Another financial year is coming to an end, hopefully your work and shares have had a good financial year.
Most businesses’ financial years are ending this week as well. As investors we need to look forwards with our investing decision, so we need to consider what shares we think will be strong performers in FY19 (and beyond).
I’ve positioned my portfolio to where I think the future growth lies, here are five of my favourite holdings for FY19:
Costa Group Holdings Ltd (ASX: CGC)
Costa is a major Australian food producer, it grows berries, citrus fruit, mushrooms, tomatoes and avocadoes. Demand for Australian-grown fresh food is increasing in Australian supermarkets and from overseas markets.
Just as Asian demand has boosted infant formula companies and vitamin businesses, Costa could continue to benefit from rising food prices.
Its share price has done very well since it listed, but it’s only trading at 27x FY19’s estimated earnings.
Duxton Water Ltd (ASX: D2O)
Duxton is the only pure-play on water entitlements on the ASX. It simply buys water entitlements and leases them out. Hopefully the value of the water entitlements grows over time which leads to capital and income growth.
I believe it’s a good indirect way to benefit from a prospering agricultural sector.
Challenger Ltd (ASX: CGF)
Challenger’s has been a bit bumpy over the last few months and it may continue to be volatile. However, its sales of annuities and fixed income products continues to ramp up to Australian and its Japanese business partner.
I think the recent government change requiring superannuation trustees to offer lifetime income options could be a big boost to Challenger. The number of over-65s is projected to grow by 75% over the next two decades, Challenger could benefit well from this tailwind.
It’s currently trading at only 16x FY19’s estimated earnings.
Magellan Global Trust (ASX: MGG)
I regularly write how I think Australians have too little exposure to international earnings or internationally-listed shares. I can understand why investors wouldn’t want to open the can of worms of trying to research even more shares and involving currency risk.
However, I think it would be a mistake to miss out on shares like Visa, Apple, Facebook and Alphabet (Google). I’m happy to let one of the high-performing investment managers make those decisions for me, which is why Magellan Global Trust has a position in my portfolio.
Paragon Care Ltd (ASX: PGC)
This small cap healthcare business is creating a one-stop-shop for all a hospital’s equipment needs – essentially like a healthcare version of Amazon, although it is nowhere near as good as Amazon.
The acquisitions that it has added to its businesses over the past year means that profit could jump by more than 20% in FY19 and lead to an inclusion into the ASX 300, which could markedly improve the valuation.
It’s currently trading at around 10x FY19’s estimated earnings.
I believe all of these shares will perform in FY19 and beyond, that’s why all of them are decent positions in my portfolio. At the current prices I think Paragon is the best value, followed by Challenger.
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Motley Fool contributor Tristan Harrison owns shares of Challenger Limited, COSTA GRP FPO, DUXTON FPO, MAGLOBTRST UNITS, and Paragon Care Limited. The Motley Fool Australia owns shares of and has recommended Challenger Limited and COSTA GRP FPO. The Motley Fool Australia has recommended Paragon 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.