MarketMeter Top 10 stocks: Tech titans, solid industrials and winning financials

For a few years now, we’ve used the institutional insights from MarketMeter to identify some of the most popular large-cap Australian companies. The companies identified have remained remarkably similar, though each iteration has seen at least a few changes.

In this wire, we look at the top 10 companies based on the latest MarketMeter research.

The Parameters

MarketMeter co-founder Nicholas Coles shared with us the 10 ASX 100 companies that recorded the highest average scores across five of the 28 factors in the MarketMeter research library.

The five factors in question were rated by the participating fund managers and analysts (around 150 participants, with many of the fund managers featured on Livewire taking part) as the most important factors in their investment process in the latest research (the top five factors can change from period to period). Since last time, Clarity Of Strategy has been removed as a factor, and Sustainable Competitive Advantage has been added. The current factors are as follows:

• Effectiveness of CEO
• Execution of Strategy
• Earnings Quality
• Credibility, and
  
• Sustainable Competitive Advantage.

The outcome

Of the stocks that topped the list this time around, the following trends can be observed:

• Four of the names are notable tech firms, two of them often cited for their strong network effects.
• A couple of names each from the industrial and financial sectors – and a sole consumer discretionary company – round out the list.
• Goodman Group has jumped markedly higher, up from #10 last time to #4 now, on the back of its exposure to data centres and the AI megatheme.

All companies have delivered positive returns in the year so far, with all but three in the double-digits. This supports the view that "quality" companies, as defined by strong management, clear business strategy, and earnings growth, provide quality returns - at least over the past six months.

Note: The following list of names is based on a limited data set and a survey of Australia's top fund managers. The list of stocks should not be considered financial advice. Please do your own research and consult a professional before making any financial decision.

The changes this time around, versus the prior list prepared at the end of December, are as follows:

In

• Brambles (ASX: BXB)
• Wesfarmers (ASX: WES)

Out

• CSL Limited (ASX: CSL)
• The Lottery Corporation (ASX: TLC)

Here's what several fund managers have had to say about the three top performers recently:

Macquarie Group (ASX: MQG)

A staple financial holding of many portfolios, Macquarie was recently highlighted by MLC Asset Management’s Anthony Golowenko as a “world-class” global franchise that is evolving into a homegrown success story.

In early May, Livewire’s Carl Capolingua reported the big brokers’ views on Macquarie, on the back of its FY24 earnings result. 

REA Group (ASX: REA)

The brand behind one of Australia’s most popular property listing portals, realestate.com.au, REA Group is commonly cited as a high-quality company.

FNArena’s Rudi Filapek-Vandyck earlier this month cited the company among his list of management teams displaying best-practice capital management.

Investors Mutual’s Daniel Moore also called out REA Group's “brilliant business” and “incredible franchise”. It was named as one of his favourite ASX large-cap stocks in a recent episode of Buy Hold Sell.

CAR Group (ASX: CAR)

Often mentioned alongside REA, again for its strong network effect and high quality management team, CAR operates the successful carsales.com.au automotive sales portal.

It was named by Yarra Capital Management Executive Chairman and Head of Australian Equities Dion Hershan in early May as an ex-ASX 20 stock pick. Noting CAR’s 14% CAGR over recent years, “it has a strong runway to lift yields across key regions and products, is well-positioned to benefit from car dealerships, and has excellent product innovation,” he said.