7 ASX stocks and the themes top-performing managers are backing

Earlier this month, my colleague Anna Dadic listed the top-performing Australian equity funds for FY26, as per the Livewire "Find Funds" database. That wire can be seen below. 

Funds

The top-performing Australian equities funds of FY26

View

It's one thing to list a bunch of funds; however, it's another to extract insights from those top-performing managers. To do that, no, I haven't interviewed all the managers separately (though you will be hearing from a select few top performers in due course). 

Rather, I've enlisted AI's help to analyse the latest monthly reports, portfolio updates and top holdings from nine of FY26's best-performing Australian equity funds (the tenth manager, a quantitative strategy, does not publish a comparable monthly commentary). 

The group spans almost every investment style imaginable, from microcaps and emerging companies to commoditities, concentrated large caps, long/short strategies and benchmark-aware portfolios. So, before I share the results with you, a couple of important caveats;

• These funds operate in different parts of the market cap spectrum (all the way from micro to large), so it's not a like-for-like analysis
• Whilst commonly held stocks are interesting, the deeper insight is across sectors or themes, where multiple managers are thinking about opportunities (regardless of market cap exposure) the same way
• This analysis is backward-looking, using the most recent fund updates. Most of them are June updates, but some are from May. Obviously, stock holdings and thinking may have changed. 

Theme one: Australia's electrification boom has become the consensus trade

If there was one investment idea that kept coming up, it wasn't AI software, lithium, or even gold. It was electricity. More specifically, the companies building and upgrading Australia's electricity network.

Four separate managers (LSN Emerging Companies, Ausbil MicroCap, Ellerston Australian Micro Cap, Katana Australian Equity) owned GenusPlus (ASX: GNP), making it the clearest consensus stock across the small-cap managers we analysed. 

Southern Cross Electrical (ASX: SXE), Wagners (ASX: WGN) and several engineering and infrastructure businesses also appeared repeatedly.

What's striking is not just the overlap, but the reasoning. Across multiple reports, managers referenced:

• transmission upgrades
• renewable energy connections
• data centre demand
• electricity infrastructure
• record project pipelines
• long-duration order books

Different language but identical thesis. Rather than trying to predict the next commodity winner, these managers are investing in the businesses that will build the infrastructure required to support Australia's energy transition.

Theme two: AI isn't just about technology anymore

One of the more interesting findings was how managers are approaching artificial intelligence. Few are making oversized bets on the obvious AI winners. Instead, many are investing in businesses that supply the infrastructure behind the boom. That includes:

• electrical contractors
• engineering firms
• communications infrastructure
• industrial suppliers
• network businesses

Several managers effectively described AI as an industrial investment opportunity rather than purely a technology theme.

That thinking also aligns with commentary from Ophir, which argued that stock selection, rather than simply buying AI leaders, drove returns during FY26. The manager also believes the long-awaited broadening of market leadership has arrived, creating a more supportive backdrop for active stock pickers and smaller companies.

The consistent message from many of the managers is that the AI winners of the next few years may not all be software companies. Some could be wearing hard hats.

Theme three: Small caps are finally getting their moment

Almost every manager discussed improving conditions for smaller companies. While each framed the opportunity slightly differently, the underlying arguments were remarkably similar. Repeated themes included:

• easing inflation
• improving liquidity
• lower interest rates
• more attractive valuations
• broader market participation

Several managers suggested the market is finally moving beyond the narrow leadership that defined much of the previous two years.

Again, Ophir's June letter reinforced this view, arguing that market breadth has finally returned after years of mega-cap dominance, creating a healthier environment for active managers focused on smaller companies.

That doesn't guarantee outperformance, but it does suggest many of Australia's leading active managers believe the opportunity set is improving.

Theme four: Quality still matters

One thing that didn't appear was speculative investing. Across almost every report, managers continued to emphasise:

• strong balance sheets
• recurring earnings
• pricing power
• high returns on capital
• structural growth
• cash generation

Whether buying BHP or GenusPlus, James Hardie or Codan, the emphasis remained firmly on business quality.

There was little evidence of managers chasing low-quality companies simply because valuations looked cheap. Instead, most appear prepared to pay for durable earnings.

Theme five: Stock picking is back

Perhaps the biggest takeaway wasn't any individual stock. It was the growing belief that active management itself is becoming more valuable. Multiple managers referenced:

• greater dispersion
• wider valuation gaps
• improving opportunities
• company-specific returns

Rather than relying on rising markets to generate performance, managers increasingly believe returns will come from identifying businesses capable of outperforming regardless of the broader market.

After several years where simply owning the largest technology companies was enough, FY26 increasingly rewarded fundamental stock selection. 

Top stocks held by multiple managers

As well as being featured in some of the top-performing fund updates, the stocks mentioned above have also been prominent on the Livewire platform. Below, we highlight some of the commentary. 

GenusPlus (ASX: GNP)

In this wire in early May, Bell Potter Securities highlighted GNP as a stock riding the electrification boom, maintaining a BUY rating and lifting its price target to $10.50, implying ~15% upside. The upgrade is driven by a stronger revenue outlook, supported by a $2.5 billion order book and a $2.6 billion tender pipeline, setting up strong medium-term growth.

In particular, GNP is tendering on three large-scale transmission projects: the Hunter Transmission Project, the Gippsland Offshore Wind Transmission Project, and the New England REZ Transmission Project (Stage 1).

"Announcement of preferred contractors for each project is expected in CY26, representing significant catalysts," Bell Potter says.

In this wire back in October last year, Mark Elzayed from Investor Pulse highlighted GNP as a stock you'll wish you owned a decade from now, saying the following; 

"If the company sustains its growth trajectory, executes well and captures the infrastructure tailwinds, it has clear potential to scale into a leadership position over the next decade. Its business model (infrastructure services), strong balance sheet, and high growth make it a credible future leader," he says.

Southern Cross Electrical Engineering (ASX: SXE)

In this wire from April, Centennial's Michael Carmody said the following about SXE; 

Southern Cross Electrical Engineering is a national provider of specialised electrical, instrumentation, communications and maintenance services. The company recently delivered a strong 1H FY26 result, with underlying EBITDA growth of 30%.

As a bonus, management upgraded guidance by eight percentage points and flagged ongoing opportunities for order book growth in data centres.

“Specifically, management identified $1 billion in further data centre work to be awarded during 2026. We believe SXE is well-positioned to win a significant share of this new work,” Carmody says.

The broader data centre and electrical services pipeline remains robust, supporting further earnings growth and margin expansion.

In this wire from October last year, Yarra's Joel Fleming highlighted SXE and said the following; 

“There’s resilience in the diversity they’ve created, a finite resource in the form of qualified electricians, and a really strong net-cash balance sheet,” he says.

“It’s trading on reasonable multiples and benefits from the ongoing need to invest in the grid.”

Wagners (ASX: WGN)

On a May episode of Buy Hold Sell, following the Macquarie Conference, 1851 Capital's Chris Stott was unequivocal when it comes to Wangers. 

"I'm not going to sit on the fence here, it's a clear buy for us. Wagners is the most leveraged exposure on the ASX over the next five to six years into the 2032 Brisbane Olympics. As Chris talked about, their primary businesses in Southeast Queensland, which will be the fastest growing economy in Australia over the next five to six years for the Olympic build primarily.

And key as well, in addition, is that the competitive landscape has never been better for Wagners. It's very rational. It hasn't been that way for a long time, which essentially leads to higher prices and higher margins, high profits for Wagners. So they're in an incredibly good position and so strong buy for us.