Buy Hold Sell: 3 fan favourites and 2 stocks on the rise

Buy Hold Sell

Livewire Markets

"Triple-0, what's your emergency? Your small and large-cap picks for 2021 have taken a dive off a cliff? And returns barely have a pulse?"

Oh dear. 

Well, it can feel like an emergency, can't it? Small caps are down -5.85% for the year, while large caps are faring slightly better at -5.05%. Meantime, the benchmark S&P/ASX Small Ordinaries Index has returned around 6%, while the S&P/ASX 200 has lifted nearly 9%. 

But it's not over yet. There's more than just one stock pick or two in town. And you know it. That's why in this episode of Buy Hold Sell, Livewire Market's Ally Selby was joined by Marcus Burns from Spheria and Chris Stott from 1851 Capital to get their thoughts on three regularly requested stocks across Livewire's platforms. 

We put Brainchip Holdings (ASX:BRN), EML Payments (ASX:EML) and Tesserent (ASX:TNT) on the chopping block. And for a bit of fun, we asked our small-cap fundies to share one beaten-down stock on the rise. 

Note: You can watch, read or listen to the discussion below. This episode was filmed on 27 May 2021.

Edited Transcript

Ally Selby: Hello and welcome to Livewire's Buy Hold Sell. I'm Ally Selby, and today we are turning the mic to you. We've invited Marcus Burns from Spheria and Chris Stott from 1851 Capital to analyse the top stocks requested across Livewire's platforms. Plus they'll also name one stock that they think is ready for a rebound. Thank you for joining me, gents. 

Brainchip Holdings (ASX:BRN)

I'll start on you, Marcus. First up we have Brainchip Holdings. Its share price is up a whopping 650% over the past 12 months. Do you think it's a buy, hold, or sell?

Marcus Burns (SELL): I think it's a screaming sell. The business has no revenue, has $15 million-plus of costs. Who knows what a neuromorphic chip is?

Ally Selby: Chris, over to you. Do you think it's a buy, hold, or sell?

Chris Stott (SELL): It's definitely a sell. Yeah. Less than a million dollars of revenue, they've probably got a year's worth of cash in the bank. So, if I was them, I'd be out there raising money right now.

EML Payments (ASX:EML)

Ally Selby: Next up we have gift and prepaid card provider EML Payments. It's been in the news for all the wrong reasons recently, but can investors pick up a good stock at a discount? Is it a buy, hold, or sell?

Chris Stott (SELL): It's a sell for us. We're taught at an early age, to never invest in binary outcomes, and we've got that right now with EML with the controversy over there in Ireland. So, we await the decision there, but I think it's too risky at this point until we get clarity around that situation, so sell.

Ally Selby: Marcus, its share price is still up around 130% over the past 12 months. Do you think it's a buy, hold, or sell?

Marcus Burns (SELL): Look, I think it's a sell as well. Even post that massive drop in share price, it's still on a massive multiple. So, people are still banking on a huge amount of growth long term, and we just don't think the quality of business is there to really support it.

Tesserent (ASX:TNT) 

Ally Selby: Next up, we have Tesserent, which is Australia's largest listed cybersecurity company. Do you think it's a buy, hold, or sell?

Marcus Burns (SELL): I think it's probably a sell. Again, it's rolling up about seven or eight acquisitions over the last 15 or so months. It's still integrating those. I don't think the business model's been really defined that well, and again, it barely makes any money for a markup of $220 million or something like that. So, it seems rich for us. For a business that is just finding its way.

Ally Selby: It's still been pretty good for investors' pockets. It's up around 233% over the past 12 months. What do you think Chris? Is it a buy, hold, or sell?

Chris Stott (HOLD): Hold for us. Cyber is an attractive area, obviously over the medium to long-term; but a few things make us nervous short term. One, Patrick Flannigan, its highly regarded director, left the board only a few months ago. And echoing Marcus' thoughts around the integration of all these acquisitions, it's going to be very tough. I think for them to do that over the next couple of years, so hold.

Small-cap stocks ready for a rebound

Ally Selby: Okay. We've talked about our fan favourites. Let's talk about beaten-down stocks that are ready for a rebound. Chris, I'll start on you. What have you brought for us today?

Chris Stott: Frontier Digital Ventures (FDV). It's essentially the REA in car sales of emerging markets, so run by Shaun Di Gregorio, ex-iProperty Group, ex-REA. Really good skin in the game, again, in terms of his shareholding. So we think they've got exposure to some really exciting assets particularly over there in South America. So, we think that's been caught up in the recent weakness in the tech sector. We think it's a buy.

Ally Selby: Awesome. Marcus, your time in the hot seat. What have you brought for us?

Marcus Burns: A stock called MaxiTRANS Industries (MXI). It's a truck trailer producer, one of the leading ones in Australia, so quite cyclical but going through a bit of rebound right now and has a truck trailer parts business as well bolted onto that. Again, really cheap. It's sold off some assets in the last two or three years, sold some property also. It comes ungeared, very cheap, and it's got incredible rebound earnings ahead of it. So, we like that one a lot.

Ally Selby: Well, Marcus brought along MaxiTRANS, and Chris brought along Frontier Digital Ventures. But we'd love to know what you think. 

What beaten-down stock do you think is ready for a rebound? Let us know in the comments section below. 

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Buy Hold Sell

Buy Hold Sell is a weekly video series exclusive to Livewire. In each episode two fund managers give their views 'Buy, Hold or Sell' on five ASX listed companies. Not recommendations, please read the disclaimer and seek advice where appropriate.

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