Last year, I wrote a post outlining the seven stocks to buy from the All Ords in 2012. Those shares made an average increase of 19.4%.
So now it’s time to do it all again. This year there are nine companies that fit my criteria (that I outline in Shopping for Shares).
That is, they must be in the All Ords, have a ROE of 15% or greater, Earnings Stability of 80% or more, Debt to Equity ratio of less than 75% and make AT LEAST 5% average p.a. over the past five years.
Here are the ones that currently do just that:
AUB – AustBrokers
ROE: 17.2%
Debt/Equity Ratio: 21.7%
Earnings Stability: 83%
5 year average return: 17.6%
Dividend Yield: 3.7%
5 year chart:
BCI – BC Iron
ROE: 38.4%
Debt/Equity Ratio: 12.7%
Earnings Stability: 82.7%
5 year average return: 18.1%
Dividend Yield: 4.6%
5 year chart:
CBA – Commonwealth Bank
ROE: 17.3%
Debt/Equity Ratio: -%
Earnings Stability: 80.9%
5 year average return: 7.1%
Dividend Yield: 5.5%
5 year chart:
DMP – Domino Pizza
ROE: 23%
Debt/Equity Ratio: 12%
Earnings Stability: 88.2%
5 year average return: 30.2%
Dividend Yield: 2.8%
5 year chart:
RFG – Retail Food Group
ROE: 16.8%
Debt/Equity Ratio: 65.3%
Earnings Stability: 80.2%
5 year average return: 16.8%
Dividend Yield: 6.2%
5 year chart:
RHG – RHG Limited
ROE: 28.1%
Debt/Equity Ratio: -%
Earnings Stability: 90.8%
5 year average return: 58.6%
Dividend Yield: 32.2%
5 year chart:
TGA – Thorn Group
ROE: 19.9%
Debt/Equity Ratio: 10%
Earnings Stability: 86%
5 year average return: 28.1%
Dividend Yield: 3.6%
5 year chart:
TNE – Technology One
ROE: 31.8%
Debt/Equity Ratio: 9.9%
Earnings Stability: 88.2%
5 year average return: 12.1%
Dividend Yield: 3.6%
5 year chart:
TRS – The Reject Shop
ROE: 32%
Debt/Equity Ratio: 45.8%
Earnings Stability: 82%
5 year average return: 7.9%
Dividend Yield: 2.4%
5 year chart:
I hope you found this post useful. Merry Christmas.
Tracey 🙂
Credits: Blue Charts – Yahoo Finance Australia | Grey Charts – Commsec
Disclaimer: These are my opinions only and should not be substituted for your own judgement. Seek independent financial advice before making any investment decisions.
18 Comments
Thanks for sharing your stocks for 2013. How do you decide when to enter a stock? For instance, I agree with you about CBA but if you had entered say in August 2011, versus last month, it would turn a good buy into a great/fantastic buy.
I would appreciate your thoughts as to what signals you use to enter a stock for long term hold such as CBA on a particular day.
Thanks for sharing Tracey! I’m planning to purchase CBA, RFG and BCI this year. Really appreciate your analysis.
First book I’ve read on investing that provides sensible and well thought-out information that can be put to use. I wish I had it some 40 years ago when I first ventured into the stockmarket – it would have saved me many painful and costly experiences.
Thanks Dean, glad you liked it.
Tracey 🙂
Thanks Tracey. The only other shares I’ve ventured out into apart from your recommendations are Monadelphous Group (because I love them and earnings stability of 60% isnt too far off 80%) and McMilan Shakespeare (again only fell over on earnings stability at 73%). Lets see if deviation from your rules pays off! Keep up the good work. Kind regards, Belinda
Oooh good luck. I don’t know much about McMilan Shakespeare but now I’m off to research them myself (anything with Shakespeare in the name sounds cool 😉 )
All the best,
Tracey 🙂
Belinda, did you stick with Monadelphous or sell before they fell?
Hi SArah, No I still have them at 30% down I got pounded! I’m going to hang on to them though as I still have faith they are good mining services company with good management etc. I also got caned on McMillan Shakespeare when Rudd pulled the pin (FBT/Cars). I knew back in 2010 when he was in power he was considering removing that. The moment he sprang back in to the top job I should have sold!
Hi Belinda,
Would you buy more monoadelphous now at around the $18 mark?
you need to consider 30% down means you need to make 43% increase to get back where you were. That is actually more of a slog considering things tend to drop easier than they rise, from my observations
I would have considered an auto sell trigger at 12-15% to preserve my capital.
to each their own. 🙂 good luck Belinda!
I’m doing well on the TNE shares by the way, thanks Tracey 🙂
Hello Tracey,
We just wanted to say thankyou for this information as we used it for our school assignment on the ASX share market game 🙂
From Niamh and Sophie
Wow! I hope you get top marks! Thanks so much. Tracey 🙂
Could you give me reasons as to why you believe these companies are the best to invest in? For examples what have their recent anouncements stated and is the company moving on a good path?
Hi there, just reading you Shopping for Shares book. Thankyou for such an easy to read, fun guide. Just wondering if you are planning to post your Top Shares to buy in 2014?
Hi Susan,
I was just thinking that I should do a 2014 update on the blog. Great minds 😉
I haven’t started any research yet, but I’ll get to it over the holidays and have something up in January.
Merry Christmas!
Tracey
Hi Tracey
I am just reading your book and regret not reading it a long time ago as I would have followed what you say. Now that QBE got a hammering, should I buy it as it has come down in price or should I wait. Also can you please give some tips on what to buy. I go through Commsec online but cannot find the ‘Advanced search tool, news & research and company research tabs.
Looking forward to your advice.
Thank you and Merry X’mas.
Seemawathie
Glad you’re enjoying my book! I’ll be going through the stocks to buy in 2014 very soon, so I’ll check out the stats for QBE while I do that. Also I’ll be writing a blog post early next year on how to find all the research (a few people have emailed me about finding them lately). Stay tuned and merry Christmas! Tracey 🙂
That’s great news! Looking forward to reading your thoughts for 2014 🙂