2 leading ASX 200 shares this top fund manager rates as buys right now

These stocks have been called out as attractive businesses.

| More on:
A handsome smiling man sits in the front seat of an electric vehicle with his hands on the wheel feeling pleased that the Carsales share price is going up and the company will shortly pay its biggest dividend ever

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

There are many interesting businesses on the S&P/ASX 200 Index (ASX: XJO) that could offer investors good returns.

There are lots of different types of companies to choose from, such as cyclical ASX mining shares, fast-growth ASX tech shares or resilient ASX industrial shares.

The largest listed investment company (LIC) on the ASX, Australian Foundation Investment Co Ltd (ASX: AFI), has just held its annual general meeting (AGM) and highlighted two ASX 200 shares that it thinks are opportunities.

While it owns dozens of businesses, only a certain number of them are classified as 'growth companies' within the AFIC portfolio. The two below businesses are ASX 200 shares that the LIC's investment team likes.

ARB Corporation Ltd (ASX: ARB)

AFIC described ARB Corporation as a founder-led global business operating in the 4WD parts and accessories market.

One of the things that the investment team likes about ARB is that it's vertically integrated. It controls all aspects of its business across design, development, manufacturing, distribution, and retailing.

AFIC believes the company has a "significant long-term opportunity supplying branded parts directly to 4WD manufacturers".

There were two other positives that the investment team highlighted – the company's "excellent" balance sheet and its "experienced" management team.

In the recent 2024 financial year result, the company reported that its total revenue increased by 3.5% to $699 million, the net profit grew 16.1% to $102.7 million, and the annual dividend per share rose by 11.3% to 69 cents.

Carsales.com Ltd (ASX: CAR)

The other ASX 200 share that AFIC highlighted was the leading online auto classifieds business, Carsales. It has market-leading positions in Australia, the USA, South Korea, and Brazil.

AFIC said that the management team have a long-term track record of delivering strong returns for shareholders.

According to AFIC, one of the main advantages of its global operations is that it can leverage its intellectual property from Australia to accelerate growth in international markets.

The investment team believes a "significant long-term opportunity remains within all operating markets."

In the FY24 result, the ASX tech share reported that its revenue increased 41% to $1.1 billion, adjusted net profit rose by 24% to $344 million, and bottom line (statutory net profit) fell by 61% to $250 million. The FY23 result included a $487 million gain on the acquisition from Trader Interactive and webmotors, according to Carsales. In FY25, Carsales is expecting to deliver "good growth in revenue, adjusted EBITDA and adjusted NPAT" on a constant currency basis.

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

More on Broker Notes

Woman in celebratory fist move looking at phone
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

Man jumps for joy in front of a background of a rising stocks graphic.
Broker Notes

These ASX 200 shares could rise 20% to 50%

Looking for big returns? Brokers think these shares could do the job.

Read more »

A young man sits at his desk working on his laptop with a big smile on his face.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

man thinking about whether to invest in bitcoin
Broker Notes

Why Macquarie expects this ASX 200 dividend stock to keep outperforming

Macquarie has tipped this ASX 200 dividend stock to outperform. Let’s find out why.

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.
Broker Notes

These ASX 200 shares could rise 20% to 35%

These shares are being tipped to deliver market-beating returns by analysts.

Read more »

Keyboard button with the word sell on it.
Broker Notes

8 ASX All Ords stocks downgraded to sell ratings

Find out which shares are out of favour with the experts.

Read more »

Woman smiling whilst shopping in a clothing store.
Dividend Investing

Why this quality ASX 300 dividend stock is tipped to surge 54%

A leading fund manager forecasts significant outperformance from this quality ASX 300 dividend stock.

Read more »

A group of businesspeople clapping.
Broker Notes

Bell Potter names more of the best ASX 200 stocks to buy in June

These stocks could be best buys this month according to the broker.

Read more »