Stocks to consider in this lower-growth world

One of the continuing influences affecting the Australian equity market is the sober outlook for world growth. Recent economic numbers confirm the world’s economies will continue in a low-growth environment. Our strategy remains... Be patient; invest for the long term, not for the fast gain. The market’s currently overpaying for growth and selling down proven long-term returners, such as financials. High-growth stocks in this environment are becoming more risky because their growth will inevitably peter out. High-growth and high ROE are not sustainable in this low-growth environment. There are very few unique growth opportunities and in the main these are excessively priced. Companies can grow above broader economic growth for a period, but projecting out three to four years of 20 per cent-plus growth is extremely foolish. We believe the best opportunities for real total investment returns (that include low capital gain and high income) in this low-growth environment will be low-but-sustainable-growth, high-yielding stocks. That includes the major banks, CBA, Westpac, NAB and ANZ; the major retailers such as Woolworths and Wesfarmers; infrastructure companies; and the likes of Telstra. (VIEW LINK)