Buy Hold Sell: 3 ASX stocks built to handle tough conditions

Winter might be over, but in markets, the clouds can roll in at any time. And when they do, only the sure-footed survive. With the Melbourne Spring Racing Carnival in full swing, we’re once again taking inspiration from the track - this time, looking for the “wet-track wonders” of the ASX. 

These are the companies that can handle tougher terrain, those with strong balance sheets, reliable earnings, and management teams that know how to keep moving forward when the ground gets heavy.

In this episode of Buy Hold Sell, Livewire’s Chris Conway is joined by Marcus Ryan from Yarra Capital Management and Nick Pashias from Antares Equities. Together, they’ll explore what defines true resilience in the sharemarket and where investors might find the best footing if conditions deteriorate.

Before they dive into the stocks, Chris asks Nick what traits he looks for in businesses that can weather the storm - from fiscal discipline and predictable cash flows to that all-important pricing power. Marcus then weighs in on which sectors tend to thrive when the economic going gets tough.

As well as analysing three ASX names, for good measure, the guests each share a stock in their portfolio that they might look at differently if conditions head south. 

Please note this episode was filmed on 22 October 2025.

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Edited Transcript

Chris Conway: Hello and welcome to Livewire’s Buy, Hold, Sell. My name is Chris Conway. With the Spring Racing Carnival upon us down here in Melbourne, we're using racing parlance to characterise opportunities on the ASX. Today, it's the wet track wonders; companies that can survive and thrive when conditions turn soggy. Joining me trackside is Marcus Ryan from Yarra Capital Management and Nick Pashias from Antares. All right, gents, before we talk stocks, a couple of questions. Nick, I'm going to come to you first. What traits are you looking for in companies that can weather the tougher conditions?

Key traits of resilient companies

Nick Pashias: I guess in terms of revenue, if we start there, you want recurring revenue streams that are non-discretionary in nature that consumers need - ideally often and can't do without. So think food, think telcos, think utilities. If they're regulated, even better. So they're the top level attributes. You, obviously, want something that has a variable cost base, so if your volumes do fall, your costs also fall as well. And then key to all of it is the balance sheet. But I just want to make two distinctions on the balance sheet because it's not just about the debt and the debt coverage. That's clear. But what's often missed is liquidity.

So let me try and explain that a little bit, because it's the amount of cash you can put your hand on easily and quickly. So if the planes stopped flying or your customers can't come in because of COVID, you can still pay your salaries, you can still pay for the power to come on. And we've seen a number of companies come unstuck. So you might not have any debt, but you've got no liquidity and that's a problem. So it's a number of those things that we look for.

Chris Conway: Very important, yep. Marcus, which sectors typically thrive when conditions turn a little bit soggy?

Which sectors thrive when conditions worsen?

Marcus Ryan: Chris, what we've observed over time is it's typically those defensive sectors that perform best in tough economic conditions. So over time we've observed that, and really building on some of Nick's points, we might see that in the consumer staples sector, think food, groceries. Think Coles, Wesfarmers. We'll also see this in the utility space. Think gas, electricity, stock wise, Origin (ASX: ORG) and APA Group (ASX: APA). Healthcare, another sector. Could be blood plasma products for CSL (ASX: CSL) or private hospitals in Ramsey (ASX: RHC). And then gold and precious metals is probably the final sector just to call out where investors historically have sought some safety in that space.

Woolworths Group (ASX: WOW)

Chris Conway: Gents, you both referenced food and the importance of staples. So the first stock that we're going to run the ruler over in terms of our wet track wonders is Woolworths. Marcus, everyone knows Woolworths, but it did have a pretty tough reporting season. Again, it was down sharply on the results release. Buy, hold, or sell for you?

Marcus Ryan (HOLD): Woolworths for us is more of a hold at current levels. The first point we talk about is still margin susceptibility. So as many people would be aware with the supermarkets, they are low margin businesses, around 5%. But what we continue to observe is persistent cost inflation, labour cost inflation, and I think one of the things we learned out of the last result is, when sales come under pressure at only 2% like-for-like, your EBIT can go back double-digit in that environment. The second point to call out is the risk of Woolworths needing to respond with some degree of extra price investment to get back in the game against Coles. It's quite interesting, but the Woolworths' under performance to Coles now actually extends pretty much over the last 18 months. So that sits out there as a potential risk.

Two final points just to call out, competition and mix. One of the things we're observing is some of the, particularly around package goods, just other competing formats. That might be Chemist Warehouse. That might be Amazon. And with respect to the sales mix, online sales, that is helpful from a sales perspective, it also does present a margin headwind. So Woollies, Chris, trading on about 20, 21 times earnings, that's - historically speaking - not demanding. We're still quite cautious around the earnings growth, so we'd prefer alternative defensive exposures.

Chris Conway: Makes sense. Nick, Woollies down around 18% over the last 12 months, trading near 52-week lows. Is it starting to present value for you? Buy, hold, or sell?

Nick Pashias (BUY): It's a buy. Notwithstanding everything that Marcus just spoke about, which are all valid risks to the investment case, but when we look at Woolworths, it's not that the business is impaired, it's the execution that's gone wrong, and that is fixable. So Woolworths still has a great brand. It sells 30% more groceries than Coles. It has a great network, but they've just executed poorly. They've taken their eye off the ball, off the key supermarket business, and they've paid a very heavy price. But that is now in the share price. So Amanda has all the ingredients that she needs to improve the business. It's an execution story. We think the negatives that Marcus spoke about are in the price, but it's up to them. They need to rebuild credibility.

Ansell (ASX: ANN)

Chris Conway: Next up, we're going to talk about protective equipment maker Ansell, famous for its latex gloves, of course, but has expanded its equipment over the years. Nick, I'll stay with you. Buy, hold, or sell?

Nick Pashias (HOLD): This one's a hold. We've owned this one historically and the issue that we've had with it, Chris, when one segment of the company fires, another segment misfires, and it was historically difficult to find what the main driver was – i.e. what drives the share price. I think it's over diversified in terms of its product. I think it's over diversified in terms of its geographic mix. It's just hard to gain conviction. So it's a hold.

Chris Conway: Marcus, this one up 7% over the past year. So it hasn't set the world on fire but hasn't disappointed overly either. Buy, hold, or sell for you?

Marcus Ryan (BUY): We take a slightly more constructive stance on Ansell, and for us it's a buy. I call out a couple of stock specific reasons for this. The first is around the non-discretionary nature of its products selling into the healthcare market. Think about a lab, for example, or selling into industrial settings. So think an auto factory in Germany. We like the industry structure. We think that's actually getting better over time and we observe this through some of Ansell's peers, that when they're also experiencing input cost inflation, we're seeing the industry actually being able to offset that with higher pricing, which is quite pleasing. Company specific, we like the flexibility and the diversity within Ansell's manufacturing supply chain.

The fourth point would be on management executions. We actually think in the last number of seasons that's actually got better with this group. And I think the point Nick raises is a really good one. I think historically there's been some patches there. I think we've grown to a greater confidence in the management layer in the organisation. Wrapping that all up, the stock is trading on about 15 times earnings. So in that defensive space with circa 10% earnings growth, it feels a pretty good spot for us.

ResMed (ASX: RMD)

Chris Conway: Next up we're going to take a look at a ResMed, another healthcare name. Of course, the sleep apnea device maker. It was rocked in mid-2023 when GLP-1 drugs hit the market. Marcus, I'll stay with you. Buy, hold or sell?

Marcus Ryan (BUY): ResMed for us is a buy. It's a strong buy. It would be our leading defensive healthcare name in the portfolio today. The opportunity in ResMed today, I think it still sits around this lingering concern of the GLP-1 weight loss drugs that have now been in the marketplace for some time. But we do feel as if that still sits out there as a risk. What we find really fascinating is we do channel checks all the time - we talk to prescribing clinicians in some of ResMed's biggest markets like the US - and what we're getting back from that is indeed ResMed are doing a great job at growing the funnel.

Now, that's a fancy term for saying getting more potential patients to be diagnosed with sleep apnea and then ResMed helping to hold their hand onto CPAP treatment. So we like the outlook for ResMed. We like the very large addressable market, low penetration rates today, strong operating leverage, strong double-digit earnings growth, still trading on quite a modest multiple.

Chris Conway: Pretty strong views on that one. Nick, it's had a pretty solid 12 months, up around 15%. Does this one still look compelling for you? Buy, hold, or sell?

Nick Pashias (BUY): Yeah, it does. It does. Just echo everything that Marcus has said. Really, we are only beginning to understand the benefits of sleep to our health. So it is a megatrend. It's driven by all of this technology that we have around us, the awareness is only increasing, and ResMed is uniquely placed to exploit that. They've got this chart in their presentation pack which shows a billion people have sleep apnea and then you need a microscope to go and find the number of connected devices that they had, which is 22 million. So it's massive. The opportunity is huge. There is a competitor, they're just on the sidelines at the moment. They'll come back eventually, but I think there's a very, very big TAM (total addressable market) that ResMed plays into for a slight premium to the market. I think that's a bet worth taking.

Guest picks – reassessing if things turn bad

Chris Conway: Another strong double buy to round out this part of Buy, Hold, Sell. All right, again, one of my favourite parts of any Buy Hold Sell episode is asking the gents to bring along a stock. I've asked them, I've challenged them today, to think about a stock that they might look at slightly differently if the rains came just before a big race. So they don't necessarily have to want to throw it out of the portfolio, but if things slow down, GDP slowed, economic conditions change a little bit, they might just look at it slightly differently. Nick, what's the one in your portfolio that meets this criteria?

James Hardie Industries (ASX: JHX)

Nick Pashias: Don't throw your rotten tomatoes at me when I say the name of this stock.

Chris Conway: I won't.

Nick Pashias: It’s Hardie's.

Chris Conway: Okay.

Nick Pashias: We owned this one around the time of the GFC and it was a very painful experience. It bottomed at about $4. You would've made 10 times your money if you had have held it for several years afterwards. But it was just a painful experience. So there, we're expecting rate cuts. We're expecting the US to muddle through in terms of growth. We think the negativity of the acquisition, and we're about to go into AGM, that negativity is still around, but that's why it's in the portfolio.

Chris Conway: Yep, makes sense. Same question to you, Marcus. One that you might look at slightly differently if economic conditions worsened?

Woodside Energy Group (ASX: WDS)

Marcus Ryan: I think under that scenario, Chris, Woodside would perhaps be the example that I would provide there. So while it's not our central case, should, for example, global growth come under significant pressure, one could anticipate the demand from a business perspective, from a consumer perspective, would wane. Parts of the resources space would come under pressure with lower commodity prices. Oil and gas probably wouldn't be immune and Woodside could be impacted under that scenario. I think what's really important to call out, however, is that's the external environment. We've got a bunch of stock specific factors, however, that really support our Woodside view today. And, look, coming back to quality, we like the quality of the assets and one of the things we observe there is the low operating costs of their assets.

We like the management capability, the management depth. We like the production growth. In fact, if you were prepared to look forward five years with Woodside, you've got a business that is probably doing volumes production 26-odd percent higher than it is today, driven by two big major projects. And look, valuation is still very attractive on Woodside from our perspective. If you're prepared just to look forward three years, the stock is trading on an implied free cash flow yield that's double-digit. So we do feel as if patient investors will be rewarded.

Chris Conway: Gents, thank you both for playing along with that thought experiment. As I said to you on the pre-call, it's like asking you to select who is your least favourite child. It's hard to do. I know these stocks are in your portfolio. So I appreciate it. If you enjoyed this episode of Buy, Hold, Sell make sure to give it a like and don't forget to follow our YouTube channel. We're adding lots of great content every single week.