Top Stocks 2017. Roth Martin

In the latest edition we find a group of seven companies, one fewer than last year. Some have been growing strongly, though few offer high dividend yields.

      Top Stocks 2017: healthcare companies

High dividend yields

      With interest rates low, many investors have been seeking stocks offering high dividend yields. These are still a worthy target, as they should offer a degree of protection if the market is falling.

      Three years ago, in Top Stocks 2014, with investors looking for smaller companies with high dividend yields, I published a list of smaller companies from the book (a market capitalisation of below $450 million) with a dividend yield of at least 5 per cent.

      There were 22 such companies in Top Stocks 2014. In Top Stocks 2015 there were 15 stocks and last year there were 16.

      In the latest edition of the book there are 11. Interest rates continue to fall, so I have added a further five companies with a yield of more than 4 per cent.

      Dividend yield: small companies

Australian companies with overseas activities

      Investors have on occasion been sceptical about Australian companies taking a big plunge into offshore activity, believing that such moves have a high chance of failure. These doubts have sometimes proven correct. Some local corporations, successful at home, have done poorly abroad. But others have performed very well, including many that are in Top Stocks.

      With the Australian dollar relatively weak, and possibly set to fall further, astute investors will certainly wish to consider companies that have a large overseas presence. Here are companies in Top Stocks 2017 that generate a substantial amount of their revenues abroad. Do note, however, that this does not automatically mean they are beneficiaries of a weaker dollar. Some have a hedging program – or some other arrangement – in place that limits the potential gains from the weak dollar.

      • Altium is a high-tech company with most of its activities overseas.

      • Ansell is a global leader in safety and healthcare products, with 85 per cent of sales abroad.

      • ARB exports its automotive accessories to more than 100 countries, with overseas business around a quarter of total sales.

      • Beyond International is a prominent producer and distributor of television programming, with more than 40 per cent of sales to overseas buyers.

      • Blackmores reports that direct exports of its healthcare products represent less than 20 per cent of total revenues, but the company estimates that a further 25 per cent of sales are to Chinese tourists or to wholesalers exporting to China.

      • Breville Group sells its home appliances in more than 50 countries, with foreign revenues now about 60 per cent of the total.

      • Coca-Cola Amatil has significant business operations in New Zealand, Indonesia, Fiji and Papua New Guinea.

      • Cochlear derives about 90 per cent of the sales for its ear implants from overseas customers.

      • Codan sells its metal detectors and high-frequency radios to more than 150 countries, representing 85 per cent of company turnover.

      • Corporate Travel Management, following a series of acquisitions, undertakes a majority of company operations overseas.

      • Domino's Pizza Enterprises does business in Japan, New Zealand, France, Belgium and the Netherlands, accounting for more than 70 per cent of total income.

      • Flight Centre gets around 45 per cent of its income from its overseas branches.

      • Fortescue Metals sells most of its iron ore to China.

      • GBST Holdings makes more than half the sales of its financial software products to foreign customers.

      • Hansen Technologies is rapidly expanding its billing services overseas, and this business represents around three-quarters of total income.

      • IMF Bentham is opening offices in several countries, and these are bringing in a growing amount of the company's business.

      • Infomedia makes most sales of its electronic car parts catalogues outside Australia.

      • Integrated Research's specialised performance monitoring software is sold mainly abroad.

      • IRESS derives more than half its revenues for its financial software from overseas buyers.

      • Lendlease is a financial giant that operates around the world, with more than 40 per cent of its revenues coming from outside Australia.

      • Macquarie Group has banking operations in 28 countries, and international business accounts for more than two-thirds of total income.

      • Mineral Resources is a big iron ore exporter, with much of its income from abroad.

      • Navitas gets more than a third of its income as an education provider from overseas operations.

      • Northern Star Resources is a major gold producer, with the international gold price determining its sales prices.

      • Pro Medicus sells medical imaging software, with more than three-quarters of revenues from abroad.

      • Rio Tinto is a major global supplier of minerals.

      • SAI Global is a large specialist corporate consultancy with more than half its business overseas.

      • Seek, Australia's online jobseeker leader, is growing rapidly thanks to its overseas businesses, which now represent more than 60 per cent of total company turnover.

      • Servcorp, the serviced office space provider, has more than two-thirds of its business offshore.

      • Sirtex Medical sells its liver cancer treatment around the world, and most company income derives from overseas buyers.

      • Sonic Healthcare's fast-growing overseas pathology businesses now account for more than half of total revenues.

      • Wellcom Group's corporate design services are enjoying increasing demand outside Australia, with overseas business now around half of total revenues.

Who Is Top Stocks written for?

      Top Stocks is written for all those investors wishing to exercise a degree of control over their portfolios. It is for those just starting out as well as for those with plenty of experience but who still feel the need for some guidance through the thickets of around 2200 listed stocks.

      It is not a how-to book. It does not give step-by-step instructions on ‘winning' in the stock market. Rather, it is an independent and objective evaluation of leading companies, based on rigid criteria, with the intention of yielding a large selection of stocks that can become the starting point for investors wishing to do their own research.

      A large amount of information is presented on each company. Another key feature of the book is that the data is presented in a common format, to allow readers to make easy comparisons between companies.

      It is necessarily a conservative book. All stocks must have been listed for five years even to be considered for inclusion. It is especially suited for those seeking out value stocks for longer-term investment.

      Yet, perhaps ironically, the book is also being used by short-term traders seeking a goodly selection of financially sound and reliable companies whose shares they can trade.

      In addition, there are many regular readers who buy the book each year, and to them in particular I express my thanks.

What are the entry criteria?

      The criteria for inclusion in Top Stocks are strict:

      • All companies must be included in the All Ordinaries Index, which comprises Australia's 500 largest stocks (out of around 2200). The reason for excluding smaller companies is that there is often little investor information available on many of them and some are so thinly traded as to be almost illiquid. In fact, the 500 All Ordinaries companies comprise, by market capitalisation, more than 90 per cent of the entire market. (Note that one company in the