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I was wondering if you could please provide me with your opinion on the following stocks, and if they would be a good inclusion to a growth portfolio?
Crown Resorts, Genworth Mortgage Insurance, Domino’s Pizza Enterprises, ANZ Banking Group, Suncorp Group and Telstra Limited.
A: If you think of “growth” like I do, I wouldn’t define Genworth or Telstra in that category – they are almost utility style businesses.
That doesn’t mean that the share price won’t increase – it just means that it is very hard for management to influence the growth in business outputs. Either they are near monopolies (Telstra) or they don’t have a lot of direct leverage over the inputs to their business (e.g. Genworth, with the number of mortgages with loan-to-value ratios (LVRs) over 80%).
Crown Resorts and Domino’s Pizza would meet my test of a “growth” business, ANZ is a potential (if you believe they are serious about its Asian strategy) and Suncorp, maybe, however, I don’t like insurance businesses.
So, barring price issues – yes to Crown and ANZ. While Domino’s has a great track record, it is trading on some pretty heady multiples – 40.7 on FY 14 and 32.2 on FY15. There are a lot of growth expectations already build into the current share price.
