Ask A Fund Manager
The ASX share for a comfortable night's sleep
The Motley Fool: If the market closed tomorrow for 4 years, which stock would you want to hold?
Elfreda Jonker: I have to go with a good old favourite that's been in our funds for many years. It's Goodman Group (ASX: GMG).
This is just a business that, over the last 10 years, that's just consistently been in an earnings upgrade cycle. What they do, I'm sure most people know it… it's an industrial and logistics property group.
Effectively they're the major asset manager. So they don't actually own these properties, but they do manage it. Their assets under management is sitting at around $60 billion at the moment, and they've got a substantial work-in-progress pipeline of around another $5 billion. So they are really expanding that balance sheet.
They largely do work for all these big e-commerce companies. So the increasing requirement from Amazon.com Inc (NASDAQ: AMZN) and the likes, that just keep on requiring bigger spaces, they manage a lot of those logistics properties for them.
Besides that, they're also doing just a global expansion. It's really one of those Australian companies that's managed to expand globally very well. There's very few competitors with their size and scalability.
So for us at the moment, the reason why we particularly like it now is [that] at the recent results they announced that their earnings growth would be around 10% for the next year, which was a bit lower than what the market expected and I think a little bit disappointing. But then, literally a few months later [for] the first quarter, they just lifted that to 15%.
So it just shows the massive confidence that they have to generate that sort of earnings growth over the next year.
For us, it's just been one of those stories that, not only is it an incredibly well-run business with a very strong balance sheet and a fantastic management team, it's probably one of the highest-rated teams in our view in the market.
We also see that there's just one of these thematics playing out — the world going online — and they are right there at the cusp and have the availability of the properties, and the skillset that others don't.
For us, this is certainly the stock that you can close your eyes, buy for 4 years, and you know in 4 years' time, it's going to be there and will be even stronger.
