With the bell ringing in the New Year it's a good opportunity for investors to take stock of 2013 and to consider 2014. As part of this vital process, investors may wish to consider what improvements they could make to their investment strategy going forward and whether there are any position changes that need to be made to their portfolios.
The following five stocks are ending 2013 in fine form, with their shares all trading not only near their 52-week highs but also at all-time record highs. Investors who search beyond the banks, Telstra (ASX: TLS), BHP Billiton (ASX: BHP) and Rio Tinto (ASX: RIO) for opportunities, may be familiar with these stocks. They are leading businesses in their respective fields.
Reflecting on the past year and looking to the future begs two questions.
1) Given the performance of these stocks – did the investor miss something in not adding them to their portfolio (or perhaps you did add them!)? In other words, is there anything in their investment process to change?
2) Given the impressive outperformance and rocketing share price in 2013, is it too late to buy them in 2014?
Navitas (ASX: NVT) provides education services and has recorded a 32% rise in its share price over 2013. The stock had a reasonably steady climb from its lows around $4.60, to a record high of $6.47 over the year. With the stock trading on a price-to-earnings (PE) ratio of 28 times consensus estimates for 2014, investors would need to be very bullish about Navitas' future growth prospects to be comfortable buying at these levels.
Ramsay Health Care (ASX: RHC) has continued to expand its business both organically and through acquisitions over the course of 2013. Likewise the share price has expanded from a low of $27.16 at the start of the year to a record high of $43.48 in the past week. With the stock now trading on a forecast PE of 26.7, a lot of good news is already priced in.
Seek (ASX: SEK) has also reached record highs recently after providing shareholders with a return of 88.5% in 2013. The stock is trading on a forecast PE of 27.6, which is undoubtedly high, but strong growth prospects both domestically and overseas are still evident.
Slater & Gordon's (ASX: SGH) share price has surged 121% over the past 12 months to an all-time record high of $4.79. The recent expansion into the UK has the potential to provide significant scope for further growth. With the forecast PE at just 16.7, the law firm's shares could continue to be supported in 2014.
TPG Telecom (ASX: TPM) has grown into a $4 billion company thanks to management's numerous acquisitions, earnings growth and a 100% gain in the share price during 2013. The share price is currently selling within a whisker of its new record high of $5.29 and on a forecast PE of 24.4. It's a high multiple but the recent acquisition of AAPT could continue to drive earnings in 2014 and beyond.
Foolish takeaway
A key feature of 2013 was that the market experienced 'multiples-expansion'. If this is followed by earnings growth then the higher multiples will have been justified, however if earnings growth fails to materialise then investors should be wary of lofty stock prices being maintained and supported.
