Coles Group (ASX: COL) is one of Australia’s leading retailers, operating more than 1,800 supermarkets and liquor stores nationwide. In August, Coles Group reported strong results underpinned by margin expansion and robust sales momentum, with July and August sales growth exceeding market expectations. The company highlighted early signs of an improving consumer backdrop, which, combined with disciplined strategy execution, supported the incremental volume growth. Earnings growth in FY2026 and beyond is expected to be supported by improving returns on supply chain investments and sustained cost efficiencies. We also see its enhanced capability in online operations and retail media as key drivers of long-term value, supporting a premium to historical valuations. Given Coles Group’s superior execution, the company is well positioned to command a valuation premium relative to Woolworths Group (ASX: WOW), reinforcing its role as a core portfolio holding.
NEXTDC (ASX: NXT) is a leading Australian technology company providing the critical infrastructure underpinning the digital economy, delivering secure, high-capacity power and connectivity for global cloud providers, enterprises and government clients. NEXTDC delivered a solid FY2025 result, supported by strong contracted utilisation and reduced funding concerns through clear outline of debt capacity and a shift towards a more capital-light model. Importantly, billing utilisation is ramping faster than anticipated, signalling potential upgrades to consensus forecasts. We established our position in NEXTDC earlier in the year when the stock was oversold on concerns around artificial intelligence (AI) demand and equity raising, and recent developments have materially strengthened the outlook. With new joint ventures and debt funding reducing equity issuance risk, combined with sustained demand for AI and cloud infrastructure, NEXTDC remains well-positioned as a critical enabler in the digital economy, with further opportunities for major contract wins and long-term earnings growth.
