7 ASX stocks and 2 ETFs the pros are eyeing and buying during the correction

With the ASX 200 and Small Ords indices shedding over 5% since their October highs, intense selling pressure, particularly in high-multiple growth stocks, has created a potentially huge disconnect between share prices, market narratives and an otherwise strong macro backdrop. 

While many investors retreat, four leading investment professionals see this as a rare chance to buy growth and quality at a discount. We cut through the fear to get their definitive takes, strategies, and the ASX stocks they're buying right now. 

And don't worry, for you growth-minded investors, we've got an adviser's top two ETFs for you too. 

Let's get straight into it.

Editor’s note: Views in this article were gathered before Nvidia’s earnings result due 20 Nov.

Mark Elzayed, Chief Investment Officer, Investor Pulse

While it seems tough out there, especially in the hotter parts of the market, Elzayed says investors shouldn't panic. After all, the market has flown for much of this year. He sees recent moves as a healthy, technical correction.

"Corrections are normal - and after a 19% rally since April, we were certainly due one - but with interest rates stable and no growth or inflation shock, some of the share-price moves already look extreme,” he says. 

He reminds small-cap investors in particular to focus on fundamentals: “I focus on what hasn’t changed: business models, balance-sheet strength, cash flow and management execution. If those fundamentals remain intact, then a 15 to 25% price swing tells me more about market positioning than company value,” he says.

If there's a lesson to be learned from the sudden and sharp moves in recent weeks, it's that your position sizing and level of diversification in the portfolio matters.

Top Stock Picks

#1 - Xero (ASX: XRO)

Xero has shifted into a more disciplined, margin-accretive phase, and the recent de-rating hasn't changed the durability of its small and midsize enterprise (SME) penetration story across Australia and key international markets such as the UK and Canada. 

Revenue growth remains in the mid-teens while margins expand, meaning the multiple is compressing while fundamentals hold steady.

"At current levels, Xero is trading on a noticeably lower multiple than earlier in the year. On consensus numbers, the stock is approaching the equivalent of 30 to 32x FY26 free cash flow, down from the mid-40s during the market’s peak optimism," says Elzayed.

The combination of its long-duration growth profile and improving cash conversion leaves it as "one of the more compelling valuation setups the company has offered in several years," says Elzayed.

"Entering the stock at $105 to $115 looks attractive to me - a zone aligned with historical support that brings the valuation back toward long-term averages and offers a more reasonable risk-reward on forward free cash flow. We maintain a price target of $140 over the near term," he says.

#2 Origin Energy (ASX: ORG)

Origin combines steady cash generation from utility operations with meaningful exposure to the energy transition theme via Octopus Energy.

At current levels, Origin is trading on a ~13–14x earnings multiple, sitting below the global utilities peer group, and an EV/EBITDA of around 10x, near the bottom of its historical range.

"Importantly, the company’s forward earnings profile is improving as guidance implies $1.4–$1.6bn in FY26 underlying EBITDA - supported by stabilising retail margins, disciplined capital allocation and growing contribution from transition assets," says Elzayed.

An entry range of $11.00 - $12.50 appears attractive - a zone that offers a margin of safety -  with a fair value target of $15.50.

Joe McCarthy, Portfolio Manager, Elston

McCarthy agrees that what investors are seeing now is a general market correction rather than something more sinister, as there have been no substantial cracks in the global economy.

"The sell off is mostly concentrated amongst the ‘quality growth’ cohor,t which are debatably overvalued – although it now appears the debate may be in the process of ending," he says.

He observes that the scale and speed of some of the downsides in companies seem excessive. At the time of writing, TechnologyOne was down 17% after beating its own guidance but missing expectations by 2%, which "seems a bit harsh even as a non-owner."

As such, what we're likely seeing is a lack of market depth and a closing of the gap between what momentum versus value investors are willing to pay for some of these names.

TOP STOCK PICKS

#1 - Bluescope Steel (ASX: BSL)

Elston added Bluescope Steel due to improving fundamentals in the US business, where spreads are on the rise.

"There has been a structural improvement in the industry following the reintroduction and expansion of steel tariffs and BSL should see higher margins in their North Star business. This combined with their investment initiatives, good track record of execution and attractive starting valuation suggest that good returns are on offer," says McCarthy.

# 2 - Macquarie Group (ASX: MQG)

The high-value asset management division improved, while the commodities trading business is experiencing a softer period that should normalise over time.

"The latter will improve over time and at ~17x current earnings represents good upside and are looking to add to the holding," he says.

#3 - James Hardie (ASX: JHX)

With the AZEK acquisition complete, shareholders have clearly signalled their expectations on capital allocation and engagement. Looking ahead, the company is executing well, delivering stronger revenue and cost synergies and upgrading its outlook despite a soft macro backdrop.

"Current performance is also well ahead of our balance sheet stress test scenarios we ran and we are a lot more confident. We are current holders but at these levels we are considering increasing our position," says McCarthy.

Romano Sala Tenna, Portfolio Manager, Katana Asset Management

Sala Tenna characterises the current market environment as a “watching brief.”

“At present, the indices are technically constructive and the retracement is in line with what we would expect to see. Of course that could change tomorrow. If we see sentiment turn tangibly negative, then we would adjust our view and positioning,” he says.

Katana has lifted cash to just above its preferred maximum of 20%, driven by discomfort with valuations in several names and changes to a number of investment theses over time. Sala Tenna explains that many holdings had experienced substantial re-ratings over the past six months, and when momentum began to roll over, Katana chose to lock in gains.

“A good number of stocks in the Katana portfolios have experienced substantial re-ratings over the past six months. As the momentum in these stocks rolled over, we progressively locked in profits,” he says.

“This included Technology One (TNR), Life360 (360) and Megaport (MP1). We have also exited a number of stocks where the original thesis is no longer intact, including Block Inc (XYZ) and Light and Wonder (LNW).”

TOP STOCK PICKS

#1 - Cuscal Ltd (ASX: CCL)

CCL owns the largest digital payments network behind the Big Four banks and just acquired the #2 competitor, Indue.

"This will drive strong earnings growth for at least the next 3 years. High quality, low churn business with excellent management," says Sala Tenna.

# 2 - Healthco Wellness REIT (ASX: HCW)

HCW is a pure asset play, backed by a high-quality portfolio of hospitals, medical centres and similar healthcare assets. 

With a 99% occupancy rate, tier-one properties and strong geographic positioning, the fundamentals remain solid. Yet uncertainty surrounding Healthscope has left the REIT trading at just 46 cents in the dollar.

"This is nonsensical. Even fire sale valuations deliver a substantial uplift to the current stock price," he says.

Andrew Wielandt, Director, DP Wealth Advisory

Wielandt sees the recent tech sell-off as both expected and healthy. After a powerful run since April’s “Liberation Day,” he believes the sector simply needed to cool, and notes that many fund managers reduced Nvidia exposure ahead of earnings in case guidance disappointed.

Overall, he views this as a standard correction, though he flags that a deeper move wouldn’t be surprising given how long markets have gone without a meaningful reset.

In its model portfolios, DP Wealth Advisory has been underweight US tech for some time, holding around 22% exposure versus the 34% market weight due to sector valuation concerns.

"Our international models have been skewing towards Japan, Europe and emerging markets where we have been able to deliver similar benchmark returns but without taking additional risk," says Wielandt.

"We have also been holding between 8 and 12% cash relative to our benchmark, which is around 4 to 6% cash. The cash holding was in part due (until recently) higher interest rates vs no risk and also having cash available to deploy to bring our portfolios closer to benchmark exposure for tech at the appropriate time."

TOP ETF PICKS

#1 – Munro Global Concentrated Growth ETF (ASX: MCGG)

The Munro Global Concentrated Growth ETF holds 20–40 high-conviction global growth stocks across the team’s structural “areas of interest,” with current top positions including Nvidia, Amazon, TSMC, Microsoft and Alphabet.

Wielandt says the appeal lies as much in the manager as the mandate. He highlights the experience and conviction of Chief Investment Officer Nick Griffin’s team and their ability to act decisively when volatility creates opportunity.

“Should there be continued weakness in tech, I would be looking to the team from Munro to take advantage of that, given their high conviction and highly concentrated ETFs," he says.

#2 – VanEck MSCI International Quality ETF (ASX: QUAL) / Hedged (QHAL)

VanEck’s QUAL is Australia’s largest smart beta ETF and targets companies with three key characteristics:

1. High return on equity
2. Earnings stability
3. Low financial leverage

While quality hasn’t been rewarded in the past 6–9 months, Wielandt believes that stretch of indiscriminate buying is now fading and that fundamentals will reassert themselves.

“I would also think the underperformance of QUAL would turn around… [these are] companies which have strong return on equity, steady to increasing earnings and steady to decreasing debt,” he says.

For investors concerned about currency volatility, QHAL provides a fully hedged option of the strategy.

Over to you

Every correction creates different opportunities for different investors. Out of the ideas shared above, which one would you be most inclined to act on? 

If you've already been taking advantage of the dip, let us know what you've been buying in the comments below!