Looking at companies near yearly highs, two stocks caught my attention. One looks like a turnaround story, which all investors like to hear about. The other is a great example of a market leader that is building up the company and growing through acquisitions.
– AMP Limited (ASX: AMP), the wealth management and financial planning company, has been slowly working its way up over the past 10 months, setting a new 52-week high of $5.96 recently.
Earnings growth over the past five years hasn't been great, which led to the stock trading sideways between $4 -$6 since 2009. The company is reorganising its business and consolidating to improve margins.
For example, after a strategic review, it plans to rationalise its Genesys Wealth Advisors financial planning business back into the company. It's making the right moves to drive better earnings.
At a time when superannuation and SMSFs are top priorities for savers and investors, AMP's wealth management division is seeing its net cash flows up considerably compared with this time last year. Assets under management in October stood at $105.2 billion, up 1.3% in its third quarter of FY 2014.
AMP Limited is on a better footing now and could be a good turnaround story for investors. There has also been some market speculation that Wesfarmers Ltd (ASX: WES) could be eyeing the wealth manager as it possibly enters the financial services market. I would put this stock in your watchlist and see how the full year results play out.
– Automotive Holdings Group Ltd (ASX: AHE) is near its 52-week high of $4.16 and may be building up momentum to push through that price level. The company is the largest motoring group with 169 franchises at 95 dealership locations across Australia and New Zealand.
It ended FY 2014 with revenue and underlying net profit up 9.8% and 11%, respectively. Australian new vehicle sales were at a record high in CY 2013, but CY 2014 is forecast to be slightly down, so maintaining profit margins will be key for the company. Also, it can continue acquiring other dealerships in what is a highly fragmented industry.
In addition to car sales, the company is the country's largest refrigerated logistics service provider after completing two acquisitions during FY 2014. This diversification stabilises the business if car sales revenue weakens.
It may not be a fast grower, but the stock pays a hefty 5.7% yield fully franked, which will be attractive for superannuation and SMSF investors.
Editor's Note: The previous version of this article noted that Automotive Holdings had a total of 264 dealerships and franchises across Australia. This was incorrect, and the current article reflects the true position of the company.
