3 ASX stocks that thumped the market

ASX rises 0.2%, but these three managed much better

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published October 31, 2012 8:36 pm AEDT

The S&P / ASX 200 Index (Index: ^AXJO) (ASX: XJO) closed up 0.2% yesterday, finishing at 4,485.7. Given US markets were closed due to Hurricane Sandy, a fairly flat day was on the cards. Sector performance was mixed, with telecommunications the best, rising 1%, while the information technology sector was the worst performer, dropping 0.7%.

The Australian dollar was up slightly against the US dollar, currently buying 103.6 cents.

These three stocks trounced the market.

Pacific Brands Limited (ASX: PBG) climbed 6.3% to close at 59.5 cents, on no news at all. Perhaps investors are speculating that private equity may be looking at the company as a potential takeover target, after walking away from Billabong International. Pac Brands appears cheap, trading on an estimated P/E ratio of just 8 times, but that may mask some other issues the company faces, such as $191m in net debt, and a weak retailing environment.

Virgin Australia Holdings (ASX: VAH) added 5.4%, to end at 48.5 cents, after the company announced 3 separate deals on the same day. Singapore Airlines is taking a 10% stake in Virgin, while Virgin has bought 60% of struggling domestic airline, Tiger Airways, and made a takeover offer for regional airline, Skywest Airlines (ASX: SXR). The transactions are all designed to allow Virgin to take on Qantas, on a more even footing.

Mermaid Marine Australia Limited (ASX: MRM) rose 3.2% to close at $3.23, after a company operating in the same industry, Neptune Marine Services received a takeover offer from its largest shareholder. Investors may be speculating that Mermaid, which provides various marine services to the offshore oil and gas industry, may be next. That's despite Neptune offering services, such as underwater welding and subsea pipeline engineering which are completely different to Mermaid's business.

If you only invest in one company this year, make it our "Top Stock for 2012-13". Operating in two hot markets — one set to double by 2012, the other predicted to grow 5x over the next five years — this stock is a solid growth play that also boasts strong recurring revenue, zero debt, and lots of cash. Get its name and full research case in this brand-new FREE report.

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Motley Fool writer/analyst Mike King owns shares in Billabong. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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