It's tough to find opportunities in today's market. Sometimes it feels like the only companies that are reasonably priced compared to their prospects, are those with problems, like iSentia Group Ltd (ASX: ISD).
Here are 3 companies that I would consider buying right now with $5,000:
Nearmap Ltd (ASX: NEA)
Nearmap is a provider of high-quality aerial imagery that allows a variety of companies to conduct quotes and assessments faster, and with lower cost. So far, its major customers have been insurers and solar companies, although that is expanding as all kinds of businesses (including a mobile lunch business) come to see the potential in Nearmap's products. The company has a profitable business in Australia and is continuing to win customers in its initial foray into the USA.
Although unprofitable, Nearmap looks attractive at today's prices.
Retail Food Group Limited (ASX: RFG)
Retail Food Group owns a variety of Australian franchises including Gloria Jeans, Donut King, Michel's Patisserie, Crust Pizza, and more. It is aiming both to grow the number of franchises as well as sales to those franchisees from its vertically integrated coffee roasting and baking businesses. Retail Food Group is also expanding in a variety of companies overseas through the granting of Master Franchisor licenses.
Although domestic growth is expected to be weak, international expansion has some promise and the company does not have to grow very fast to be a market beater at today's prices.
RCG Corporation Ltd (ASX: RCG)
RCG is a footwear retailer and distributor that operates 300 stores spread across 7 retail chains including Vans, Merrell, and Saucony. Shares were sold off recently after the company announced a 4% downgrade in profit, and investors are worried both about the performance of a recent acquisition, and the entrance of Amazon into Australia. Both are valid concerns, but RCG Corporation is now priced at a more reasonable 12 times forecast earnings, and offers a big dividend yield. The company's exclusive distribution rights for 10 brands across Australia and New Zealand also provide a degree of protection against competition.
Although RCG might be out of favour at the moment, if it is able to return to growth it does not have to grow fast to be a market beater from here.
