2 leading ASX 200 shares to buy that could keep outperforming in 2023: fund manager

These two names could keep delivering outperformance.

| More on:
Two older male friends using tech to record their run.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • WAM Leaders has identified two of its top picks in its portfolio
  • Medibank’s sell-off was “overdone” according to the fund manager
  • Brambles is benefiting from price increases

The fund manager Wilson Asset Management (WAM) has recently identified some S&P/ASX 200 Index (ASX: XJO) shares that it owns (or owned) in one of its biggest portfolios.

WAM operates several listed investment companies (LICs), including WAM Capital Limited (ASX: WAM) and WAM Research Limited (ASX: WAX).

There's also one called WAM Leaders Ltd (ASX: WLE) that looks at the larger companies on the ASX, often referred to as ASX blue-chip shares.

WAM says WAM Leaders actively invests in the highest quality Australian companies. But does WAM have a good reputation for picking stocks?

The WAM Leaders portfolio has delivered gross returns (before fees, expenses, and taxes) of 14.8% per annum since its inception in May 2016. This compares to the S&P/ASX 200 Accumulation Index's average return of 8.8% over the same period.

These are two ASX 200 shares that the WAM Leaders investment team picked out.

Medibank Private Limited (ASX: MPL)

Created with Highcharts 11.4.3Medibank Private Ltd PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

WAM Leaders revealed that it added Medibank Private shares to its portfolio late last year after the "cyber breach incident" and subsequent earnings guidance downgrade.

The large Australian private health insurer suffered from a share price decline. But, after the negative news flow "dissipated" and the share price still hadn't recovered, the WAM Leaders team thought that the negative sentiment was "overdone".

WAM noted that the result released in February 2023 was "strong", with health insurance claims remaining "subdued" because the healthcare system is "capacity constrained" due to the lack of staff, while industry growth remains "buoyant", driven by net migration and new participants domestically.

The fund manager also pointed out that the ASX 200 share noted its policyholder numbers had "stabilised" and the outlook has "improved for the year ahead."

Brambles Limited (ASX: BXB)

Created with Highcharts 11.4.3Brambles PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

The WAM investment team described Brambles as a business that specialises in the pooling of unit-load equipment. The ASX share has been in the WAM Leaders portfolio for over 12 months.

WAM said that Brambles' half-year result in February was "strong", which was driven by "significant pricing increases."

Brambles is expecting its cash flow to remain in outflow this year. But, it upgraded its earnings guidance and noted cash flow pressures will "ease into next year as capital expenditure slows."

The fund manager finished its bullish case on the ASX 200 share with the following:

Going forward, we expect profitability to be a key focus, with pricing increases in a tight market continuing while pallet efficiencies improve. The impact of pallet destocking as the economy slows should help bring more balance to the pallet market globally.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Opinions

Happy miner giving ok sign in front of a mine.
Opinions

Which ASX 200 stock offers 'material upside' amid continuing uncertainty over US tariffs?

Blackwattle Investment has identified one ASX 200 large-cap stock that is thriving on the uncertainty.

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
Financial Shares

2 rising ASX financial shares with 'meaningful upside' still left: fundie

Financials outperformed every other sector in FY25, but there are still buying opportunities left, say these experts.

Read more »

A businessman hugs his computer and smiles.
Opinions

If I could only own one ASX 200 share for the rest of my life, it'd be this one

This is one stock I expect to own forever.

Read more »

Man ponders a receipt as he looks at his laptop.
Technology Shares

Brokers rerate 3 leading ASX 200 tech stocks

Experts reveal their ratings on the ASX 200 tech sector's three biggest companies.

Read more »

Person holding a blue chip.
Opinions

Buy alert! 2 ASX 200 blue-chip shares worth a look now: expert

Dylan Evans from Catapult Wealth has identified two blue-chip shares that he thinks are good buys today.

Read more »

Two happy woman on a couch looking at a tablet.
Opinions

Why I'm excited to see the results of these ASX 200 shares

These stocks could reveal very interesting insights.

Read more »

Young male investor smiling looking at laptop as the share price of ASX ETF CRYP goes higher today
Opinions

Why I just bought this 5.2%-yielding ASX dividend stock and plan to buy even more

This business is one of my favourites for dividends and total returns.

Read more »

A young female investor with brown curly hair and wearing a yellow top and glasses sits at her desk using her calculator to work out how much her ASX dividend shares will pay this year
Opinions

Why I'm still investing in ASX shares during tariff uncertainty

There are a few reasons why I plan to continue investing even during uncertainty.

Read more »