Well, the 2013-14 financial year has just ended and a review of the top stocks in the ASX 200 reveals some interesting results. The Australian sharemarket returned 12.35% for the year, but the best-performing company in the top-200 stocks by market cap was gold mining group Northern Star Resources Ltd (ASX: NST). The company's shares rose over 115% in the 12 months to June 30, despite the gold price improving by only 8%.
Northern Star beat out all rivals by pursuing some opportunistic acquisitions as the gold price has failed to rise meaningfully from multi-year lows. These acquisitions should stand the company in great stead to benefit from a lower Australian dollar and higher gold price in the future.
Two of the top four performers were miners with exposure to the nickel price that has leapt over the past 12 months due to export restrictions from Indonesia. Western Areas Ltd (ASX: WSA) and Independence Group NL (ASX: IGO) gained 99% and 92.5% respectively over the 12 months and the smart investors were those that identified the impact that Indonesia would have on the global market.
The remaining star of 2014 was Domino's Pizza Enterprises Ltd (ASX: DMP). The company sells low-cost pizzas throughout Australia, New Zealand and Europe and has an uncanny knack of performing well, year after year. It is always changing its offering to keep up with the local trends and is leveraging technology to improve efficiency. As a result it was up 95% over the 12 months.
Key Lessons
I believe there are some important lessons to be learnt here:
- Identifying macro trends early can make big money as long as the investor picks the best stocks in the sector.
- Companies pursuing a growth by acquisitions strategy, such as Northern Star or G8 Education Ltd (ASX: GEM), will only perform well if they can make well-priced purchases. This is more difficult to action but some recent corporate activity has been shunned by analysts due to sky high prices.
- Consistent performers, such as Domino's, REA Group Limited (ASX: REA), Macquarie Group Ltd (ASX: MQG) and SEEK Limited (ASX: SEK) have to seriously disappoint the market to be heavily sold down.
