New Portfolio Additions: PPS, MTS, SIQ, FWD & ACF

Over the past two weeks, at Investor Pulse, we have released a series of new “buy” recommendations across a select group of Australian mid-cap companies, Praemium (ASX: PPS), Metcash (ASX: MTS), Smartgroup (ASX: SIQ), Fleetwood (ASX: FWD), and Acrow (ASX: ACF), reflecting our increasingly constructive view on high-quality businesses demonstrating both operational momentum and valuation support. Each of these names, while distinct in sector and strategy, shares a set of attributes we believe the market is under-pricing: strong balance sheets, disciplined capital management, proven earnings strength, and clear visibility into medium-term growth. Our decision to release these recommendations now is rooted in what we see as an inflection point in the Australian equities landscape. The Reserve Bank’s expected dovish pivot and stabilising inflation backdrop are helping to reset investor sentiment after a volatile year, particularly for smaller and mid-cap companies whose valuations had lagged despite improving fundamentals. As rate pressures ease, we expect renewed capital rotation into these undervalued, cash-generative growth names, a dynamic already visible in improving technical momentum across the segment. In this context, our coverage focuses on businesses that are not merely recovering from cyclical troughs but are entering sustained expansion phases supported by structural tailwinds, from wealth platform digitalisation (Praemium) to stable consumer distribution (Metcash), to the digitalisation of salary packaging (Smartgroup), modular infrastructure growth (Fleetwood), and industrial access demand (Acrow). Each company has delivered tangible evidence of progress through recent results, reinforcing our conviction that the market is still discounting their forward earnings potential. Collectively, these updates form part of our broader thesis: that the next leg of market outperformance will be led by mid-cap companies with robust fundamentals, improving earnings trajectories, and clear strategic execution. As macro conditions stabilise, investors will increasingly reward operational consistency and capital discipline, both traits that these five businesses exemplify. Our Five Stock Picks Source: Google Finance, PPS, MTS, SIQ, FWD,ACF year-to-date performance (2025) [1] Praemium (ASX: PPS) - Up +28.87% year-to-date - Dividend Yield: 2.46% Source: PPS, weekly chart (2025) Praemium (ASX: PPS) has kicked off FY26 with impressive momentum, reporting record quarterly net inflows of $667 million and a 13% year-on-year increase in total Funds Under Administration (FUA) to $67 billion. Its Spectrum platform alone brought in over $1 billion in new business within ten months, a strong indicator of market adoption. This growth is underpinned by the company’s ongoing digital enhancements and seamless adviser experience, helping it outperforms the ASX All Ordinaries Index by more than 5%. Over the past six months, the stock has surged over 25%, reflecting strong investor confidence and clear buy signals from both short- and long-term technical trends. Financially, Praemium’s story is one of strength and discipline. The company remains debt-free, maintains a healthy net cash position, and posts solid profitability with a 44.3% gross margin and 13.2% net margin. Revenue grew 24.6% year-on-year, and earnings are forecast to climb 15.8% annually over the next few years. With a return on equity expected to reach 17.9% within three years, Praemium’s capital efficiency continues to improve. Its dividend yield of around 2.5% remains well-covered by earnings, signalling confidence in the business’s sustainability and cash flow strength. Despite a trailing P/E of 29.6, its valuation remains compelling versus peers given its growth profile and platform scalability. Looking ahead, structural tailwinds, including intergenerational wealth transfer, rising high-net-worth demand, and regulatory shifts towards advice-driven, fee-for-service models, continue to expand the addressable market for wealth platforms. Praemium’s scalable SMA and reporting solutions position it well to capture this growth. Technical momentum is strong, with the stock recently hitting a 52-week high of $0.945 and support around $0.85. On valuation grounds, fair value sits between $1.00 and $1.15 per share, based on both peer comparison and discounted cash flow analysis. Overall, Praemium combines growth, profitability, and financial stability, a rare mix that reinforces our “Buy” rating and a clear upside path toward $1.00 per share and beyond. Metcash (ASX: MTS) - Up +21.73% year-to-date - Dividend Yield: 4.72% Source: MTS, weekly chart (2025) Metcash (ASX: MTS) continues to prove why it’s one of Australia’s most reliable names in wholesale distribution. For FY25, revenue rose 7.2% to $19.5 billion, led by strong performance in its food division and recent acquisitions, including Superior Foods, Alpine Truss, and Bianco, that expanded its footprint across food, liquor, and hardware. While higher finance costs saw underlying profit after tax dip 2.4% to $275.5 million, statutory profit still climbed 10.1% to $283.3 million. The company’s cash flow remained impressive, with operating cash flow up 11.7% to $539 million and free cash flow at $390.5 million, supporting a fully franked 18-cent dividend (4.75% yield). With shares trading around $3.83, Metcash looks undervalued compared to our $4.67 target, supported by its resilient earnings and disciplined capital management. Despite a challenging backdrop, from softer hardware demand to rising competition in liquor, Metcash’s diversified model continues to deliver steady results. The food segment was the standout performer, offsetting headwinds elsewhere, while new initiatives such as LocalEyes, a retail media network, and the ‘Family Founded’ campaign have helped the company build a more data-driven and consumer-facing model. This combination of scale, innovation, and close ties to independent retailers gives Metcash a strong competitive moat, particularly in regional areas where major chains have less reach. Even as the broader economy slows, these strengths allow Metcash to defend market share and maintain consistent profitability. Looking ahead, Metcash appears well-positioned for FY26 and beyond. With rate cuts expected to support consumer spending and a stabilising inflation outlook, its steady cash generation and efficient operations provide a solid foundation for both growth and income. The company’s focus on expanding higher-margin initiatives, including retail media and private-label offerings, should drive incremental gains in profitability. For investors, Metcash offers the best of both worlds: a dependable income stock with solid upside potential. Trading below intrinsic value and supported by consistent dividends, it remains a compelling “buy” for those seeking a balance of stability and long-term growth. Smartgroup (ASX: SIQ) - Up +4% year-to-date - Dividend Yield: 4.83% Source: SIQ, weekly chart (2025) Smartgroup Ltd (ASX: SIQ) has evolved into one of Australia’s most efficient and dependable outsourced employee management providers. Its tech-enabled platform spans Salary Packaging, Novated Leasing, and Fleet Management, serving largely defensive sectors like government, health, and not-for-profits. This focus gives Smartgroup a stable foundation of long-term contracts and exposure to over two million eligible employees, creating a vast, under-penetrated market. The structural demand for salary packaging, essentially helping Australians maximise take-home pay, adds resilience and predictability to its growth model, while digital efficiency drives superior operating leverage. The company’s Half-Year 2025 results underline just how well this model works. Revenue rose 7% to $159.1 million, while EBITDA jumped 13% to $63.6 million, with margins expanding two points to an impressive 40%. Active customers grew 20% to 484,000, and the novated leasing vehicle base climbed 24% to 80,000, buoyed by the Federal Government’s EV discount policy. Strong returns back this operational success, ROE hit 30.7%, interest coverage reached 18x, and the interim dividend lifted 11% to 19.5 cents per share, fully franked. These results point to a business with high-quality growth, solid cash generation, and the ability to deliver consistent shareholder returns. Looking ahead, Smartgroup’s capital-light model and digital scalability make it a standout in an otherwise cyclical market. With robust policy tailwinds in novated leasing, growing adoption of EVs, and rising demand for tax-efficient employee benefits, the company is positioned for continued expansion. Trading at a reasonable P/E of 13.4x, Smartgroup offers both growth and yield, with a target price above $10 reflecting its strong fundamentals and long-term upside potential. In short, Smartgroup combines dependable earnings, healthy dividends, and a scalable growth story, making it a clear Buy for investors seeking stability and sustainable returns. Fleetwood (ASX: FWD) - Up +54.45% year-to-date - Dividend Yield: 8.47% Source: FWD, weekly chart (2025) Fleetwood Limited (ASX: FWD) has gone from a quiet turnaround story to a genuine growth engine in FY25. Net profit after tax jumped 284% to $14.6 million, and underlying EBIT soared 360% to $37.7 million, showing how far the business has come. The real star is Community Solutions, where Searipple Village lifted occupancy to 84% last year (up from just 34%) and already has 86% locked in for FY26, that’s high-margin revenue locked and loaded. Building Solutions is also firing, with 15% revenue growth and a strong $115 million order book across schools, social housing, and transportable buildings. Meanwhile, RV Solutions continues to tick along, providing a reliable stream of aftermarket income. All this operational strength is showing up where it matters, in shareholder returns. Fleetwood boosted its FY25 dividend to 25 cents per share, fully franked, marking a 400% increase on FY24. That’s backed by $27 million in free cash flow and a commitment to paying out 100% of NPAT. With profits climbing and the balance sheet in great shape, management expects earnings per share to grow more than 25% a year over the next three years, while margins expand to around 6%. In short, Fleetwood has turned its operations into a steady profit machine with real momentum behind it. For investors, the story’s becoming hard to ignore. With a target price of $4.00 and a juicy 8.4% fully franked dividend yield, Fleetwood offers both income and growth in one neat package. Strong contracted demand in workforce accommodation, an expanding modular construction pipeline, and disciplined cash management all point to sustainable upside. What was once a turnaround story is now a confident growth company, one that’s rewarding shareholders and well-positioned for long-term gains. Acrow (ASX: ACF) - Up +4.63% year-to-date - Dividend Yield: 5.18% Source: ACF, weekly chart (2025) Finally, Acrow (ASX: ACF) rounds out our list as a beneficiary of sustained infrastructure investment and industrial expansion across Australia. FY25 results showed a 23% jump in group revenue to a record $265.1 million, while underlying EBITDA rose 8% to $80.2 million. The real star was the Industrial Access division, which surged 83% year-on-year and now contributes about half of total revenue, providing a solid foundation for earnings stability. Despite EPS easing slightly to 11.17 cents due to growth-driven dilution, the company-maintained dividends at 5.85 cents per share, yielding 5.1%, supported by 71% cash conversion and a healthy ROE of 16%. With a forward P/E of 9.9x and strong margins, 78.5% gross, 22.6% EBITDA, Acrow looks undervalued, with a 12-month target price of $1.35, implying roughly 18.5% upside. What sets Acrow apart is its shift from traditional formwork and scaffolding into high margin, recurring Industrial Access contracts. Operating across 17 locations, it combines proprietary engineered systems with in-house design, engineering, and skilled labour, delivering customised solutions for complex infrastructure projects. This pivot toward long-term contracts with blue-chip clients like BMA and Origin Energy creates more predictable cash flows and positions the company to capture a growing share of Australia’s multi-billion-dollar infrastructure pipeline. Looking ahead, Acrow’s strategy of reinvesting in proprietary systems, coupled with strong recurring revenue and disciplined capital management, makes it a compelling hybrid of growth and yield. The company’s balance sheet remains sound, with manageable debt, solid interest coverage, and strong operating cash flow. Margins are high, cash generation is efficient, and dividends are sustainable. For investors seeking both stability and upside, Acrow combines defensive qualities with structural growth, making it a high-quality mid-cap infrastructure opportunity on the ASX. Together, these five companies, Praemium, Metcash, Smartgroup, Fleetwood, and Acrow, represent the kind of disciplined, cash-generative, and strategically focused businesses that we believe will define the next phase of the Australian mid-cap recovery. Each sits at a different point of the economic cycle, yet all share a common DNA: clear earnings visibility, prudent balance sheet management, and exposure to enduring structural trends. Whether it’s Praemium’s scalable wealth-tech platform, Metcash’s steady consumer backbone, Smartgroup’s digitalisation of employee benefits, Fleetwood’s expanding modular infrastructure presence, or Acrow’s critical role in construction and industrial services, these are businesses that combine resilience with long-term optionality. In our view, they form a compelling shortlist for investors seeking both defensive stability and sustainable growth in a market still rediscovering its confidence. Mark Elzayed CIO, Investor Pulse