1. ResMed Inc. (CHESS) (ASX:RMD)

ResMed designs, manufactures and distributes medical equipment for treating and diagnosing sleep disorders. ResMed's potential market opportunity is huge. The National Heart Blood and Lung Institute estimates that 12 million people in America suffer from sleep apnea and ResMed believes that currently only four million people are treated or diagnosed each year. Analysts at UBS estimate that around 100 million people globally suffer from sleep apnea, with the rate of people suffering from sleep apnea increasing by between 4-8% each year.

As a global leader in sleep apnea treatment, ResMed is set to benefit over the long term. Furthermore, ResMed has a strong history of financial performance by increasing earnings per share, and analysts have forecast earnings growth of 20% for FY15. Currently trading on a price earnings ratio of 20, the shares look cheap.

2. Sirtex Medical Limited (ASX:SRX)

Sirtex Medical has developed a novel device to treat liver cancer that involves the infusion of radioactive microspheres to target liver tumours. The share price of Sirtex Medical has increased by a whopping 90% year-to-date. Is there more upside to the share price or has the future growth already been factored in?

Sirtex increased dose sales by 27% for the quarter ended 30 June 2014, and sales from the Americas increased by an impressive 33%. Sirtex has now reported 40 consecutive quarters of dose sales growth, increasing from 3,658 in FY09 to 7,299 in FY13.

A key date for Sirtex and investors will be the release of clinical trial results in the first quarter of 2015. Successful results would likely deliver a huge growth in sales for Sirtex and send earnings and the share price rocketing. Currently, the Sirtex treatment is used as a treatment of last resort or as the company describes it "a last line, salvage therapy" with less than 10% of patients with symptoms regarded as eligible for the treatment.

However, if the results were successful, the Sirtex product could be used as a "first-line" treatment, meaning the product could be used much earlier in the treatment process. This would mean that the potential addressable market for Sirtex would increase significantly.

However, even if the trial tests were not positive, the company has stated that dose sales growth should continue in line with prior historical growth rates, meaning that Sirtex will continue to grow sales and earnings even if the trial results are negative.

I believe there is certainly plenty of upside to the share price in FY15. A positive trial result would see the shares soar, however a negative result should not see the share price fall significantly as the company will continue to grow sales strongly.

The post 2 growing healthcare companies to buy today appeared first on The Motley Fool Australia.

More reading

• Testing again
• Aaron Test 2
• Aaron Test

Woolworths Limited (ASX: WOW) is Australia's largest grocery retailer with a market share of approximately  40%. Woolworths' food and liquor business make up more than 80% of Woolworths' total earnings. It is an extremely high quality business, with reliable defensive earnings and only one major competitor, Coles.

The market is currently concerned with losses resulting from the roll-out of the Masters home improvement division. However, to put the home improvement losses into perspective,  Woolworths' earnings before tax from its food, liquor and fuel division were a whopping $3.4 billion for FY14. In comparison,  the loss from the Masters division was an immaterial $169 million. Furthermore, the move into home improvement offers substantial upside given the highly fragmented nature of the industry where the current market leader, Bunnings, only occupies a 16% market share.

Although it is unlikely that Woolworths will see the high growth rates it has experienced over the past decade, it will still likely grow earnings at an annual rate of in excess of 10% as a result of the following factors:

1) The huge size and scale of Woolworths' supply network affords it the lowest costs in the sector which results in high margins and substantial free cash flow.

2) A return of food inflation. Every 1% increase in food inflation results in an approximately 2% increase to Woolworths' earnings. Food inflation is currently at near record lows and is forecast to increase throughout 2015.

3) Increased earnings growth in the grocery division as a result of recently opened stores continuing to gain customers and recently implemented marketing initiatives and loyalty programs.

4) A profitable howe improvement division. Although Woolworths' home improvement stores are currently loss making, over the medium term, Masters will be profitable. The market has currently not factored this into the share price given the short-term focus of analysts.

5) Woolworths has invested heavily in new capital expenditure over the last five years, however capital expenditure is now easing and will result in increased cashflow and higher dividends to shareholders.

In addition, Woolworths also pays a reliable and growing dividend, which currently yields 4%. Therefore, investors should see an annual return of 15%, making Woolworths a great long-term investment.

The post Why you should hold onto your Woolworths Limited shares appeared first on The Motley Fool Australia.

More reading

• Testing again
• Aaron Test 2
• Aaron Test

QBE Insurance Group Ltd (ASX: QBE) has had a shocking run since 2008 following a string of poor financial performances and profit downgrades. The share price has fallen from $35 in 2008 down to $11 today. However, can the company finally recover its glory days and reward investors who have witnessed the value of their holdings fall significantly?

Despite the recent poor economic performance, QBE has a strong and robust global business model which is highly leveraged to a stronger US economy and higher long-term interest rates in the United States and Europe. The large US business remains a problem for the company, however major restructuring measures have been implemented in an attempt to turnaround the US operations. As these factors materialise over the coming years, QBE is poised to see a significant increase to earnings.

Furthermore, the underlying business should continue to improve as insurance margins increase and premiums are raised. A series of natural disasters between 2011 and 2013, along with lower investment returns and costs associated with implementing acquisitions substantially reduced insurance margins. Insurance margins should improve in the medium term.

QBE is also implementing a cost reduction program which is forecast to reduce operating costs by $250 million per year.

Following yet another earnings downgrade in July of this year and capital raising in August, QBE management cannot afford another earnings disappointment. In my view this is unlikely and I believe there is substantial upside to the current share price over the medium-to-long term.

The post Should you buy QBE Insurance Group Ltd? appeared first on The Motley Fool Australia.

More reading

• Testing again
• Aaron Test 2
• Aaron Test

G8 currently has a portfolio of 361 childcare and education centres in Australia, and a further 78 contracted but not settled. G8 also has 18 centres in Singapore. However, G8 has a huge potential market in which it can continue to grow. The company estimates that there are 4,000 potential centres which it could acquire in Australia, and therefore it currently only occupies 5% of the potential addressable market.

G8 also has a number of competitive strengths, including:

• Strong long-term demand for early childhood education centres as a result of increased female participation in the workplace.
• Supportive government policies, including rebates and other financial incentives which contribute to G8's revenue.
• A multi-brand strategy, G8 operates 16 brands in Australia and 3 in Singapore to cater for the different needs of the respective community.
• Management has been hugely successful in increasing occupancy rates and reducing costs in respect of acquired facilities, thereby increasing profitability of each acquired centre.

G8 operates in a highly-fragmented industry with huge room to grow. This enables G8 to be very selective in targeting potential businesses. Although the shares appear expensive trading on a price earnings multiple of 41 times, analysts have forecast earnings per share to increase by 48% in FY15 and therefore the current share price appears reasonable for such a high growth company.

The post Why now is the time to buy G8 Education Ltd appeared first on The Motley Fool Australia.

More reading

• Testing again
• Aaron Test 2
• Aaron Test

When looking at quality, global Australian companies that earn the majority of their revenue overseas, it's hard to go past the healthcare sector. Australia has some global leaders in the healthcare sector, including CSL Limited (ASX:CSL), Cochlear Limited (ASX:COH) and ResMed Inc. (CHESS) (ASX:RMD). These companies benefit from a falling dollar once their overseas earnings are converted back into Australian dollars.

CSL earns the majority of its revenue in North America and Europe (approximately 72%) and is one the largest blood plasma producers globally. The share price of CSL has increased by 700% over the past decade, and the shares still look cheap.

Cochlear earns approximately 40% of revenue in North America and 45% in the EMEA region. Although the shares currently look a little expensive, the company is set to benefit over the longer term from growing demand from emerging markets, and increasing government healthcare spends in the developed world.

ResMed is a leader in the treatment of sleep apnea and the potential addressable market for ResMed is huge. Furthermore, ResMed derives the majority of its revenue in the United States and will benefit from an increasing U.S. dollar.

By investing in these companies, Foolish investors can gain through exposure to the growing U.S. economy and falling Australian dollar without taking on direct exchange rate risk.

The post 3 companies to profit from a lower Australian dollar appeared first on The Motley Fool Australia.

More reading

• Testing again
• Aaron Test 2
• Aaron Test

Ainsworth has an impressive history of financial performance in recent times, growing net profit from $15 million in 2011 to $82 million in FY14, while sales growth has been equally as impressive rising from $45 million in 2009 to $244 million in FY14.

Ainsworth is one of the top three players within the Australian market and holds key regulatory licenses in Australia. Analysts at Morningstar have stated that Ainsworth's share of gaming floor product in the two key markets of New South Wales and Queensland has increased from 10% in 2012 to 15% today. This growth looks set to continue to increase in the relatively mature Australian market.

However, Ainsworth is currently experiencing huge growth internationally, and as at 30 June 2014 had 163 jurisdictional licenses. International revenue increased by 37% for FY14 and international revenue now makes up 41% of the company's total revenue.

Impressively, profit in Latin America increased by a whopping 139%. Furthermore, total gaming machines installed in the Americas increased to over 1,900, up 72% on the previous year and the company recently acquired 24 acres of land in Las Vegas to continue its expansion plans in America. Ainsworth expects the Las Vegas facility to be completed in FY16.

Ainsworth expects further strong revenue growth in FY15, and with the shares trading on only 15 times FY14's earnings, Ainsworth is cheap. Furthermore, Ainsworth has a strong balance sheet with little debt and pays out between 40%-60% of profits as dividends.

The post Why Ainsworth Game Technology Limited looks a stock at bargain prices appeared first on The Motley Fool Australia.

More reading

• Testing again
• Aaron Test 2
• Aaron Test

Peter Lynch is one of the best stock market investors of all time. He managed the Magellan Fund between 1977 and 1990 and achieved extraordinary returns of 29% per annum, making it the best 20-year return of any American mutual fund over that period. I recently read his book titled "One up on Wall Street" and have outlined three key takeaways from the book. For anyone looking for a great read on investing in the sharemarket, I highly recommend the book.

1) You don't need to make money on every stock you pick. In Lynch's experience, six out of ten winners in a portfolio can produce a satisfying result. Why is this? Your losses are limited to the amount you invest in each stock (i.e. it can't go lower than zero), while your gains have no absolute limit. Invest $1,000 in a dud company and in the worst case, maybe you lose $1,000. Invest $1,000 in a high achiever, and you could make $10,000, $15,000, $20,000 over several years. All you need for a lifetime of successful investing is a few big winners, and the pluses from those will overwhelm the minuses from the stocks that don't work out. For example, if you invested $1,000 in REA Group Limited (ASX:REA) 10 years ago, that investment would now be worth over $50,000 and would more than cover a few poor investments in your portfolio.

2) Don't try and forecast where the stock market is heading based on economic predictions. Since the stock market is in some way related to the general economy, one way that people try to outguess the market is to predict inflation and recessions, booms and busts, and the direction of interest rates. No one can consistently predict where the economy is heading. There are 60,000 economists in the US, many of them trying to forecast recessions and interest rates, and if they could do it successfully twice in a row, they would all be millionaires by now and retired. But as far as I know, most of them are still gainfully employed, which ought to tell us something. Invest in quality businesses and don't try and forecast where the market is heading.

3) Stop listening to professionals. The amateur investor has numerous built-in advantages that, if exploited, should result in him or her outperforming the experts, and also the market in general. Lynch makes the point that one of these advantages is that an individual investor has better sources and they are all around you. If you stay alert, you can pick the spectacular businesses right from your place of employment or in your local shopping centre, and long before the mutual funds and professional investors discover them.

The post 3 investing insights from legendary investor Peter Lynch appeared first on The Motley Fool Australia.

More reading

• Testing again
• Aaron Test 2
• Aaron Test

Burson is the largest trade focused distributor of automotive aftermarket parts in Australia. The automotive aftermarket distribution industry supplies replacement parts and consumables used in the service and repair of vehicles. Burson distributes automotive parts using an extensive distribution network that comprises 114 stores.

A look at Burson's financials reveals an impressive past performance. Net profit was $11 million in FY12 and has grown to $19.4 million in FY14, which narrowly exceeds the prospectus forecast of $19.3m. The FY14 profit result represents an increase of 21% over FY13. Sales growth has also been impressive, growing from $284 million in FY12 to $341 million in FY14. The company expects FY15 net profit to be $21.9 million – an increase of 13% from FY14.

The distribution of automotive parts to workshops is an attractive industry because of its underlying growth and resilient demand. The industry has experienced steady growth underpinned by increasing numbers of vehicles per household, population growth, an increase in older vehicles requiring repair and an increase in the percentage of vehicles serviced by workshops.

The range of parts required by workshops has expanded as the number of vehicle makes and models in Australia has increased. This trend has placed pressure on the ability of smaller distributors to compete with Burson and other large players. The company expects these industry trends to continue going forward. Further, volatility in the sale of new vehicles does not impact Burson as it supplies parts to vehicles that are predominately four years old or older.

Burson increased its store count by 11 stores in FY14, growing its total store count to 116, and also saw same store sales growth of 3.9%. Burson is targeting 175 stores by 2019.

Burson Group is a quality business set for further growth. At the current share price, the shares still represent good value.

The post Is it time to buy Burson Group Ltd? appeared first on The Motley Fool Australia.

More reading

• Testing again
• Aaron Test 2
• Aaron Test

If I was looking to buy one ASX company today to hold for long term, I would not hesitate in buying CSL Limited (ASX:CSL). Despite the share price increasing by 10% over the past 12 months, I believe it has further upside in the short term and will easily beat the market over the long term.

CSL's core business is the manufacture of products derived from human plasma. It is one of the largest blood plasma producers globally with operations in Australia, the United States and Europe. CSL will continue to see an increase in demand for its products around the world as a result of ageing populations in the developed world and rising wealth levels in emerging markets. This should continue to drive double-digit growth over the longer term.

CSL also delivers a range of other vaccines and pharmaceuticals, including seasonal flu vaccine. CSL intends to develop new products which are protected by its own intellectual property. Its significant investment in research and development should ensure it continues to consistently develop new, high-margin products. 

The size and scale of CSL's operations give it a substantial cost advantage over its competitors.  Itss reputation for reliability and quality has established the company as an extremely powerful brand in the blood products arena.

Some investors are reluctant to invest in CSL due to the relatively low dividend yield of 1.7%, however it has continued to prudently reinvest profits into the business to generate high returns on shareholders equity and develop new products. As a consequence, the company's share price has increased by almost 700% over the past decade, far exceeding the return income investors have received by investing in high-dividend stocks such as Telstra Corporation Ltd (ASX:TLS).

CSL should form a core position in any long-term focused portfolio and the current share price offers good value for a quality company. 

The post Why CSL Limited looks a great buy today appeared first on The Motley Fool Australia.

More reading

• Testing again
• Aaron Test 2
• Aaron Test

CSL Limited (ASX: CSL) delivered another impressive result this week, increasing underlying net profit by 11% for FY14. Furthermore, CSL has forecast that strong earnings momentum will continue into FY15, forecasting profit before tax to increase by 15%. The result has impressed the majority of analysts, with UBS having a $85 price target on the stock, up from the current share price of $67.

The result was driven by robust demand for the company's blood plasma products which is expected to continue going forward. Analysts estimate that the global demand for blood plasma products is growing at over 10% per year and is set to continue on the back of surging demand from China. CSL will be a major beneficiary as it is one of the largest plasma fractionators in the world, with substantial operations in the United States, Europe and Australia.

CSL also delivers a range of other vaccines and pharmaceuticals, including seasonal flu vaccine. Over the long term, CSL intends to develop new products which are protected by its own intellectual property. CSL's significant investment in research and development should ensure it continues to develop high-margin products year-on-year.

Over the past decade, CSL has delivered shareholder returns of in excess of 700%, making it one of the best-performing large stocks on the ASX. The company is also currently conducting a huge $950 million share buyback program, which further benefits shareholders through increases in earnings per share. CSL should form a core position in any long-term focused portfolio and the current share price offers great value for such a quality, shareholder friendly company.

The post Why now is the time to buy CSL Limited appeared first on The Motley Fool Australia.

More reading

• Testing again
• Aaron Test 2
• Aaron Test

Analysts at Deutsche Bank have a "buy" recommendation on FlexiGroup Limited (ASX: FXL) and a $4.20 price target (compared to the current share price of $3.67). Deutsche says that "FlexiGroup's FY14 result goes some way to affirming the growth outlook for the business, with volume increases across all divisions coming in line with the company's stated targets".

This week FlexiGroup announced its full-year profit result and reported a strong 18% increase in cash profit and a 14% increase in the dividend. FlexiGroup saw strong volume growth of 19% and hit the $1 billion mark for the first time in transaction volume.  FlexiGroup has transformed the mix of its profit pool over the past financial year which delivered strong volume and receivables momentum across all areas of the business and should continue into FY15 and beyond.

Further, the company's recent mergers and acquisition strategy is delivering. FlexiGroup is already seeing the benefits from the acquisitions of RentSmart, Think Office Technology and Equico NZ. These are set to deliver strong returns over the longer term.

FlexiGroup generates strong cash flows which allows it to reinvest funds into receivables growth and also increase dividends to shareholders.

FlexiGroup expects cash profit to be approximately 7% higher in FY15. However, I believe FlexiGroup will see double-digit profit growth from FY15 once recent acquisitions are fully integrated. At the current price share price of $3.67, the shares look undervalued for a business that is set to grow moderately over the next five years.

The post Why you should buy FlexiGroup Limited appeared first on The Motley Fool Australia.

More reading

• Testing again
• Aaron Test 2
• Aaron Test

Reserve Bank governor Glenn Stevens believes the Australian dollar is clearly overvalued "and not just by a few cents". At the end of 2013, Stevens said he would prefer to see the dollar closer to US85¢ than US95¢. If you agree with Stevens and believe the Australian dollar is overvalued, how can you profit?

I believe the best way to play it is to buy Australian companies with significant offshore earnings, as opposed to directly trading the Australian dollar, as accurately forecasting exchange rates is notoriously difficult.

Australian investors can benefit from a falling Australian dollar by looking at ASX companies that earn a large portion of their revenue offshore, as Australian earnings increase once offshore earnings are converted into Australian dollars.

These companies include global healthcare giants CSL Limited (ASX: CSL) and Cochlear Limited (ASX: COH). CSL currently earns approximately 42% of its revenue in North America and 30% in Europe, while Cochlear earns 40% of revenue in North America and 45% in the EMEA region.

Australian-listed mining companies will also benefit as commodity prices, such as iron ore and petroleum costs, are priced in U.S. dollars. BHP Billiton Limited (ASX: BHP) has estimated that each one cent change in the AUD/USD exchange rate has a $100 million impact on net profits.

Consumer electronics retailer JB Hi-Fi Limited (ASX: JBH) is also set to benefit as Australian consumers pay more for online purchases from overseas and therefore purchase more goods domestically.

By investing in these companies, Foolish investors can gain through exposure to the growing U.S. economy and falling Australian dollar without taking on direct exchange rate risk.

The post 4 top stocks to profit from a lower Australian dollar appeared first on The Motley Fool Australia.

More reading

• Testing again
• Aaron Test 2
• Aaron Test

A small investment in the two companies outlined below could turn into a small fortune over the next five to ten years as both companies continue to experience rapid growth. Outlined below is why I think both these companies would be a smart addition to all growth investors' portfolios.

1. Vocus Communications Limited (ASX: VOC)

Vocus has seen its share price increase by a huge 1,000% over the past five years and 142% over the past 12 months. However, there appears to be plenty more growth to come. Vocus is a leading provider of wholesale and corporate telecommunications services in Australia and New Zealand, providing internet, fibre, ethernet and data centre services.

Vocus has managed to grow revenue and earnings at a staggering compound annual rate of approximately 50% over the past three years. It continues to experience strong customer growth, growing from 133 customers in 2010 to 1,126 in December 2013, which equates to a compound annual increase of 85%.

Because Vocus' cost base is predominately fixed, the majority of revenue earned from additional customers will fall directly to earnings. Further, Vocus has stated that it expects capital expenditure to decline over the coming years after peaking in FY2013, and therefore it is set to benefit over the coming years from a large capital spend in FY12 and FY13.

Despite trading on a price earnings ratio of 68 times FY13 earnings, Vocus looks set to grow strongly over the next five years.

2. Amcom Telecommunications Limited (ASX: AMM)

Amcom operates high-speed fibre-optic networks in Western Australia, South Australia and the Northern Territory. Amcom also provides hosted cloud and IT services to corporate customers, predominately to small to medium-sized businesses. Amcom has grown net profit from $10 million in 2010 to $21 million in 2013.  Amcom expects earnings growth in the short term to come from its ability to leverage off its existing network and cross-selling into additional services.

Further, over the longer term, demand for Amcom's fibre network will grow strongly as network traffic increases. Amcom expects double-digit percentage growth in net profit for FY14, and with the shares trading on a price earnings ratio of 22 times FY13 earnings, it looks good value.

The post 2 growing telcos you need to own appeared first on The Motley Fool Australia.

More reading

• Testing again
• Aaron Test 2
• Aaron Test

It is rare that you find quality companies trading below their intrinsic value. However, it is even rarer when this company is arguably the highest-quality stock on the ASX. The stock I am referring to is CSL Limited (ASX: CSL). An investment in CSL 10 years ago would have seen your investment increase by an incredible 800%. For comparison, an investment in BHP Billiton Limited (ASX: BHP) over the same period would have seen your money increase by 206%, and that during the biggest mining boom in Australia's history.

CSL is constantly overlooked by investors due to its low dividend yield when compared to the big banks and Telstra Corporation Ltd (ASX: TLS). However, the capital growth achieved by investing in CSL would have absolutely smashed the returns received by investing in Telstra and the big banks. Rather than distributing excess cash to investors by way of dividends, CSL is able to re-invest earnings into the business to drive higher profits year-on-year.

Following a fall of 5% in the share price of CSL over the past six months on no negative news, now is the perfect time for long-term investors to pick up shares. CSL is one of the world's top three blood plasma manufacturers. The huge size and scale of CSL's operations provide it with a significant competitive advantage and make it difficult for competitors to enter the industry. CSL has a wonderful history of innovation which will continue to drive future profits. Ageing populations in developed countries, along with the growing expenditure on healthcare in emerging economies should result in high industry growth rates over the next decade, which should see CSL's earnings increase strongly.

Further, while I would never purchase a stock based on foreign exchange rates, a fall in the Australian dollar would also provide an increase in CSL's reported earnings as a result of its offshore earnings being converted to Australian dollars.

CSL is also currently embarking on a huge share buyback program which indicates management are of the view that the shares are currently undervalued. CSL is a defensive growth stock and the current price of $66 represents great value for such a high-quality company set to grow earnings over the long term.

The post Here's why the best quality stock on the ASX is now on sale appeared first on The Motley Fool Australia.

More reading

• Testing again
• Aaron Test 2
• Aaron Test

Investors in QBE Insurance Group Ltd (ASX: QBE) have experienced a difficult time over the past five years after witnessing the share price tumble from over $25 in 2009 down to $12 today. The fall in the share price was on the back of several unexpected earnings downgrades which resulted in many investors losing patience with the company.

However, I believe now is finally the time to buy QBE shares as earnings are set to improve dramatically over the next three years, with this upside not captured in the current share price. QBE will grow earnings as a result of the following factors:

1) QBE will benefit from major restructuring and consolidation undertaken over the past three years, which will drive productivity gains and reduce costs. The company has stated that the cost reduction program should result in cost savings of approximately $250 million per year by FY15.

2) Insurance margins are improving from the near record low margins which QBE witnessed in 2012 and 2013 as insurance premiums rebound.

3) While QBE's Australian and New Zealand operations have been performing relatively well over recent years, the US and European divisions have been performing poorly. The US division accounts for approximately 40% of QBE's gross premium revenue. With US economic conditions improving significantly in recent times, the US division is set to improve and return to profitability, resulting in a huge lift to QBE's earnings.

4) Finally, increasing global interest rates, in particular in the US and Europe, will provide a significant lift to QBE's earnings as the company will start to earn a return on its large cash pile.

The post Is now the time to buy QBE Insurance Group Ltd? appeared first on The Motley Fool Australia.

More reading

• Testing again
• Aaron Test 2
• Aaron Test

Litigation funder Bentham IMF Ltd (ASX:IMF) is the pre-eminent litigation funder operating in Australia and has the largest share of litigation funding business in Australia. Bentham provides funding on a contingency basis to businesses and individuals and in return receives a share of the amount awarded to the client where successful.

Bentham has a competitive advantage over its competitors due to its superior risk mitigation process in selecting cases and case management expertise. This is reflected in the company's results, over the past 12 years Bentham has only lost 4% of cases (out of 155 cases). Over the past 13 years, the company has averaged an impressive 185% return on funds invested in each case (including lost cases).

Bentham looks set for strong growth over the next five years and has identified major growth opportunities both domestically and overseas, including:

• Confirmation it will fund its largest ever case (the Wivenhoe Dam case);
• Entering into a joint venture arrangement to fund European litigation, focusing on the UK and the Netherlands markets;
• Continuing its expansion into the lucrative United States market.

Bentham now has a large investment case portfolio of $2.2 billion as at 31 March 2014, the portfolio's returns are expected to be realised over the next three years. As a result earnings should be significantly higher over the next three years than those achieved in FY13. Trading on a price earnings ratio of just 17 times FY13's earnings, the shares are cheap. Bentham also pays a very attractive dividend yield of 4.9%, which also looks set to increase over the coming years.

The post Why you should buy Bentham IMF Ltd today appeared first on The Motley Fool Australia.

More reading

• Testing again
• Aaron Test 2
• Aaron Test

Cochlear Limited (ASX: COH) is the global leader in implantable hearing solutions with an estimated 70% of the global market. Following the recall of its Nucleus 5 implant in 2011, Cochlear's market share has come under pressure from competitors such as Sonova who have closed the technological gap on Cochlear. The share price has also fallen over the past three years, falling from over $80 in 2011 down to $63 today. However, what does the future hold for Cochlear?

In June of this year, Cochlear announced that it will be relaunching its C1500 series implant in Europe after voluntarily recalling the product in 2011. Cochlear has stated that this implant is the thinnest implant on the market and will support a wider range of surgical techniques. The product is set to be rolled out into other countries in the near future pending regulatory approval. Cochlear also launched its Nucleus 6 product in the United States and Europe and reported positive feedback on these new products, expecting sales growth momentum into FY15.

Cochlear estimates that its devices are currently only penetrating a very small percentage of the addressable market – possibly as low as 1%. The cost of the implant simply makes it too expensive for a lot of people. However, increasing wealth from emerging countries and increased levels of government healthcare spend in the developed world will likely result in Cochlear increasing sales growth rapidly over the long term.

Cochlear has a superior reputation for technological innovation and reliability in a highly specialised medical field. It also holds key intellectual property over its products which give the company a strong competitive advantage. While the current share price is not cheap and may fall by over 10% in the short term, I believe Cochlear will grow strongly over the next decade and the share price will be significantly higher in years to come.

The post Should you buy Cochlear Limited? appeared first on The Motley Fool Australia.

More reading

• Testing again
• Aaron Test 2
• Aaron Test

As a value investor, I believe that while the market is currently not cheap, there are some quality ASX companies that are trading below my estimated fair value. The two companies outlined below are both quality companies and cheap at current prices.

1. McMillan Shakespeare Limited (ASX: MMS)

Leading salary packaging and novated leasing provider, McMillan Shakespeare has seen its share price fall from over $15 to a low of $6.70 over the past 12 months. The fall in share price was the result of the previous government announcing that it proposed to remove the concessional Fringe Benefits Tax (FBT) treatment in relation to motor vehicles. However, the current government subsequently decided not to proceed with the proposed changes to the FBT law, and recent government commentary indicates that there will be no material changes to the FBT law which will impact McMillan Shakespeare's business.

McMillan has indicated that it has been "business as usual" following the reversal of the proposed laws and that it is experiencing strong growth in its key novated leasing and salary packaging divisions. Analysts at Morningstar have forecast that the company will increase earnings by 35% in FY15. McMillan also sees a huge opportunity to expand in the UK. With the shares trading on a price earnings ratio of just 13 times FY13 earnings and paying an attractive dividend yield of 4.5%, the shares look very cheap.

2. CSL Limited (ASX: CSL)

CSL is one of the highest quality companies on the ASX. Over the past decade, the share price has increased by a staggering 800%, making it one of the best-performing stocks of the last decade. However, the party is far from over.

CSL is one of the world's leading blood plasma manufacturers. The size and scale of CSL's operations provide it with a significant economic moat and make it difficult for competitors to enter the industry. Further, CSL has a wonderful history of innovation which will continue to drive future profits. Ageing populations in developed countries, along with the growing expenditure on healthcare in emerging economies should result in high industry growth rates over the next decade which will see CSL's earnings also increase strongly.

CSL management is also shareholder friendly. The company is currently embarking on a huge share buyback program which indicates management are of the view that the shares are currently undervalued. CSL is a defensive growth stock and the current price of $67 represents good value for such a high-quality company set to grow earnings over the long term.

The post 2 cheap, quality ASX companies to buy today appeared first on The Motley Fool Australia.

More reading

• Testing again
• Aaron Test 2
• Aaron Test

Sirtex has now reported 40 consecutive quarters of dose sales growth. Dose sales have been a key measure of the company's performance and have increased from 3,658 in FY09 to 7,299 in FY13.

A key date for Sirtex and investors will be the release of clinical trial results in the first quarter of 2015, which if successful would likely deliver a huge growth in sales for Sirtex and send earnings and the share price rocketing. Currently, the Sirtex treatment is used as a treatment of last resort or as the company describes it "a last line, salvage therapy" with less than 10% of patients eligible for the treatment. However, if the results were successful, the Sirtex product could be used as a "first-line", stage 1 treatment, meaning the product could be used much earlier in the treatment process. This would mean that the potential addressable market for Sirtex would increase significantly.

Macquarie analyst, Craig Collie is confident that the trial results will be positive, backed up by the company tripling their manufacturing capacity later in 2014. However, even if the trial tests were not positive, the company has stated that dose sales growth should continue in line with prior historical growth rates, meaning that Sirtex will continue to grow sales and earnings even if the trial results are negative.

I believe there is certainly plenty of upside to the share price in FY15. A positive trial result would see the shares soar, however a negative result should not see the share price fall signifcantly as the company will continue to grow sales strongly.

The post Can the share price of Sirtex Medical Limited keep climbing higher? appeared first on The Motley Fool Australia.

More reading

• Testing again
• Aaron Test 2
• Aaron Test

Many investors and analysts often describe Woolworths Limited (ASX: WOW) as a stock that is past its growth days. However, I believe a combination of near double-digit earnings per share growth and a steadily increasing dividend yield make it one of the best and safest long-term investments on the ASX.

Over the past 10 years, Woolworths has increased its dividend from 18c per share in 2003 to 62c per share in 2013, an increase of 244%. The nature of Woolworths' business means that it is able to generate huge cashflow from a reliable and defensive earnings stream and therefore it is highly likely that the increase in dividends witnessed over the past 10 years will be repeated again over the next 10 years. While the current dividend yield is still an attractive 4%, investors buying the shares today with a longer-term focus will likely be the beneficiaries of substantially higher dividend yields over the next 10 years – perhaps as high as 20% on today's share price.

Although Woolworths will likely not see the same high levels of earnings growth going forward as that achieved over the past decade, analysts at UBS have still forecast earnings per share growth of almost 10% over the medium term as a result of the following factors:

1) An increase in food inflation. Every 1% increase in food inflation results in an approximately 2% increase to Woolworths earnings. Food inflation is currently at near record lows and is forecast to increase throughout 2014 and 2015.

2) Increased earnings growth in the grocery division as a result of recently opened stores continuing to gain customers and recently implemented marketing initiatives and loyalty programs.

3) A profitable Master's division. Although Woolworths' Master's home improvement stores are currently loss making, over the medium-term Master's will be profitable. The market has currently not factored this into the share price given the short-term focus of analysts.

4) Woolworths has invested heavily in new capital expenditure over the last five years, however capital expenditure is now easing and will result in increased cashflow and higher dividends to shareholders.

The combination of solid earnings per share growth and an increasing dividend yield means that investors should get a return of in excess of 15% annually from Woolworths over the next decade. This return makes it one of the safest investments on the ASX and a great way to build long-term wealth.

The post Why Woolworths Limited should be in your portfolio appeared first on The Motley Fool Australia.

More reading

• Testing again
• Aaron Test 2
• Aaron Test