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7 stocks for multi-year double-digit earnings growth

June 2024 |  3 min read

Interview with Hans Lee of Livewire Markets


The world's most famous scientist, Albert Einstein, reportedly once called compound interest "the eighth wonder of the world. He who understands it earns it. He who doesn't pays it." And pay it, you will. Quality companies with market and sector-leading earnings often attract very lofty valuations—and if you haven't caught on early, you'll be paying dearly for that track record.

This is especially true in tech stocks, where the S&P 500 Technology Sector's trailing P/E ratio is significantly higher than that of the S&P 500 index itself (32.51 vs 24.42, according to

But if you know where to look and are patient enough, you could find yourself a multi-bagger that you can hold onto for years on end.

With this mission in mind, we asked Chris Smith, Portfolio Manager at Intermede Investment Partners, to share with us some of his views on three non-tech sectors where double-digit earnings growth exists. Then, he shares seven portfolio holdings that he thinks have what it takes to outperform through and beyond the cycle.

You can watch the video below or read an edited transcript. This interview took place on 1 May 2024.

  • Tell us about Intermede's approach to investing in global equity markets.

    We are looking for high-quality companies that compound year to year, that are well managed, and generate a lot of free cash flow. We look for companies that are currently producing, not expected to produce down the road. We own a fairly concentrated portfolio of those companies - it's around 40 stocks at any given point in time.

    Ideally, we'll own them for many years. We've had a number of positions in the portfolio since we started out 10 years ago. Our average holding period is a few years plus.

    Financials and healthcare are two of your most significant exposures by sector. How do you find growth opportunities in these two sectors?

    I think you have to be quite selective, within the financials in particular. A lot of the benchmark is in names where there isn't as much growth, and where we don't consider there to be a quality angle to it.

    A lot of banks, a lot of insurance companies. But also within financials, you have payment companies, you have companies like Mastercard (NYSE: MA). It's been a position in the portfolio for the last 10 years. You have S&P Global (NYSE: SPGI), which is a data company providing very mission-critical information, whether it's indices, data or credit information that's required for bond issuances.

    We have exchanges like Chicago Mercantile Exchange (CME Group - NYSE: CME). When you put all that together, we end up typically with an overweight position in the sector that you wouldn't think would offer this sort of opportunities we're looking for.

    In contrast, healthcare is an area where there is a lot more growth, generally, given the ageing population, and all the innovation that's happening in that sector. For us, one of our favourite holdings is Novo Nordisk (CPH: NOVO-B), we have the maker of anti-obesity drugs and the GLP-1s. We feel that there is a tremendous opportunity ahead of them there, and their current portfolio of products. They also have a very deep bench of additional pipeline products coming down the road that will have fewer side effects, we believe, and also be easier to take for the consumer. There are lots of opportunities in healthcare.

    As an analyst, your primary area of interest is consumer stocks. How do you seek out good quality consumer-facing opportunities in a complex real economic environment?

    I would say that the one thing to focus on and what's really key to consumer spending is employment. Unemployment levels have remained quite healthy in much of the developed world - pretty much all markets are at near-record lows. Consumers are feeling relatively good. Now, inflationary pressures have been pronounced in many places also. That does lead to lower consumer confidence. But the spending is still happening.

    We see a lot of opportunities in places such as travel. We have Airbnb (NASDAQ: ABNB) in the portfolio. They continue to expand their platform. They have a very high market share. People keep travelling. They want to have more than just a hotel room for certain of their stays. That's been a good area of growth.

    We have names like LVMH (EPA: MC), which has a great portfolio of brands in the luxury space. I've seen good growth. There's been depressed spending from Chinese consumers, but that's coming back this year, up 10% in the first quarter of the year. Here in Australia, I'm sure you're seeing a lot more tourists now, and then spending is up. A lot of attractive areas within the consumer space. Overall, we're a little bit overweight in that sector in relation to the benchmark.

    The higher-end consumer has been better able to handle the inflationary pressures. There's more freedom in the budget to be able to travel more. The pandemic is now a ways away in the rear-view mirror, but people still want experiences over goods. LVMH is kind of doing both things in the sense of providing luxury experiences. But yeah, I think the higher end is the place to be.

    But you also own McDonalds (NYSE: MCD). What is the rationale behind owning that company - which is decidedly less high-end than Airbnb or LVMH?

    In the case of McDonald's, it depends on the market you're in. In some places, it's more of an affordable luxury. In a developed market, less so. It's more consumed by lower-income consumers to a larger extent. It is a place where if the consumer environment were to soften, there's often a trade down into fast food, and that sort of environment from a more expensive, sit-down dining experience. It can perform well through the cycle, which is something that we like about it.

    It's a company where they make the vast majority of their profits from just a few markets, with a lot of potential to improve profitability in the other hundred and some countries that they operate in, which is what we've been seeing, and a reason for us to have recently bought it.




Important information

The information in this communication is provided by Chris Smith, an authorised representative of MLC Asset Management Pty Limited ACN 106 427 472, AFSL 308953 (‘MLCAM’). MLCAM is the distributor for units in the Intermede Global Equities Fund (‘Fund’) issued by responsible entity, MLC Investments Limited ABN 30 002 641 661 AFSL 230705 (‘MLC’). Barry is not the holder of an Australian Financial Services (‘AFS’) licence, or an employee of MLCAM or MLC or in partnership or joint venture with MLCAM or MLC. This communication is not an offer, invitation or recommendation to buy, hold or dispose, any assets, undertakings, securities or any other financial products in any jurisdiction or to otherwise participate in any investment opportunity. The communication is of a general nature only and is not advice, it has been prepared without taking into account of the objectives, financial situation or needs of any person. Before making an investment decision, you should consider your objectives, financial situation and needs. Before making any decision about the Fund, you should consider its Product Disclosure Statement (‘PDS’) which is available from or by calling 1300 738 355. Opinions are subject to change and the accuracy of the information in this communication is not guaranteed. Past performance is not a reliable indicator of future performance. Whilst formulated on reasonable basis, any projection in this communication may be affected by inaccurate assumptions or may not take into account known or unknown risks and uncertainties. The actual results achieved may differ materially from the projection.