The ASX stock BHP Group Ltd (ASX: BHP) is one of the largest businesses Australians can buy. But, I also think its size is one of the main drawbacks against it.
The bigger a business is, the harder it is to grow its net profit by another 10%. If a business makes $10 billion in net profit, it may be difficult to find a way to add another $1 billion of earnings in the shorter-term.
But, a business that's making $100 million of net profit may still have plenty of room to grow.
Iron ore is one of the most important industries for the Australian economy, but the outlook is not rosy for the resource price.
Property is another sector that's important to Australia and there are a few very compelling companies that could benefit. The ASX 200 share I want to highlight is REA Group Ltd (ASX: REA) for a few different reasons.
Ongoing revenue growth
REA Group owns and is invested in a number of businesses including realestate.com.au, realcommercial.com.au, flatmates.com.au, property.com.au, Mortgage Choice, PropTrack, Campaign Agent, Realtair, Simpology, Arealytics and Athena Home Loans.
It also owns controlling stakes in REA India, Planitar (the maker of iGuide – it offers 3D tour tech) and Move (which operates the US business Realtor.com).
The main earnings generator for the ASX 200 stock is realestate.com.au and this continues to deliver for investors.
As Australia's population continues to grow, the addressable market for REA Group is expanding. Additionally, the business implements a price increase every so often that helps boost its revenue.
In the first quarter of FY26, national property listings were down, but the company's revenue still increased 4%. 'Buy' revenue growth was driven by a 13% increase in the yield, benefiting from a 7% average Premiere+ price rise as well as growth in add-on products such as 'audience maximiser' and 'luxe', higher subscription revenue and increased depth penetration. In other words, customers are adopting premium products.
Operating leverage
For a digital business like REA Group, it's able to deliver operating leverage for investors.
Rising profit margins helps the ASX 200 stock's bottom line grow at a faster pace than revenue. The company regularly mentions that it's targeting positive operating jaws.
In the FY26 first quarter, while revenue grew 4%, earnings before interest, tax, depreciation and amortisation (EBITDA) rose 5% to $247 million and free cash flow surged 16% to $86 million.
Over the coming years, I'm expecting the company's net profit to rise faster than revenue.
More appealing valuation than BHP
Since the high in August 2025, the REA Group share price has dropped around 25%, making it look better value to me than BHP.
Using the forecasts on Commsec, it's now trading at 41x FY26's estimated earnings, 36x FY27's estimated earnings and 27x FY28's estimated earnings, at the time of writing.
