When compared to other stock markets around the world, 2014 was a year to forget for Australian investors. Over the course of the year, the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) managed to rise just 1.1% thanks to a last minute Santa Rally.
Although the index itself struggled to gain traction, however, there were plenty of stocks which did manage to excel. Qantas Airways Limited (ASX: QAN), for instance, surprised the investing community with an 119% rally while Corporate Travel Management Ltd (ASX: CTD) rose 75%. Had you held them through the year, there's a good chance you'd have handily outperformed the rest of the market.
While it's impossible to know for sure how individual stocks are going to perform in any given timeframe, it is possible to identify themes or trends which could give you the best chance at beating the market's returns. Below are three such trends which could come to play in 2015 (and indeed, in the years or decades ahead), and six stocks that could benefit handsomely.
Trend 1. An ageing Australia
The Australian population is ageing at a rapid clip – a result of sustained low fertility and increasing life expectancy – which will have a profound impact on the Australian economy as a whole. According to the ABS, the proportion of the population aged 65 years and over increased from 11.8% to 14.7% between 1994 and 2014, and that age group is tipped to increase much more rapidly over the next decade.
Company #1: Japara Healthcare Ltd (ASX: JHC). Japara is a for-profit aged care operator which listed on the ASX last year. The company owns and operates 39 facilities with a total of 3,391 places and while the industry remains highly fragmented, there is plenty of room left for expansion. Given the pace at which our population is ageing, the Aged and Community Services and Australia group has estimated that the country will need another 82,000 new aged care beds by 2020 – many of which could be provided by Japara.
Company #2: Sonic Healthcare Limited (ASX: SHL). Sonic Healthcare is an international medical diagnostics company specialising in pathology and radiology services while it is also Australia's largest operator of medical centres. An ageing population should see demand for Sonic's services rise strongly which should help generate strong shareholder returns.
Trend 2. Oil slump
Lower oil prices are wreaking havoc on the energy sector and indeed, on the Australian sharemarket as a whole. In fact, oil has lost more than half of its value since June 2014 and there are strong signs suggesting it could fall even further. While that's terrible news for oil producers who sell the commodity, it's great for companies which have high oil costs.
Company #3: Lindsay Australia Limited (ASX: LAU). The transport and logistics company spent approximately $40.7 million on fuel and oil in FY14, which is a substantial expense for a company with a market cap of just $103 million. While the company is already one of Australia's largest trucking firms, it has strong growth potential, particularly in far north-Queensland where there is increasing demand for the transportation of refrigerated seafood to Asia.
Company #4: Automotive Group Holdings Ltd (ASX: AHE). Australia's largest automotive dealership group should also benefit from lower oil prices. Automotive Group also owns Australia's largest refrigerated food transport and warehousing business. As fuel costs decrease, so do transportation costs which should help bolster the company's profits.
Trend 3. Interest rates
The Reserve Bank is expected to reduce interest rates at some point this year with a number of analysts suggesting rates will hit just 2%. While that's great news for borrowers and consumers, it's even better for investors who own shares in stocks offering high dividend yields.
Company #5: Woolworths Limited (ASX: WOW). The supermarket behemoth has lost the market's favour recently with the stock trading near a two-year low. For long-term investors however, this could be a fantastic opportunity to pick up one of Australia's strongest and most consistent performers at a very compelling price – particularly while it's expected to yield 4.9% (fully franked) in FY15. If interest rates do fall, Woolworths could become a very popular target amongst income-hungry investors.
Company #6: JB Hi-Fi Limited (ASX: JBH). Lower interest rates would also lead to greater disposable income which could generate stronger sales for companies like JB Hi-Fi. In addition, the company has strong growth potential as it continues to roll-out its new HOME format stores while it also offers a 5.5% fully franked dividend yield.
The Motley Fool's top investment advisor, Scott Phillips, has just named another compelling dividend stock which could be an even greater buy than Woolworths or JB Hi-Fi.
