High performance stocks can be the bedrock of your investing future. Recently, I recommended three blue-chip stocks that can stand the test time, but in addition to that I wanted to put out three more that have achieved a high level of growth.
The difference is that these are small-cap stocks. Apart from their strong performance, their smaller market capitalisations could give them the opportunity to double in share price multiple times over their business lifespan. Increasing dividend income and share price growth are the two ways portfolios can outperform over time.
1) Drillsearch Energy Limited (ASX: DLS)
This $702 million mid-tier oil and gas company is Australia's third largest onshore oil producer, producing around 3 – 3.3 million barrels of oil equivalent in FY 2014. By FY 2019, it expects to produce more than double that.
It's based in the Cooper Basin region in SA and Queensland and will be able to send its product on to the GLNG LNG project plant in Queensland for export through Santos Ltd (ASX: STO). The growing LNG export industry will need as much resources as it can get its hands on, so Drillsearch has a strong market to sell into.
2) Nick Scali Limited (ASX: NCK)
Nick Scali is a $221 million furniture retailer that has steadily grown revenues and net profit over the past ten years. It pays a very attractive 4.5% dividend yield fully franked, but what also attracts me is that its return on equity, a key indicator of financial performance, is usually above 40%.
It has 35 stores mostly in NSW, Victoria and Queensland, where the growing housing market is currently generating more potential furniture sales for the business chain. The company expects full year underlying net profit to be up about 15% over the previous corresponding period.
3) Retail Food Group Limited (ASX: RFG)
Investors may know this $659 million company by such brand names as Donut King, Brumby's Bakery, Michel's Patisserie and Pizza Capers. Its stores are common features in many shopping mall food courts and the company has raised revenues over four times in the last ten years. Net profit has grown from about $6 million to $32 million in the same time.
Analyst consensus forecasts have the company growing earnings strongly over the next two years. It also offers a healthy 4.5% yield fully franked. It's an easy stock to cover because you can visit your local shopping mall and see how business is going- and how tasty everything is!
