The #1 ASX stock picks for 2023

Matthew Kidman: Hello, I'm Matthew Kidman.

Ally Selby: And I'm Ally Selby. And today we have 15 investors putting their necks on the line to pitch their number one stock for the year ahead.

Mineral Resources (ASX: MIN)

Matthew Kidman: Romano, let's get into the dangerous part of the game, stock picking. Pick one stock for 2023.

Romano Sala Tenna: Look, it's an unusual one because it's up 140% in the past two years, but Mineral Resources (ASX: MIN). We think it has a lot of upside still to come from here. It's a top-five lithium producer globally, but they're moving into hydroxide. And we think over the next two years they'll increase that by a factor of about 10, and that's the high-margin product, of course. They're also a top-five iron ore producer, and they're bringing on a 35 million tonne of per annum production at $40 FOB, which is profited through the cycle.

Matthew Kidman: Sounds like a show bag with something for everybody.

Romano Sala Tenna: Indeed.

Constellation Energy Corporation (NASDAQ: CEG)

Nick Griffin: So for us, we've spent a lot of time looking at the energy transition. And what was a dilemma, how do we decarbonise with lower costs? Turned into a trilemma, effectively. It got 50% worse. It's like how do we decarbonise, how do we lower costs, and how do we make sure we've got energy security because of what happened in Ukraine? And so when we think about that, that basically led us to the company we wanted to talk about today, which is Constellation Energy. Constellation Energy is a nuclear energy provider in the US. And we just think these are orphan assets that are going to become really attractive again.

Marcus Padley: I can give you a big one or a small one. I'll give you a small one. We have a member who we call the $12 million man, who turned $189,000 into $12 million in one stock. He has now grown that to $36 million. The name of the game is to find a stock, buy millions of it, and then tell everyone else about it. So I will tell you his stock for next year, it's called Latin Resources. It's a $250 million market cap. It's lithium, and I don't know anything about the fundamentals other than don't rely on them.

Estia Health (ASX: EHE)

Oscar Oberg: So it's the largest aged care provider in Australia. It's called Estia Health (ASX: EHE). So the aged care sector has been one of the most decimated sectors through COVID, and prior to that, it was actually through a Royal Commission. Now that you've had a change in government to Labor, the regulatory model is actually changing for the first time in a decade, and this should actually allow the sector, and obviously, Estia, to see increasing margins over time over the medium term. So as I said before, the company's recovering from COVID, which is positive. And also, a number of the smaller operators in the industry are actually struggling with the compliance burden. So we actually see a very positive environment for acquisitions for Estia over the next few years.

Catherine Allfrey: I'm going to go with the one that we've just added, it's not without risk, and that would be Domino's. We haven't been in that stock for a long period of time, but what gives us confidence is they've fixed the balance sheet with their equity raise. They're still sticking to their 8-12% store rollout target. And in terms of the cost inflation that's really impacted their cost of goods served, you've seen in January '22 a huge impact, the same in July '22, and now we'll get another small impact I think again in February. So the first half of 2023 will be a tough result in February. But from there, we think that's the bottom. And after that, we think they'll be able to grow and grow quite strongly, so we are backing Domino's.

Ally Selby: Okay. It has quite a big short interest, Domino's. What do you think the shorters are getting wrong?

Catherine Allfrey: They're worried about the balance sheet, which they're fixed in terms of the equity raise. And clearly, the earnings going into this first half result [are worrying]. Shorters obviously look short term. We always look three to five years out when we are looking at a story. And for us, we can see that there will be a growth story with Domino's.

Dion Hershan: At Yarra, we're always happy to take a contrarian position if we can find high-quality companies that are out of favour. One that's a standout to us at the moment is Reliance Worldwide (ASX: RWC). They're a leader in the plumbing parts business. It's got a degree of cyclicality, it's exposed to the US economy, and there are pretty despondent expectations around that company. In fact, the stock's gone from over $6 a share to around $3 a share, and the selloff has been stark. And a lot of people are concerned that there's going to be a slump in US housing, and they'll be dragged down with it. And we think those concerns are largely misplaced. 

Most of what Reliance does is sell small plumbing parts for essential repairs. We don't think it's particularly discretionary. This company's had a 20-year track record of growth. It is a market leader. Margins last year were under pressure because copper and plastic and other input costs went up. They've now re-priced their product suite, and we think they're placed into 2023. So as it stands, we're buying a high-quality company that's out of favour, stock has halved, but it's trading 11 or 12 times forward earnings, and we think that's really compelling.

Generation Development Group (ASX: GDG)

MMA Offshore (ASX: MRM)

What is your #1 stock pick for 2023?