6 stocks that ranked as a Buy at the ASX Investor Day (and one to avoid)

It was nearing 4pm on Saturday at the ASX Investor Day in Sydney when the energy across the 500+ attendees started building again – with good reason, Buy Hold Sell with Bell Potter’s Grady Wulff was to begin shortly. Investors of all types were ready to hear the criteria that analysts look for in stocks and hopefully take home a few good suggestions for their own portfolios.

This year, Wulff chose to mix it up, inviting attendees to pop their own suggestions in at the ASX stand and she would seek to discuss them live. She also offered up 4 stocks herself, mixing both popular brands and lesser-known gems.

She also added in an expected category to the mix – Avoid. Will readers guess which stock Wulff held such strong concerns about?

Stocks to Buy (and Wulff’s own wishlist)

Starting with Wulff’s own list to analyse, both Coles and Rural Funds Group ranked as Buys. From the audience suggestions, Goodman Group, Life360, Telix and Wisetech were also Buy rankings.

1. Coles (ASX: COL)

Wulff notes Coles meets her checklist for a Buy. She’s seeing a peak in capital expenditure, the business is able to increase prices, it has growing dividends and a compounding annual growth rate. She doesn’t believe any result from the ACCC investigation will be material to the business.

“It’s a good time to look into Coles because we see great appreciation in growth. We see margin appreciation, and we see dividend appreciation over the coming years,” Wulff says.

2. Rural Funds Group ( ASX: RFF)

While this has agricultural exposure, Wulff points out that it is actually a REIT and owns the land that major companies like Treasury Wine Estates (ASX:TWE) rent. For a REIT to be a Buy, Wulff points to annual recurring revenue, contracts with strong companies, long leases (the weighted average lease expiry is 13.5 years – compared to a REIT average of 3-5 years) and consistent dividends. She also adds that the business has chosen to produce its own macadamias – there are extremely high margins on these, so this is viewed as a positive.

3. Goodman Group (ASX: GMG)

An audience pick that sits firmly on Wulff’s own portfolio wishlist, she describes this as a very “strategic company”.

“It has a fantastic outlook because AI can’t run without copious amounts of water, copious amounts of energy and these massive data warehouses that have aircon and massive computers. Goodman Group has shifted its portfolio of assets towards AI and data centres, it’s a very smart approach and I can’t fault it,” she says.

4. Life360 (ASX: 360)

Another stock that Wulff personally loves is Life360. It has had “four consecutive quarters now of positive free cash flow. They are verging on profitability,” Wulff says. She likes that it has dominated the geolocation tracking app service space and offers both free, paid, and subscription versions. It is seeing growth in annual recurring revenue and has also acquired Geobit and Tile and moved into roadside assistance and home insurance.

5. Telix (ASX: TLX)

Telix is a market darling for its leadership in cancer imagery and therapy. Wulff notes it is already making money and has six further products in the pipeline. It has an enormous addressable market and huge margins on its approved products.

6. Wisetech (ASX: WTC)

Wisetech may have hit the news in recent times, but Wulff notes there’s nothing of concern in the actual fundamentals of the company. It’s also on her portfolio wishlist. 

“Wisetech is the best technology company on the ASX by far,” she says, pointing to the fact it has 17,000 global clients on its Cargowise logistics software CRM system and has made several strategic acquisitions.

Stocks to hold or sell

Wulff pointed to Adairs (ASX: ADH) as a Hold, given slowing consumer spend and the need to see more growth in its focus on furniture segment, Woolworths (ASX: WOW) is priced well but perhaps has less big growth opportunities compared to Coles, and ResMed (ASX: RMD) (though it’s on her portfolio wishlist).

Whitehaven Coal (ASX: WHC) was also a Hold because of the acquisition of metallurgical coal assets which should benefit from a rebound in China.

Wulff cautions investors, “Diversification across assets is something you want to see across all mining companies. You don’t want a single-asset miner because that’s very high risk if something goes wrong at the mine that impacts their earnings. You want to see a few different mines, different commodities on their books.”

A2 Milk (ASX: A2M) was a sell for the Bell Potter team as they saw a profit-taking opportunity and couldn’t see fundamental tailwinds to drive growth in material demand.

The stock to avoid

Finally, the stock that was responsible for a completely new category – not just Sell, Avoid!

Appen (ASX: APX)

“Appen had AI put on a silver platter for it and just didn’t capitalise on it. They were the first mover to the market for AI and semiconductors. They had government contracts. They had so much opportunity to be the leader and just didn’t do it,” says Wulff.

She notes Bell Potter stopped covering it last year and would want to see at least a year of runway and revenue through the door before she’d consider investing again.

You can watch a snapshot of the session below: