If you could only pick one stock

At our forthcoming roadshows, in Melbourne on 21 November and Sydney on 26 November, I'll be joined by Steve Johnson, Kevin Rose and Gareth Brown of Intelligent Investor Funds Management, Kerr Neilson of Platinum Asset Management and Chris Mackay and Domenico Giuliano of Magellan Financial Group to discuss investing strategies and some of the stocks we're currently interested in.

You can buy tickets here. In the meantime, I've asked our analytical team which stock they'd buy right now, if they could only buy one. I got some interesting results – and not only because it appears that two of our analysts can't count up to one.

James Carlisle (ResMed – RMD)

I've already got a decent-sized holding, but leaving portfolio weighting considerations aside, the first stock on my buy list today would be ResMed. There can be few companies that offer such reliable growth prospects – it has famously increased revenues for 74 consecutive quarters, yet chief executive Mick Farrell estimates that only around 5–15% of the company’s core sleep disordered breathing market has been reached.

On top of that, the company has recently announced a new machine to help with the treatment of chronic obstructive pulmonary disease (the third most common cause of death in the developed world after heart disease and stroke) and is trialing a machine to help with heart failure.

Its machines add a lot of value, but the market is underdeveloped. In the current low interest rate environment, genuine growth prospects are highly valuable – as can be seen from the ratings on some internet stocks for example – yet ResMed is trading on a multiple of only about 23 times this year’s forecast earnings. That’s good value for such a high-quality growth stock.

Jason Prowd (Echo Entertainment Group – EGP)

It's a close call, but I’ve picked Echo Entertainment over M2 Telecommunications. Neither has many friends at the moment, but Echo is probably the least loved. Since being spun out of Tabcorp at $4.27, its share price has fallen to $2.66 – close to a record low and a 23% discount to book value – as investors weigh up the impact that Crown’s planned casino at Barangaroo will have on Echo’s recently refurbished Sydney casino, The Star. So what's the market missing?

New chief executive John Redmond is currently making a range of operational improvements at The Star that have the potential to attract more punters and profits well before 2019 when Crown Sydney is expected to open. The opening of Crown Sydney may even expand the market with flow on benefits to The Star, just a beautiful stroll across Pyrmont Bridge. Echo might also upgrade its tired Queensland properties, although this would be expensive and the company could also face increased competition from new rivals.

Today’s investor could win from both higher earnings if Redmond's improvements pay off and a higher valuation if, as I believe, things aren’t as dire for Echo as they seem.

Gaurav Sodhi (Junior Gold Miners)

One stock to rule them all; it’s an enticing idea isn't it? I'm going to disappoint by picking not one, but five. The reason for the diversity? My picks are all gold miners. Picking just one is too reckless (some might say picking any is too reckless) but gold miners are perhaps the most downtrodden sector in the market and I can't help but be drawn to the neglected.

Although lower gold prices ought to prompt lower equity values, the sector looks as though it has undergone a capitulation rather than a thoughtful adjustment. My five gold picks are: Silver Lake Resources, Kingsrose Mining, Northern Star Resources, Beadell Resources and Ramelius Resources.

Kingsrose and Beadell are both among the lowest cost gold miners anywhere and will make money even if gold prices halve from here. Both miners face unique risks and could come unstuck, but the gold price is unlikely to be the cause of failure. These aren't bets on higher gold prices.

Silver Lake and Ramelius are just the opposite. Silver Lake is profitable today but at slightly higher gold prices profits and production will soar. Ramelius is cash rich and high cost. Its project is marginal today but, at slightly higher prices, it would be worth far more; lower prices would see it fold. It is, in other words, a classic punt on the gold price.

Northern Star is a low-cost miner with an excellent exploration pedigree and terrific geology. It is making generous returns even at today's prices.

These five would benefit from higher gold prices, but only Silver Lake and Ramelius depend on them. This portfolio should only form a small part of a risk-tolerant portfolio, perhaps 5%, but it has the resilience to last and enough upside to tempt.

Nathan Bell (M2 Telecommunications – MTU)

Computershare is still my preferred pick from our current Buy list, as it’s one of Australia’s best businesses and I’m prepared to own it for many years to come. But to avoid sounding like a broken record, I’ve picked M2 Telecommunications. It undoubtedly has its fair share of fleas; debt is high after several acquisitions, parts of its business potentially face terminal decline, and the list of sizeable acquisition targets is shrinking.

On the flipside, if the listed telco players consolidate their market share, then they might be on the cusp of regaining some pricing power as the demand for data increases rapidly. The trend towards being able to download movies direct to our televisions, for example, has barely begun, and listed players like M2 are in the box seat to profit from this revolution for years to come.   

Greg Hoffman (Junior Gold Miners)

I’m naturally drawn to the areas that have been left behind in the current bull market: traditional media and gold.

There’s a lot of risk in the traditional media stocks and I’d need lower prices to be enticed. And while the chance of complete failure is probably higher in the gold stocks, I think the upside is greater and clearer. The media stocks may get a cyclical bounce but the businesses face severe secular challenges.

With the gold stocks – and the junior gold stocks I’ve focused on in particular – the upside could come from exploration success or a potential spike in the gold price. I’ve been guided by Gaurav’s research in relation to the former but I’m probably more of a gold price bull than Share Advisor’s ‘house view’.

There’s a chance, perhaps 15-25%, that the current monetary policies around the world will lead to radically surging inflation at some point. And, under such conditions, it’s highly likely that the gold price would soar. So I can see a path to enormous gains as these gold stocks would once again come into vogue.

I’ve learned my lesson about being too focused in such investments, though (long-term members may cringe along with me at the memory of Croesus Mining). So I’ve taken a ‘basket’ approach in recent months, buying roughly 1% positions in four stocks: Kingsrose Mining, Silver Lake Resources, Northern Star and Troy Resources.

The overall position sizing (less than 5% as a group) limits the downside if things go wrong, while giving good upside potential. As a group, these stocks could three or four bag (or more) over the next few years. That would provide a nice kicker.

Gareth Brown (B&C Speakers – BEC.MI)

At Intelligent Investor Funds Management we like to fish unfished stretches of water, so it felt good when Steve Johnson and I headed up a pretty semi-rural valley outside Florence in May to visit a company that, at the time, only reported in Italian. When we arrived at the B&C Speakers head office and were greeted with the news that we were the first ever non-Italian money managers to visit, our hooks were well-sharpened.

B&C is not a household name, but if you’ve been to a few outdoor concerts or footy games, you'll have heard their products. Essentially, they make the noise-making componentry that sits inside professional audio speakers – things like high-frequency drivers, low-frequency drivers (woofers), coaxials and horns. It’s a scaled-up craft industry.

The professional audio market is dominated by US giant JBL which controls perhaps half the global market and makes everything in-house. But other large and perhaps more innovative speaker companies like d&b audiotechnik and L-ACOUSTICS buy third-party drivers. In this outsourced market, we estimate that B&C has a 25-30% share globally – and a bit more for high frequency drivers.

The business generates fat margins and excellent returns on capital employed. Barring an obvious pause in 2008/09 for the global financial dummy spit, revenues and profits have marched up steadily over the past decade.

B&C is a growth company, but we bought it when it was priced like an invalid – trading at eight times our estimate of 2013 earnings and paying a dividend yield of 7%. But the word has been spreading: the company was recently admitted to the STAR index of fast-growing Italian small capitalisation stocks and now also reports in English, and management recently finished its first ever European investor roadshow.

The stock is now up 40% since our purchase and this changes the picture somewhat. The estimated 2013 price-earnings ratio is now around 11, but we think 14-15 is more appropriate. Investing in small caps like B&C (with a market capitalisation of just €61m) inevitably involves risk, but it's an interesting little growth company that still looks quite cheap.