More than halfway through 2014 now, how have your stocks been? It may be time for some "spring cleaning" and to review your holdings.
Just as a comparison, the S&P/ASX 200 Index (ASX: ^XJO) gained about 8.3% since late January, so on average it's been a promising year so far.
What you need to do is a quick check-up to see what needs to be pruned. I have several questions you can ask yourself about each stock in your portfolio. Then, to follow up I have three stocks that could be good fits for strong returns to round out your portfolio.
Portfolio review questions:
1) Has the story of your stock improved or worsened in the past six months?
You may have bought it when it was down, but has there been progress by the company to improve business? Are developments changing the stock's outlook? If so, then it may be best to hold on.
2) Is the catalyst that made you buy the stock in the first place still in play or has the situation changed?
Maybe a new factory, improving market conditions or a promising business opportunity was supposed to drive the stock higher, but now it's not happening. If the rationale behind your purchase isn't there now, maybe the stock shouldn't be, either.
3) If the past was suddenly erased and you had the chance to buy the stock for the first time again, would you right now?
Don't throw good money after bad. If you now wish you hadn't bought it at all, then it may be time to pull this weed.
Three stocks I think would be good to buy
— Suncorp Group Ltd (ASX: SUN)
The insurer and banker is expecting to save about $265 million in costs by 2016 through its business simplification program, which will benefit the bottom line and streamline and modernise the company. The growing housing market will help the banking division with more income from residential mortgages. First half interim dividends were increased and there might be more to come with a possible special dividend in the near future. Its dividend yield is 5.0% fully franked.
— Stockland Corporation Ltd (ASX: SGP)
As one of the major residential housing developers, the current high demand for housing due to very low interest rates could keep Stockland's housing construction order book full for quite some time. Also, the undersupply of housing just from general population growth should also maintain this trend for a number of years. The yield is 5.9% unfranked.
— Cochlear Limited (ASX: COH)
The developer and producer of bionic hearing aids has a long, great reputation, yet several years ago had problems with some of its implants. That brought the earnings and share price down until the manufacturing situation could be resolved. It is on top of that now and has another new product on the market to go along with the revised one.
Market demand for these kinds of hearing devices is usually high and some patients had been holding off until the latest model finally came out. That pent-up demand could be a driver for revenue and earnings. The stock has been steadily recovering since February. Its yield is 4.0% partially franked.
