Recently, I was comparing the holdings in my SMSF’s portfolio against the companies that I believe are the absolute superstars of the ASX.

The process can be helpful in identifying the companies you should probably be holding – and also the ones that you might need to get rid of.

Identifying the superstars isn’t that hard really. I considered factors such as high levels of earnings per share (EPS) growth over both 5 and 10 years, and a high return on equity (ROE). Using just those three factors eliminates around 90% of the stocks listed on the market.

Add in relatively low levels of debt and the list shrinks even further and then set a limit of a market cap of more than $1 billion and my screen spits out a list of around 30 companies that I’d be very happy to have in my portfolio.

Selecting the top 10 for value is simply a matter of evaluating all the companies by several valuation ratios and ranking them by the relative cheapest.

Here’s my current top 10 list.

Company Return on Equity
Flight Centre Travel Group Ltd (ASX:FLT)           22.5
Sirtex Medical Limited (ASX:SRX)           34.1
JB Hi-Fi Limited (ASX:JBH)           37.6
Magellan Financial Group Ltd (ASX:MFG)           65.0
SEEK Limited (ASX:SEK)           21.8
TPG Telecom Ltd (ASX:TPM)           25.1
REA Group Limited (ASX:REA)           35.2
Platinum Asset Management Limited (ASX:PTM)           64.2
Commonwealth Bank of Australia (ASX:CBA)           16.5
Ramsay Health Care Limited (ASX:RHC)           25.9

Source:  Data provided by S&P Global Market Intelligence

As you can see, they all have strong returns on equity (ROE) and six of them have no net debt. For one thing, that makes it very difficult for them to go bankrupt. The other is that it gives the companies options on where best to allocate capital, not to mention no interest expenses.

All of them have delivered strong earnings growth over either 5 or 10 years and in many cases both. TPG Telecom’s EPS has grown at a compound annual rate of 37% over 5 years and 30% over the past decade. That’s one reason why the share price is up 1,376% since June 2006.

Foolish takeaway

The only problem with a number of the above is their current share price – which unfortunately makes them expensive. They are relatively cheap compared to the other 20 companies, but not necessarily cheap in their own right.

At lower prices I’d be happy to top up on any of the above companies, or add those I don’t already own to my SMSF portfolio.

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Motley Fool writer/analyst Mike King owns shares in Flight Centre, Sirtex Medical, Seek, TPG Telecom, and CSL Limited. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.