Despite the markets playing hide and seek, and not giving a clear signal, a few growth stocks stand out
Telstra Group Limited (ASX: TLS)
Telstra Group Limited, one of the potential growth companies, delivered a robust performance in FY24, marking its third consecutive year of underlying EBITDA growth. This success underscores the company’s operational resilience and strategic focus, with underlying EBITDA increasing 3.7% YoY to $8.2 billion, adding approximately $300 million. Telstra’s disciplined execution of its T25 strategy has driven a 7.5% increase in underlying NPAT to $2.3 billion, supporting a compound annual dividend growth rate of 4% over the past three years. With a final dividend of 9 cents per share, Telstra returned over $2 billion to shareholders in FY24 while maintaining conservative debt levels.
The mobiles segment remains the cornerstone of Telstra’s earnings growth, contributing over $400 million in EBITDA during the year. This was fueled by a net increase of more than 560,000 handheld subscribers and a 5.6% growth in mobile services revenue, driven by ARPU expansion. The infrastructure portfolio, comprising InfraCo Fixed and Amplitel, also delivered approximately $150 million in combined EBITDA growth, benefiting from rising demand for connectivity assets. Meanwhile, the Fixed Consumer and Small Business segment demonstrated resilience, achieving $120 million in EBITDA growth through ARPU gains and cost efficiency. Telstra’s strategic investments in emerging technologies and infrastructure are well-positioned to capture future growth opportunities. The company is leveraging its intercity fibre network and expanding its mobile network to meet growing data demands. Partnerships in Low Earth Orbit (LEO) satellite technology further extend its reach to underserved regions, enhancing long-term value creation. Telstra is also actively integrating AI and data analytics to improve network efficiency and enhance customer satisfaction, as evidenced by sustained improvements in Net Promoter Score and a significant reduction in customer complaints over three years.
The company’s sustainability efforts are equally noteworthy. In FY24, Telstra increased its absolute Scope 1+2 carbon emissions reduction target to 70% by 2030, from a FY19 baseline. Investments are being reprioritized towards decarbonization projects, which are expected to lower carbon footprints and reduce energy costs. Initiatives such as the Cleaner Pipes program underscore Telstra’s commitment to cybersecurity, having blocked over 10 million scam calls and 14 million scam SMS monthly. Looking ahead to FY25, Telstra aims to maintain its growth trajectory by strengthening customer experience, driving operational simplification, and improving productivity. The Enterprise segment, though challenged, is undergoing a strategic reset to unlock its potential. Management remains focused on balancing capital efficiency with strategic investments, aligning with its goal of sustainable, long-term growth. While the competitive landscape and inflationary pressures pose challenges, Telstra’s strong financial foundation, leading market position, and continued emphasis on innovation provide a solid framework for future performance. The company’s ability to adapt to evolving market conditions and deliver shareholder value through consistent dividends positions it as a compelling investment for long-term growth.
Northern Star Resources Limited (ASX: NST)
On December 2, 2024, Northern Star Resources Limited (ASX: NST) announced its agreement to acquire De Grey Mining Ltd (DEG) through a recommended scheme of arrangement. Under the terms of the deal, De Grey shareholders will receive 0.119 new Northern Star shares for each De Grey share they hold, valuing De Grey at approximately A$5 billion. This acquisition strengthens Northern Star's position by adding De Grey’s flagship Hemi Project, one of the largest undeveloped gold projects globally, located in the Pilbara region of Western Australia. The Hemi Project, with 11.2 million ounces of Mineral Resources and 6.0 million ounces of Ore Reserves, is expected to produce 530,000 ounces of gold annually over its first 10 years.
The Hemi project, one of the largest undeveloped gold projects globally, will provide Northern Star with a long-life, low-cost production center that fits well within its strategy of expanding shareholder value. Northern Star is among the best growth stocks to buy now, as it expects its mining expertise to unlock Hemi’s long-term potential, adding to the company’s existing resources. Following the completion of the transaction, Northern Star will operate across four production centers, with total Mineral Resources of 74.9 million ounces and Ore Reserves of 26.9 million ounces. This acquisition positions Northern Star to be a low-cost gold producer with significant growth prospects.
For De Grey shareholders, the deal offers an attractive premium and the opportunity to retain exposure to the upside of the Hemi project through a 19.9% stake in the combined Northern Star Group. The transaction de-risks the development of Hemi by leveraging Northern Star’s expertise and strong financial standing. In addition, De Grey shareholders will gain ownership in a major ASX-50 gold company with a proven track record of consistent dividends and stable free cash flow. The acquisition also offers potential capital gains tax rollover relief for eligible shareholders, enhancing the appeal of the deal.
Source: Company’s Report
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