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My top 10 ASX shares for 2018 in review

Back on December 20 2017 I tipped 10 top shares to buy in 2018 based on then valuations versus profit growth outlooks and company quality.

Although a year is a short time frame on which to judge investment returns let’s take a look to see how the stocks performed versus the S&P/ ASX200’s -7.2% negative return for the period Jan 2 2018 to Jan 2 2019. Note returns exclude the impact of dividends.

ANZ Bank (ASX: ANZ)  – Closed at $28.58 on Jan 2 2018 and sells for $24.24 today, which is a negative return of 15.2%. In hindsight ANZ Bank was a poor pick given the outlook for house prices, although the hit from the Royal Commission was hard to see. However, adjusted for ANZ’s big dividends the return would have been a little better.

Bapcor Ltd  (ASX: BAP) – Closed at $5.64 on Jan 2 2018 and sells for $5.89 today, which is a gain of 4.4%. A slightly disappointing return, but on the bright side I rate this stock a buy at $5.89 today.

Class Ltd (ASX: CL1) – Closed at $2.79 on Jan 2 2018 and sells for $1.40 today, which is a 50% loss. A diabolical return and embarrassing pick. The lesson here is don’t buy turnarounds, Class was already reporting problems when I picked it and it’s best to sell on the first signs of trouble, not buy. A bad mistake.

CSL Limited (ASX: CSL) Closed at $140.55 on Jan 2 2018 and sells for $186.70 today, which is a 33% gain. A strong year and nothing actually changes in the share market just because a calendar year ticks over. I expect a strong 2019 for profit growth ahead.

Macquarie Group Ltd (ASX: MQG) – Closed at $99.05 on Jan 2 2018 and sells for $108.70 today, which is a 9.7% gain. When you add in dividends this would be a healthy 15%+ return. I’d rate the stock a buy today, but wouldn’t pay more than today’s price given some risks including Brexit.

Reliance Worldwide Corp (ASX: RWC) Closed at $3.76 on Jan 2 2018 and sells for $4.50 today, which is a 19.7% gain. A good return from a strong founder-led business executing well.

ResMed Inc (ASX: RMD) – Closed at $10.83 on Jan 2 2018 and sells for $16.19 today, which is a 49.6% gain. An exceptional return and this is no spec stock, it’s a $23 billion giant with a moat and strong future. This point is important as ResMed offers the prospect of strong long-term compound returns unlike many spec stocks that can sink faster than they rise.

Sydney Airport (ASX: SYD) – Closed at $7.10 on Jan 2 2018 and sells for $6.71 today, which is a 5.5% fall. Dividend adjusted this would be a flat return, and the airport continues to look a good stock for income seekers in the SMSF mode for example. Don’t expect much growth in 2019 though.

TPG Telecom Ltd (ASX: TPM) – Closed at $6.53 on Jan 2 2018 and sells for $6.39 today, which is a 2.1% loss. The stock went on a wild ride over 2018 that ended with it diving after the ACCC controversially knocked back (for now) its proposed merger with Vodafone Australia.

Webjet Limited (ASX: WEB) – Closed at $10.14 on Jan 2 2018 and sells for $11.08 today, which is a 9.5% gain. The stock actually reached $17.80 in last August but plunged over the last quarter of 2018. I’d rate it a buy (higher up the risk curve) on today’s valuation.

Foolish takeaway 

On my maths that’s an average return of 5.3% plus dividends which is way ahead of the market (-7.6%) and the top 10 stock picks of famous sell-side broker UBS for 2018 that returned around -8.5% plus dividends.

Clearly with over 10 years’ experience in markets globally and professional investment qualifications I’m at an advantage when it comes to beating the market, but it’s perfectly possible for anyone to learn the basics of successful share market investing.

It’s not rocket science.

You identify high-quality companies only (e.g. CSL, Macquarie, ResMed), on good valuations.

However, in the share market the past means nothing, it’s the future that counts, so this week I’ll run off 10 more stocks I like for 2019.

Motley Fool contributor Tom Richardson owns shares of Bapcor, CSL Ltd., Macquarie Group Limited, ResMed Inc., TPG Telecom Limited, and Webjet Ltd.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia owns shares of and has recommended Bapcor and Sydney Airport Holdings Limited. The Motley Fool Australia owns shares of Class Limited. The Motley Fool Australia has recommended ResMed Inc., TPG Telecom Limited, and Webjet Ltd. 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.

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