How many times have you had a stock in your portfolio that doubled or even tripled in share price? "Not enough" might be a common reply. It does happen, though. Those investors fortunate and patient enough to have such stocks can sometimes completely erase the poor returns of several other stocks just with one excellent performer.
Since share prices are mostly driven by earnings growth, a company that annually increases its earnings around 7% could see net profits double in about 10 years. Now if it can raise earnings 15% each year, you have a fast grower that doubles earnings in around five years.
Just one good year of earnings growth isn't enough. Any company could have a one-off good year, but then sink right back down to where it usually is in performance.
But not these stocks below. They have proven themselves with exemplary profit growth over the last five years and are still looking towards double-digit growth in the near future.
Telecommunications company TPG Telecom Ltd (ASX: TPM) is attempting to become number two in mobile phone and broadband service (after industry leader Telstra Corporation Ltd (ASX: TLS)) by putting together an extensive network of telecom infrastructure. It is currently in the midst of a takeover offer for iiNet Limited (ASX: IIN). If successful, it will see its subscription customers greatly increase, especially among NBN high-speed users, and iiNet's network will widen TPG Telecom's infrastructure that much more. Compared to the company's expected growth forecast, current share prices are not that expensive. TPG Telecom could be one solid stock to have in your portfolio.
Ramsay Health Care Limited (ASX: RHC) is another fast grower that could keep growing independently from the general rise or fall of the ASX. It has a stable base of operations as owner of the largest number of private hospitals in Australia. That's a good cash flow generator for its overseas expansion. In financial year 2014, Ramsay Health Care bought a controlling share in one of France's leading private hospital operators and now has become France's number one private hospital operator. Further expansion opportunities in China are opening up recently as the health care provider has agreed to be a joint venture partner in operating five hospitals in China. That could set Ramsay Health Care up for high growth over the next several years at least, so I would suggest having a position in this quality company now.
