If you're looking to add some new stocks to your portfolio, a buy and hold strategy is my number one recommendation. Identifying quality companies with solid fundamentals may seem like a challenge, yet we continue to see plenty of companies outperforming the Australian market each year. So, here are three stocks that offer outstanding growth prospects, with the added benefit of attractive prices.
Capitol Health Ltd (ASX: CAJ) provides diagnostic imaging services to the healthcare industry, operating via 52 clinics throughout Victoria. The company has recently been on a rapid growth path, gaining about 190% in the past three years. However, its future growth trajectory also seems outstanding as it takes advantage of a heavily fragmented market. Furthermore, a strategic focus on the MRI sector would allow it to continue its growth path, given the expansion of direct GP referrals of MRIs for adults.
For a company with a market capitalisation of only $285 million, Capitol Health pays a 1.1% fully franked dividend yield. At current prices, Capitol Health looks like a perfect candidate for a buy-and-hold strategy.
2. Childcare centre owner and operator G8 Education Ltd (ASX: GEM) is the owner of brands such as Early Learning Services and Community Kinds. G8 has recently been in an acquisition phase, purchasing 63 childcare centres since the beginning of the year and has announced plans to acquire 25 more within the next few years. G8 operates in the lucrative childcare industry where its services are in high demand and it has the added benefit of receiving government subsidies. Despite its recent chain of acquisitions, G8 holds a reasonably healthy debt-to-equity ratio of 37% and given double-digit analysts' growth forecasts for the next two years, I think G8's looks a stock to own today.
Greencross Limited (ASX: GXL) is leading provider of veterinary services across Australia. It has recently been growing through its roll-out strategy, which involves acquiring smaller businesses in an attempt to expand its market share. After its recent acquisition of City Farmers, its market share has crept up to a decent 7.5%. Furthermore, demand for veterinary services is growing, given the fact that pet owners are willing to pay more to keep their beloved animals healthy.
Greencross' lofty valuation may deter some investors, given its price-to-earnings ratio of 29. However, I think its future growth prospects more than outweigh its price and Greencross should definitely be a stock to consider for your portfolio.
