Buy Hold Sell: 3 ASX names moving from promise to profitability (and 2 that might not make it)

Facebook (now Meta) founder Mark Zuckerberg coined the phrase “move fast and break things” – a catchy motto designed to celebrate speed and experimentation. But as investors know, speed counts for little if a company can’t cross the Rubicon from potential to profitability.

That’s the real test: turning hype into hard dollars. Profitability is the finish line, and plenty of flashy contenders never make it across.

In this episode of Buy Hold Sell, Livewire’s Chris Conway is joined by Martin Hickson (1851 Capital) and Steve Johnson (Forager) to zero in on a clutch of ASX names either approaching that threshold or already beyond it.

Which businesses are set to graduate from promise to performance – and which are still running on fumes, with more buzz than balance sheet? For good measure, both guests also reveal one stock they believe is presently offering more hype than substance.

Please note this episode was filmed on 10 September 2025.

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Edited Transcript

Chris Conway: Hello, and welcome to Livewire's Buy Hold Sell. My name is Chris Conway. Whilst moving fast and breaking things might grab the market's attention for a minute, it ultimately means nothing if companies can't transition from potential to profitability. So today, in this episode, we're going to look at companies at or near that inflexion point, as well as a couple that might prove to be more hype than substance.

To help me do that, I'm joined by Martin Hickson from 1851 Capital, and Steve Johnson from Forager. First up, we're going to run the ruler over a handful of stocks that are at or near that inflexion point of profitability. We'll start with SKS Technologies. And Steve, I might come to you first. Buy, hold, or sell?

SKS Technologies (ASX: SKS)

Steve Johnson (HOLD): Yeah, that inflexion point was a couple of years ago for this business. It's nicely profitable today and growing very, very quickly on the back of data centre rollouts here in Australia. I'm a bit worried that there's a lot of hype behind that sector. There's a lot of capital going into it that, and I think people are going to be disappointed with the returns that they earn on that capital. So, I'm worried about how much of this is cycle versus actual business execution and innovation. And for that reason, I'll say hold on the stock.

Chris Conway: Martin, it's up over 140% over the past year, so it's had a ripping run. Buy, hold, or sell for you?

Martin Hickson (BUY): I think it's still a buy. Over the last 18 months, the share price has gone from 40 cents to $3, so it's been a cracker for those that have held it. They operate in the data centre space. Over 70% of their order book now comes from data centres, and that's up from zero four years ago. So they're early on that trend. They've built a very, very strong business on the back of data centre work.

At the moment, the company has an order book of $200 million, a tender pipeline of $500 million, so there's still a lot more work in that data space that's flowing through to them. It trades on a PE of 16 times, so it's profitable, earnings are growing at 30% plus. So we still think there are significant upside for SKS as this data centre thematic continues to play out over the next few years.

Chris Conway: Next up we're going to talk about Baby Bunting, all things nappies and strollers. Martin, I'll stay with you. Buy, hold or sell.

Baby Bunting (ASX: BBN)

Martin Hickson (BUY): Yeah, we think Baby Bunting is also a buy. So Mark Teperson, the new CEO - relatively new - he's been in the role for two years now, he's doing some really great things. So the recent result, he gave an update around these new refurbished stores that the company had opened.

So they'd refurbed three stores already. They're doing a further 10 to 12 this financial year. And the three that are refurbed, they've seen revenue increase by over 25% in those particular stores. So very, very strong post refurb.

They're also rolling out smaller format stores, increasing exclusive brands, increasing private label products, so that's really seen an acceleration to share price. It's up 50% on the back of that result. We thinking it can go further. We think Baby Bunting's a buy.

Chris Conway: Yeah, it pretty much won reporting season. I think it was up 40% on the day and up 80% over the past year. Steve, is this one too hot? Buy, hold or sell for you?

Steve Johnson (SELL): A bit hot for me. Yes. And I think that's been a bit of the reporting season we had. This is true in our portfolio as well. People are willing to buy a promise and a story now, whereas that wasn't the case 12 months ago. That doesn't mean it's wrong. I just think there's a lot more optimism in some of these things now. And this business has been a cyclical, pretty difficult business over a long period of time, and I would like to see more evidence there that it's turning up in the numbers across the whole business rather than a period here of outperformance.

Chris Conway: Next up we're going to talk about EML payments, $80 billion in transactions annually. Steve, I'll stay with you. That's a lot of transactions. Buy, hold or sell.

EML Payments (ASX: EML)

Steve Johnson (BUY): Talk about a business with a littered history of things going wrong over time. This business has had its problems. We own the stock. I'm pretty optimistic about where it's going so it's a buy for me. And I think you're going to see a pretty substantial change in profitability of this company over the next few years. It's a new management team in there. They have said they can hold the cost base flat with where it is at the moment, while they add tens of millions of dollars to the revenue line. I think if you can do that, you're going to see a dramatically more profitable business than you're seeing today. And again, I think for good reason, a story that people are not yet buying, but one that I do think they can deliver on.

Chris Conway: Right. Up 40% over the last year. Martin, buy, hold or sell for you on EML?

Martin Hickson (HOLD): I think EML is a hold at the moment. As Steve mentioned, they've got a new management team. We think they're doing all the right things. They're adding to the sales team, they're focusing on their tech platform. So we think that FY26 is more of a reset year. We think that investors have got time with this particular company. We're watching very closely, but at the moment we think it's a hold.

Guest picks – more hype than substance?

Chris Conway: Ladies and gentlemen, my favourite part of Buy Hold Sell. I've asked the gents to bring along a couple of stocks, but this time it's where valuations might have departed from reality. So we might get a little bit spicy here, but not too spicy. Martin, I'm going to stay with you. What's one that you think is a little bit overcooked?

4DMedical (ASX: 4DX)

Martin Hickson: One that's up 10 times over the last two months is a company called 4DX. That particular company operates in the imaging space. They had an investment from Pro Medicus more recently and that's what's really driven the share price over the last two months. But at the moment it's got a billion-dollar market cap. In FY25 it made $6 million in revenue, burnt through $35 mil of cash. There's only $6 mil of cash remaining, So we think it's in a pretty precarious position. I think the company needs to raise money. So at the moment I think it's a sell.

Chris Conway: Steve, what about you? One that might be a little bit more hot air than substance.

IperionX (ASX: IPX)

Steve Johnson: Well, my company also has a market cap of more than a $billion and it has $6 million less revenue than Martin's, so we're talking about zero. And there are a surprising number of companies on the ASX at the moment that have billion dollar market caps and at the moment are nothing but stories. This one is a good story. I'm talking Iperionx. They are talking about recycling titanium, doing it at a much lower price than the rest of the industry operates at the moment. And there are a lot of end markets, a lot of US government support for on-shoring. They are set up in the US to produce.

I just think there's a long way to go before this company's going to justify a $1.4 billion market capitalisation. And I know with these manufacturing type businesses that things do go wrong. It always takes longer. It has already taken longer with this company.

And there's just one more thing that I think people should be really careful of with these types of businesses. The promotional announcements are coming thick and fast and every time you see the share price go down a bit, there's another announcement that comes out.

And when we had a listed investment company on the market, you can sit there and type out an ASX announcement and you send it across to the ASX and it goes up on the platform. And people just need to recognise that it's pretty easy to write these announcements to the ASX and it's pretty hard to generate revenue and put it in the bank. And you need to distinguish between those different types of things when assessing some of these more speculative companies.

Chris Conway: Ladies and gentlemen, that's all we have time for. If you enjoyed this episode of Buy Hold Sell make sure to give it a like. I'd like to thank Steve Johnson and Martin Hickson for the entire series and don't forget to follow our YouTube channel. We're adding lots of great content every single week.