Buy Hold Sell: 3 "fallen angels" ripe for a rebound (plus 2 stocks testing 52-week highs)

Inflation, shifting rates, and volatile oil prices have served up a "vicious cocktail" for investors. While many of 2025’s high-flyers have come back to earth, the dynamic small and mid-cap market remains a breeding ground for opportunity.

In this episode of Buy Hold Sell, Livewire's James Marlay hosts Chris Prunty (QVG Capital) and Chris Stott (1851 Capital) as they go head-to-head on five stocks from the growth engine of the ASX. 

They run the ruler over three "fallen angels" ripe for a rebound, two names testing 52-week highs, and reveal the "steady compounders" they’re backing for the year ahead.

Plus, we break down the must-know takeaways from the Macquarie Conference.

This episode was filmed on Friday, 8th May 2026.

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Edited Transcript

James Marlay: Welcome to Livewire's Buy Hold Sell. My name is James Marlay and as part of our 2026 Growth Series, I'm joined by two investors with an eye for growth and a stomach for the volatility that comes with it. I'm joined by Chris Prunty from QVG Capital and Chris Stott from 1851 Capital. Gents, it's been since 2018 since we had you on the show going head-to-head. So thanks for coming in.

Chris Stott: Pleasure. Thanks for having us, James.

James Marlay: Now, on the show, we're going to be discussing our regular Buy Hold Sell segment on a cross-section of high-flyers and a few fallen angels from the market. I've also asked my guests to dust off their folders and find a steady compounder for these volatile times. But before we do, the Macquarie Conference has just wrapped up three days, with over a hundred companies presenting. So I thought we would get a couple of insights from my guests on what they heard from the companies, given the backdrop we find ourselves in at the moment, which has been, let's be honest, a little bit bleak. So it's going to be a slightly longer show today. Grab a cup of tea, get comfy, and let's get into it.

Big picture thinking

James Marlay: Chris, I'll start it with you. Let's start before we jump into the conference, big picture, backdrop. How are you feeling about it? What are you seeing out there?

Chris Prunty: Well, James, the way I'd describe it is it's a narrow, thematic market, so no surprise to anyone. The theme is AI. In Australia, we don't have the direct ways to play it, so it's all about AI derivatives or what we're calling the AI supply chain. That's the positive story. That's where all the money is gravitating towards, and there are opportunities there.

Unfortunately for us, that leaves everything else behind. And the other thing I don't think you can fail to mention is just interest rates. The Aussie 10-year was around 5% at the start of the month. It's eased back a little bit. With interest rates so high, it's very hard for stocks to work and, as you said, very hard for growth stocks to work.

James Marlay: Chris, I read your latest monthly report. It said you're holding a little bit of cash to deploy at some point. What's your read on the backdrop, and is that cash not burning a hole in your pocket?

Chris Stott: Mixed is the best way to describe it. So as Chris mentioned, we've now had three consecutive rate hikes this calendar year, which has suppressed the economy. Anecdotal feedback is that when the price of petrol went up in March, the economy ground to a halt for the economically sensitive companies.

So for us as investors in small caps, that represents a big part of our benchmark. So we've certainly noticed that. Super Retail came out at the Macquarie Conference and put out a softer trading update, citing the price of fuel and higher interest rates. So there's been a significant slowdown in the economy and anecdotally, speaking to real estate agents, the property market has come back a bit too.

So it's a mixed outlook. We think the RBA will go once more, increase rates once more. And then we're starting to look at rate cuts going into calendar year 2027. As we know, the market moves six to nine months ahead of the economy. So our thinking right now is that the economically sensitive names have been beaten up, so the retailers are down 50% to 70% in some cases, like Accent or Adairs, in the small cap end of the market. So there's going to be a great buying opportunity between now and Christmas. We don't know exactly when yet, but we think that it's going to be the best buying opportunity for the next five years for some of these small industrial growth companies that are economically sensitive, plugged into the economy.

Macquarie Conference insights

James Marlay: Well, I love that bullish tone. I appreciate you bringing that to the table today. Now, as I mentioned, the Macquarie Conference has been on for three days, a deluge of company updates and information, which is useful at a time of year when we're between the reporting periods. I've asked our guests to bring along a couple of their key insights and we'll talk through some of the stocks that stood out. Chris Prunty, I will start with you. What were your top two takeaways from the conference? What was it? Why did it matter?

Chris Prunty: Well, we have a bit of a saying in the firm: What's worse than a downgrade? It's flagging a downgrade. So Macquarie historically has been called the Downgrade Conference. It actually hasn't lived up to its name and it didn't live up to its name again this year.

There were a few retailers, obviously, that softened up their numbers, but what I noticed was that there were companies that gave trading updates until March, when things were sort of hanging in there. Maybe they had a strong January, February, and then we know what happened in March and then things have eased off even subsequently.

So there are a few companies I can think of that used the phrase 'risks are to the downside'. And SEEK, Endeavour, Flight Centre, Channel 9, all used language to that effect. So if the war persists and if rates stay as high as they are, I think we're just at the precipice of another leg of earning softness. So that was one insight.

And then the other one, just getting back to the AI thematic, you can't avoid it. Even if your company has nothing to do with AI, you're still going to get the question, "How are you using AI in your business?" So that really is the predominant theme.

James Marlay: Any good answers?

Chris Prunty: Well, there's a bad way to answer it, which is to say we have ChatGPT licences and we're using it to cut costs. What the market really wants to see with AI is how you are using it to make your product better and to drive revenue growth, because that's the thing that's lacking in the Australian economy, and the listed equity market is growth. There's a real scarcity just because of the economic malaise in which we find ourselves.

James Marlay: Chris, same question for you: top two takeaways from the Macquarie Conference.

Chris Stott: Similar to Chris. AI is a big theme. Every company is scrambling frenetically to work at how they can take advantage of this particular thematic. And quite frankly, AI is probably the biggest thing the world's seen since the internet, in our opinion. So it's going to be substantial. People are still learning about it, working out how to use it properly within their businesses and take full advantage of it.

We've seen workforces be laid off and the naysayers say, "Well, AI is going to significantly increase unemployment." We disagree with that. If you look back at the 1800s, 80% of the workforce were farmers. So people evolve, industries evolve and that will happen again with AI as we go forward over the next few decades. So every company spoke about AI at the conference, spoke about how they're trying to take advantage of it and why it's wonderful and why they're using it.

And then the second key takeaway, as I sort of highlighted earlier, was that the economy is struggling. Rate hikes are biting. And it was interesting to see that the RBA governor put out a slightly softer tone in her minutes and, going back on the rate hike of this week, just to try to appease people, I think, just to say, "Look, there's potentially one more coming," but to still keep spending, because there's certainly a lot of fear out there right now.

Best presentation and outlook from the Mac Conference

James Marlay: Alrighty. I've asked each of you to bring along a nomination for, first of all, the best presentation and best outlook. So the company that exceeded expectations gave a compelling outlook. What's your nomination?

Codan (ASX: CDA)

Chris Stott: Codan. Ticker, CDA. Capped at over seven billion, PE of 35 times. It's got a couple of fantastic businesses, one in the communication space, another business called Minelab in the gold detecting space. Codan put out a really strong trading update over the last few weeks guiding to $170 million of NPAT for this year, which represented over 10% profit upgrade at the time. So they presented very, very well and was a standout for us at the conference. We think their outlook is incredibly strong and the beautiful thing about Codan is it's not related to what interest rates do. 

James Marlay: AI resilient as well.

Chris Stott: It is. And so the price of gold at record highs, we know that and that's certainly helping their Minelab business as well grow the next few years with new product launches driving their earnings growth. So, Codan for us was the standout presentation at the conference.

James Marlay: Chris, what was your standout presentation? Most compelling outlook?

Infratil (ASX: IFT)

Chris Prunty: I went along to Infratil, which is a Kiwi infrastructure investor, a bit of a conglomerate. Has performed well historically, but the real story there was they brought along the CEO of Canberra Data Centres, CDC, Greg Boorer. And I would say once or twice a year in my seat, you get to see an exceptional CEO who really understands their business and their industry, and Greg is one of those people. So he basically gave a 45-minute tutorial on the data centre business.

It became crystal clear through that presentation that he understands what he's talking about on a financial and technical level. It's no surprise that they have had the success that they've had. CDC is the real deal. And really, the great thing about that was we're so early in understanding AI and the supply chain, and he laid it out and there are a lot of other companies that I don't need to name that are making similar claims, but you've got the sense that this guy, he's the real deal, he understands his business, and they're going to execute.

It also helped that he'd announced the largest ever capacity contract with a hyperscaler two days before, a 555 megawatt deal with an unnamed hyperscaler. So that'd be Microsoft or Amazon, which was about 40% of the current data centre capacity. So the scale of what is coming is enormous.

Which company flew under the radar at the Mac Conference?

James Marlay: The next one I wanted you to do was let's go from the bullish and the upbeat presentation to the empty room. So, which was the stock that maybe flew under the radar but caught your attention?

TechnologyOne (ASX: TNE)

Chris Prunty: It shouldn't fly under the radar because it's a top 100 company, but TechnologyOne. They were in the big ballroom at Macquarie. They've got four rooms running concurrently. If you're a top 100 company, you typically get put in ballroom number one, and that was only about 40% full, which, for a business that is going to grow its earnings 18% to 20% this year and has had a phenomenal track record of mid-teens growth for over a decade, it was a real surprise to see that TechOne was so poorly attended. But then you've got to remind yourself it's a software stock, and if AI is the winner, then software is the loser or at least a perceived loser at the moment. So I thought that was emblematic of what's happening in the market.

James Marlay: How the market's thinking.

Chris Prunty: Yeah.

James Marlay: Chris, uncrowded room award for the overlooked presentation?

Autosports Group (ASX: ASG)

Chris Stott: So I love this because this is typically where you find the best opportunities, where the market's not looking. And so I went with Autosports Group, ASG is the ticker. So they're the leading luxury retailer of cars in Australia. So the room was around a third full, and Nick Pagent, CEO, high-quality CEO, gave a pretty compelling presentation.

What's changed in his business over the last few months, what we learned, is that EV sales have gone through the roof. They've gone ballistic. So as soon as the price of petrol went up, everyone went out and bought an EV. Their EV sales are up over 300% year-on-year, and so they are right in the sweet spot with brands like Zeekr, Geely, they're really tapped into what's happening on the EV side of things.

So, for a price-to-earnings ratio of seven, people are unfairly dismissing them, we think, in terms of higher interest rates being bad for them. It's not playing out that way, with M&A potential for them as well going forward. So that was a standout for us in terms of being undiscovered.

James Marlay: Yep, very good. Alrighty folks, well, let's get into our Buy Hold Sell segment. We're going to start with a couple of fallen angels and finish on some highs. Chris, I'll start with you. Our first stock, Zip Co - buy now, pay later. Share price fell almost 70% from its October highs to the March lows. Buy, hold, or sell?

Zip Co (ASX: ZIP)

Chris Stott (BUY): Buy. So Cynthia Scott, CEO, has done a terrific job with Zip over the last few years, coming in and essentially turning the business around. It was almost going out the back door when she came in. So she got the business humming. They put out a really strong trading update, greater than 40% growth in the US continues and we continue to see a really positive outlook for Zip, so buy.

James Marlay: Chris, they reaffirmed their FY26 guidance at the Macquarie Conference in the presentation. Buy, hold, or sell for you?

Chris Prunty (BUY): Double buy for us. The story of Zip in the last four months has been one of enormous volatility. They had a spike in bad debts in the December quarter. The market really freaked out. It was down 40% on the day. I think I should know the number we owned it, so it wasn't a great day.

James Marlay: You erase those ones from the memory, don't you?

Chris Prunty: Yeah, you do. You should. We were never as concerned as the market about that, because the tenure of their loans is only about six weeks. So their ability to readjust underwriting in that business and get bad debts under control, we felt they had their arms around it and subsequently they came out with a much better number in the March quarter and the update at Macquarie was solid, so it's a buy.

Lovisa (ASX: LOV)

James Marlay: Next stock is Lovisa. We talked about sentiment in the consumer space. It's been dire. Lovisa, buy, hold, or sell.

Chris Prunty (BUY): It's a buy. Even though it's a retailer, obviously, most retailers are experiencing earnings downgrades at the moment. Lovisa's share price incorporates a lot of pessimism. The best thing I can say about Lovisa is that Brett Blundy owns 40% of the company. He loves a buck. He's a multi-billionaire. And for the first time in 11 years and three months, he bought stock on market in Lovisa. Bought $14 million worth of stock and the returns on capital and the growth are very much intact there, so we like it.

James Marlay: Chris, the brokers like it as well. I had a look at some price targets, three of them north of 30 bucks. Buy, hold, or sell on Lovisa for you.

Chris Stott (HOLD): Well, I'm clearly not the customer that Lovisa targets, so I've gone for a hold here. Elevated valuation. Lovisa is a great business. It's had a fantastic, market-leading position for many, many years now, but the competition's starting to arrive and it's eating into their lunch. So companies like HARLI + HARPA have launched in Australia and other places around the world, and are starting to impact them. They're very aware of it, Lovisa. So essentially, the competitive intensity is going to increase over the next three to five years for Lovisa, so we've gone for a whole for now.

Generation Development Group (ASX: GDG)

James Marlay: Okay. Next stock is Generation Development Group, GDG is the code. A one-way train in 2025. It's currently trading very close to 52-week lows. Chris, buy, hold, or sell?

Chris Stott (HOLD): Hold. Grant Hackett, CEO, has done a terrific job, pushing the company to over $1.5 billion in market cap. It's now in the ASX 200. The jury is out a little bit at the moment on GDG in terms of Evidentia, the acquisition that they made over the last 12 months. It's underperformed elevated expectations. So I think that's the key to the stock going forward in terms of trying to turn the share price around. But certainly, it's a hold to buy for me. It's getting close to ... We've got close on it. It's a hold for now, but we're watching it very, very closely.

James Marlay: Okay. Chris, a lot of structural growth within that business. You've got the managed accounts, which is a bit of a runaway train in your industry. Buy, hold, or sell?

Chris Prunty (BUY): It's a buy for us. We would agree with Chris. The Evidentia acquisition has disappointed. They paid a big price to buy the leader in that managed accounts field and maybe to backfill a high price they paid, they put out some pretty aggressive growth targets, which haven't been met. Having said that, the managed accounts trend is not going away. It's a business we think can grow earnings in the mid-20s for the foreseeable future, and you're paying about that on a forward PE basis if you back out the annuity losses. So, actually, it looks quite compelling here.

Wagners (ASX: WGN)

James Marlay: Okay. Our next stock has been on an absolute tear. The stock is Wagners. "Harden up", I believe is their catch cry. Queensland-based stock, lots of insider ownership. It's outperformed the ASX 200 by 130% over the last 12 months. Can it keep going? Buy, hold, or sell?

Chris Prunty: I'm on the fence between a hold and a buyer here. If you ask my colleague-

James Marlay: Harden up?

Chris Prunty (BUY): Yeah. If you ask my colleague, Tony, he'd say it's a buyer. I'm more on the hold side, but he's my boss, so we'll go with the buy. I took the family to the Gold Coast three weeks ago during school holidays. It was a real eye-opener. That part of the world is booming. Every time you go to Western Australia or Southeast Queensland in particular, you get a reminder of what growth looks like. Wagners play right into that, selling concrete, and they're expanding capacity and this is all pre-Olympics, so we'll stay on the buy side of buy/hold.

James Marlay: Chris, buy, hold, or sell? As Chris mentioned, that build-out in Southeast Queensland, buy, hold, or sell?

Chris Stott (BUY): I'm not going to sit on the fence here, James. It's a clear buy for us. Wagners is the most leveraged exposure on the ASX over the next five to six years into the 2032 Brisbane Olympics. As Chris talked about, their primary businesses in Southeast Queensland, which will be the fastest growing economy in Australia over the next five to six years for the Olympic build primarily.

And key as well, in addition, is that the competitive landscape has never been better for Wagners. It's very rational. It hasn't been that way for a long time, which essentially leads to higher prices and higher margins, high profits for Wagners. So they're in an incredibly good position and so strong buy for us.

SRG Global (ASX: SRG)

James Marlay: You mentioned Queensland being a good spot. Let's go to WA. Final stock here, SRG Global, maintenance, engineering, construction services. They even inspect your equipment with drones. So it's got a bit of a tech play. Buy, hold, or a sell?

Chris Stott (BUY): Buy. So we've owned SRG for more than five years now. It's been terrific. It continues... the outlook looks even better than it has for many, many years. So Dave Macgeorge, CEO, has done a terrific job in his team there. We think that they are really continuing to take advantage of the growth in the West, consistently growing in those low double digits, with M&A appeal as well. They've been really good at acquiring businesses over the last few years, so we think SRG remains a buy.

James Marlay: Okay. Like Wagners trading very close to a 52-week high. Buy, hold, or sell?

Chris Prunty (HOLD): It's a hold for us. Like Chris, we've owned it in the past and have an enormous amount of respect for David Macgeorge and Roger Lee, the CFO there. They've done a great job of re-engineering that business into a higher quality one with more recurring earnings, predictable earnings. And the market's rewarded them by rerating the multiple on that stock. It also went into the ASX 200, which saw a further rerating. That forward PE of about 20 times, albeit with the chance of an upgrade, that looks fair to us, so therefore hold.

James Marlay: Okay. Now, I've asked our guests to bring along a steady compounder to pitch us an idea. Something maybe not quite as volatile as some of the stocks, but against a difficult backdrop, we're after something steady. Chris, what's your pick?

Cuscal (ASX: CCL)

Chris Prunty: It's a business called Cuscal, which is in payments infrastructure. So this company IPO'd last year, so won't be on the radar of many. The issues we had to get over in understanding it were that it's heavily regulated and capital-intensive, and it's in payments and payments on the ASX, with businesses like SmartPay and Tyro, haven't been a great place to be.

The thing that Cuscal benefits from is that they're really the infrastructure provider behind some of those companies, credit unions, and the like. So very defensible business, because it doesn't make sense for any one of those individual customers to build the infrastructure themselves to hold the capital, to be regulated and compliant.

They grow mid- to high-single-digits in terms of revenue, which with a bit of operating leverage, turns into low double-digits and then have done a good job of acquiring, including acquiring their largest competitor. So all of that turns into, for the next few years, high teens earnings growth. And for that, you're only paying about 17 times forward earnings. So, above-market growth, below-market PE. And finally, they benefit from higher interest rates because they hold float. So should rates continue to go up, then that'll flow through to their earnings.

James Marlay: Okay. One that's maybe still a bit under the radar. Chris, what's your pick for today?

Smartgroup (ASX: SIQ)

Chris Stott: Well, I had Cuscal, but Chris stole it. So we've gone with Smartgroup. So, Smartgroup, for those of you who don't know, is primarily a novated lease salary packaging business. It's been under pressure for the last two or three years with regulatory risk around novated leases for electric cars.

Earlier this week, we got clarity on that in terms of the next five or so years and what the regulatory side of the equation looks like. And it's very, very favourable for companies like Smartgroup. So that risk has been taken off the table, we believe over the next few years, and it's actually worked out a lot better than what some people had anticipated here.

So, a price earnings ratio of 15 times, growing at low double digits we believe over the next few years, really strong balance sheet, great management team. And we think that people are underestimating the growth in novated lease space over the next two to three years, with the take-up of electric cars. It's an absolute no-brainer to use a novated lease from an after-tax perspective for anyone out there who fits the criteria. So we think that Smartgroup is probably the most well-positioned out of all the ASX companies in that space. So that's a strong buy for us.

James Marlay: Very good. Alrighty folks. Well, I hope you enjoyed that slightly elongated session of Buy Hold Sell. I'd like to thank Chris Prunty and Chris Stott for coming in. Gents, let's not make it eight years before you get you going head-to-head again.

Chris Stott: Thanks, James.

James Marlay: And folks, remember you can check out Buy Hold Sell on our YouTube channel. It's also available as a podcast on all the major podcasting platforms. We'll see you next time.