What are the up-and-coming stock stars that could keep growing for the next 5 – 10 years? I have two companies that have solid earnings track records and in the previous financial year grew profits over 15%.
There's always the chance that a company has a fantastic year, yet then blows out in the next. That's why you want to see a good performance history. It's like a pedigree or list of accomplishments that show this is not a one-off.
Does it 100% predict the future? No, but it can lean toward a probable outcome. You can improve your stock picking by understanding what a company sets out to do and how well it performs in the months and years ahead.
Premier Investments Limited (ASX: PMV), the fashion retailer headed by billionaire businessman Solomon Lew, has a number of well-known brands like Just Jeans, Jay-Jays, Portmans and Jacqui-E. On top of those, its stationery store chain Smiggles has been quite a success in Australia and is expanding in the UK. With plans for as many as 200 UK stores to be opened in the next five years, the popular children's stationery business could be a big hit for Premier Investments.
AP Eagers Ltd (ASX: APE) raised annual earnings 21% to $76.2 million thanks to improved car dealership performance and recent acquisitions. The recent Brisbane hail storm may lift demand in vehicles in the second half of financial year 2015. Also, record low interest rates could drive sales as car purchases become more affordable.
AP Eagers plans to continue acquisitions. The company also holds a 19.9% stake in Automotive Holdings Group Ltd (ASX: AHE), Australia's largest auto retailer, which itself announced a record half-year profit increase of 17.4% recently. AP Eagers is a good, steady grower.
Both Premier Investments and AP Eagers are yielding 3.5% fully franked. Together with expected growth rates, investors could see a return over 10% in each stock.
