4 great ASX stocks to buy and 4 to avoid in 2015

Telstra Corporation Ltd (ASX:TLS), BHP Billiton Limited (ASX:BHP), Woolworths Limited (ASX:WOW) and Coca-Cola Amatil Ltd (ASX:CCL): Which ones are worth your money in 2015?

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Following on from a lacklustre 2014, investors had been hoping for a strong start to the year. Unfortunately, that hasn't come to fruition just yet with the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) having retreated 1.1% – wiping out all of last year's measly gains.

As is always the case, there are mixed beliefs about how the Australian share market will perform over the course of the year. While Credit Suisse has suggested the index could climb to 6000 points, others have suggested the oil crisis, a falling Australian dollar and slowing Chinese growth could all hinder its progression.

If there is one thing I think is for certain, investors will need to be on their A-game to perform well in this market. With some of Australia's biggest and most popular companies trading at outlandish prices, it's as important as ever to choose your investments wisely. With that in mind, here are four stocks to avoid and four companies worth your consideration:

Avoid:

  1. Commonwealth Bank of Australia (ASX: CBA). The bank has delivered enormous returns to shareholders in recent years, but its shares are by no means in 'buy' territory. The bank's earnings could come under considerable pressure in the coming years and a buy today could result in years of market underperformance.
  2. Telstra Corporation Ltd (ASX: TLS). Like Commonwealth Bank, Telstra's shares just aren't cheap enough to warrant a 'buy' today. Although the stock offers a very nice dividend yield, investors will likely realise better returns from other high-yielding stocks with greater growth potential.
  3. BHP Billiton Limited (ASX: BHP). Having lost nearly one third of its value since August, BHP Billiton's shares are certainly looking tempting. While it deserves a position on your watchlist, the stock could continue to fall should iron ore and oil prices retreat any further. Until the volatility in the sector comes off, an investment in BHP Billiton today remains too risky.
  4. Medibank Private Ltd (ASX: MPL). The health insurer has garnered plenty of attention since floating in November, but this hype appears to have been priced into the company's shares. While I like the company, there is too much riding on its ability to cut costs and improve margins to justify its current valuation at $2.34 per share.

Opportunities:

  1. Woolworths Limited (ASX: WOW). Unlike the blue-chip companies mentioned above, Woolworths would be an excellent addition to your portfolio today. Fears of heightened competition from Costco and Aldi, as well as concerns over the growth of its Masters Home Improvement chain, have been exaggerated giving long-term investors the perfect opportunity to stock up. Right now, it's expected to yield 4.7% this financial year, fully franked, making it an even more compelling prospect.
  2. Coca-Cola Amatil Ltd (ASX: CCL). It's been a tough run for shareholders of the beverage manufacturing giant but their fortunes could finally turn around in 2015 with the company appearing to be back on track. While there is still a chance of further falls, the stock looks very compelling at its current price.
  3. Collection House Limited (ASX: CLH). Despite its strong growth prospects and ripper dividend yield (4.3%, fully franked), the stock is still trading on a forecast price-earnings ratio of just over 12. The debt collection business has a strong track record for revenue and earnings growth – a trend I expect to continue over the foreseeable future.
  4. Nearmap Ltd (ASX: NEA). The small-cap provider of geospatial mapping technology has done extraordinarily well in the Australian market and is currently ahead of schedule in its highly anticipated expansion into the U.S. market. Since peaking at 83.5 cents in November, the stock has trended back to 58 cents giving investors the perfect opportunity to stock up on what could potentially be a 'multibagger' over the coming years.

There's one more company which could deliver even greater returns in 2015 and in the years to follow.

Motley Fool contributor Ryan Newman owns shares in Coca-Cola Amatil Ltd, Collection House Limited and Nearmap Ltd. You can follow Ryan on Twitter @ASXvalueinvest.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »