Previously, I introduced to readers a group of stocks that could be a well-diversified portfolio for this new financial year and wrote that periodically we would look at how well they are performing over time. For a little fun and competition, I wanted to add another set of five stocks that offer a similar mix of income, earnings growth and turnaround potential.
After seeing both groups, which do you think will do better? Could any of these individual stocks make your own current portfolio more diversified and add to its gains?
1) Transurban Group (ASX: TCL)
The infrastructure developer, manager and operator has an extensive portfolio of toll roads in Melbourne, Sydney and even near Washington D.C. in the US. Recently, the company and its consortium won the bidding for Queensland Motorways Ltd, which holds five of the six toll roads and tunnels in Brisbane. Now with a major presence in three Australian capital cities, it will have great competitive advantages and significant protective "moats" for its business. Toll road income will continue for decades.
This is an income stock for the portfolio and offers a very generous 4.3% yield partially franked.
2) Challenger Financial Ltd (ASX: CGF)
This provider of annuities and other products for long-term investment and savings has hit a hot button of investor and customer interest. Superannuation plans and self-managed super funds are progressively growing in number because of the need to prepare for retirement.
Another good income stock to have over the years, growing along with its clients' investments. The yield is 3.1% unfranked.
3) Sirtex Medical Limited (ASX: SRX)
This healthcare company develops medical treatments to fight liver cancer. It operates overseas, especially in big medical markets like the US and its dose sales growth has increased for the last 40 consecutive quarters. This is a growth stock for the group.
4) SEEK Limited (ASX: SEK)
Another growth stock for our instant portfolio, this company operates the Seek job search website. As the number one site, it enjoys a strong brand name, many viewers each day and fat profit margins to drive earnings. It also is involved in education and training and is currently expanding in South East Asia to maintain its high growth levels. The yield is 1.5%.
5) McMillan Shakespeare Limited (ASX: MMS)
This company handles salary packaging and vehicle fleet management and had a great growth rate of revenue and earnings up until last year. When the previous Labor government announced proposed changes to the Fringe Benefits Tax, which would adversely affect the company's revenues, the share price plummeted from about $18 to $8. The changes were never put in place, but the stock hasn't recovered fully. This short-term setback scared off investors, yet could be a buying opportunity while the company turns around.
