Amid ongoing tensions in the middle east and falling interest rate environment, there are a few stocks that remain bullish and can be considered for investment.
Objective Corporation Limited (ASX: OCL)
Objective Corporation Limited has demonstrated meticulous effort in enhancing organizational alignment, providing greater clarity on tasks across all levels to deliver highly valued outcomes for customers and differentiate itself in the market. The company has surpassed the significant ARR milestone of $100 million this financial year, serving over 2,000 customers across 60 countries.
OCL has secured its first UK customer for Objective RegWorks, signing a significant $3.4 million, six-year contract with the Gambling Commission of Great Britain. This becomes significant as it highlights a major expansion into the UK market and underscores the growing international presence of OCL’s regulatory solutions.
Objective Corporation Limited demonstrated impressive financial performance and robust growth over recent years. The company has managed to lower its dividend payout ratio, reallocating more earnings towards reinvestment, which has increased the reinvestment rate to 22.3%. Overall, Objective Corporation’s financial health, coupled with its strategic investments and strong growth trajectory, positions it as a compelling value creator with a focus on long-term growth.
OCL is expanding its addressable market through strategic product innovation and entry into new geographies. The company recently secured its first contract for Objective RegWorks, a significant $3.4 million, six-year agreement with the Gambling Commission in Great Britain. Additionally, OCL is making notable progress with new customers using Objective 3Sixty in The Americas and, more recently, in the UK.
Aligned with its long-term growth strategy, OCL has invested 30% of its software revenue generated in FY24 into its global SaaS business. The incorporation of AI into OCL's products further enhances their capabilities, while the use of a comprehensive design language across all products ensures a pixel-perfect, consistent, and highly engaging user experience.
OCL exemplifies a company with a long-term vision and robust growth prospects. Its impressive year-on-year increase in recurring revenue and successful transition to a 100% subscription software model, with 81% of revenue now recurring, highlight its strategic focus on sustainable growth. Over the past five years, the company's Annual Recurring Revenue (ARR) has grown at a compound annual growth rate (CAGR) of 18%, while its SaaS business has achieved a remarkable CAGR of 31%. This growth trajectory is supported by substantial investments in research and development (R&D), which have accounted for 43% of its total R&D expenditure during this period. OCL’s solid financial performance, driven by targeted R&D investments and a well-balanced approach to profitability, positions it as a forward-looking firm with strong long-term growth potential.
The a2 Milk Company Limited (ASX: A2M)
The a2 Milk Company delivered solid FY24 results with a 5.2% revenue growth of $1,675.5 million. Group EBITDA increased by 6.9% on pcp to $234.2 million and EBITDA margin increased by 2ppts to 14%. Group NPAT was up by 7.7% to $167.6 million. Basic EPS was 23.2 cents, up by 9.2% on pcp. Ended the year with net cash of $968.9 million, up by $211.7 million on FY23 and reported cash conversion of 125.7 million.
A2M continued to concentrate on the China market, where the a2™ brand has made notable strides, becoming a top-5 brand in the China infant milk formula (IMF) sector. The successful launch of an upgraded China-label IMF product further supports this growth. The company is also investing in expanding its offerings in liquid milk and other nutritional products for various age groups, including kids, adults, and seniors, while exploring opportunities in new markets. In Australia, a2 Milk® has seen growth in its lactose-free segment, bolstered by a brand relaunch and a major upgrade of the Kyabram milk processing site in Victoria, set to be completed in FY25. Additionally, the company is optimizing its English label route-to-market strategy through drop-shipping from Tier 1 distributors directly to consumers and has formed a new strategic distribution partnership with Yuou, a leading player in the O2O (online-to-offline) channel.
A2M has significantly improved its profitability in the USA and has begun distributing infant milk formula (IMF) through selected retailers, both in-store and online, under FDA Enforcement Discretion. The company is making progress toward long-term IMF approval, which remains on track for FY26.
Overall, these strategic initiatives together with exploring opportunities in other regions provide it with a long-term growth trajectory.
Source: Company’s Report
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