That's the great thing about being a Foolish investor. You can just turn off the white noise of the market and its woes and concentrate on buying quality companies at fair prices.
It's good to keep up with the news to know what to avoid, but investors wanting to beat the average market return have to do something out of the ordinary.
Resources stocks are being beaten down from weak commodities markets and now global ratings agency Fitch says the big four banks may see a slowdown in earnings growth due to a weaker economy and increased competition.
Well, those are two stock groups to avoid until they sort themselves out.
Rather, I have two companies that:
– have nothing to do with commodities,
– have good growth prospects for 2015 and,
– are not too expensively priced.
Navitas Limited (ASX: NVT)
The education and training company has its own colleges that work together with established schools and universities to provide professional training, as well as preparation for entering university-level education and full degree courses.
Revenues and underlying profit have grown steadily over the past 10 years and the company has a high-double digit return on equity.
Navitas experienced a sharp share price drop in July 2014 when Macquarie University decided not to continue the long-running service contract past 2016. Losing such a big contract sent the shares down about 30% initially. The impact on earnings should come around the second half of financial year 2016.
The stock has recovered slightly, up from $4.43 to $5.25 currently. Navitas is creating more working relationships with new universities to help offset the expected loss of the Macquarie University contract.
Analysts forecast about 16% annual earnings growth over the next two years. The stock offers a 4.4% fully franked dividend as well, so it is very reasonably priced, trading at around 21 times earnings. Navitas could be a solid grower in your portfolio with decent dividend income.
Ramsay Health Care Limited (ASX: RHC)
Australia's largest private hospital operator performed exceptionally well in financial year 2014. Through two recent acquisitions, it is now the largest private hospital operator in France as well. Within Australia, the company is expanding facilities and services at its existing hospitals to maximise revenue.
2015 will see Ramsay Health Care enter the Chinese healthcare market and start a new growth phase. It entered a joint venture with a Chinese healthcare provider to acquire and manage five hospitals in south east China. With an estimated 25% of China's population (around 300 million) moving into urban areas over the next 10 – 15 years, the healthcare industry will see major growth.
In the next two years, Ramsay Health Care's earnings are forecast to rise around 18% annually. The company is an ideal defensive stock for your portfolio and could provide solid, double-digit growth.
