One advantage of buying individual shares is taking advantage of short term volatility. Around earnings season, many companies will jump up 10%, or down 20% in a day or two.
Often based on a simple remark made in the company’s report that spooks investors. While the short-term outlook may be affected, for a long-term investor it can be a great time to buy.
The following shares could represent a good opportunity at today’s levels.
Ramsay Health Care Limited (ASX: RHC)
Ramsay Health Care has fallen out of favour with the market of late, over concerns about slowing growth. The global hospital operator lowered guidance during the year but still reported a solid 7% growth in profit.
Ramsay’s rapid growth days may be behind it, but the investment thesis is still in play. It’s a story of an ageing population and growing demand for healthcare and hospitals globally. With shares down about 20% in the last 12 months, Ramsay looks to be good value.
The company has a strong history of regularly growing earnings and dividends per share. Shares are currently trading at around 20 times earnings, and the current dividend yield is around 3.5% grossed up. Quite reasonable for a company that is still expected to grow at a decent rate.
Kogan.com Ltd (ASX: KGN)
The online retailer is growing on me. While I’m usually wary of high PE stocks, Kogan is growing strongly enough that today’s price could prove a good entry point. Especially when you consider that shares are around 30% down from their peak earlier this year.
The company recently posted great results, declaring net profit after tax increased by 110%, while revenue was 42% higher than the prior year. Kogan also managed to increase its margin, keep costs controlled, as well as introducing new services to its offering. Customer numbers also increased by 45% over the year.
With shares trading at 46 times earnings, it’s not cheap by traditional metrics. But Kogan has strong business momentum which looks to be continuing.
Out of these two companies, Ramsay Health Care is the safer choice. However, I’m increasingly being won over by Kogan, as a customer and as a possible investment. It wouldn’t be a smooth ride, but it could show explosive growth over the next 10 years.
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Motley Fool contributor Dave Gow owns shares of Ramsay Health Care Limited. The Motley Fool Australia has recommended Kogan.com ltd and 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.