If you've seen some of the commentary coming out of global stock markets recently, you'd know many of them are reaching multi-year highs…
For example, the USA's Dow Jones Industrial Average is at an all-time high.
Whilst China's SSE Composite Index is up 86% in just one year!
London's FTSE 100 is also at an all-time high, despite obvious troubles in the Eurozone.
Meanwhile, closer to home, Australia's S&P/ASX200 (Index: ^AXJO) (ASX: XJO) has reached its highest point since January 2008.
And – arguably – the only reason we're not at our own all-time high is due to plunging commodity prices.
Falling material prices (think: iron ore, copper and coal) are a major source of economic wealth for our country. Long-term investors should be looking for stocks outside this sector.
But when you couple a mining downturn with the expensive share prices of Australia's leading industrial companies – who are currently trading at an average price-earnings ratio of 19 – the chances of consistent double-digit returns over the near term are unlikely.
However, if you're a prudent investor with a view to the long term, there are still opportunities to be found.
Whilst almost every stock will be volatile during an economic downturn or crash, the best companies have a proven ability to bounce back within a few years.
If I had $10,000 to invest today, here are four stocks I'd buy first…
- Woolworths Limited (ASX: WOW) is Australia's leading supermarket operator with enviable profit margins and a reliable dividend. Following continued pressure from rival Coles and losses from its hardware business, Masters, investor sentiment soured on Woolies. However with shares plunging 18% in the past year, it appears a sound long-term value investment at today's prices.
- Credit Corp Group Limited (ASX: CCP) is Australia's largest receivables management company (debt collector) with a $530 million market capitalisation. After taking a heavy fall during the Global Financial Crisis, Credit Corp has rebounded strongly and currently offers a 3.5% fully franked dividend.
- G8 Education Ltd (ASX: GEM) is the highest risk pick of these four stocks. It's a childcare centre owner and operator currently pursuing a rollup strategy (whereby it acquires new centres at cheap prices by issuing debt or shares, then integrates them into the company). However, at today's prices, investors are arguably compensated for the risk. Its 7.1% fully franked dividend yield (equating to over 10% grossed-up) is icing on the cake.
- Computershare Limited (ASX: CPU) is a leading share registry services company with a global presence. In addition to regular shareholder dispatches, Computershare provides an array of lucrative services for the corporations who it counts as customers. Services provided include the payment of company dividends. This entails holding billions of dollars of customers' funds for a short period of time. With a durable competitive advantage, leverage to increasing U.S. interest rates and a partially franked 2.3% dividend yield, it could be a good stock to buy and hold over the long term (10 years or more).
