Macquarie tips these 6 ASX stocks could outperform

When the millionaire’s factory tips stocks to surprise on the upside, it pays to take a closer look. While the hardnosed company has had its share of mistakes over the decades, it’s become the success story it is with a lot of savvy calls. But are these stocks a good call or not?

I’ll take a closer look in this wire.

A quick summary of Macquarie’s outlook

Macquarie pointed to an improving earnings backdrop for its upcoming conference with presentations from 113 companies. The good news is that this should mean a conference featuring more upgrades rather than downgrades.

There has been downgraded earnings forecasts for larger companies, especially in mining but smaller and mid-cap companies have looked more promising. There were net EPS upgrades of 5% in March and 8% in April.

“The unseasonably strong earnings revisions are another positive sign for the near term earnings outlook,” Macquarie said in its outlook. It sees promise for further upgrades before August.

There are four key themes Macquarie anticipates to feature across the conference:

• The impacts of sticky inflation

• Outlook for demand given delayed rate cuts

• Potential impact from the 2025 Budget and geopolitical events

• Investments in AI

Hardly a surprise given how prominently these topics continue to impact on daily life.

Companies with potential positive surprises

Macquarie’s quantitative filter has identified six stocks which it has Outperform ratings on, are not overbought and have had positive consensus earnings revisions in the last three months.

1. AUB Group AUB

The integrated insurance provider ranks as a STRONG BUY on Market Index’s Broker Consensus Tool. It offered stellar returns in February reporting season and many fund managers have used insurance companies as their preferred exposures to the Financials sector. Insurers have benefitted from rising interest rates (expected to stay higher for longer) and growth in gross written premiums.

2. GPT Group GPT

The property investment company operates its portfolio across Australian office, logistics and retail assets. It is predominantly owned by institutional investors – this type of ownership is often viewed as a mark of quality given the stringent investment criteria that institutions use.

While the business had been affected by challenges in commercial real estate, there are signs the market may be starting to turn and there is certainly continued potential in logistics real estate in particular. It ranks as a STRONG BUY in Market Index’s Broker Consensus Tool.

3. Reliance Worldwide RWC

Reliance is involved in the design, manufacture and supply of water flow, control and monitoring products and solutions for the plumbing and heating industry. It had stellar results in the February reporting season and reaffirmed its trading outlook this week – tipping a slight decline in consolidated group revenues.

It was recently referenced in an episode of Buy Hold Sell as a Sell given it has hit expectations for Auscap Asset Management’s Will Mumford. It ranks as a STRONG BUY in Market Index’s Broker Consensus Tool.

4. GWA Group GWA

The supplier of building fixtures and fittings to households and commercial premises ranks as a BUY in Market Index’s Broker Consensus Tool. It has previously been hit by inflation concerns as customers put renovations on hold meaning revenues were flat in 2023. Demand for new builds along with renovations in commercial properties, like aged care, is expected to increase and support revenues across the year.

5. McMillan Shakespeare MMS

MMS offers salary packaging, novated leasing and fleet & asset management and related financial products and services. It ranks as a STRONG BUY on Market Index’s Broker Consensus Tool.

Morgan Stanley also recently tipped MMS as having the potential to enter the ASX 200. It offered a strong half year report in February and had some pullback in prices following that.

6. Imdex IMD

The global mining-tech company develops cloud-connected sensors and drilling optimisation products for clients. It ranks as a STRONG BUY on Market Index’s Broker Consensus Tool. L1 Capital’s Mark Landau has previously pointed to Imdex as an opportunity given its valuable tech capabilities can propel structural long-term earnings growth.

Companies with potential negative surprises

Macquarie also filtered out several companies it has seen negative revisions in with the potential for more. These include:

• ASX ASX

• Qualitas QAL

• Pexa Group PXA

• Propel Funeral Partners PFP

• Pro Medicus PME

• Endeavour Group EDV

• IPH Ltd IPH

Macquarie noted that Corporate Travel Management CTD and Nine Entertainment Co Holdings NEC have been oversold so any negative surprises may have already been accounted for.