The market would have you worry about where the economy is going and what the ASX might do over the next six months in 2015. I would just say forget about it and concentrate on the stocks that have little direct link with commodities and have other kickers that will set them apart.
Investment bank Macquarie Group Ltd (ASX: MQG) and financial services company UBS think so as well.
To get more bang for your buck, the two financial firms recently suggested investors focus on stocks that are:
– market leaders
– international companies with strong overseas currency earnings
Here are three stocks among a group of over 10 suggested by the investment firms.
Insurance Australia Group Ltd (ASX: IAG)
One of the leading general insurance companies in Australia, the stock is paying a whopping 6.2% yield fully franked. The company expects its gross written premiums to rise in FY 2015 due to the acquisition of the insurance underwriting business from Wesfarmers Ltd (ASX: WES). Also, the company is expanding in Asia, where it operates in Thailand, Malaysia, Vietnam and China.
ResMed Inc (CHESS) (ASX: RMD)
This breathing aid and respiratory device producer is a market leader in the US, where it gets about half of its total revenue. Its next big move is in e-health, creating devices that can monitor, record and analyse a user's breathing and sleeping patterns with contactless technology to promote healthier sleeping and help prevent sleep apnea. Consensus forecasts are for earnings to rise about 10% annually for the next two years. With new products and app tie-ups with Apple and even Nintendo, it is working to make its products more mainstream and expand its addressable market.
Automotive Holdings Group Ltd (ASX: AHE)
Australia's largest automotive retailer as well as the largest refrigerated food transport and warehousing provider could benefit from further interest rate cuts as it makes vehicle purchase financing more affordable for buyers. In FY 2014, earnings were up 13.2% in a subdued general economy. Thanks to a strong balance sheet, it was able to make a number of acquisitions of several auto dealerships, the Covs Parts automotive parts store chain and refrigerated transport companies. This consolidates its market leader position even more. Analysts project earnings and dividends could rise annually around 8% and 10%, respectively, over the next couple of years. That's steady, solid growth.
