With the summer of cricket starting today, what better time to imagine what an ASX test team would look like.
The selectors at Motley Fool HQ put our heads together to come up with a team of Australia's best companies. Bear in mind, these aren't buy recommendations – we've focused on business quality.
Some of our picks may be controversial, so if you'd like to have your say, feel free to comment on our Facebook page. We'll publish some of your suggestions in Take Stock, our free newsletter. You can click here to subscribe.
So here goes.
The top order
Firstly, we need some good solid, dependable openers -companies with solid competitive advantages, that are hard to shift out of their market leading positions. We've gone for Coca-Cola Amatil Limited (ASX: CCL) and Telstra Limited (ASX: TLS). Strong brands and recurring revenues make our openers a natural choice to see off the new ball.
At three, we've gone for arguably the best company in Australia, as captain and our best batsman. CSL Limited (ASX: CSL) is not just an Australian market leader, but a global market leader, that keeps going from strength to strength. Who can argue with a consistent run rate on equity of 28%, and an average earnings per share growth of 22% over the last 10 years?
Coming in at number four, we have hearing device maker, Cochlear Limited (ASX: COH). A potential future captain of the team, and current vice-captain. Another market leader in its field, it delivers through consistent practice and spend on research & development in the nets, keeping it ahead of its competitors.
All-rounders and the keeper
Holding down the fifth and sixth positions in the batting order, we wanted two companies that could bat through an innings and still be performing for years to come. Fool selectors have plumped for Woolworths Limited (ASX: WOW) and Wesfarmers Limited (ASX: WES). With the full range of shots and divisions, both are dependable and versatile. Picked for the supermarket prowess, both have the ability to backup the spearhead bowlers with some part time bowling of hardware stores, petrol stations, and bottle shops, which comes in handy.
At number seven, we have the 'keeper. Washington H. Soul Pattinson (ASX: SOL), Australia's second oldest company has paid a dividend every year since listing on the ASX in 1920. Not a bad batsman either, Soul Patts has delivered an average 11.5% per year to shareholders over the past 15 years. No debt, plenty of cash and a huge range of diversified investments make this company one to keep.
Bowling lineup
Number 8 in the Australian team has traditionally been a mercurial spinner and a half-decent batsman. Fool selectors have picked Crown Limited (ASX: CWN), best known for its casinos and majority shareholder James Packer. Wicket taking ability is a must have and Crown has it in spades (sorry!). This was most recently shown by Crown's ability to befuddle Echo Entertainment in its quest for a Sydney casino. Echo is left with no alternative but to limp back to the change room, head slumped low, and bat dragging along the ground.
Australia's fast bowling stocks are well and truly overflowing. We selected Flight Centre Limited (ASX: FLT) here as opening bowler, for its astonishing speed of growth and dominance in its market. Once written off as past its age, the company has shown that as it matures it seems to get better and better.
Although not as fast as Flight Centre, BHP Billiton (ASX: BHP) has been selected at number 10, for its ability to operate in many different countries on many different pitches, and be very good at it. Honing its skills to focus on five major deliveries, iron ore, coal, oil & gas, copper and potash should see BHP able to dig out most opposition. Unfortunately, its batting has been called into question on occasion, and BHP has been demoted down the order from 8.
The line and length bowler, at number 11, is a company that needs to be consistent year in year out. Fool selectors have opted for Westfield Group (ASX: WDC) for its consistency, even during the GFC, when other property companies were dropping like flies. The name Westfield has become synonymous with shopping malls, and the aging company shows no signs of slowing down, sticking to its tried and true methods.
What's a team without a backup and twelfth man? In a hotly disputed contest, Fool selectors have gone for a big game player, out of form and looking to resurrect its career. Dropped from the starting side, but still on selectors minds is Macquarie Group (ASX: MQG). Its recent deal with Yellow Brick Road (ASX: YBR) may signal a switch of direction for the group, but whether this will return the company to its average return on equity of over 20% remains to be seen.
The Foolish bottom line
So there you have it, Motley Fool's Test XI. If you have any suggestions or comments, feel free to comment on our Facebook page, and let us know what you think. Oh and good luck to the Aussie team against South Africa!
If you only invest in one company this year, make it our "Top Stock for 2012-13". Operating in two hot markets — one set to double by 2012, the other predicted to grow 5x over the next five years — this stock is a solid growth play that also boasts strong recurring revenue, zero debt, and lots of cash. Get its name and full research case in this brand-new FREE report.
More reading
- Finally, some bank competition
- Is this the start of a retail recovery?
- Why I recently bought Billabong
- Should you buy SCA, Woolworths' property fund?
- RBA tells savers: Switch to shares
Motley Fool writer/analyst Mike King owns shares in Cochlear, CSL, Woolworths, Flight Centre and BHP. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
