Do you want a way to buy rising stocks at a discount? How about a way to avoid regret over paying too much for a stock?
One way to do both is not to chase a stock when it's climbing quickly and hitting new highs. All you're doing is giving sellers someone to sell to.
For example, CSL Limited (ASX: CSL) recently raised FY 2014 net profit 9% and analysts are expecting it to grow earnings about 15% annually over the next two years.
As a result it hit a $75.30 high. It then retreated to about $72 before it turned back up again. The lower price would have given you a 4.4% discount. It may not sound like a lot, but an extra 4% here and there adds up over time. CSL still looks good from here on out.
AMP Limited (ASX: AMP), the financial and investment services company, looks like it is due for some better times as well. After hitting a $5.95 multi-year high, patient investors were able to pick it up for around $5.45 three weeks later, saving 8.4%.
Since early 2014, it's been on a strong run up. Its interim underlying net profit was up 16%. Being involved in wealth management and financial planning, it can benefit from the demand in superannuation. The stock pays a 4.3% yield partially franked.
Retail Food Group Limited (ASX: RFG) is another stock I'm watching. The operator of such food brands as Donut King, Brumby's Bakery and Michel's Patisserie, has had eight consecutive years of rising underlying net profits. The stock peaked at $5.04 in early September, then dropped over four days to $4.59. Waiting for the pullback saved you about 9% in price and now it is almost back to $5.00 again.
I like this stock because people love its products and the company's stores are in many shopping centres.
A big part of investing is learning how to be patient, following good stocks and waiting for better prices. Of these three, I prefer CSL because of the strong long-term performance, although AMP may give you a bigger return in the short term.
