October was a surprisingly good month for the S&P/ASX 200 (Index:^AXJO) (ASX: XJO) with the index rising 4.3% as investors took the opportunity to buy some well-known stocks that had been beaten down.
The improved market performance also contributed to an increase in investor confidence and this helped some stocks to outperform the market significantly. There was also a flurry of takeovers, acquisitions and mergers and this also helped some stocks to begin to trend in the right direction.
So with that in mind, here are four stocks that had an exceptional October:
1. FlexiGroup Limited (ASX: FXL) – Flexigroup's share price gained more than 30% in October as a result of its acquisition of New Zealand-based Fisher & Paykel Finance. Despite launching a $150 million capital raising to fund the acquisition, the market has clearly been happy with the deal which will provide Flexigroup with strengthened exposure to the New Zealand market along with further diversification to the company's existing product range. Importantly, the company also re-affirmed its Financial Year 2016 (FY16) cash net profit after tax guidance of A$92 million-A$94 million (excluding the Fisher & Paykel Finance acquisition). Despite the strong rebound in the share price, the company still appears to be attractively priced with the shares trading at only 10x earnings and offering a dividend yield of nearly 6%.
2. Ainsworth Game Technology Limited (ASX: AGI) – Ainsworth's share price gained more than 18% in October despite no new news being released by the company. The share price has struggled to gain any momentum over the past 12 months and the recent outperformance has been on relatively low trading volumes. Ainsworth is expanding rapidly in its overseas markets and recently gained regulatory approval for new gaming machines that will be launched in the domestic market. It will be interesting to see if this momentum can continue over the next few weeks as the shares look to break through the $3.20 level.
3. Aveo Group (ASX: AOG) – Aveo Group's share price increased by more than 15% in October and has gained nearly 50% over the past 12 months. Although there were no specific announcements made by the company, the market has been drawn more closely to a number of retirement village operators over recent months. There are a number of strong tailwinds in the sector including the ageing population and rising property prices and these should provide the platform for a stream of defensive but growing earnings over the medium to long term. Importantly for investors, Aveo is forecasting underlying earnings growth of at least 45% in FY16 resulting from an increase in the number of housing units expected to be sold. The shares appear fully valued at the moment, however, trading at nearly 30x FY15 earnings.
4. APN Outdoor Group Ltd (ASX: APO) – APN Outdoor's share price gained more than 25% in October and even more impressively, has doubled in price over the past 12 months. The company is one of the leading outdoor advertising operators in Australia and New Zealand and owns some of the most visible and highly sought after pieces of advertising real estate. Unlike other traditional advertising companies, APN Outdoor has experienced strong growth in revenue as well as earnings and the company recently upgraded its full year guidance with the Australian outdoor market continuing to grow solidly and above expectations. oOh!Media Ltd (ASX: OML) also recently upgrade its earnings outlook and both companies are now expecting to deliver earnings well ahead of their respective prospectus forecasts. Although APN Outdoor is expected to deliver a strong result, the shares appear fully valued and investors may be better served by remaining patient and waiting for a more attractive entry point.
