S&P/ASX 200 Index (ASX: XJO) shares can be a great pick for investors looking for established businesses with solid market positions that are also growing.
The team at listed investment company (LIC) WAM Leaders Ltd (ASX: WLE) hunt for stocks at the ASX large-cap share end of the market by "actively investing in the highest quality Australian companies".
Some of the ASX 200 shares in the portfolio include Spark New Zealand Ltd (ASX: SPK), Rio Tinto Ltd (ASX: RIO), South32 Ltd (ASX: S32), Treasury Wine Estates Ltd (ASX: TWE) and A2 Milk Company Ltd (ASX: A2M).
In the LIC's latest monthly update, Wilson Asset Management (WAM) highlighted two ASX 200 shares that it thinks are attractive and compelling. Let's look at those two stocks.
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Block Inc CDI (ASX: SQ2)
WAM described Block as a company that provides a suite of financial services, including payment and point-of-sale solutions. Square and Afterpay are two of its main businesses.
The fund manager pointed out that Block is benefiting from two recent tailwinds.
Firstly, it holds more than 8,000 Bitcoin on its balance sheet and generates revenue by facilitating Bitcoin transactions for its cash app customers.
Bitcoin saw a price rally in November after the re-election of Donald Trump in the US presidential election. This rally held in December, supporting Block because of its correlation to Bitcoin's price movements, according to WAM.
The fund manager also pointed out that the ASX 200 share was benefiting from broader confidence in the US economy and US currency-based earnings, boosting investor optimism. That optimism "positioned Block as a clear beneficiary on the ASX, with investors focusing on its growth potential."
The WAM Leaders team also had this to say:
We continue to hold Block in the portfolio, as management remains committed to expanding its market opportunity while improving profitability. In our view, its valuation remains attractive in the context of its growth profile.
Mirvac Group (ASX: MGR)
This ASX 200 share owns and manages property assets across office, retail, industrial and living sectors in its investment portfolio, with approximately $22 billion of assets under management (AUM). Its development activities include commercial and mixed-use, build-to-rent, and residential.
The Mirvac share price has fallen 12% since the end of November 2024, as the chart below shows. WAM suggested this reflected broader challenges faced by the real estate investment trust (REIT) sector.
Rising bond yields (caused by lower bond prices) "weighed heavily on the sector" in December, with the US government 10-year bond yield climbing 0.4% during the month, according to the investment team. The ASX 200 share was exposed to this through both its residential and office market operations.
Despite these headwinds, the WAM team is positive on the business, explaining:
Residential margins appear to have stabilised, supported by the strong performance on new project launches. Progress on its asset sale program has been strong and office valuations have reached through trough.
At current levels, Mirvac's valuation screens as compelling, offering upside potential for the long-term.
