5 Christmas Crackers: the “cheap” stocks with big growth potential

On the 5th day of Christmas, Livewire gave to me...
5 Christmas cracker stocks for 2025 priced under $30

I’m sure most of you, by now, have picked up the mandatory box of crackers to pull around the dinner table on Christmas day. Perhaps you’ve got the Reject Shop version with the bright plastic toys, or maybe you’ve shelled out for a more luxe version offered by a brand with high-quality inclusions you’ll actually keep. I note the quality of the paper hat and jokes don’t seem to improve in either version.

For those going a bit more luxe, what if your inclusion was, in fact, a cheap stock – but one with big potential you want to hold on to?

Your Christmas crackers are about to get a premium upgrade – while keeping to a budget.

That was the premise put to the following fund managers, and we told them their big growth pick had to cost below $30/share:

• Joel Fleming, Yarra Capital Management
• Michael Higgins, Milford Asset Management
• David Lloyd, Ausbil Investment Management
• Oscar Oberg, Wilson Asset Management
• Luke Laretive, Seneca Financial Solutions

It was no small ask.

As Laretive puts it, “A single stock that’s going to go up heaps in 2025 and then continue to outperform in perpetuity? Far out. You guys at Livewire don’t ask for much.”

But as it turns out, it is not impossible, with all five offering up a variety of interesting picks.

Without further ado, here are the Christmas Crackers of 2024 (in alphabetical order of fund manager surnames).

Saunders International (ASX: SND) 

Portfolio manager: Joel Fleming, Yarra Capital Management
Price: $0.85 (at 16 December 2024, Source: Market Index)

Fleming likes Saunders, which provides solutions across the oil and gas, defence, water, mining and power sectors – big remit there!

“With a strong demand outlook and an interesting new shareholder on the register, we believe there is money to be made here,” he said.

Fleming believes it has been left behind in sector re-rates and has been quietly building out its capabilities.

“The company offers exposure to defence spending as well as critical infrastructure such as water, fuel, and energy. It is now capable of handling much larger projects than it could a few years ago,” Fleming says.

He believes that improving sentiment towards microcaps, strong execution, and positive contract news flows could be “just the tonic needed to get the value recognised.”

Tuas (ASX: TUA) 

Portfolio manager: Michael Higgins, Milford Asset Management
Price: $5.72 (at 16 December 2024, Source: Market Index)

Higgins likes a founder-led business and is a fan of Tuas Executive Chair David Teoh, who he describes as “incredibly astute and cost-conscious and has taken material market share in Singapore with a mobile plan 60-70% cheaper than incumbents.”

The Singaporean telco has had a license to be the fourth official Singapore mobile network since 2016 and now has over 1 million subscribers. It has also launched into the home broadband market.

“We look forward to the next 12 months following the roll out of a competitively priced broadband offering across an existing client base. We also believe a regional expansion into other South-East Asian markets isn’t out of the question,” says Higgins.

Iluka Resources (ASX: ILU) 

Portfolio manager: David Lloyd, Ausbil Investment Management
Price: $5.07 (at 16 December 2024, Source: Market Index)

Iluka Mining is one of the world’s largest producers of mineral sands products and one of the largest producers of zircon and high-grade titanium dioxide feedstocks. These are used across consumer, lifestyle and industrial applications.

Lloyd likes Iluka for a range of reasons.

“The macro backdrop of improving global economic growth supported by a global easing cycle, a strong pro-business President in the US, and the ongoing stimulus being undertaken by China are all supportive of renewed cyclicality and improving demand for resources,” he says.

He also argues the market is focusing on a ‘worst case’ outcome for Iluka’s Eneabba rare earths refinery, despite Iluka’s market-leading position for building materials.

“For example, Iluka produces titanium dioxide used in pigments and welding, zircon which is used in an array of applications from tiles and sanitary wear to digital printing, rare earths and oxides that are essential for magnets and batteries, and activated carbon needed for potable and wastewater treatment, and industrial applications,” Lloyd says.

He is bullish on the outlook, noting, “The company has a strong balance sheet, and we believe an earnings outlook that is yet to be recognised by consensus.”

G8 Education Limited (ASX: GEM)

Portfolio manager: Oscar Oberg, Wilson Asset Management
Price: $1.39 (at 16 December 2024, Source: Market Index)

The early childcare operator has more than 400 centres across 21 brands. The past year has been a tough year for childcare businesses, with a lot of movement in the industry. Oberg started buying shares just over two years ago because he believes the childcare sector will benefit from government funding increases in this space - similarly to how the aged care sector benefited after the Royal Commission.

"We think G8 is about to enter what could be a very strong period of price increases more than offsetting cost increases. This would be the first time that this has happened in the business for over a decade. You've got flat support costs as they have been more prudent around cost control. There's a buyback of about 5%. 

Put it all together and this is going to support the business with organic growth into 2025 and beyond," Oberg says.

He notes that childcare is increasingly becoming a prominent issue for the next Federal Election in 2025, with Labor discussing the potential of scrapping the activity test. Oberg sees this as a positive for the sector, helping to increase demand and boost occupancy.

"It's a business that generates great cash flow. It has a cheap valuation and a good management team and we see a 50% upside on the stock," Oberg says.

He cautions that the biggest risk to the outlook will be occupancy growth - after all, it's a competitive sector with low barriers to entry - but Oberg thinks supply is starting to moderate at a point that demand is likely to increase.

Wildcat Resources (ASX: WC8) 

Portfolio manager: Luke Laretive, Seneca Financial Solutions
Price: $0.2175 (at 16 December 2024, Source: Market Index)

Laretive focused on the potential to double inside the next 12 months and takeover targets in his selection of Wildcat Resources.

“Western Australian spodumene needs to consolidate to survive – it’s only through economies of scale that it remains competitive with what we’ve labelled “The Brine Cartel” (ALB, SQM, RIO) in the global lithium market,” he says.

Laretive believes Wildcat could be a target for the likes of Pilbara Minerals – after all, its Tabba Tabba mine is only 47km down the road.

“Its thick, mineralised ore body would operationally fit in well with the more stratified Pilgangoora ore (which requires more ore-sorting capacity). This could materially lift recoveries and reduce unit cost for Pilbara, as well as better utilise their existing infrastructure,” he says.

However, Mineral Resources (ASX: MIN) could be a stumbling block given its 18.8% stake in Wildcat.

“We think potential disagreement is likely to be resolved with a contractor-friendly mining services agreement and a big wedge of cash for the Mineral Resources stake,” Laretive says.

So, there you have it, five Christmas crackers to add to your research list, and because you can’t write an article about Christmas crackers without a terrible joke, here’s one to make the family cringe:

What do you get if you cross Santa with a duck?

A Christmas Quacker

Join in the fun in the comments – share your Christmas cracker stock, or your favourite terrible (and clean) Christmas joke.