According to a report released by the Boston Consulting Group (BCG) entitled Value Creators, Australia's top listed companies ranked tenth in terms of the average performance of their top-20 stocks by total shareholder return (TSR). Australia's top-20 stocks achieved an average return of 23%. In comparison Japan was the top performer with a 59% return while the global average was 26.2%.
Australia's top 5 were:
1) Macquarie Group Ltd (ASX: MQG)
2) National Australia Bank Ltd (ASX: NAB)
3) Brambles Limited (ASX: BXB)
4) Suncorp Group Ltd (ASX: SUN)
5) Australian and New Zealand Banking Group (ASX: ANZ)
While compiled lists such as these are always interesting, one of the findings of BCG was particularly interesting. In a quote published in The Australian the report's author stated that "the implied value that investors place in a stock beyond its fundamental value, what we call its expectation premium, had recovered significantly since its 2012 low. This…essentially reflects the level of investor confidence that a company will defy the industry's historical fade-to-average profitability."
In other words it appears that the BCG sees these top stocks (as a group) as trading above fair value and questioning whether the TSR gains are more the result of margin expansion possibly brought about by the chase for yield.
Rounding out the top 10 were Santos Limited (ASX: STO), Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), CSL Limited (ASX: CSL) and Telstra Corporation Ltd (ASX: TLS).
Foolish takeaway
For investors looking for investment opportunities its worth highlighting that last year's top performers are generally unlikely to be next year's top performers again. Indeed a list highlighting last year's worst performers could be more helpful to identify candidates. However a company which consistently ranks highly in a list such as this one – which focuses on TSR – can make a great investment due to its above average ability to consistently create shareholder value.
Also note that this particular list focused on the largest listed companies around the world which ignores the opportunities individual investors can gain by identifying cheap, quality companies amongst the less followed and less researched small and mid-cap sectors.
