Wouldn't you love to peek over the shoulder of a professional investor and find out what they think are great stocks?
Recently, the Head of Australian Equities for fund management firm T Rowe Price, Randall Jenneke, told Fairfax Media three stocks that he thought have attractive potential. Firstly, companies that generate a greater proportion of revenue overseas will have an advantage in a weaker Aussie dollar environment.
Just last week, the US Federal Reserve stopped its quantitative easing (QE) and the US dollar has bumped up in strength. Conversely, that sent the Aussie down.
Jenneke suggested these three companies:
1) Amcor Limited (ASX: AMC), the global packaging giant gets only 17% of its revenue from Australia. It had a bumper year in FY 2014, thanks to demerging from Orora Ltd (ASX: ORA) and growth from acquisitions. It yields 3.8% unfranked and is priced at 16 times earnings.
2) Ansell Limited (ASX: ANN) is the market leader in plastic gloves and other protective wear which investors can find in hospitals and food service companies. It has about 84% of revenue coming from overseas. Over the next two years, consensus forecasts are for earnings to grow double digits in the mid-teens. It pays a 2.2% yield unfranked.
The sector that he is really bullish on is fertility clinics. Privately, they have been around for years, but recently several have listed on the ASX. More people are having difficulty with bearing children and specialised services like these can do good business. Here's one that Jenneke's investment firm bought at the IPO stage.
Virtus Health Ltd (ASX: VRT) provides assisted reproduction services. Since listing in June 2013, the stock is up about 23%. Net profit was up greatly from FY 2013 and it's expected to grow earnings around 19% annually over the next two years. It looks very promising and has a 3.6% fully franked dividend, so I'll need to watch this new stock myself. Add it to your watchlist if not to your portfolio.
