Generational Development Group Ltd (ASX: GDG) has gathered a lot of attention recently, and several fund managers have identified it as a top stock pick.
So what's all the fuss about?
The share price has rocketed
GDG's share price is relatively flat today, changing hands at $5.33 a piece at the time of writing.
The stock has recovered the gains lost when the share price tumbled in early April. It shed 19.5% despite a strong quarterly financial performance, with all businesses contributing to growth despite continued market volatility. But the results appeared to disappoint investors who expected an even stronger performance from the financial services company.
GDG's share price has risen an impressive 117.33% over the past year, and it has risen a whopping 790% over the past five years.
For FY 2025, the company's share price was the strongest riser of the ASX 200 financial sector.
Here's why the share price has gone from strength to strength.
Company growth has boomed
As mentioned above, GDG has posted consistently strong financial performance and earnings growth, which is backed by good return on equity. Both return on equity and earnings growth have outpaced the industry average over the past year.
GDG has also piqued attention for its acquisitions over the past year.
It acquired investment research and rating company Lonsec in August 2024 and financial services firm Evidentia in February this year. Following its acquisition of Evidentia, the company claimed it has become the market leader across all segments of the managed accounts sector.
On 8 May, the company also announced a strategic alliance with US global asset management giant BlackRock, driving a wave of investors to the stock. The companies will co-design and distribute a product called Holistic Retirement Solutions tailored for Australian retirees.
As part of the alliance, BlackRock will acquire a $25 million minority stake through a share subscription at $4.15 per share.
Here's what fund managers are saying about the stock
GDG's strong growth trajectory and strategic market positioning have garnered a lot of attention from fund managers, too, with many announcing it as their "top pick".
Blackwattle Small Cap Quality Fund portfolio managers Robert Hawkesford and Daniel Broeren praised GDG and its BlackRock alliance in their May monthly report.
They said that the new joint product addresses longevity risk and benefits from long-term tailwinds from the retirement income covenant.
The retirement income covenant is an Australian law requiring superannuation trustees to develop a strategy to help members achieve sustainable income in retirement. This includes considering their financial needs and preferences.
They also see a bright future for the business: "Despite the recent share price run, we still see plenty more upside as GDG capitalises on the structural tailwinds of managed account penetration, superannuation tax reform and the retirement income covenant."
Damien Nguyen from Morgans is also positive about GDG shares. According to The Bull, he expects that the Federal Government's proposal to raise taxes on superannuation investment earnings over $3 million will be a potential tailwind.
The tailwind could lead to further upside for GDG's share price, he explains.
Arden Jennings, a portfolio manager at Ausbil, also points to GDG shares as a top stock pick. Speaking to the AFR, Jennings said he has been tracking the stock for almost a year.
"It [the business] has more than doubled over the last four or five years, and we see it double again in the next five years. It's a huge structural tailwind," he said.
It looks like there could be more to come for the GDG share price, thanks to positive sentiment and continued strong growth. According to analysts, one-year price forecasts for GDG have a maximum estimate of $6.52 and an average of $6.00. That represents a potential upside of as much as 22.32% from today's price.
