Picking the right stock isn’t just about luck—it’s about strategy, insight, and timing. With the Australia stock market constantly shifting, investors face the tough challenge of identifying stocks that can deliver real growth.

Should you go for a well-established giant from the ASX Top 50, or take a chance on an emerging player from the ASX 200?

The fear of picking the wrong stock, missing out on big gains, or falling into a market trap is real. But what if you had expert-backed insights to guide you? Expert analysts have done the heavy lifting—deep research, market trend analysis, and performance evaluation—to bring you three of the best stocks to buy in Australia right now. These stocks have strong fundamentals, growth potential, and the ability to generate solid returns. Keep reading to discover the top picks that could elevate your portfolio.

1.  Megaport Limited (ASX: MP1)

Megaport Ltd. engages in the provision of software-defined networking based elastic interconnection services. Its products include Port, MCR, Megaport Marketplace, and MegaIX. It operates through the following geographical segments: North America, Asia-Pacific, and Europe. The company was founded by Bevan Andrew Slaterry in 2013 and is headquartered in Brisbane, Australia.

From the Company Reports:

Megaport Limited (ASX: MP1) has demonstrated a strong financial turnaround in FY24, reporting total revenue of $195.3 million, a 28% increase from FY23.

The company’s Annual Recurring Revenue (ARR) grew to $203.9 million, highlighting the strength of its subscription-based model. Notably, gross profit rose by 32% to $136.8 million, reflecting improved operational efficiency.

The most significant milestone was achieving a record EBITDA of $57.1 million, marking a $36.9 million improvement, driven by a shift toward profitable, efficient growth.

Moreover, Megaport recorded its first-ever net profit after tax of $9.6 million, a substantial $19.4 million improvement from the previous year’s net loss.

The company also generated $28.0 million in net cash flow, reflecting disciplined financial management, with its cash balance surging 84% to $61.2 million.

Competitive Moat:

Megaport possesses a formidable competitive moat in the data center and technological services market, primarily driven by its status as the largest Network-as-a-Service (NaaS) provider globally. The company pioneered private Multicloud connectivity on a global scale, offering seamless, code-provisioned interconnections between major cloud providers. With an extensive Data Center Interconnect (DCI) and Global Wide Area Network (WAN) spanning over 860 data centers across 24 countries, Megaport ensures unparalleled reach and flexibility. Notably, 100G connectivity is available from 597 of these data centers, reinforcing the company’s high-speed, scalable network infrastructure. This robust ecosystem not only enhances service reliability but also creates high switching costs for enterprises, strengthening Megaport’s market positioning. Additionally, the company’s ability to deliver rapid, software-defined networking solutions gives it a significant edge over traditional network service providers, securing its dominance in the evolving cloud and data connectivity landscape.

Risk Analysis:

While Megaport boasts strong growth prospects, it faces several risks that could impact its trajectory. The company operates in a highly competitive and rapidly evolving cloud connectivity market, where technological advancements and new entrants could erode its market share. Additionally, economic uncertainties and fluctuations in enterprise IT spending may affect demand for its services. Furthermore, while declining capital expenditures support profitability, any unforeseen infrastructure costs or delays in network expansion could pose financial risks to future growth.

2. GQG Partners Inc. (ASX: GQG)

GQG Partners, Inc. is a holding company, which engages in the provision of investment services through its subsidiary. It offers mutual funds and other structures including pooled investment vehicles. The company was founded by Rajiv Jain and Timothy Jacob Carver on June 2016 and is headquartered in Fort Lauderdale, FL.

From the Company Reports:

GQG Partners Inc. (ASX: GQG) recently reported net inflows of $20.3 billion for the fiscal year ending December 31, 2024. This includes net inflows of $2.8 billion in the fourth quarter, while December alone recorded a net outflow of $0.2 billion.

As of December 31, 2024, the firm’s funds under management (FUM) totaled $153.0 billion.

Year-to-date net inflows stood at $20.3 billion, representing a significant increase compared to the $10.2 billion recorded for the full year ending December 31, 2023.

Dividend Profile:

The company has demonstrated a strong dividend growth trajectory, increasing its annual distributions from $0.01 per share in 2021 to $0.14 per share in 2023. This upward trend continued in fiscal year 2024, with four dividend payments throughout the year, bringing total distributions to $0.188 per share. Consequently, the security’s yield has significantly improved, rising from 0.84% in 2021 to 8.11% in 2023, and still remains attractive for investors at 8.99%.

Investment Rationale:

GQG has demonstrated significant growth in its funds under management (FUM), increasing by approximately 50% in the first half of 2024 compared to the same period in the previous year. The company’s FUM composition remains well-positioned, with a diversified geographic footprint spanning international, domestic, and emerging markets, particularly in the APAC region. Additionally, its balanced exposure across both institutional and wholesale channels enhances access to capital. Furthermore, GQG’s return metrics remain strong, as evidenced by its robust fund performance, with nearly all of its open-end funds receiving the Morningstar Gold Medal rating as of June 30, 2024.

3. Data#3 Limited (ASX: DTL)

Data#3 Ltd. engages in the provision of on premise, outsourced, and cloud technology solutions in a hybrid information technology throughout Australia and Asia Pacific. The company was founded by Terry Powell and Graham Clark in 1977 and is headquartered in Brisbane, Australia.

FY24 Highlights:

Data#3 Limited (ASX: DTL) recently announced its financial results for FY24, ending 30 June 2024, reflecting solid performance across key financial metrics.

Gross sales grew by 7.6% year-over-year to $2.8 billion, driven by robust demand across its portfolio. Statutory revenue saw a modest increase of 0.4%, reaching $815.7 million, while gross profit climbed 7.8% to $270.1 million, indicating strong operational efficiency.

Earnings before interest and taxes (EBIT) rose 5% to $53.5 million, highlighting disciplined cost management despite market challenges. Net profit before tax (NPBT) surged 16.6% to $62.1 million, translating into a net profit after tax (NPAT) of $43.3 million, up an impressive 17%. This robust profitability growth is further reflected in a 16.9% rise in basic earnings per share (EPS) to 28.00 cents.

Data#3 rewarded shareholders with a 16.4% increase in its total fully franked dividend to 25.50 cents per share.

Historical Financial Snapshot:

Data#3 Limited has demonstrated remarkable financial progress over recent years. The company achieved a significant improvement in net margins, which expanded from a modest 1.3%-1.4% range prior to 2023 to an impressive 5.38% in 2024. This margin expansion fueled net income growth from $23 million in 2020 to $43 million in 2024, showcasing exceptional profitability gains. Return on Invested Capital (ROIC) also surged to nearly 50% in 2024, reflecting superior shareholder returns. Despite its extensive scale, Data#3 maintained a stable sales growth trajectory, with gross sales increasing from $1.62 billion in 2020 to $2.75 billion in 2024, underlining its operational resilience and market strength.

Outlook:

Data#3 is well-positioned for sustainable long-term growth, leveraging its robust industry partnerships and market leadership. As Microsoft’s largest Australian business partner, the company benefits from a strong alignment with one of the world’s most prominent technology providers. Additionally, its collaborations with leading firms such as HP, Dell, and Cisco enhance its ability to deliver integrated solutions across a broad range of IT services. These strategic alliances not only solidify Data#3’s market position but also provide a competitive edge in addressing evolving customer needs.

Risk Analysis:

While Data#3 operates in a promising industry, risks remain. The company’s reliance on major technology partners like Microsoft, HP, and Cisco creates dependency risks, as any disruptions or changes in these relationships could impact performance. Additionally, rapid technological advancements require continuous innovation, posing a challenge to maintain competitive offerings. Market volatility and potential economic slowdowns could also impact IT spending, affecting growth. Investors should consider these factors alongside the company’s strong fundamentals.

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