TOL - 6th Apr, 2024
The ASX's next-generation powerhouse
Plus, how to exploit the mispricing in Aussie small and micro-cap stocks.
When it comes to powerhouse stocks, a few darlings come to mind.
Take Allied Mining and Processing, for instance, which in 2003 under Andrew 'Twiggy' Forrest's leadership rebranded as Fortescue Metals at just 2 cents a share. Ignoring dividends, and looking at the iron ore miner's $25.34 share price today, that's a magnificent 126,600% uplift in just over 20 years.
Other spectacular ASX success stories include Aristocrat Leisure, Xero, Afterpay (now Block), CSL, TechnologyOne, Pro Medicus, Mineral Resources, WiseTech Global, Altium, ResMed, and many more.
So, how do you identify the ASX's next major powerhouse?
According to Lennox Capital Partners' James Dougherty, there's one ASX-listed business well on its way.*
Its share price dropped from around $20 to just $4 after losing its way for a few years. But in 2023, the board announced a new CEO would step in. Since then, this CEO has introduced a new strategy that has helped bring growth back to the business, increasing its addressable market enormously. Its revenue growth is expected to rise significantly over the next few years and, if it gets one particular strategy right, there is a lot of operating leverage in the business, Dougherty explains.
In this Views from the Top interview, Dougherty names the ASX's next-generation powerhouse, outlines his four-step repeatable process for finding winning small and micro-cap stocks, and shares how readers can avoid capital-destructive investments and identify mispriced opportunities instead.
*If you can guess which stock Dougherty is talking about without watching the video, let us know in the comments section below. I will send a free Livewire hat to the first person who gets it right... Let the games begin!
Note: This interview was filmed on Thursday 28 March 2024.
Timecodes
- 0:00 - Intro
- 0:25 - Long-term underperformance of Small Ords Index
- 2:34 - How to identify and avoid capital-destructive small-cap investments
- 4:27 - Lennox Capital's 4-step process for identifying opportunities
- 5:47 - A possible takeover target: PEXA (ASX: PXA)
- 7:11 - Digesting the Superloop (ASX: SLC) and Aussie Broadband (ASX: ABB) drama
- 8:56 - An ideal outcome from this deal activity
- 9:19 - Why markets are inefficient (and how to exploit mispricing on the ASX)
- 10:57 - An example of a stock that has been mispriced by the market today: oOh!Media (ASX: OML)
- 12:11 - The ASX's next-generation powerhouse: Don't be lazy, watch the video to find out
- 16:00 - A business that Lennox Capital has recently sold out of
- 16:54 - James Dougherty's view from the top: "The value of admitting you are wrong is probably higher than the value of actually being right."
Finding the leaders of tomorrow
Lennox Capital Partners is an active investment manager with a focus on finding emerging businesses with the potential to grow into powerhouses over coming years. For more information, please visit their fund profiles below or their website.
Managed Fund
Lennox Australian Small Companies Fund
Australian Shares
View
Managed Fund
Lennox Australian Microcap Fund
Australian Shares
View
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Ally Selby is the deputy managing editor at Livewire Markets, joining the team at the end of 2020. She loves all things investing, financial literacy and content creation, having previously worked for the likes of Financial Standard, Pedestrian Group, Your Money, Sky Business and Sky News.
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Livewire gives readers access to information and educational content provided by financial services professionals and companies (“Livewire Contributors”). Livewire does not operate under an Australian financial services licence and relies on the exemption available under section 911A(2)(eb) of the Corporations Act 2001 (Cth) in respect of any advice given. Any advice on this site is general in nature and does not take into consideration your objectives, financial situation or needs. Before making a decision please consider these and any relevant Product Disclosure Statement. Livewire has commercial relationships with some Livewire Contributors.
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4 stocks mentioned
2 funds mentioned
1 contributor mentioned
Ally Selby is the deputy managing editor at Livewire Markets, joining the team at the end of 2020. She loves all things investing, financial literacy and content creation, having previously worked for the likes of Financial Standard, Pedestrian...
Expertise
Ally Selby is the deputy managing editor at Livewire Markets, joining the team at the end of 2020. She loves all things investing, financial literacy and content creation, having previously worked for the likes of Financial Standard, Pedestrian...
Expertise
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