Objective Corporation has software products that can handle common problems or manually intensive tasks local governments and businesses in highly regulated sectors undertake on a daily basis as well as to store data. This software increases the ease, security and efficiency with which such tasks can be accomplished.  

Objective Corporation has software products that can handle common problems or manually intensive tasks local governments and businesses in highly regulated sectors undertake on a daily basis as well as to store data. This software increases the ease, security and efficiency with which such tasks can be accomplished.

For FY24, the company made $118m in revenue (up 6%) and $105m in Annualised Recurring Revenue (ARR) (up 11%). Its EBITDA was up 66% to $44m and it made a $31m profit (up 49%). The company closed the period with $96m in cash and paid 17cps in dividends. Crucially, the company continued to edge towards its goal of having 100% subscription software.

The company’s growth has meant it can grow its bottom line whilst still investing in R&D, with $276m invested in FY24 – 30% of software revenue.

For FY25, estimates call for $126.6m in revenue (up 7%), $48.7m EBITDA (up 10%) and $0.35 EPS which translates to a $33.3m profit (up 7%) with 95m shares on issue. For FY26, $140.3m revenue, $56.3m EBITDA and a $39m profit (up 11%, 16% and 17% respectively).

The company’s P/E is 39.1x, its EV/EBITDA 25.4x and its PEG is 1.8x. This is expensive for an ASX 200 stock, but it is below companies such as WiseTech (ASX:WTC) which are a lot more hyped up.  

Xero (ASX:XRO) is one of the ASX’s best-performing tech stocks over the last decade, offering accounting software helping SMEs do business. Although the company was caught up in the Tech Wreck of 2022-23, shedding half of its value across that calendar year, it has bounced back with a vengeance in recent months, and we think there's more growth to come in FY25.

Xero is all about helping small & medium sized businesses do business. The company, which has over 3 million subscribers, primarily sells accounting software that helps businesses keep books, pay bills and send invoices. But it has gradually developed features useful beyond book-keeping, such as storing files, converting currencies, keeping track of inventories and creating professional quotes.

Clearly, Xero is an essential service to its customers….it’s very hard to switch it off just to save a few bucks. And what incentive is there to switch to another solution like an MYOB? Very little. Whatever few bucks would be saved, would be lost in the long-run. Xero’s tools are estimated to save its customers on average 5.5 hours of manual work per week. We guess that is why its churn is less than 1%.

As if that wasn't good enough, the company continues to innovate over time, is growing faster outside Australia and New Zealand than outside, is expected to record its first profit in FY24 and still has some room for growth. The company believes the TAM (Total Addressable Market) is NZ$100bn and that is just the top 3 jobs its software is used for – Accounting, Payroll and Payments. Adjacent Tasks, including other tasks such as inventory, CRM and project management, could be another $39bn. The company has the explicit goal of doubling revenues by the end of FY27.

In FY24 – the 12 months to March 31, 2024 – the company recorded: NZ$1.7bn in revenue (up 22%), 4.16m subscribers (up 11% and 419,000 from 12 months prior), $39.29 in average revenue per user (up 14%), an 88% gross margin and a $174.6m profit (compared to a $113m loss in the year before).

PFP is the second largest funeral provider, but you may not have its name before. This is because it is an owner of several franchises and we’d imagine you will have heard of some of them – White Lady Funerals and Simplicity Funerals just to name a couple.

Death is one of life’s two certainties. But it is also worth noting that funerals are a 24-hour, labour-intensive business with extensive planning and various facilities. And none of this comes cheap. Deaths in Australia are set to continue to grow in the years ahead. And Propel is the 2nd largest provider in the market with operations in >144 locations.

In FY24, PFP delivered $209.2m (up 24%) and an NPAT of $23.4m (up 12%). It paid 14.4c per share, representing a 2.5% yield and a payout ratio of 85% of distributable earnings, off the back of 21,655 funerals although this figure was inflated by M&A activities. Average Revenue Per Funeral was $6,635. Since listing, the company has spent $295m on mergers and acquisitions.

Consensus estimates for FY25 call for $238.0m in revenue (up 14%) and a $26.2m profit (up 12%). For FY26, a $252.6m in revenue (up 6%) and a $29m profit (up 11%). This places the company at a P/E of 30.8x for FY24, a figure slightly above the ASX 200 average, and the mean price is $6.31 per share (a ~5% premium to the current share price of $6).

Capricorn is riding the waves of the gold boom. flagship project is the Karlawinda Gold Mine, near Newman in WA’s Pilbara. The deposit was discovered by IGO (then known as Independence Group) back in 2008 and Capricorn bought it in 2016.

It entered production in the middle of CY21 (right on June 30) on time and on budget. Prior to entering production, the plan was for it to be a 100-120,000 ounce a year mine. So far so good, it has produced over 120,000 in the last 2 years.

Karlawinda is an open pit mine that is anticipated to last another 10 years and possesses 1.25Moz Ore Reserves and 2.23Moz Mineral Resources. This does not account for the prospect for further discoveries at the project, which could enable a mine life extension.

But Capricorn Metals is hoping to do the same with Mt Gibson, a historic gold mine in the Murchison region of WA that had produced >868koz gold between 1986 and 1999. The project was mothballed for 30 years due to low gold prices in the 1990s – we’re talking A$450/oz – and remained mothballed for 20 years. Capricorn picked it up in December 2021 when it was granted tenure.

Ever since, the company has built up a 1.45Moz Ore Reserve Estimate, with an operation delivering A$1.2bn in free cash flow and with an NPV of A$828m. It anticipates an average of 152kozpa for the first 7.5 years and a full mine life of 10 years. Again, the company thinks it can extend this, given the average pit depth is only 140m.

Breville is a premium kitchen appliances business with a presence in Australia, Europe and the Americas. It was founded in 1932 – founded from capital obtained from a successful 4-to-1 bet at the 1932 Melbourne Cup.

Breville sells ~$1.5bn in goods each year in over 100 countries globally and caters to middle to higher income earners. It is headquartered in Sydney, has manufacturing facilities in China and regional offices in key markets.

Breville listed in 1999 and has achieved growth of over 2000% since. In the last 10 years, it has gained more than 250%. In FY24, it generated $1.53bn in revenue (up 4%), $185.7m in EBIT (up 8%) and a $118.5m NPAT (up 7.5%). It recorded a 35% gross margin. The 4% revenue growth is hardly earth shattering, but follows revenue growth of 19-25% during the 'COVID years'. It paid a total dividend of 33c per share, representing 40% of EPS and a yield of 1%.

The company was impacted in the aftermath of the pandemic due to fears that inflation would impact consumer demand and the company's costs, not to mention the company's inventory uplift. Neither of the former two came to pass, while the latter issue has been resolved.

We think there are four reasons why Breville can grow. First, it’s track record of sales growth with 14.6% CAGR in EBIT over the last seven years. While this isn’t a guarantee it can achieve the same results, it does inspire confidence. Second, the company’s experience in successfully entering new markets. The company estimates 70% of its revenue potential is unaddressed and it could ultimately achieve $9.7bn in revenue.

The third reason is the market the company is in. Breville offers premium and functional goods, targeted at consumers with higher disposable income. It is therefore less likely to be hit by a slowdown in consumer spending, at least to the extent of companies targeting lower incomes. Consumers feeling the pinch might view upfront investments in Breville’s products – coffee machines, ovens and juicers – as saving money in the long run. And consumers already with appliances and needing new ones won’t put off purchasing a new one for too long. Fourth, we observe that Breville has not had the same supply chain issues other companies have had. Unlike Kogan (ASX:KGN), Breville did not over-invest in new inventories predicting the boom would go on indefinitely.

Reliance is a plumbing supplies company that is the largest manufacturer of PTC (Push to connect) behind the wall plumbing fittings. Reliance Worldwide’s flagship product is the Sharkbite range of brass push-to-connect fittings (as pictured below). These devices avoid the traditional soldering of parts into place, saving plumbers time.

It has proven resilient to inflation because of its ability to pass increases onto its customers. The company recorded over $1.2bn in revenue in each of the last 3 financial years and profits of over $100m.

In investors looking for a growth stock in the industrial sector that will be immune from the worst of inflation will find it tough to find a better company (at least in the industrials sector).

CSL (ASX:CSL) is the ASX's largest healthcare companies and one of the very few that is capitalised at over $100bn. It is best known for its flu vaccines and blood plasma businesses but has other products too and undertakes major R&D work.

CSL was once a government entity, established in 1916. It was privatised in 1994 at $2.30 a share, although it undertook a three for one share split in 2007 making its IPO price 76.7c in real terms, meaning it has been more than a 300-bagger since listing!

The company's most recent gamble has been to pay US$11.7bn for Swiss company Vifor Pharma. CSL is evidently looking to profit from kidney disease, which affects 850m people globally – a figure expected to grow given the global obesity epidemic. It has faced challenges in justifying this price tag to investors, especially given the rise of Ozempic.

When CSL released its FY24 results, it delivered US$14.8bn in revenue and a $2.9bn post-tax profit, both up 11% from FY23. It paid a total dividend of US$2.64 per share, or A$4. The biggest contributor was the Behring segment which delivered US$10.6bn in sales, $5.7bn of which came from its Immunogobulin products including Privigen and Hizentra.

The company anticipates its profit to be $3.2-3.3bn for FY25 and for revenues to be 5-7% higher. CEO Paul McKenzie proclaimed the company was in a strong position to deliver annualised double-digit earnings growth.

CSL has faced an uncertain outlook given the threat of Ozempic, falling margins and skepticism about Vifor. We, however, are confident in the company.

Even if Ozempic could indeed reduce obesity, and with it reduce people developing kidney disease in the future, it would not help people who already have the disease. The cooling of inflation should help its vaccines and blood plasma businesses. And we are also confident in the company's future products. The biggest catalyst in the latter regard is potential FDA approval of Hemgenix (the world’s first gene therapy for haemophilia B).

Universal Store is a chain of casual fashion stores aimed at Millennial and Gen Z customers (think 18-35 year olds). Universal Store has 79 stores across Australia, which tend to be in major shopping centres, as well as a further 20 or so stores exclusive for particular brands like Perfect Stranger, and the group makes 14% of its sales online. Both curated third-party products and private brand products are sold in-house, although the former dominates.

It is a good business, but has been hit by perceptions that its customers will cut back their spending because they feel the brunt of the cost of living crisis. We think the recent Taylor Swift shows and the merchandise spent by them (estimated to be over $60m at the concerts alone) show that they will still spend when they perceive value.

In FY24, sales grew 10% to $288.5m, EBIT increased by 17% to $47.1m and its profit rose 45% to $34.23m. Not bad in the rising interest rate environment. You can see that sales grew, but the company maintained disciplined cost control. The company achieved this through consolidation of its other brands, direct sourcing of private brands and it reduced international freight imports.

Despite shares doubling during FY24, the company is still trading at a P/E of less than 15x. We are optimistic for further growth in the next 12 months as the Stage 3 Tax cuts come into effect. The revised package will put more money into the pockets of Universal Store's customer base.

Cyclopharm (ASX:CYC) is a radiopharmaceutical company that is responsible for Technegas, a proprietary functional lung ventilation imaging agent.

Essentially, a patient inhales Technegas before undertaking a Ventilation-Perfusion (VQ) scan and it makes the lungs easier to see. The company makes revenues through Technegas generators, but also through consumables and after-sales services of the devices. Technegas is not only less damaging than alternative agents but is highly accurate, is quick and simple to administer and has minimal exclusion criteria (in other words, it can be administered to almost all patients including those with chronic lung obstruction disease).

Technegas is approved and/or sold in over 60 countries globally, a list that has only included the USA since October 2023. 2024 is set to be a key year for the company as it enters the world's largest healthcare market.

The company estimates that there is a market opportunity of US$90m or 600,000 procedures. Cyclopharm is targeting 80% of these, or 480,000 of these and believes it can achieve a 50% market share in 2-3 years and 90% in 5-7 years.

Cyclopharm is also seeking to expand the use of Technegas against other indications that could be larger markets - including COPD, asthma and Long COVID.

Pexa is named after its platform for electronic conveyancing. Conveyancing is the process of transferring properties and their legal title, something that occurs when properties are transferred between different owners or when owners refinance their properties with different lenders.

Pexa began in 2010 after the Council of Australian Governments (COAG) agreed to digitise and automate conveyancing. Conveyancing fees are paid as part of a property’s settlement and substantially vary depending on the nature of the transaction, but are typically between $200 and $2,000. 

Back in 2017, only 20% of all refinancing transactions were completed on Pexa. But now, it processes 99% of all refinancing transactions and 80% of property transfers.

The opportunity with Pexa is that it is expanding into the UK, a market potentially thrice as large as Australia and where even if it may not have a legal monopoly, it could have a practical one because there is no one doing what it is.