At this time of year a lot of share market pundits like to predict what might change over the year ahead, but when it comes to investing it's best to focus on what won't change. As the best companies tend to keep on winning and the fundamentals of investing successfully never change in needing to find high-quality companies on reasonable valuations.
Below are 5 for 2018 and beyond.
Melbourne-based SEEK Limited (ASX: SEK) is the operator of the eponymous jobs website in Australia that now earns around half of its profits overseas. This is largely thanks to its Zhaopin.com Chinese jobs website that is growing strongly with plenty of potential ahead. SEEK continues to invest aggressively in new business opportunities and should deliver solid total returns.
Macquarie Group Ltd (ASX: MQG) has a market-thumping long-term track record and looks well positioned to take advantage of improving global economic conditions in Europe and the U.S. in 2018. Largely an asset manager that also does some investment banking these days it should benefit from U.S. tax cuts and a weaker Australian dollar. At $102 the shares offer a reasonable mix of income, value and growth.
Elmo Talent Management Software (ASX: ELO) is a fast-growing software-as-a-service business that charges customers annual fees to use its human resources management software. It possesses recurring subscription revenues, a capital-light business model, a history of healthy growth and an ambitious founder aiming to grow the business in an underserved market. It ticks the boxes for small-cap investors looking to take on more risk in pursuit of superior returns. For now the share price may have got a little ahead of itself and investors could hold off a purchase until it reports its half year results in February.
Apple Inc. (NASDAQ: AAPL) enjoyed a strong finish to 2017 powered by sales of its new iPhone 8, iPhone X, Apple Watch Series 3 and Apple Mac laptop products. Outside hardware its services business is also now generating growing recurring revenues via online services such as Apple TV and iTunes. Selling for US$172 the stock trades on just 15x analysts' estimates for US$11.40 in earnings per share over the current fiscal year. This looks good value for arguably the world's best company.
Challenger Ltd (ASX: CGF) is the annuity provider that has a couple of tailwinds at its back in the form of Australia's ever-growing superannuation savings balance and a cashed-up baby boomer population seeking income in retirement. Challenger also has a dominant competitive position in an industry with significant barriers to entry thanks to the capital and balance sheet strength required to sell annuities on a commercial scale. Challenger also looks to offer a good mix of growth, income and value to investors.
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