It's no surprise to me that the best Australian stocks are able to outperform the ASX share market. Quality is appealing for a reason.
Investing in great businesses seems like a winning formula, in my opinion. They can continue re-investing the generated profit into great opportunities inside their existing operations which are already performing well.
Following recent share price declines, I believe both of the Australian stocks below are compelling investments that I'd happily put $10,000 into today.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
This investment conglomerate has been demonstrating its quality for a number of decades and it remains a leading example of how to manage a business for the long-term.
The Australian stock has built an impressive portfolio of assets across a number of industries, including building products, industrial properties, resources, telecommunications, swimming pools, electrification, farming, water entitlements, financial services, credit, healthcare and plenty more.
The business has designed its portfolio to be defensive and generate strong cash flow in all economic conditions for shareholders. This makes it likely the business can continue growing the cash flow its portfolio generates, which is a key statistic of focus, as it invests in additional opportunities.
The Soul Patts share price has dropped close to 20% since 10 September 2025, making it a lot cheaper to grab a piece of this excellent business.
I'm confident the company has a compelling future ahead because of how it can adjust its portfolio when it sees new opportunities arise. Additionally, it can sell assets if it's no longer optimistic about an investment.
I think this business is likely to be around in another 20, 30 and 50 years thanks to its investment flexibility, while delivering a solid dividend along the way.
Pro Medicus Ltd (ASX: PME)
Pro Medicus describes itself as a leading healthcare informatics company, which provides a full range of medical imaging software and services to hospitals, imaging centres and healthcare groups around the world.
The business aims to provide an end-to-end offering in healthcare imaging across radiology information systems (RIS), picture archiving and communication systems (PACS), AI and e-health solutions.
Pro Medicus' software is clearly resonating with customers, with the number of large new contracts it's winning, as well as add-on modules.
For example, at the start of December, the company announced a seven-year, $25 million contract to add another module for Baycare, which is one of Pro Medicus' largest existing contracts.
The Australian stock has rapidly ramped up its revenue – in FY25 alone, revenue climbed 31.9% to $213 million, while net profit after tax (NPAT) surged 39.2% to $115.2 million.
While revenue growth is strong, the company's underlying operating profit (EBIT) margin is an extremely high 74% – that's one of the highest on the ASX. Such a high EBIT margin means most of the revenue translates into profit for the company.
The Pro Medicus share price has dropped more than 20% since September, making its forward price/earnings (P/E) ratio seem more reasonable. It's now trading at 99x FY28's estimated earnings, according to the projection on Commsec at the time of writing.
