Australia is one of the richest countries in the world. However, diversification is not utilised by a lot of Australian investors. Most people have a lot of their wealth tied up in one or a handful of properties plus bank shares. Arguably, the bank shares are also heavily linked to the property market.
Therefore, I think it’s very important for every investor to diversify away from these two areas.
Here are three ideas to do that:
National Veterinary Care Ltd (ASX: NVL)
National Vet Care is the second largest veterinary clinic business in Australia and New Zealand. Its share price has fallen by about a third since the start of 2018, but the underlying business hasn’t changed that much.
It’s steadily acquiring other veterinary businesses in different locations to expand its geographical reach and hopefully increase its economies of scale.
Vets have a pretty defensive source of earnings because around two thirds of cats and three quarters of dogs visit the vet each year. National Vet Care also has a vet management business.
National Vet Care’s profit margin won’t be quite as high as investors would like in FY18, however over the long-term the margin, revenue and bottom line profit should continue to grow as it adds more clinics to its network.
Propel Funeral Partners Ltd (ASX: PFP)
Propel is also utilising an acquisition strategy to grow its business. It’s a funeral operator that currently has a stronghold in the regional areas of Australia and is looking to grow into metro areas.
Death volumes are expected to grow by 1.4% per annum between 2016 to 2025 and then increase by 2.2% per annum from 2025 to 2050. This will be a slow-and-steady tailwind for Propel for decades to come. In the meantime it can quickly increase its market share with strategic acquisitions.
UBS IQ MSCI Asia APEX 50 Ethical ETF (ASX: UBP)
This interesting exchange-traded fund (ETF) gives investors exposure to the biggest 50 listed businesses in Asia outside of Japan.
Some of its top holdings include Tencent, Alibaba and Baidu. These shares are referred to as the acronym ‘BAT’, similar to the FAANG businesses. Why is it only the tech shares that get interesting acronyms?
China is steadily gaining economic power and is on course to overtake the US as the leading economy in the world. There is a gigantic number of middle class in China and this should lead to wonderful growth for many of its listed businesses. Around half of the index is made up of China-listed businesses.
All three shares are trading at attractive value to me. The two small caps are near 52-week lows yet have more annualised revenue than ever before, whilst the Asian ETF could be a great way to get exposure to Chinese tech giants.
Another business looking to make it big in Asia is this exciting ASX share which is predicting profit growth of 30% in FY18 alone.
It's been a nail-biter of a reporting season here in the first half of 2018.
But the real action, in my opinion, is what companies are doing with dividends.
What does this mean for you? Well there is one stock I've found that could very well turn out to be THE best buy of 2018. And while there's no such thing as a 'sure thing' when it comes to investing - this ripper might come as close as I've ever seen.
Motley Fool contributor Tristan Harrison owns shares of NATVETCARE FPO and Propel Funeral Partners Ltd. The Motley Fool Australia owns shares of NATVETCARE 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.