Buy Hold Sell: 12 key ASX stocks and the important themes from reporting season

Whether you're a fund manager overseeing billions or a Livewire reader investing your hard-earned money, there is no better time than the end of reporting season.

Firstly, because it’s bloody exhausting, and secondly, because it’s the clearest picture you will ever get of the health of corporate Australia and the shape of your own portfolio.

Right now is the moment where there is the least noise, the least speculation, and the least fluff. This moment allows investors to make some intelligent decisions, with the fullest information possible, about which opportunities they want to pursue, and forgo, over the coming six months.

So, what were the key themes from the season? And, more importantly, which stocks crushed it - and which got crushed?

To help answer those questions, Livewire’s James Marlay sat down with James Gerrish from Market Matters and Jun Bei Liu from Tencap for this special February 2025 reporting season wrap-up of Buy Hold Sell. 

Note: This episode was recorded on Thursday, 26 February 2025. You can watch the video, listen to the podcast or read an edited transcript below.

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Edited Transcript

James Marlay: Hi there folks. I'm James Marlay, and welcome to this bumper episode of Buy, Hold, Sell. The dust is settling on reporting season, and what a busy month it's been. So I'm joined by James Gerrish from Market Matters, and Jun Bei Liu from Ten Cap to talk about some of the key insights that we picked up, and to get into a few of the best stock ideas that they uncovered.

Now, this is going to be a bit longer than our normal Buy, Hold, Sell episode, so grab a cup of tea or your favourite drink, settle in, and let's crack into it. 

Jun Bei, I'm going to start with you, busy month. What was one key insight that you picked up through February that you think matters for investors as we go forward in 2025?

Jun Bei Liu: I think this reporting season it's very clear that the valuations matter. So we see a very clear trend of investors taking profit in good quality companies that deliver good earnings, but a little bit expensive. So investors a really taking profit in those, and more willing to look through and buy some of the laggards, so companies that earnings expected to be weak and turn out to be somewhat weaker, but very, very cheap, and investors moving into those. So it's clear rotation. This reporting season we see growth underperform value, we see the smaller outperform some of the larger, and then we see a lot of those essentially catch up trades are doing a bit better than some of the previous winners.

James Marlay: James, what about for you? What's the one thing that matters going forward?

James Gerrish: I think very similar. So expectations matter. So obviously, that's quite obvious going to reporting season. You've got to report in line or above expectations, but I think there was a lot of stretched expectations ahead of this result season.

Jun Bei made a really good point around the laggards catching up to some of the top performing areas of the market. If you think about Tech year to date, that's down 4.5%. Materials are actually up 4%.

So, the trades that worked last year, the momentum factors that really played into the market, I think, as I look forward into 2025, I think there's some risks around that trade. It's probably something I learnt so far in reporting, which has been a pretty challenging time, I've got to say, James.

James Marlay: You touched on their expectations, a really important thing to keep front of mind, how did companies report versus your own expectations when you looked at February, and have you made material changes to your portfolio as a result?

James Gerrish: Probably. As I just said, it was probably a more challenging period from reporting for us. Some companies beat our expectations, some companies missed our expectations. One of the things that has been obvious is that those that beat probably haven't rallied as far as those that have missed expectations. There's been some huge volatility on the stock side, and that does throw up opportunities. So we've tilted the portfolio throughout the month, but we haven't made material changes.

I think if you are looking for some actionable ideas that we've done, some examples would be we've bought James Hardie in our growth focus portfolio. We've stepped up and bought ARB Corp. I think there's some interesting trends playing out there in the US business. Banks have been interesting, we'll get onto those shortly, but we've bought some Westpac, Goodman Group into the recent capital raise. There's tweaks around the portfolio edges, but not material changes around our strategy and portfolios.

James Marlay: Jun Bei, same question for you. How has reporting season played out versus what you were expecting to see, and has it resulted in any material changes in the portfolio?

Jun Bei Liu: Reporting season actually turned out exactly as we expected, but however the share price turned out not to so much as we expected, exactly what I was saying before. For example, JB Hi-Fi had a fantastic result. We were expecting a fantastic result and then it came through it was a fantastic result, great trading update and the like, but yet share price has fallen because it got a bit too expensive.

That's what we see during reporting season. I actually think this reporting season actually providing a lot more opportunity. We're not really necessarily changing the tilting, we still think in the next six months your driver in terms of return will come from some of the cyclical sectors. Sectors that's more leveraged to a falling interest rate, particularly here in Australia. So these are the companies or sectors trying to pick up more opportunities as they get sold off. So these will be the retail sector, whether it's a property trust sector, and a couple of other things that's just throwing out with opportunity.

We exit the reporting season looking pretty good and then we continue just to maintain our skew towards some of those more cyclical sectors, some growth sectors, but growth is still a little bit too expensive in terms of valuation, but we're looking for opportunities to move back into them.

James Marlay: Let's talk about the banks now because over the past few years they have been the dominant sector, cracking performance in 2024. Catching a lot of people's eye for the lack of growth and the price that you're paying for that growth. We saw a blip last week with a couple of big downgrades and share price movements. Is this a moment in time or do you expect that momentum to return?

Jun Bei Liu: Oh look, to be honest, I think that blip when the banks have fallen significantly, except CBA didn't quite fall as much. I think I hear a lot of cheering across investors because they're just way too expensive and many calling that's the start of something. Look, it might be, but it might happen slowly. Yes, the earnings, the first time they actually missed their earnings in the last 12 months. So this first time earnings have been downgraded except CBA. Things will get a little bit harder. Sounds like the first rate cut come through, they'll all have to match in terms of the interest rate cut for their consumers. So next three months might be a little bit tough for the banks. Our view is that we're reasonably pragmatic. We think if we can find opportunity where we can deliver more return than a stagnating bank share price, we will go for it.

It is a good funding source because we don't think the bank share price is going anywhere. If the share price goes down, it'll go down with it, but share price goes up, it probably will be left behind. They got the good capital position. There's still a lot of capital the bank holds. The reason the bank share price come back after the big four is because they're doing aggressive buyback.

A company like NAB was doing 50% of the volume in terms of buyback, and CBA just started their DRP, which means they'll be in the market 20% of volume every single day for quite a long period of time, so that will support their share price. So we do think the share price is not going anywhere, but it's reasonably supported. So we reasonably neutral. But if we find something that's more much more expected return, we'll absolutely use it as a funding source.

James Marlay: James, on the banks, is it a turning point for what has been an incredible momentum driven rally?

James Gerrish: It could be. I probably err on the side that it's not. I look over the past three corrections in the banks, and within two weeks to a month they've gone back and recovered a lot of those declines. So they often correct, Circa Seven, 10%. We had the likes of Westpac down 13% in the space of a week or so. So I'm erring on the side that it's a dip to buy. I think one of the reasons that underpins that view just is around the market getting a little bit more challenging over the next six months or so. I know rate cuts are coming and I know there's a lot of reasons to remain fairly optimistic.

The market, I just think in the immediate term you've got continuing talks about tariffs. They're obviously a tax, so that's negative for growth. Over in the US you've got really immigration is slowing, there's a lot of pressure there and there's a lot of focus on government spending. So that's effectively pushing austerity through the US government. So that in itself reduces liquidity out of the system and spending in the system.

So to me, I'm a little bit cautious in the short term from a market's point of view. Banks pulling back into reasonable risk reward levels, I think that's not a bad safe place to allocate a bit more funds into a recent weakness.

James Marlay: We're getting into our stocks in just a moment, but one more question before we do. What do you think will take the market higher from this point?

James Gerrish: Well, banks did the heavy lifting last year. Jun Bei made some really good points around JB Hi-Fi and some of the consumer discretionary stocks having fantastic periods and becoming quite stretched from valuation point of view. I think it needs to be the miners, they're climbing lows. We've seen slight semblance of more positivity coming from China. I know it's early days and there's been a few false dawns around this, but I think what we've seen in the last month or so is some soaring of appetite to buy Chinese facing equities and commodities fit that bill. So not all commodities, but some commodities. I think that's going to be the next driver of the market returns at the index level because you've got to have a sector that's a big index constituent.

James Marlay: Same question for you Jun Bei. What takes the market higher from here?

Jun Bei Liu: Look, I think the market is going higher. Let's think that way. So I do think the banks will help in this way. Resources has to be the one that will drive it higher aside from some of the other growthier names, the CSL, which has really been punished for not meeting expectations. They will help to drive the market higher. I think the resources are interesting. China is really going through the roof in terms of the Chinese equity more in recent days, not today but recent weeks. But are resources not responding because investors just sort of be sick of the China on and off, on and off startup. China's National People's Congress Meeting is next week, I think. There is a level of expectations of more stimulus to come. It might be more or less the same as before, but the stats in the Chinese data is actually looking quite strong. With a little bit more stimulus I think that would just keep that momentum going. So I do think the resources look pretty good for the next six months.

James Marlay: Well folks, we're going to get into a bit of buy, hold, sell. We're going to be talking about stocks that surprised, stocks that flew under the radar, a couple of the high-quality results. Jun Bei, I'm going to start with you. Let's talk about big surprises. Mineral Resources, it's having a really tough time at the moment. Buy, hold or a sell?

Mineral Resources (ASX:MIN)

Jun Bei Liu: Sell 

Look, that one I put on the sell for now. It looks really interesting and the result itself is not bad, but just with the amount of debt this company's holding, they're just way too much risk. I do feel there will be corporate activity, some sort of M&A angle coming for this company, but just as an investor putting money into it, hoping for that to happen, is very difficult.

It is a sell for me because of the regulatory concern there, and then the debt level, and then this company's corporate governance under the radar.

James Gerrish: Buy

I'm going a high risk buy. I get the conversation around debt, they're carrying about 5.1 billion worth of debt. A lot of things have got to go right for them to be able to address that issue. For now they've had a barrage of things that have gone wrong. The earnings were fine, they've had haul road issues, they've had wet weather issues, they've had all sorts of corporate governance question marks.

I think investors have lost patience and lost a bit of trust with the company, but there's still value in those assets. So if you start to see if we're bulls on China and resources having a better six months, that's a highly leveraged way of playing that thematic. So buy for us for the moment, James.

REA Group (ASX:REA)

James Gerrish: Sell

That'll be a non-consensus call, but I think Domain has been a limp competitor for many, many years. The takeover is from a really credible, well-funded operator coming out of the US that's had a really strong record over in the US in similar sorts of businesses. They're going to throw a lot more money at Domain than Domain have been able to do with the support of Nine. So for me, it's a sell. They're also doing that underneath the cloud I guess, of a new CEO coming on board soon. So to me, it's a sell.

Jun Bei Liu: Buy

Look, I'm going to be cheeky, so it's a buy for the next four months. Buy for the next four months. Look, to be honest, yes you have a bidder coming in, but we don't know. Nine just said it's strategic. We don't know if Nine's selling or if it's going to be another vehicle. We don't know what price it is we'll be selling at. It's going to take ages, and meanwhile what we're seeing is that the housing market is doing a bit better. Listing is turning and these guys still getting more depth, the product getting through. So yield's growing, volume's growing. Everything that we love about REA is all happening and getting better for the next six months. So my view is that tactically next four months it's going higher.

Cochlear (ASX:COH)

Jun Bei Liu: Buy

It's a buy. So they've got this new product coming through. Clearly, I've never heard Cochlear blaming US consumer weakness and everything for not upgrading their Cochlear implants. But look, when they do have a new product coming through, people hold off from buying the older product, and clearly, this result because new product is not expected until mid-year they can't talk about it. So there's no excitement about new product. At the same time things are a bit soggier. I think next six months earning will be a bit softer, but this is one of the highest quality company in this market and underpinned by really long-term structural growth for many years to come. I'll be buying this stock here.

James Gerrish: Hold

I've got Cochlear as a hold, but I'm erring the side of sell. I think the challenges that they alluded to in their earnings call recently, or earnings update recently where the stock got hit, are valid ones. I think there's some concern risks around Moderna's trial that's going on at the moment for CMV, I think that will create a big issue for Cochlear if they get a positive outcome from those trial results. And the healthcare more broadly, you've got to look at the sector collectively. I mean, CSL has been under pressure as well. Sectors have headwinds or tailwinds at a particular time, and I think the healthcare sector has got a headwind at the moment, so I'll be more on the avoid side.

WiseTech (ASX:WTC)

James Gerrish: Buy

Not sure. I'll go on the buy side, but I think there's obviously risks around it from a timing point of view. So just going back to they downgraded earnings, that was as to be expected. They obviously had their eyes off the ball and that's what's led to downgraded guidance. I think what it also shows is what plays out when Richard's not in the business. He's been the architect of WiseTech over a long period of time. I get the optics don't look good here. I get what's gone on does not sit well with a lot of investors out there, and rightly so. But the reality is that he's put this business together, he's the driving force behind it, and I think from a share price perspective and a business perspective, it's better off him being there. So going back into the executive chairman role and he'll pick the CEO who's going to take over and drive the business forward, but his involvement will stay on.

Jun Bei Liu: Buy

I'll put on a buy as well. I think this is the first one we agreed today. Yeah, look, I think it's a buy. Yes, there is still a lot of uncertainty. Others were probably more on a speculative side, but he created this business. He created this incredible business that's probably one of the most profitable tech growth companies in the world with such high margin, there's so much growth runway to go, and created from scratch by himself. So if him returning to the business is a huge reassurance that everything will head back on track, all this new product launch was delayed because of the distraction here and there, but of course now there's still uncertainty in terms of board and others, but I think risk reward, it does provide a lot of upside.

A2 Milk (ASX:A2M)

Jun Bei Liu: Buy

It's a buy. When we talk about China coming back and everything else, it's actually China's consumer coming back. It's not China material side and everything else. China's focused very much on consumer. So A2 is one of the few companies that has that sort of consumer exposure there in China. Aside from that, it's been actually a growing market share in the Chinese market, which has been incredibly difficult, and during the tough years when there wasn't many babies born. So this company is doing really well, guided to really high growth. All we know at the moment also in terms of the market there in China is that the wedding booking is incredible for this snake year they call the little dragon year, and that as you know, there'll be baby born the year after. So you're looking at least five years of strong growth for the infant formula. I think this company's very well positioned to take advantage of and it's not that expensive relative to others. James, same question for you. Buy, hold or sell on A2 Milk?

James Gerrish: Hold

It's a hold, but I like it. It's run up to eight bucks so it's had a really phenomenal run post a really solid result, so I like what they've done. When a company goes into the backrooms for a couple of years and fixes themselves up and then comes out stronger than they went in there, that's a positive sign. I think the biggest positive I took out of the result was A2 growing 10% top-line in growth in a market that was actually contracting. Jun Bei made some really good comments about new babies being born in China, but they're also relaxing some of their issues around having kids out of wedlock and all of those sorts of things. So I think this mentality around China, China's got to grow to get stronger so the consumer's got to be supported over there.

We're seeing it in tech from DeepSeek coming out and a changing rhetoric from the centralised administration around their view on technology and all of those things. So that's why I think China-facing companies, consumer-facing companies like A2, have got a better future in the next couple of years.

Telstra (ASX:TLS)

James Gerrish: Buy

They loved to hate it and now they're loving it again. I think it's a buy at these current levels. It's obviously had a good run post results, but I think there was a couple of things that really caught my eye in their results. I think the cost out is really driving their earnings. I think there's more to go in terms of the cost out. I think they've got more confidence around the trajectory of their business. They've shown that through a 750 million dollar buyback and an increase in the dividend.

I think broadly the Telco space is actually now going into a period of tailwind. We've seen multiple years where it was really competitive out there. I think the market's become more rational, and Telstra being the big Goliath will benefit from that. Obviously, AI is another driving thematic for Telstra. So for me, it's a buy.

Jun Bei Liu: Hold

Look, for me, it's a hold. I know normally I don't have recommendations to hold, either buy or sell, but this one's a true hold for me. So I think dividend yield 4% or 5%, 4.5% or so, had a good result. Big dividend yield previously was in the high single digit, now back to 4.5. The outlook looks pretty good. People looking at double-digit growth with 4.5% dividend yield. But the challenge for me is that I am still sceptical on how much price increase you can have on your mobile bill. I know it's been the multi-year increase globally for those telcos to increase their mobile bill. But you look at everything else because of cost of living, everything else is under pressure. Even insurance rates are under pressure now. Every insurer is telling us that premium growth is slowing. So I really struggle to see their ability to keep putting up their prices for mobile bill environment.

Yes, I know it's become more rational, but we just saw Vodafone and others decrease the prices somewhat. I'm yet to be convinced this is a multi-year tailwind, so it's a hold for me for now.

Two stocks that flew under the radar

APA Group (ASX:APA)

James Gerrish: I don't know if it flew under the radar, but APA Group, so regulated utility infrastructure company. This is a stock that's moved from above $12 to $6.50 over the last couple of years, has had a number of headwinds. So the market was concerned about their ability to fund their growth over the coming couple of years. They were pricing in a capital raising, shorts got quite aggressive on this, they were up about 5%. They came out and delivered a strong result. They're reducing their cost base to below inflation and they don't need to raise equity. So there's going to be short covering there. So it has popped in the last couple of days, but I thought the result, relative to where the share price is trading, was really strong. So relative to where it's at, I think that one was a good one.

Lovisa (ASX:LOV)

Jun Bei Liu: There's many this reporting season. We see a lot of good results get ignored. I think one of the more interesting idea is Lovisa. We quite like Lovisa. It's a great company with store [inaudible 00:21:42], result came through a little bit disappointing. However, the com store growth actually, it's been pretty good since early this year. And then the new store roll out seems to be on track and doing really well. So we do really see this as a really great buying opportunity for a retailer that has global rollout opportunity.

Goodman Group (ASX:GMG)

Jun Bei Liu: Buy

It's a buy. I couldn't believe how much scale back everyone got. We all bid for a huge amount and then we got a tiny little bit of shares, and for four billion dollar raising, which is just never heard of. I think this business - it's growth is underpinned, 10%, 15% growth for the next decade. Incredible how quickly they pulled up this pipeline. Amount of megawatts that they can generate in the next 12 months, suddenly it's bigger than Nextdc which took years to build. And then these guys, already profitable, making great return with their existing property, and now just converting into the data centres. This one is a buy.

James Gerrish: Buy

It's a buy. We've just bought it after this raise. It is now trading below the raise price, so investors out there can get it below the price institutions bought it for. The demand was huge in the cap raise. I think from an outlook point of view, they came out and said that their guidance for operating earnings are going to be up 9% for the full year. That's probably a little bit lower than where the market thought they would be. They do have a track record of beating their guidance and that would've been 10% excluding the capital raise, the new issue of shares under the capital raise. Just to Jun's point, I'd relay that the thematic looks really strong. It's going to be more challenging to get the smarts to build data centres and roll those out. They're new in the piece so there's challenges there, but having 4 billion bucks in the bank certainly helps. So to me, I think they'll do well, and it is a buy.

Hub24 (ASX:HUB)

James Gerrish: Hold

It's been a phenomenal run for HUB. I've got it as a hold. I like the stock, I'd be a buyer at lower levels. I just can't make it stack up after such a big run. These platform companies are really strong beneficiaries of scale. HUB's now got scale, Netwealth's now got scale, and the thematics over the next three, four, five years really stack up. So you've obviously got an increase in independent financial planners. You've got an increase in legislated superannuation that's going to drive flows onto these platforms. It takes a lot to get where they are now. They've got there and I think they're going to do well over the coming years. But just from an evaluation standpoint, it's really difficult.

Jun Bei Liu: Hold

Look, it's a hold for me as well. I'm the same, I want to buy on the pullback. Great company doing incredibly well. We're sitting in Netwealth, but it's a similar thematic. I think the structural tailwind is enormous for these guys. Just look at the amount of flow that's increasing through. Put on a hold, but it's incredible business.

Two stocks with cracking outlooks

Zip Co (ASX:ZIP)

Jun Bei Liu: Look, I actually think Zip gave an incredible outlook for this year. Share price has gone up a little bit, but the business, especially in the US where it's growing, it's growing over 40% and it's enormous market and very deep market in terms of the consumer credit products and it's really taking share in those space and it's just a fraction of the market share over there. So I think that company will continue to do really well.

Aussie Broadband (ASX:ABB)

James Gerrish: I'm going to stick with the Telco space and go Aussie Broadband. I think their results were a beat and a bump in terms of the guidance they've delivered. They're likely to grow at 20%, 25% over the next three years in terms of their earnings. I think they've got Buddy, which is their challenger Telco brand, is costing them money at the moment, but it's going to drive earnings in years ahead. So the underlying business is going particularly well and I think they've got the tailwinds that we've just spoken about in terms of the Telco sector more broadly. So Aussie Broadband would be my one that's guided particularly well, James.