4 fresh ideas from Australia’s emerging leaders

There's no denying that it's a stock pickers market right now. The S&P 500 is breaking fresh ground almost every session, yet the Equal-weight S&P 500 hasn't hit a record high in almost two weeks. Likewise, the ASX 200 is down around 1.7% from its 21 August all-time high, yet the Small Ords has been moving in a vertical fashion since April.

This market dynamic provides a rich opportunity for active managers who can identify mispriced opportunities from overlooked corners of the market. So what are the stocks that are front of mind from some of Australia's leading investment managers?

In a fast-paced session at that delivered everything from contrarian turnaround plays to structural growth themes, four emerging leaders pitched their best investment ideas.

• Anna Milne, Deputy Portfolio Manager, Wilson Asset Management
• David Lloyd, Co-Head of Emerging Companies, Ausbil Investment Management
• Jun Bei Lu, Founder and Lead Portfolio Manager, Ten Cap
• Jessica Farr-Jones, Portfolio Manager, Regal Funds Management

Pitch #1: Goodman Group (ASX: GMG)

Wilson Asset Management's Anna Milne sees Goodman Group as the best AI infrastructure exposure on the ASX, with the industrial property giant currently building 500 megawatts (MW) of data centre capacity, which is "enough electricity to power a city the size of Canberra."

Following a $4 billion equity raise in February, Goodman is well-funded to execute its data centre pipeline, which Milne expects will reach $10 billion in end value by June. She describes it as "the only large global listed stock in the ASX 200" with meaningful AI infrastructure exposure.

The investment thesis centres on Goodman's integrated model generating multiple revenue streams: land value uplifts, development fees, and recurring management fees. The company has relationships with Amazon and Google, plus a five-gigawatt power bank valued at over $100 billion.

Milne believes the valuation opportunity is compelling, currently trading at its lowest premium to the market in five years, the same level as when it was "simply an industrial shed company." With management's track record, she sees it as owning "a slice" of the data-driven future at an attractive entry point.

Pitch #2: Soul Patts (ASX: SOL)

Ausbil’s David Lloyd pitched Soul Patts as Australia's answer to Berkshire Hathaway. The unique investment house never skipped a dividend for over a century, yet remains uncovered by major sell-side analysts.

The investment thesis centres around its transformation from a concentrated portfolio of three listed stocks into a $14 billion diversified investment house. The 2021-22 Milton acquisition created $1 billion in goodwill that was impaired, allowing faster capital recycling. While the recent Brickworks merger will collapse cross-shareholding structures and split assets evenly between listed and unlisted investments.

What makes Soul Pattinson unique is its permanent capital structure. No third-party money means no redemption risk or fee pressure, enabling opportunistic investing across asset classes.

The track record is consistent as they come, with 25 years of uninterrupted dividend growth at CAGR of 9.6%, even accelerating during crises to 11.5% (GFC) and 10.7% (COVID).

Currently trading below its long-run 10% premium to NAV, Lloyd sees re-rating potential to 25% premium, implying a target price "well into the $50 range." The simplified structure should improve liquidity and trigger index inclusion.

Pitch #3: Domino’s Pizza (ASX: DMP)

Ten Cap's Jun Bei Lu offered the audience three clues for her stock pitch.

1. You’ve seen this brand in 10 countries around the world, delivering over one million meals a day
2. The share price has tanked, down over 60% in the past twelve months
3. Margins have collapsed, from 8% to 5%

My initial thought was that this isn't a domestic stock, maybe a smaller overseas ride sharing and food ordering platform like Lyft or Grab. But when Jun Bei whipped out a Domino's Pizza hat and planted it on her head, I thought "there's no way she's pitching Domino's".

But she was. Her contrarian thesis centres on a Domino's transformation under returning chairman Jack Howard, pivoting away from aggressive store rollouts toward profitability per pizza slice. The investment case rests on a significant cost-cutting opportunity since the company spends $100 million on procurement and overhead, "double every other franchise business in Australia."

"Even if the margin just recovers a tiny bit from 5%, you're looking at earnings doubling," Lu explained.

At 12x earnings, Domino's trades at a 50% discount to Collins Foods despite superior global reach. Jun Bei pointed to Collins Foods' recent 40% rally as evidence of how quickly cost-led earnings growth can rerate valuations. Despite risks including CEO exits and international struggles, she argues negatives are priced in.

Pitch #4: Auto1

Regal Funds Management's Jessica Farr-Jones pitched Auto1 as "Europe's answer to Carvana," betting on the structural shift to online used car retail in a trillion-dollar market where traditional dealerships still dominate.

The investment thesis centres on Auto1 replicating Carvana's proven US model across Europe. Founded in 2012, the vertically integrated platform allows customers to buy cars online in 10 minutes with same-day delivery and seven-day money-back guarantees, addressing what the manager called "one of the worst consumer retail experiences."

Auto1's competitive advantages include superior customer experience, cost savings from owning inventory and logistics networks, and physical infrastructure that's "very hard to replicate" and immune to AI disruption.

The numbers are compelling: eight consecutive beat-and-raise quarters, €600 million cash with no debt, and 2.5% European market share targeting 10%. EBITDA margins are expanding from 2% to 5-9%, suggesting revenue will be "multiples of where it is today."

Auto1 trades at a 30% discount to Carvana, and at 22x EBITDA, its trading one standard deviation below its historical average.

As a bonus, Australian equivalent Karma is "slated to IPO on the ASX very soon."