Lincoln’s 10 best stocks for 2014

Lincoln's top 10 financial health picks for 2014:

1. Ardent Leisure Group (AAD): StrongAAD's first-quarter trading update was positive, with strong revenue and underlying earnings growth forecast for FY14. Health clubs and US-based businesses remained growth drivers and management indicated other divisions were tracking well. Also, its theme parks will benefit from the Queensland Government's $15 million tourism campaign. Suits income investors comfortable with entertainment asset exposure who do not require high franking credits.
2. CSL Limited (CSL): StrongCSL looks set for solid profit growth for the full year, with earnings per share growth to benefit from the $950 million share buyback and a lower Australian dollar. The longer-term outlook remains positive as increased research and development investment ensures a strong future product pipeline. Suits growth investors seeking defensive earnings and foreign-currency exposure.
3. RCG Corporation (RCG): StrongRCG, our preferred discretionary retailer, recently announced acquisitions in line with strategy and upgraded earnings-per-share growth in FY14. Management subsequently announced a share sell down, resulting in it having a reduced but still very meaningful holding in the company. This is positive, in our view, for the company (access to more capital through institutional investors) and shareholders (better share liquidity). Suits growth- and income-seeking investors comfortable with a recovery in Australia's retail sector.
4. Wesfarmers Limited (WES): StrongWES is the preferred consumer staples play. Its retail businesses have proven strategies in place to support its continued growth in challenging retail conditions. It is also accelerating store openings to boost top-line growth. In the face of uncertain global coal demand and soft export prices, the non-retail divisions' outlook remains soft. While the outlook for WES is mixed, we believe the stronger divisions' revenues and profits will offset the weak performance of others. Suits growth- and income-seeking investors wanting diversified exposure to Australia's largest conglomerate and who believe in Coles' turnaround strategy.
5. Amcom Telecommunications Limited (AMM): Strong The telecommunications provider is on track to provide another year of double-digit growth in after-tax net profit, as the core data networks division and hosting and cloud services businesses continue to remain strong performers. Capital expenditure efficiency and economies of scale benefits will also accrue to the business, which is set to maintain an impressive track record. Suits growth investors who believe in the increasing importance of commercial cloud-based technologies.
6. Australia and New Zealand Bank (ANZ): StrongANZ, a major domestic bank that aspires to becoming a "super regional bank" in Asia, is a preferred income stock that provides an attractive above-market dividend yield. The company recently reported a strong full-year result and lifted its dividend payout ratio to the top end of its target range. Longer-term, we expect ANZ to benefit from an increased focus on Asia. Suits income investors seeking defensive dividends from one of the world's strongest banks.
7. FlexiGroup Limited (FXL): SatisfactoryA specialist finance company providing leasing, vendor finance programs, interest-free and Visa cards, lay-buys and other payment solutions, FXL has guidance for net profit growth of 17-19 per cent in FY14 and has good foreseeable earnings. We expect future growth from entry into new sectors, as well as further product innovation and market penetration. Suits risk-tolerant growth investors comfortable with a small, high-growth diversified financial-services company.
8. Infomedia Limited (IFM): StrongA provider of specialist information solutions to the after-sales automotive parts and service industry, IFM has guided for 8-12 per cent revenue growth in FY14. Pleasingly, promised margin expansion is set to see after-tax net profit grow by 10-19 per cent according to management estimates. It will also benefit from a lower Australian dollar, with three-quarters of the business exposed to foreign currency. Suits risk-tolerant growth investors comfortable with a small but established service provider to the global automotive retail industry.
9. Credit Corp Group Limited (CCP): StrongDebt-collection business CCP has seen its share price sold off lately despite upgrading its purchasing guidance at its recent annual general meeting. With operations expanding into the US, and a healthy domestic growth profile on the back of record debt purchasing last financial year, CCP appears to be offering value investors an opportunity. Suits growth investors comfortable investing in the leader of a niche industry that collects distressed debt.
10. G8 Education Limited (GEM): StrongHaving placed $80 million of stock to institutions to raise capital, GEM is well placed to continue to acquire and integrate long-day care centres into its broader business. Given the continued strength in the company's balance sheet, GEM is expected to grow further in FY14. Recent acquisitions will add earnings to the 2014 profile as scale benefits are realised at a greater pace than initially anticipated, and the company is expected to continue to pay a healthy quarterly dividend. Suits growth and income investors seeking exposure to defensive earnings, but comfortable with acquisition-led growth.

Source: Lincoln’s 10 best stocks for 2014