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A2M 1-year snapshot. Source: Market Index<\/p>\n
Story sees a2 Milk as a standout opportunity, underpinned by a recovering Chinese consumer and stabilising property markets. <\/p>\n
Solaris visited China four times in the past year, tracking the green shoots. They see demand for premium infant formula reaccelerating, with a2 well-positioned to capture share. <\/p>\n
Forecast earnings growth is near 20% in FY26 and FY27, with the stock trading at a reasonable 25x PE. <\/p>\n
Despite its modest 1% yield, a2 Milk features in all three Solaris portfolios (including its income fund) thanks to its capital growth potential, strong execution, and robust balance sheet.<\/p>\n
Bearish: Wesfarmers (ASX: WES<\/a>)<\/p>\n WES 1-year market snapshot. Source: Market Index<\/p>\n In contrast, Wesfarmers is on the avoid list. The stock is up 26% over the past 6\u20137 months, but Story sees no earnings justification.<\/p>\n Of the pie that makes up Wesfarmers, Bunnings is mature and flat, lithium is down, Officeworks is still unwinding COVID gains, and industrials are under pressure. <\/p>\n He attributes the rally to offshore flows and passive buying, not fundamentals:\u00a0<\/p>\n \u201cThere’s no sizzle in the Bunnings EBITDA,\u201d he says. In a typical FIFA World Cup soccer match, the average score has been one to nil. That means, in a 90-minute game, 0.04% of the time someone’s kicking a goal and the other 99.96% is spent trying to score a goal.\u00a0<\/p>\n Blake Henricks<\/a>\u00a0of Firetrail says investing isn’t much different. The day isn’t spent buying and selling stocks; it’s in trying to find opportunities. He gives two high-conviction ideas.<\/p>\n Bullish: Cochlear (ASX: COH<\/a>)<\/p>\n COH 1-year market snapshot. Source: Market Index<\/p>\n Firetrail had never owned Cochlear in 20 years, until the last three months.<\/p>\n While it has done very well in gathering market share among children in developed markets, a big opportunity for Cochlear remains in emerging markets, where only 10% of children with severe or profound deafness receive a cochlear implant.\u00a0<\/p>\n This is a significant growth market for Cochlear, but the largest one is actually for adults and seniors in developed markets. Only 3% of people with severe or profound hearing loss receive an implant. Typically, this has been developed later in life.<\/p>\n Henricks explains the process: Cochlear sells the implant, with upgrades required every five to seven years. But cost-of-living pressures have delayed people from coming in for their required upgrades.\u00a0<\/p>\n Downgrades and weak earnings have pushed the stock 30% off its highs. However, Henricks believes the launch of its new Nexar implant is a game-changer. It offers remote programming, better performance, and 20\u201330% clinic efficiency gains – a major drawcard for audiologists. Firetrail sees significant upside in both earnings and market share.<\/p>\n Bullish: GemLife (ASX: GLF<\/a>)<\/p>\n GLF 1-month snapshot since IPO. Source: Market Index<\/p>\n A fresh IPO with no broker coverage, GemLife is flying under the radar.<\/p>\n The founder-led business develops over-50s lifestyle communities, but keeps the land and rents it back, building a high-quality, inflation-linked rental stream.\u00a0<\/p>\n With construction in-house and margins stable around 50%, Firetrail sees it as a rent-roll play with bond-like earnings, excellent scalability, and strong cash flow. <\/p>\n With 10,000 sites in the pipeline and trading at under 15x PE, Henricks calls it \u201ca very attractive long-term opportunity.\u201d<\/p>\n Profitability over popularity<\/p>\n David Wanis<\/a>\u00a0from Longwave likens investing to music: popularity doesn\u2019t equal profitability.\u00a0<\/p>\n A prime example is R&B group TLC, at the top of the charts in 1994 (and this editor\u2019s first-ever CD album purchase at 13), but bankrupt within a year, versus the little-known, wildly profitable Trans-Siberian Orchestra. Heard of them? Me neither.<\/p>\n That\u2019s the lens he applies to markets, especially small caps, where hype often eclipses substance.<\/p>\n Bullish: Imdex (ASX: IMD<\/a>)<\/p>\n IMD 1-year market snapshot. Source: Market Index<\/p>\n Imdex, a long-standing mining tech and tools business, is a classic example of a profitable compounder hiding in plain sight.<\/p>\n It\u2019s cyclical – return on capital has swung from negative to nearly 30% – but averages 15% over the cycle, and Wanis sees upside as mining capex returns and higher-margin products gain traction. <\/p>\n While it lacks the AI buzz of data centres, it has earned nearly three times the annual return of NextDC over the past five years. \u201cIt\u2019s not about popularity,\u201d says Wanis. \u201cIt\u2019s about real business returns.\u201d<\/p>\n Bearish: NextDC (ASX: NXT<\/a>)<\/p>\n NXT 1-year market snapshot. Source: Market Index<\/p>\n On that note, despite strong EBITDA growth, Wanis sees structural flaws in NextDC. The data centre darling is capital-intensive, and its return on invested capital continues to fall; now close to zero.<\/p>\n Even under bullish assumptions, Longwave estimates the business would struggle to exceed a 6% return on capital.\u00a0<\/p>\n Cash flow is king\u00a0<\/p>\n For Marcus Burns<\/a>\u00a0of Spheria Asset Management, the true north is cash flow: driving long\u2011term returns through free cash flow, strong balance sheets, and rational valuations.<\/p>\n In a market flooded with passive flows, Spheria focuses on these fundamentals in unearthing opportunities in quality small caps.<\/p>\n Bullish: Eagers Automotive (ASX: APE<\/a>)<\/p>\n APE 1-year market snapshot. Source: Market Index<\/p>\n Eagers is a textbook example that encompasses all of the above: a dominant market share, strong cash flow, and hidden value.<\/p>\n With $600 million in property assets and growing exposure to the booming BYD brand, including the new Shark hybrid ute, the company is well-positioned to benefit from structural tailwinds in the EV market. <\/p>\n Burns also sees upside as Australia\u2019s aging car fleet creates a longer-term replacement cycle.<\/p>\n<\/p>\n
\nA comeback and a debut<\/p>\n<\/p>\n
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