX: XRO)

Xero is the leading cloud accounting software in New Zealand. It’s also the leader in Australia whilst rapidly growing in the UK and USA too.

Business owners and accountants alike love the software because of its automation tools and cloud capability. You can log into it anywhere where there’s an internet connection and it saves on a lot of time in so many areas of business operations.

It offers a lot for an affordable price, yet it costs more than its competitors – which is good for Xero. It’s building a whole ecosystem that is attracting many add-on partners and further expands the usefulness for everyone who connects to the software.

Xero isn’t yet making a net profit, but I imagine it might make a profit soon with the growth of its revenue and margins.

a2 Milk Company Ltd (Australia) (ASX: A2M)

A2 has carved a name out for itself as a high-quality product with a unique selling point.

Each year people write a2 off saying that there’s no way it can deliver even more growth than it already has produced, yet each time it surprises the market.

I think a2 is still one of the best stocks to watch out of the whole market because it’s growing in all of the geographies that it operates. I think there’s a lot more growth to come from a2 over the next five years.

A2 is currently trading at 36x FY18’s estimated earnings and doesn’t yet pay a dividend.

Foolish takeaway

New Zealand may have a small population, but it has an array of high quality shares to choose from, including the three ones I’ve mentioned in this article. At the current prices I would be inclined to pick a2 because of how much the company may still surprise the market on the upside over the next 12 to 18 months.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of June 30th

Motley Fool contributor Tristan Harrison has no position in any of the 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.

Related Articles...

Latest posts by Tristan Harrison (see all)