Following general business trends can open up opportunities for stock ideas. Apart from selecting quality companies, investors can identify stocks riding a wave of momentum when the business conditions for their industries are rising. This is especially true for cyclical stocks.
— Housing market expansion
The general economy has shown improvement, but it isn't firing on all cylinders. The lower interest rates indicate the RBA is trying to stimulate the economy and could keep them low well into 2015.
Stockland Corporation Ltd (ASX: SGP) is one company that benefits from that stimulus. The property developer is seeing strong demand for new housing construction.
CEO Mark Steinert recently said there is at least a three-year undersupply of property in every major capital city. This is driving up prices and encouraging more building of new homes.
Just in the March quarter, it saw the highest amount of net deposits for lots, 1,500, since the first quarter of 2011.
That puts it on track to do about 5,000 for FY 2014 and it is scaling up to be capable of 20% more in FY 2015. Residential and retirement living make up about 60% of total group revenue.
Currently, the stock offers a whopping 6.0% dividend yield.
— Energy and LNG export boom
Woodside Petroleum Limited (ASX: WPL), the largest oil and gas company in the S&P ASX All Ordinaries Index (ASX: ^AORD), has a number of LNG projects such as Pluto and North West Shelf. The LNG export business is set to boom over the next several years, supplying energy-hungry Asia with cleaner fuel sources than traditional coal.
The lack of new projects coming online has kept its share price somewhat subdued. It is looking for acquisitions or investments that could supply new revenue streams in the short to mid-term. It had informal talks with companies like Oil Search Limited (ASX: OSH) recently.
It is still one of the biggest producers of oil and gas in Australia and the income from that is steady and flowing. Take advantage of the huge 5.8% dividend yield now and then follow Woodside as it identifies growth opportunities.
