Martin Roth - Top Stocks 2014: A Sharebuyers Guide to Leading Australian Companies

Martin Roth has given investors a flying start to selecting potential winners for their share portfolios.

Sunday Herald Sun

With the selected companies finalised only days before printing, this is the most up-to-date guide on the market and an absolute must-have for every investor.

Sophie McEwan, New Zealand Investor Monthly

Investors looking to put their money into stocks for both the long and short term will find this guide extremely useful.

Money magazine

Its a must-have for beginners as well as seasoned investors

The Strategic Super Investor

Roth is widely respected for his careful application of performance criteria to assess Australian listed companies.

Derek Parker, In the Black

Share pundit Martin Roth unearths the best performing stockmarket listed companies for potential investors.

Sunday Herald Sun

But once a year, there is a slimmish volume worth waiting for, and it makes a welcome reappearance once again. The book, of course, is M artin Ro ths Top Stocks

Chalpat Sonti, WA Today

Top Stocks has helped me to identify solid companies by looking further than just chart performance. It has educated me in being able to examine the essential fundamentals when making purchase decisions.

Jason Plevras Melbourne, Victoria

I want understandable rules relating to the performance of good companies that may go bad. Martin Roths Top Stocks does this. I bought Top Stocks 2006 , read it, ignored it, and paid a very high price. Buy To p S tocks 2014 and use it in your investment plan. And my one complaint against Mr Roth? Why can he not publish Top Stocks twice a year?

Ken Hughes Camden South, NSW

I discovered the Top Stocks books about eight years ago and I found that most of the stocks that I owned appeared in the book.

Roths criteria for entry to the book were stricter than the criteria I had used and so I have tended to use his criteria for the top 500 stocks since then.

Each year, of particular interest are the new stocks that enter the list and those that exit.

From my perspective, it is an excellent book and even if trading is a wealth hazard, Top Stocks 2014 will point you to stocks that have great potential.

Professor Peter Logan Oatlands, NSW

Martin Roths Top Stocks is a vital time-saving tool for the trader or investor. Details of each of the companies operations and financials are concisely summarised in two pages. At the end of the book Martin ranks these companies by a series of different categories, from market capitalisation to the five-year share price return Top Stocks takes the hard work out of doing your own research.

Peter Ralph Melbourne, Victoria

Top Stocks saves me a lot of time researching to identify better performing stocks.

Peter Hickey Concord, NSW

The author and publisher would like to thank Alan Hull (author of Activ e I nvesting , Revised Edition, Trade My Way and Invest My Way ; ww w.a lanhull.com) for generating the five-year share-price charts.

This twentieth edition first published in 2014 by Wrightbooks an imprint of John Wiley & Sons Australia, Ltd 42 McDougall Street, Milton Qld 4064

Office also in Melbourne

Typeset in 10/12 pt Berkeley

First edition published as Top Stocks by Wrightbooks in 1995 New edition published annually

Martin Roth 2014 The moral rights of the author have been asserted

ISBN:9781118621851 (pbk.) 9781118621790 (ebook) 9780730310327 (special edition)

All rights reserved. Except as permitted under the Australian Copyright Act 1968 (for example, a fair dealing for the purposes of study, research, criticism or review), no part of this book may be reproduced, stored in a retrieval system, communicated or transmitted in any form or by any means without prior written permission. All enquiries should be made to the publisher at the address above.

Cover design: Wiley Cover image: Financial Chart istockphoto.com/Petrovich9

Charts created using TradeStation TradeStation Technologies, Inc. 20012013. All rights reserved. No investment or trading advice, recommendation or opinions are being given or intended.

Printed in Australia by Ligare Book Printer

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Disclaimer

The material in this publication is of the nature of general comment only, and does not represent professional advice. It is not intended to provide specific guidance for particular circumstances and it should not be relied on as the basis for any decision to take action or not take action on any matter which it covers. Readers should obtain professional advice where appropriate, before making any such decision. To the maximum extent permitted by law, the author and publisher disclaim all responsibility and liability to any person, arising directly or indirectly from any person taking or not taking action based on the information in this publication.

Preface

The words that began my preface to Top Stocks 2013 were prescient.

I wrote:

Bear markets do not last forever. Unfortunately, as has so often been observed, no-one rings a bell when a bear market is over. Instead, stocks start to creep back upwards, and at some point, when they have already regained much of their perceived value, the average investor starts to decide it might be time to get back into the market.

I then quoted authorities who stated their beliefs that the 201213 period would see an improvement in investor returns. One said that 2013 could see the start of a new bull market.

The benchmark S&P/ASX 200 index closed below the 4000 mark in June 2012, but, as I was writing the above words, shares were already creeping up. By the time Top Stocks 2013 hit the bookstores, late in 2012, the market move was gathering steam. Indeed, the first two months of 2013 were said to be the best start to a year for shares in more than 30 years. In February 2013 the index rose back through 5000, and it has been maintaining that level as I write.

Welcome to the 20th edition of Top Stocks .

It is not the role of this book to try to forecast the direction of the market, or the direction of individual stocks. Indeed, one of the rationales of the book is to highlight the truth that Australia boasts many excellent companies that enjoy high profits and growing profits regardless of the direction of the markets.

Despite the title, Top Stocks is actually a book about companies. Right from the first edition it has been an attempt to help investors find the best public companies in Australia, using strict criteria.

These criteria are explained fully later. But, in essence, all companies in the book must have been publicly listed for at least five years and must have been making a profit and paying a dividend for each of those five years. They must also meet tough benchmarks of profitability and debt levels. Share prices have never been relevant.

Of the 98 companies in Top Stocks 2014 one fewer than in last years edition fully 63 reported higher profits in the latest financial year (June 2013 for most of them), while 57 reported higher earnings per share and 62 reported a higher dividend.

Of the 63 companies reporting higher profits, 30 achieved double-digit profit growth, with five companies reporting a triple-digit increase. In addition, 42 of them saw profits growing at a faster rate than revenues, implying that their profit margins were expanding.

And though, as I have stated, share prices are not relevant for selection to Top Stocks , fully 69 of the 98 companies in the book have provided investor returns share price appreciation plus dividends of an average of at least 10 per cent per year over five years. In fact, of these 69 companies, more than half have provided a return of more than 20 per cent.