Finding top-notch companies to invest in is becoming harder and harder. As the Australian sharemarket gradually grinds higher, more and more investors are searching outside the larger stocks for riskier and riskier opportunities. Sometimes however, it's better to stick with cash over the short term rather than chase riskier options in pursuit of quick gains.
My watchlist is currently full of companies, some big, some small, that I like but are just a tad too expensive at current levels; here are some of my favourites to buy when the market dips.
JB Hi-Fi Limited (ASX: JBH) is currently trading at around $18.10, having retreated swiftly from its January high of $23.13. The company has been sold off as a result of weakness in consumer sentiment that has hit the sales of rival retailers, mainly in the clothing industry. So far the company hasn't made any announcements about its performance this year, which I view as a positive, and it could surprise on the upside in the coming months.
SMS Management & Technology Limited (ASX: SMX) is one of Australia's largest and best IT consultancy firms. The company has struggled in recent years as customers have focussed on reducing costs following the GFC. A recovery in IT spending has been mooted for the last 18 months or so but is yet to eventuate. The recent federal budget has promised more government spending, which should benefit SMS, but as the budget is yet to be passed, it's tough to buy SMS just yet. If it fell another 20% on no news it would be tough to ignore.
Financial services provider Iress Ltd (ASX: IRE) has operations in Australia, Canada, New Zealand, South Africa and the UK. It provides services to financial advisors and individual investors and rarely looks cheap. The company has very little competition in the Australian market and a recent acquisition in the UK should allow it to develop a significant business in the country over time. It has pulled back from highs due to concerns about its ability to grow earnings, however a recent announcement has quelled those fears to a degree. Unfortunately it's still not cheap enough for me to buy, but is a great quality business to pick up on a dip.
