A big cap and mid cap to buy now and one to watch

Challenger Ltd (ASX: CGF) is an insurance company and an investment management company that is predominantly involved in providing retirement solutions, annuities. I like the company as it is in the best position to take advantage of the Government’s new framework for retirement income products, to support the increasing ageing population. The Government recently announced that a retirement income covenant is to be included in the Superannuation Industry (Supervision) Act 1993, requiring trustees to offer Comprehensive Income Products for Retirement (CIPRs) that will facilitate lifelong income. Insurance companies are the only providers of annuities with Commonwealth Bank of Australia’s (ASX: CBA) CommInsur the other main provider, although other insurance companies are likely to play catch up on the back of the proposed changes to Superannuation.

Aferpay Touch Group Ltd (ASX: APT) is trading on a high forward price-earnings-ratio (PER) and subject to a review by Australian Secuities and Investment Commission of the buy-now-pay-later operators the company is likely to continue to grow strong earnings. The announcement of today’s foray into the US with Urban Outfitters, a robust US-based portfolio of consumer lifestyle brands, will provide further support to future earnings. Millennials’ reluctance to use credit cards as well as the size of the US fashion market of around $60 billion compared to Australia’s $3 billion go a long way to grow earnings. If you can stomach the high PER it is an exciting mid-cap to consider.

Prospa, known as a financial technology company or fintech, rather than a financial services company, is yet to be listed but will definitely be one to watch. As an online lender for small businesses, it is in a great position to be a major bank disruptor in the small business lending space. Other disruptors such as SocietyOne (rumours of a listing) and RateSetter have similar operations but also offer personal loans.

The Disruptors: 3 Revolutionary Aussie Companies to Back for 2018

We’re living in one of the most exciting times in investing history. Innovation and a booming culture of entrepreneurship are constantly creating new companies with the potential to make forward-thinking investors very rich. Now more than ever, one small, smart investment could make a huge difference to your wealth.

That’s why at The Motley Fool we’ve been scrutinizing the ASX to uncover the kinds of companies that we believe could turn into the next Cochlear or REA Group.

We’ve found three exciting companies that we believe re poised to perform in the new year. Click here to uncover these ideas!

Motley Fool contributor Rosemary Steinfort has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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 Scott Phillips.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.