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10 of my best shares for 2019

Every new year pundits like to tip new shares or companies to buy for investors, but just because the calendar year ticks over doesn’t mean anything actually changes in the share market or regarding the basis rules of successful investing.

You have to find high-quality and growing companies on reasonable valuations relative to their outlook. This is the simplest way to achieve market-beating returns in the share market.

Although a year is a short-term investing horizon, let’s take a look at a few companies I like to do well in 2019 and beyond.

CSL Limited (ASX: CSL) is a stock I’ve recommended a fair bit recently, it’s forecasting 10%-14% profit growth at ‘constant currency” for FY 2019. Despite potential for the US Fed to pull back its rate-hiking cycle in 2019, I still expect a lower Australian dollar will support CSL from today’s price of $187.92, The company also continues to invest heavily in research and development for long-term growth.

Dicker Data Ltd (ASX: DDR) is a founder-led information technology hardware distribution business that has a strong track record and continues to see heavy insider buying of its shares in particular from its own chief operating officer. At $2.85 the stock trades on 14.4x annualised earnings on a 6.3% yield plus full franking credits. It’s also forecasting more profit growth in FY 2019.

REA Group Limited (ASX: REA) might seem an odd pick given the pressure on Australian property prices, but the harder it is to sell properties the easier it is for REA’s key sales staff to sell additional products such as ‘depth’ or ‘premiere’ listings to vendors’ agents. REA Group’s secret sauce remains its staffing and the stock is worth a look at $73.94.

Hansen Technologies Limited (ASX: HSN) is a founder-led software billings business that offers a decent yield and reliable revenues to investors. It’s forecasting a flat year in FY 2019, but investors are compensated by a reasonable valuation at $3.41 and the stock may have a strong second half of 2019.

Reliance Worldwide Corp (ASX: RWC) is the founder-led plumbing business that made a big acquisition in June 2018 and continues to grow revenues and profits strongly. It’s forecasting more growth in FY 2019 and pays out just 40%-60% of profits in dividends which leaves cash left over for reinvestment. The stock sells for $4.50 today.

TPG Telecom Ltd (ASX: TPM) is facing some problems after the ACCC took a preliminary view that its proposed merger with Vodafone Australia is uncompetitive. The merger may still go ahead, but even if it doesn’t TPG may benefit from a government write-down of the NBN in 2019, while it remains a quality founder led business investing for the future. The stock sells for $6.40 today.

Xero Limited  (ASX: XRO) is a cloud-accounting business that is likely to continue to deliver strong growth in 2019 over what could be a flat year for many other Australian companies. It also boasts attractive economics that should help a shift towards profitability that is likely to support the share price in the year ahead.

Nearmap Ltd (ASX: NEA) is another software-as-a-service business that is expanding into the US, with the direction of its share price in 2019 likely to depend on the strength of sales in that region in 2019. It sells for $1.50 today and is a a high-risk bet that may offer strong returns.

Accent Group Ltd (ASX: AX1) shares are starting to look cheap again at $1.13 on a low multiple of earnings and offering a big dividend yield. It’s also forecasting EBITDA growth in the region of 15%-20% for H1 FY 2019 despite tough retail conditions as it grows margins and online sales. Its management team also knows its retail and youth fashion as demonstrated by the recent deal to buy Sydney’s trendy Subtype Store.

AfterPay Touch Group Ltd (ASX: APT) is another youth fashion type business that’s growing like nuts, although its financials aren’t so hot which again places it higher up the risk curve. This is a bet largely on success in the US retail market, with the buy-now-pay-later business selling for $11.87 today.

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Tom Richardson owns shares of Accent Group, AFTERPAY T FPO, CSL Ltd., Dicker Data Limited, Nearmap Ltd., REA Group Limited, TPG Telecom Limited, and Xero.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Hansen Technologies. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited and Nearmap Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO and Xero. The Motley Fool Australia has recommended Accent Group, REA Group Limited, and TPG Telecom 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.

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