If I was to dip my toe into the market today, these three stocks would be at the front of the queue.
A cheap price, plenty of potential growth in future, a decent dividend, low levels of debt or net cash, or a combination of a number of those features would be what I'm looking for.
I'd also consider how the three companies generate earnings, whether they have any competitive advantages and whether or not I respect management.
Flight Centre Travel Group Ltd (ASX: FLT)
Travel agent Flight Centre offers almost all of those features. A cheap price, plenty of potential growth, no debt, net cash, a good dividend and strong management are all features of the Flight Centre. At the current price of around $32, Flight is paying a trailing dividend yield of nearly 5% and also trading on a trailing P/E of under 12x. With considerable operations overseas, Flight Centre also has a diversified earnings base – and expects to book $19 billion in total transactions in the 2016 financial year (FY16). That's up from $17.6 billion last financial year.
Managing director Graham 'Skroo' Turner also holds 15million shares, so his interests are aligned with shareholders.
Servcorp Limited (ASX: SRV)
Servcorp also has substantial insider ownership with the Moufarrige family holding a 50% stake in the company and Alf Moufarrige CEO and managing Director. The company provides serviced offices in multiple locations around the world, and saw revenues rise 27% in the first half of FY16. At the end of December 2015, Servcorp had 147 floors in 52 cities in 21 separate countries.
Servcorp has $92.2 million cash in the bank, and expects to report a net profit before tax of not less than $48 million for FY16. It's also the fifth consecutive year of revenue and profit growth – with 80% of that coming from offshore. The company is also paying a 3.3% dividend franked to 50%. You can't really ask for much more than that.
Nearmap Ltd (ASX: NEA)
The photomapping software company has fallen afoul of impatient investors expecting the company's expansion into the US to have gone faster than it has. However, even without the US business, Nearmap has a strong Australian business that is growing at double-digit rates. With growing US revenues an eventual profit from the US business appears only to be a matter of time.
This niche business has few comparable competitors and has yet to really scratch the surface in what it can do and the industries it could revolutionise.
