Over the last 12 months, it has been the large, well established companies that have attracted investors en masse. Investors have flocked towards companies such as the big four banks, the two supermarket behemoths and Insurance Australia Group (ASX: IAG) in search of high dividend yields and a safe haven from economic turmoil overseas.
These blue-chip stocks have sent the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) soaring over 15% in the past 12 months, whereas stocks in the middle and lower end of the spectrum have largely been ignored, leaving a number of companies with enormous growth potential fresh for the investor's picking. Below are five stocks that are well positioned for future growth.
NIB Holdings (ASX: NHF) is a national provider of insurance products covering areas such as health, life and travel insurance. Whilst the industry itself is not necessarily growing heavily, NIB's business model looks set to deliver solid long-term results. Currently covering over 900,000 people worldwide for health insurance, the company is also a leader in offering insurance for foreign workers and international students. Despite having gained 41% over the past 12 months, it seems that the gains are only just beginning.
Cochlear (ASX: COH) is a global leader in manufacturing and distributing cochlear implantable devices for the hearing impaired. After the company was forced to recall its CI500 series due to a fault in 2011, the company's shares showed signs of fully recovering, but have again taken a fall. Whilst a number of companies overseas are aiming to challenge Cochlear's dominance in the market by offering lower-cost products, Cochlear's superior quality should prove to be enough to maintain and expand its market share. Operating in more than 20 countries, Cochlear should see further growth to come.
Air New Zealand (ASX: AIZ) has been flying from strength to strength – up almost 80% for the year. With a healthy 7.3% dividend yield and solid growth prospects in both domestic and international routes, this airline is destined for good things. In March, the company proved profitable on a number of routes, and compared to larger Australian airlines, Air New Zealand is continuously turning healthy profits and giving back to shareholders. Despite the recent move the company is still relatively cheap with a P/E ratio of just 10.13.
Jumbo Interactive (ASX: JIN) has been a solid performer over the last 18 months or so, gaining an incredible 832% since November 2011. When it was valued at 23.5c per share, the company's prospects were largely speculative, but Jumbo has proven itself as a true contender in the gaming industry. It has released a number of new products and entered into many new international markets in that time. At today's price, it could be considered relatively cheap compared to its 12-month high of $3.28 in February this year. Of course, heavy regulations that cloud the gaming industry make this company a riskier investment, but the company has proven its ability to expand in the past, and will look to continue that path.
Westfield Group (ASX: WDC) is also a good option to add to your collection. Whilst it is certainly not in its early stages of development as one of Australia's top property management groups, there is still a good chance of realizing significant growth. It currently has interests in 105 shopping centres throughout Australia, New Zealand, the US and UK, as well as Brazil. The corporation has recently made a number of large acquisitions and divested in its poorer assets in an attempt to strengthen its portfolio. Should Westfield look to enter any new markets in the future, investors will reap enormous benefits. Currently valued around $11.70 with a P/E of 18 and a yield of 4.3%, shopping for Westfield may not be such a bad option!
Foolish takeaway
With the index sitting significantly higher than it was in June last year, it would be reasonable to assume that many investors would be hesitant to put large portions of hard-earned money into shares (whether growth or not). We can never be sure which direction the index will head. Whilst the fear of loss may become reality, the index could also continue to climb much higher, leaving investors who remained on the sidelines with the dreaded feeling of 'what if'.
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The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, 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. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Of the companies mentioned in this article, Motley Fool contributor Ryan Newman owns share in NIB Holdings.
