Capital and portfolio allocation is a very important concept for investing. You want to put bigger amounts of your portfolio to your best ideas at the best prices.
If I were given $10,000 to invest today, this is how I’d do it:
Propel Funeral Partners Ltd (ASX: PFP) – $2,000
I’m a fan of this smallish funeral operator with its defensive earnings and acquisition growth plans to expand. Indeed, it just announced another acquisition today. I’m investing for the long-term and in a decade from now I hope the growth of Propel’s footprint plus the increasing death rate will make this stock a market-beater.
WAM Microcap Limited (ASX: WMI) – $1,500
This is a listed investment company (LIC) that invests at the smallest end of the share market, targeting businesses with market capitalisations under $300 million at the time of acquisition.
This LIC may be one of the most volatile out of all the WAM LICs, but I’m happy to delegate most of my small cap investing to a team more talented than me. WAM Microcap could be the LIC to generate the biggest total shareholder return over 10 years. However, its premium to NTA would stop me buying more than 15% of my total $10,000 investment.
National Veterinary Care Ltd (ASX: NVL) – $2,500
This is a fast-growing veterinary clinic business that is steadily acquiring more clinics to expand its network. The company’s organic revenue is improving nicely compared to its competitor and its margins will hopefully grow in the long-term as it reaches 100 clinics or more.
MFF Capital Investments Ltd (ASX: MFF) – $3,000
I have been very impressed with this listed investment company’s performance over the past five years, indeed it is one of the very highest-performing ones out there. I like the international diversification that it offers investors and I believe its quality holdings, like Visa and MasterCard, will mean continued strong portfolio performance.
Ramsay Health Care Limited (ASX: RHC) – $1,000
Ramsay is a high quality company that’s going through a rough time at the moment due to private health affordability issues. The current price is the most attractive it has been for a long time, but it could go even lower, which is why I’d only allocate $1,000 at the moment. I’d buy more if it dropped close to $50.
I’d be very happy with those additions to my portfolio. As my portfolio disclosure below says, I already own all of the above shares – I believe they are long-term market-beating opportunities trading at good prices, that’s why I’d want to buy more. However, each of the above shares do come with risks.
If I had another $10,000 to invest I’d want to put it towards these top stocks which are all on track for big earnings growth over the next few years.
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Motley Fool contributor Tristan Harrison owns shares of Magellan Flagship Fund Ltd, NATVETCARE FPO, Propel Funeral Partners Ltd, Ramsay Health Care Limited, and WAM MICRO FPO. The Motley Fool Australia owns shares of NATVETCARE FPO. The Motley Fool Australia has recommended Ramsay Health Care Limited. 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.