5 ASX buys that will make you forget the IPO madness

Did you watch the SpaceX IPO from the sidelines and feel your hopes of getting on the rocket-wagon drift off into orbit? You're not alone. I came across a new term recently in a New York Times article I read about the launch - forget FOMO. Embrace JOMO - the joy of missing out. 

SpaceX is up nearly 15% since hitting the market last week (despite Morningstar valuing it at roughly half at the time of IPO), and there are more monster IPOs yet to come, including Anthropic and OpenAI. 

 As AMP's Shane Oliver put it: 

"Surging capital raising via IPOs are a mixed blessing for shares. On the one hand they add to hype around the market with many wanting to get on board. On the other they suck cash out of the market which can be a drag for future gains."

So where should investors actually be looking? I caught up with two experts - Harley Grosser of HD Capital and Claudia Kwan of North Star Impact Funds, for their read on market conditions, how they're positioning, and where they're finding genuine opportunity right now.

Harley Grosser, HD Capital Partners

For Grosser, the SpaceX listing made for good viewing, but that's about where its influence ends. "Big market events like the listing of SpaceX are meaningful and fun to watch, but they don't really dictate our buy or sell decisions," he says.

Running a bottom-up, valuation-driven fund, Grosser used the March sell-off as a hunting ground.

“By the beginning of April we told our clients we were fully invested. We remain mostly fully invested today, though we have trimmed some of our winners to redeploy that capital elsewhere.

The sector that's captured Harley's attention over the past six months is software. The SaaSpocalypse hammered the sector indiscriminately, and Grosser has used the dislocation as a buying opportunity, with an important caveat. "Not all software businesses are equal and some can and will be disrupted," he says.

His focus has been on vertical market software businesses with high customer retention, many of which are now trading cheaper than they ever have.

"The fear appears to be slowly dissipating, and we expect M&A to increase from here, which should highlight the value on offer in the sector."

Stock picks:

#1 - Cogstate (ASX: CGS)

"We are increasingly of the view they are entering an accelerated phase of growth as drug development in Alzheimer's and other neurological conditions enters a golden age."

Cogstate provides software and services for cognitive assessment in clinical trials — primarily for drugs targeting neurological conditions like Alzheimer's. The company holds nearly 100% share in its market niche, and Grosser believes it's well-placed to benefit as drug development in neurology enters what he calls a golden age.

"We would caution that it has run hard and is trading near all-time highs, however we are increasingly of the view they are entering an accelerated phase of growth."

He also sees Cogstate as a credible AI beneficiary - breakthroughs in technology could drive higher clinical trial success rates and a boom in drug discovery, as well as improvements in how the company delivers its service.

#2 - ReadyTech Holdings (ASX: RDY) 

"A vertical market software business caught in the SaaS sell-off"

Readytech was sold off heavily during the SaaSpocalypse, giving Grosser's team the opportunity to build a position. Grosser talks about it in more detail on Livewire here.

The thesis was recently validated when TSS, part of the Constellation Software Group, made a $2/share takeover offer, a significant premium to the market price. The board rejected it as undervaluing the company.

"We think it is likely that RDY is taken over at some point in the future. We expect contract wins and improved cash margins from FY27 onwards, and value the stock between $2.50-$4.50/share."

Claudia Kwan, North Star Impact Funds

Kwan’s read on the current moment is that it’s a buying opportunity, but timing is everything - and the IPO mechanics matter more than most investors appreciate.

Mega-listings pull enormous capital out of the market, and it provides insight as to the risk appetite of the market. There was also a retail element to the SpaceX float - the street chatter is that institutions are quietly selling into it and recycling capital into the next wave of AI names.

"Any time there's a meaningful retail component, you naturally think, buyer beware."

Having worked on Chinese mega-listings at Morgan Stanley like Alibaba and Tencent, she sees the same characteristics: oversubscribed books, feverish demand, celebrity-grade promoters. “Different scale, but talks to the moment the market is in,” she says.

Her advice is that the better frame is LOMO, or lessons of missing out. 

"If you feel that fear of missing out kicking in, treat it as the precise signal not to buy."

Kwan is risk-on but the entry point is important. “Right now we're in an industrial disruption period,” says Kwan. In disruptive regimes, valuations are harder to anchor to because earnings growth can be explosive. Analysts are typically better at extrapolating trends, not disruption. 

Investing in disruption and newly forming industries, she says, isn’t easy but as long as every result is showing better growth than the last, the stock will move higher.

She flags that in the AI capex build-out, revenue gets recognised in full today while the matching costs are spread over future years, which creates front-loaded profit. At a macro scale, this is meaningful. 

"With this backdrop, I’m overweight quality cyclicals and industrials that play a key role in electrification and sustainable resources. The next step is finding companies that prove AI is deflationary in their margin profiles and those that find new revenue streams enabled by AI."

Stock picks:

#1 - Vysarn (ASX: VYS) 

"A water business geared to the resource cycle, with plenty of ways to win."

Vysarn operates in the water sector, a sector Kwan notes is genuinely difficult to execute well. The business is leveraged to the resource cycle but steadily diversifying by acquiring businesses that reduce the overall company’s earnings cyclicality.

"James Clement, Vysarn CEO, is one of the most impressive operators I've come across in ASX small-caps — a great capital allocator that is executing."

The investment case is underpinned by a 40% EPS growth outlook.

#2 - Critica (ASX: CRI) 

"High grade, low impact, and asymmetric at this price"

Critica is a long-term holding for Kwan. What drew her to Critica specifically is the combination of governance, asset quality and environmental profile - high-grade, low-biodiversity, limited uranium.

"Track the resource data they've published to date and the asymmetric risk profile is compelling at this share price."

The key catalyst to watch is the scoping study due September, 2026.

#3 - Advanced Energy Minerals (ASX: AEM) 

"High-purity alumina solving a problem at the heart of the AI build-out."

High-purity alumina helps data centres use less energy, directly addressing what Kwan describes as a question she thinks about every day: how to power the AI build-out with the current energy stack. AEM has cheap Canadian hydropower, keeping costs low and exceptional purity levels.

Are you embracing the joy of missing out amid the IPO frenzy, or is there a listing you think is genuinely worth the hype? And away from the headlines, where are you finding value on the ASX right now?

Let us know in the comments section below.