If you don't own this ASX stalwart stock, you're missing some serious stability

This stock is riding strong tailwinds, I really like its outlook.

| More on:
forklift holding boxes next to upward trending arrow signifying share price lift

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

Goodman Group (ASX: GMG) is an ASX stalwart stock that has delivered impressive growth and continues to have a strong outlook.

In the past year, the Goodman share price has risen 59% and it has risen over 130% in the last five years.

It describes itself as a global industrial property and digital infrastructure specialist group with operations across Australia, New Zealand, Asia, Europe, the UK, and the Americas. The business owns, develops and manages "high-quality sustainable properties" that are close to consumers in key cities around the world.

The property portfolio includes logistics and distribution centres, warehouses, light industrial, multi-storey industrial, business parks and data centres. It recently reported its FY24 half-year result, which I thought was impressive.

Continuing performance

The ASX stalwart stock is expecting to achieve FY24 full-year operating earnings per security (EPS) growth of 11%.

Businesses around the world need more, and increasingly advanced, logistics properties to fulfil their distribution network needs. Goodman owns some of the most impressive warehouses in Australia. Amazon is by far its biggest tenant by rental income.

The business has low gearing, of 9%. I think this puts it in a strong position in this high interest rate environment. Some property businesses have much higher debt levels, which is increasing their interest expenditure.

Its portfolio occupancy remains high at 98.4%, with like-for-like net property income (NPI) growth of 5%.

Strong outlook

Goodman said at its FY24 first-half result that significant progress has been made on advancing its data centre strategy, securing power and planning, commencing infrastructure and continuing to work with customers.

The business is "well-positioned to capture strong demand for new, high-value, high-tier data centre facilities in supply-constrained locations." Data centres are expected to be a key area of growth for the group.

Data centres have "attractive development margins on existing and new projects". Data centres under construction currently represent just over a third of the ASX stalwart stock's WIP.

It has total WIP of $12.9 billion, which covers 85 projects in 12 countries. The development yield on cost is 6.7% for projects in WIP. The weighted average lease expiry (WALE) is 13.6 years for the projects in WIP.

All of these completed projects will contribute significantly to Goodman's rental profits and operating EPS.

We can't control what the Goodman share price will do, but it's regularly reporting operating EPS growth of around 10% each year. Supply constraints in its locations are expected to continue to drive rental growth and maintain high occupancy rates across the portfolio.

It's not cheap, but I think it's one of the highest-quality ASX shares around. That's why I'd called it an ASX stalwart stock.

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 positions in and has recommended Goodman Group. The Motley Fool Australia has recommended Goodman Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Opinions

An analyst wearing a dark blue shirt and glasses sits at his computer with his chin resting on his hands as he looks at the CBA share price movement today
Opinions

Expert's verdict on 3 ASX 200 shares (2 have doubled in value and the other has lost 29%)

Two of these stocks were the best performers of their sectors in FY25. Should you buy, hold, or sell?

Read more »

A male investor sits at his desk pondering at his laptop screen with a piece of paper in his hand.
Opinions

Where I'd invest in ASX shares ahead of the likely RBA rate cut

These stocks look too good to miss.

Read more »

Person pretends to types on laptop drawn in sand.
Opinions

I sold one of my oldest ASX 200 shares last week. Here's why

Why would I sell one of my longest-held stocks?

Read more »

Broker analysing the share price.
Materials Shares

Buy, hold, or sell? Broker's verdict on 3 ASX 200 materials shares

Materials was one of four market sectors that weakened in overall value in FY25.

Read more »

A person sitting at a desk smiling and looking at a computer.
Technology Shares

3 ASX 200 tech shares to buy in July: Experts

The ASX tech sector delivered outstanding returns for investors in FY25.

Read more »

A group of executives sit in front of computer screens in a darkened room while a colleague stands giving a presentation with a share price graphic lit up on the wall
Opinions

2 ASX 200 large-cap shares that this fundie is cashing in after phenomenal growth

Shaw and Partners portfolio manager James Gerrish says he knows this will be an 'unpopular call'.

Read more »

Woman and man calculating a dividend yield.
Opinions

Buy or bail? Fundie's verdict on 2 ASX 300 shares

Stuart Bromley of Medallion Financial Group provides his insights.

Read more »

A woman sits in a quiet home nook with her laptop computer and a notepad and pen on the table next to her as she smiles at information on the screen.
Opinions

2 top ASX passive income stocks to buy with $5,000 today

I think these leading ASX passive income shares will keep delivering market beating yields in FY 2026.

Read more »