Merry Christmas, everyone, and what a Christmas story I’ve got for with our Stock of the Year + our Top 7 stocks for our Dividend Portfolio as a Christmas Gift!
Economic update
But first, let’s take a quick look at the economic landscape. We’re in a bit of a head-scratcher: We’ve gone through a tightening cycle, and now we’re entering a loosening phase, yet inflation remains stubborn, and interest rates aren’t coming down as quickly as expected.
So, what’s the solution in this confusing economic environment? It’s a combination of small cap growth and blue-chip income. And speaking of small cap growth, there’s one stock that’s truly stood out in 2024: Superloop (SLC).
Superloop: From Humble Beginnings to a Christmas Miracle
Superloop has had an extraordinary year, with the stock more than tripling in value. If you’ve been following our coverage, you’ll know that we’ve been long-term believers in this fibre-optic network specialist. It’s a perfect example of how a company can transform over time, turning into something much greater than it was initially. Think of it as a chrysalis turning into a butterfly. And the good news is – this is just the beginning. Small-cap growth stocks, trading at value prices, have the potential to offer similar returns, and we’re not the only ones who see it.
For years, Superloop was what I’d call a “work-in-progress.” Its share price oscillated between $1.20 and $0.60, and while it was building networks around Asia, it didn’t really set the market on fire. We first bought in just under $1 three years ago, and it’s now comfortably trading over $2. But here’s the exciting part: the company’s earnings quality has dramatically improved.
It’s been a rocky road, no question about it, but we never lost faith because we saw operational progress being made. That’s what you look for in small caps – solid fundamentals, even if the share price doesn’t reflect it immediately. The real turning point for Superloop came when it made the strategic decision to focus more on Australia and reduce its debt by selling off offshore assets. This shift to a more stable, higher-margin market paid off handsomely, and as a result, Superloop is no longer just a small-cap growth stock. It’s a legitimate core holding in our portfolio.
A Stock That’s Gone from Growth to Core
This is where the magic happens. Superloop’s transformation is not just about turning a profit — it’s about becoming a serious player in the Australian telecommunications space. It’s now a stock that can sit alongside other core holdings like Austal (ASB) and NZME (NZM) in our portfolios. And to think, just a couple of years ago, it was a modest performer, barely moving the needle.
One of the key catalysts for Superloop’s recent success was its audacious strategy to acquire Origin Energy (ORG) as a customer, which is nothing short of a Nelsonian move. For those of you who remember the 80s, this is the old Pac-Man strategy – when a company “eats” its predator. In this case, Superloop secured Origin Energy as a customer and simultaneously lit up its dark fibre, turning it into a revenue-generating asset. This move was a game-changer, and it helped Superloop solidify its position in the market.
If you’re not yet on board with Superloop, you’re missing out. This is a story of a stock that has gone from being a speculative growth pick to a core holding that pays dividends. It’s a goldilocks story — just the right mix of risk and reward, and one that will keep on giving.
Our Christmas Present to you!
The Magnificent Seven: Blue-Chip Income for 2024
We don’t just focus on growth stocks. Our strategy is all about balance, and that’s why we always advocate for a portfolio that includes blue-chip stocks with reliable dividend payouts. These stocks help you weather any storm and provide steady income, no matter what the markets are doing.
Here’s a quick look at Blue Chip’s Magnificent Seven for 2024, which we believe will continue to perform well as we head into the new year:
- ANZ Bank (ANZ)
- BHP Group (BHP)
- Macquarie Group (MQG)
- Metcash (MTS)
- Origin Energy (ORG)
- Telstra (TLS)
- Transurban (TCL)
These blue-chip stalwarts are steady dividend payers and offer reliable growth, making them key pillars of any portfolio. Macquarie Group, in particular, could see a big boost if the IPO market heats up, so keep an eye on that one.
Don’t forget to get all the research in detail in our Blue Chip report. To add our step-by step $500 strategy, activate our Core pathway now.
A Christmas Message: Look for Quality Growth and Income
As we look forward to 2025, now’s the time to assess your portfolio and take action. If you’ve had a good year with small-cap stocks, like Superloop, consider locking in some profits and reinvesting in quality dividend stocks. Remember, we’re here to help you build financial freedom — that’s our goal.
After all, it’s not about the money you make today. It’s about creating lasting wealth that gives you the freedom to enjoy the important things in life: time with family, health, and peace of mind. And if that’s your aim, then the combination of small-cap growth and blue-chip income is the perfect formula.
So, as we wrap up 2024, here’s wishing you all a Merry Christmas and a Happy New Year from the Under the Radar team. We’ve got plenty to look forward to in the coming year, including our Small Cap Dividend Portfolio, our Blue Chip Mining Report, and our Fund Manager Round Table. It’s going to be a great year ahead, and we’re here to guide you every step of the way.
Let’s make 2025 a year of financial freedom.
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