If the S&P/ASX 200's (INDEXASX: XJO) recent 4% fall has taught new investors anything, it's the importance of diversification.
For example, if you bought into Commonwealth Bank of Australia (ASX: CBA) and supermarket giant Wesfarmers Limited (ASX: WES) expecting to a make a quick buck from their dividends, then you'd be bitterly disappointed with your investment because their share price falls have completely wiped out the worth of their dividend payments!
Two of the next five companies I'll show you have also fallen hard over the past month, but their future prospects appear much brighter than their two blue-chip counterparts above.
Here are five stocks I'd consider buying if I were a new investor entering the market.
1. Computershare Limited (ASX: CPU) is a $6.8 billion company which makes share market investment possible. The company has global exposure and although shares may appear expensive using a quick P/E multiple, it's expected to grow earnings modestly in coming years and will benefit from a falling AUD.
2. Slater & Gordon Limited (ASX: SGH) is Australia's premier law firm and has recently begun its expansion into the UK – a market five times larger than ours. Leveraging off its local success, I am willing to bet that over the long term it will be a much more prosperous company than it is today.
3. NIB Holdings Limited (ASX: NHF) is a personal insurance provider with a reputable track record. Its product offering is excellent and financially the company appears very sound, which has enabled it to pay a rising dividend stream (including a recent special dividend of 9 cents per share).
4. Affinity Education Group Ltd (ASX: AFJ) is a childcare owner and operator currently pursuing a roll-up strategy. Once its most recent acquisitions are settled, the group will own a total portfolio of 140 centres. Since listing on the ASX less than a year ago, Affinity's share price has jumped 33%.
5. Senex Energy Ltd (ASX: SXY) is a mid-tier oil and gas producer with operations in the Cooper Basin. I like the company because it holds substantial 2P reserves and projects are close to infrastructure, meaning it'll likely continue to keep costs low whilst ramping up production.
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