Can FY 2014's top performers repeat the trick in FY 2015?

Will FY 2014's top performers repeat the trick in FY 2015?

Investors should always be thinking ahead to maximise their returns.

Tom Richardson

Tom is a holder of the CFA Society of the UK administered Investment Management Certificate (IMC) and has more than a decade's professional experience in the investment management industry in Australia and the UK. Tom now works as a writer and editor for TMF Australia and has two easy to remember rules of investing he likes to follow. Avoid overpaying for growth stocks and avoid paying at all for stocks that are cheap for a reason. Tom prefers growth investing over value investing and says it's not rocket science, just avoid overpaying for the best returns.

Published July 1, 2014 4:34 pm AEST

Let the trend be your friend is an often quoted investment maxim because if you want to make money in the sharemarket you really should let the trend be your friend! Four of the top 10 best performing stocks amongst the ASX 200 in the last financial year were G8 Education Ltd (ASX: GEM), Slater and Gordon Limited (ASX: SGH), Domino's Pizza Enterprises Ltd (ASX: DMP) and Challenger Ltd (ASX: CGF), up 86.18%, 85.61%, 97.77% and 99.57% respectively. So can the trend be your friend into FY 2015?

Childcare business G8 Education has taken the short cut to growth by buying smaller childcare centre businesses to roll up into its own business. It has funded this by issuing around $150 million of debt and raising $100 million of capital through equity placements. If it's able to keep net debt to a reasonable multiple of EBITDA then it has potential to power ahead into this financial year. Selling for $4.54 G8 trades on 14.9 times analysts' projections for earnings for the year ending June 30 2015, with a 3.4% dividend yield.

Slater and Gordon is a law firm that's been guilty of delivering spectacular returns for shareholders over the past couple of years. It has also borrowed to expand its business, logically identifying the large UK consumer-law markets to drive its next growth phase. In Australia its branching out into more diversified fee-earning practices, while keeping a lid on costs.

The simple business model is to build a leading consumer services legal business based on brand strength and a solid reputation. At $5.16 it sells for just 15 times analysts' projections for earnings for the year ending June 30 2015, with a 1.4% dividend yield and looks a solid buy.

Domino's Pizza also has a simple business model of selling mountains of cheap pizzas at a profit. It recently launched into the mega-market of Japan and initial success there bodes well for the future. That's why at $22.02 it sells for 33.6 times analysts' projections for earnings for the year ending June 30 2015, with a 1.6% dividend yield.

Financial services business Challenger had a successful year as the outlook for its key annuities style investment products appears strong given the twin tailwinds of an ageing population and growth in superannuation. At $7.41 Challenger sells for just 11.6 times analysts' projections for earnings for the year ending June 30 2015, with a 3.1% dividend yield.

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