The S&P ASX200 (ASX:XJO) (Index:^AXJO) is pretty much where it started around 12 months ago. The recent decline in the market has meant many investors have not made any meaningful gains and will be wondering whether they have chosen the right stocks for their portfolio. Amongst this backdrop however, have been some standout stocks which have well and truly outperformed the broader market.
- Blackmores Limited (ASX: BKL) has gained over 170% over the past 12 months. It is the market leader for complementary medicines in Australia and is expanding rapidly into the Asian market. Investors have been impressed with the level of earnings growth and the international diversification over the past 12 months with a record result expected for the full year. The stock is fully priced however, trading on a price-to-earnings (P/E) ratio of about 30. If expectations are not met, the stock will be sold off heavily and therefore I would be more comfortable purchasing Blackmores at a price below $55.
- Qantas Airways Limited (ASX: QAN) has enjoyed a resurgent year based on lower fuel prices, better capital management and the delivery of cost savings by management. The stock has climbed from a low of $1.20 to a high of $3.79 and currently trades around $3.20. While Qantas still looks attractively priced based on its most recent earnings, airlines are notoriously difficult to value and have to contend with factors out of their control. This stock is best left to traders as market conditions can change quickly and without warning.
- Corporate Travel Management Ltd (ASX: CTD) has rewarded long term shareholders with a 80% gain over the last 12 months. The company specialises in corportate travel management solutions and operates in 23 countries. It achieved record profits in all of the regions it operated in during its most recent result and that continued 20 years of successive growth. Corporate Travel Management recently announced an earnings upgrade for the full year and a new strategic partnership which will enable greater penetration into the huge Asian travel market. Although the company has a strong financial history and positive outlook it is fully priced. It is trading on a P/E ratio of around 38 so I would wait for a substantial pullback before I could justify a significant investment.
- Aristocrat Leisure Limited (ASX: ALL) has provided investors a 50% return over the past 12 months. The company has increased revenues substantially in its most recent result mainly due to the recent aquistion of Video Gaming Technologies and the lower Australian dollar. Aristocrat has been a major player in the global electronic gaming industry through its slot machines for many years and is now expanding its online and digital offerings. The company is not without risks including a high level of debt, increased competition from other manufacturers and possible changes to regulatory regimes. The stock is trading at around 25x earnings with a subdued outlook for the full year. I would be hesistant to buy at these prices and would wait for the share price to retreat to below $7.
Foolish takeaway
It is important for investors to invest in high quality stocks. While all of the stocks I have mentioned have good long term fundamentals or in the case of Qantas – short term tailwinds, they have all run hard in the last 12 months. I would wait for a substantial pullback before buying as I think there are better value stocks at the moment.
