It’s that time of the year again when I research which companies from the Australia All Ords that made my Shopping for Shares rules.
This year seven stocks made it.
A quick refresher on what I look for:
- Return on Equity must be 15% or higher,
- Earnings Stability greater than 80% (this is usually where most companies fail),
- Debt/Equity must be 75% or less
- and they should have above average returns over both one and five years. (This year I’ve defined above average returns as those that are better than the All Ords returns which were 9% over 12 months and 11% p.a. over five years).
Four of the companies also made the list last year: AUB – AustBrokers, CBA – Commonwealth Bank, DMP – Domino Pizza, & TNE – Technology One
My results from last year as as follows (all healthy increases):
- AUB – 43.5%
- BCI – 51.9%
- CBA – 27.3%
- DMP – 82.3%
- RFG – 39.8%
- RHG – takeover by Resimac at 0.50c (43% increase)
- TGA – 6.1%
- TNE – 49.5%
- TRS – 7.3%
Here are the companies to buy in 2014:
AUB – AustBrokers
- Return on Equity – 16.2%
- Earnings Stability – 83.7%
- Debt/Equity – 0.1%
- 1 year return – 43.5%
- 5 year return (p.a.) – 31.6%
- Dividend Yield – 3.0%
CBA – Commonwealth Bank
- Return on Equity – 17.4%
- Earnings Stability – 81.4%
- Debt/Equity – 0.0%
- 1 year return – 27.3%
- 5 year return (p.a.) – 31.2%
- Dividend Yield – 4.8%
DMP – Domino Pizza
- Return on Equity – 29.7%
- Earnings Stability – 88.3%
- Debt/Equity – 38.7%
- 1 year return – 82.3%
- 5 year return (p.a.) – 50.3%
- Dividend Yield – 2.0%
ONT – 1300 Smiles
- Return on Equity – 22.8%
- Earnings Stability – 88.9%
- Debt/Equity – 0.0%
- 1 year return – 18.5%
- 5 year return (p.a.) – 24.9%
- Dividend Yield – 3.0%
PTM – Platinum Asset
- Return on Equity – 37.5%
- Earnings Stability – 83.8%
- Debt/Equity – 0.0%
- 1 year return – 47.0%
- 5 year return (p.a.) – 22.7%
- Dividend Yield – 3.6%
SEK – Seek
- Return on Equity – 17.9%
- Earnings Stability – 82.4%
- Debt/Equity – 62.9%
- 1 year return – 64.0%
- 5 year return (p.a.) – 38.0%
- Dividend Yield – 1.7%
TNE – Technology One
- Return on Equity – 30.8%
- Earnings Stability – 88.0%
- Debt/Equity – 6.1%
- 1 year return – 49.5%
- 5 year return (p.a.) – 32.4%
- Dividend Yield – 2.6%
Credits: 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.
16 Comments
Hooray! I’m so excited your recommendations are out and even more excited I picked them all in December! Your rules are great. I also had a go picking: DWS (just love that dividend), CWN, IRI and MOc. I was close to picking a mob of vets with GXL but I thought there would just be not much capital growth and I’m already spreading myself thin with a few too many holdings. Thanks again for your book and sharing your recommendations Tracey. I appreciate it a lot. Take care x
Bought your book finally off Amazon after having read it many times standing in bookstores.
I would like to add Woolworths – WOW to the list of stocks that meet your criteria.
And thank you for purchasing my book even with it’s very girly cover. Wasn’t sure any men would take that risk 🙂
I have bought your books multiple times for myself (electronic and hard copy due to lending out and not getting it back). Risk? your strategy is sensible and effective. I’m excited about the potential compound returns over time.
Thanks Tracey.
-Luke
awwww. Thanks Luke. Made my day 🙂
Love your work Tracey! I recommend your book to all because it made so much sense to me.
I agree with Belinda, in that the fundamentals of DWS looked good. It’s interesting how we all interpret your criteria and come up with different things. I included value (was the share trading +/- its EPS x 16) in my criteria to get a score out of 5 for each company in the ASX 500.
Thank you again for your recommendations!
Awesome! So glad it’s working for you. 🙂
Great to see that Tracey is actually working again (poor joke – I know).
LOL! This made me laugh this morning.
Hello Tracey.
I invest in stocks in Brazil and ended up falling with a parachute on your blog. I liked it.
I wonder if you will post more often on your blog?
Sorry for the translation, because it was taken by Google Translate.
Hugs
Glad you found it! I don’t usually post often because I have other projects I’m busy with. All the best, Tracey 🙂
Just bought your book which came in the mail a few days ago. I’m on chapter 4 now and can’t wait to finish it so i can start investing in shares. Such a great book so well done to you!
Thanks Anna! That’s so sweet 🙂
Hi Tracey, I have found your book to be a great aid in helping me understand the basics and begin my portfolio – thank you!
Will you be publishing your top shares to buy for 2015 soon? It’s always good to compare notes!
Thanks,
Megan
Hi Megan, so glad you found my book helpful! Yes I absolutely am going to be publishing my 2015 picks. I was waiting until next week for when school goes back because my eight year old has been hogging the computer and I haven’t had a chance to write anything yet. 😉 Take care, Tracey
And the clincher, of course, is that Internap’s sudden share price plunge was based on a decidedly short-term issue. The company is rolling out a new traffic routing platform at the moment, and it’ll take a quarter or two longer than expected before that investment starts paying dividends.