The stock market is an unpredictable thing, with some stocks having huge price declines in a matter of days.
It's almost impossible to know if a negative event could happen to a stock you hold as Bellamy's Australia Ltd (ASX: BAL), Sirtex Medical Limited (ASX: SRX) and Vita Group Limited (ASX: VTG) were all star stocks in different industries, yet all have suffered heavily.
The best returns next year may come from some of the biggest 100 companies in Australia. Here are five stocks from the S&P/ASX 100 Index (ASX: XTO) I think would make good investments for 2017:
Challenger Ltd (ASX: CGF) is Australia's dominant annuity provider, it grew annuity sales in the second half of FY16 by 45% over the prior corresponding period.
With most of its target demographic still to enter retirement, I think Challenger is looking good value trading at 17x FY17's estimated earnings with a grossed up dividend yield of 4.17%.
CSL Limited (ASX: CSL) is Australia's largest healthcare company, its main areas are blood plasma products and vaccine research.
The CSL share price has dropped by 20% since its all time high and I think this presents a good opportunity to buy as analysts have forecast earnings per share to grow by 28% during FY17. It's trading at 24.5x FY17's estimated earnings with an unfranked dividend yield of 1.76%.
Crown Resorts Ltd (ASX: CWN) is the biggest casino operator in Australia, with a number of projects in the works. Its share price is down 11% since employees were arrested in China in October this year.
I think now could be a good time to buy before the restructuring and new projects, such as the Sydney Barangaroo project are open. Crown is trading at 17.4x FY17's estimated earnings with a partially franked dividend yield of 6.31%.
Henderson Group plc (ASX: HGG) is one of the largest fund managers listed on the ASX. It will soon be merging with Janus Capital Group to create an entity with US$320 billion of assets under management. The Brexit instability has resulted in the share price being down 24% since 23 June 2016. This makes now a potentially good time to buy.
Healthscope Ltd (ASX: HSO) is Australia's second-largest private hospital operator and has large tailwinds thanks to the aging Australian population.
Healthscope recently updated the market that if the rest of FY17 was similar to Q1's activity, then there wouldn't be any profit growth. This led to a share price drop of 24% in two days. In the long run, there will be more people visiting private hospitals and I think that was an overreaction by the market. It's trading at 19.9x FY17's estimated earnings with an unfranked dividend yield of 3.23%.
Foolish takeaway
All of the above five stocks could have a great 2017. I like Challenger and Healthscope the most, but I think all of them would be worthy of a place in your portfolio.
However, there are more than just five large cap stocks that should be in your portfolio, here are three more great blue chips to own in 2017.
