Buy Hold Sell: 4 ASX stocks for playing defence (and 1 to leave on the bench)

This episode was filmed Wednesday, 24th September 2025.

The siren might have sounded on another AFL season, but when it comes to markets, the game next stops. 

With the ASX trading near record highs and valuations stretching common sense, investors are asking the big question: how do you protect the scoreboard when conditions turn tough?

As the saying goes, attack wins you games, but defence wins you titles. And while growth stocks often grab the spotlight, low-volatility names and reliable portfolio ballast can be just as crucial for staying in the match when momentum shifts.

So in this episode, we’re drawing up our own starting lineup of ASX defenders. Which stocks deserve a place in your portfolio’s backline, and which ones should be left warming the bench?

Joining Livewire's Tom Stelzer to make the calls are Tim Riordan from Blackwattle and Brenton Saunders from Pendal, who put three ASX names under the spotlight. They also share their best defensive stock picks for when markets get choppy.

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Edited transcript

Tom Stelzer: Hello, and welcome to Livewire's Buy Hold Sell. I'm Tom Stelzer. We're fresh off the back of the AFL Grand Final, and as the saying goes, "Attack wins you matches, but defence wins you titles." With the ASX near record highs in valuations stretched, we're on the hunt for the stocks that are offering low volatility and portfolio protection in case times get tough. But who's making the starting lineup, and who should you leave on the bench? To make that call, I'm joined by Tim Riordan from Blackwattle and Brenton Saunders from Pendal. Guys, thanks for joining me.

SGH Ltd (ASX: SGH) 

Tom Stelzer: We're going to start with SGH, formerly Seven Group. It's got interests across media, mining, and construction. Brenton, buy, hold, or sell?

Brenton Saunders: (HOLD) That's a hold for us now. It's a core holding of ours, though. We are very well-disposed towards the business. Of all the management teams we get to deal with in our jobs, this is one of the best, I think. Execution, use of debt, the mix of the business, the alignment of management, and the diversity of the business are all very strong hallmarks. But probably the strongest attribute of this business is management. It's just absolutely driven to deliver. It's driven to take share, it's customer service. It really is a very strong business like that. It's got more expensive now, but it's a pretty reliable grower. And that's why we think it's a core portfolio holding in the space.

Tom Stelzer: Tim, what about you, buy, hold, or sell?

Tim Riordan: (SELL) Yeah, we're a sell at this point. Equally, I think with Brenton's views, we hold Ryan and Richard in really high regard. Their deployment of capital over the years has really set them apart as a team and earned them an incredibly solid reputation. And the business has traded to a point where, from a valuation perspective, we've found that we can find higher-quality businesses elsewhere, and that really comes back to thinking about the collection of businesses underlying SGH. And just the cyclicality within a few of those businesses, they've really been helped recently. Although they have one share by the cycle, which has obviously been quite strong for quite a long time. So, we are a little bit cautious on the back of that, together with the valuation. The last point is just where the balance sheet has got to, circa two times. It doesn't leave them with a lot of flexibility in terms of whatever might be next in terms of deploying more capital. So yeah, that just leaves us on the bench for now.

CAR Group (ASX: CAR)

Tom Stelzer: Fair enough. Next stock is CAR Group, formerly Carsales. Tim, I'll stay with you, buy, hold, sell?

Tim Riordan: (BUY) CAR's a core buy for us. The business. we think, is very special. The development of technology within CAR has been a long-held point of difference, and has led to layers of advantage for the business as they've developed technology locally. And being able to deploy capital globally, places like Korea, Brazil, the US, and then to deploy the technology that they've developed here in Aus throughout each of those locations. The maturity of the business has got on a bit. It doesn't grow quite as quickly as it has; however, the global businesses make up more than half of the profitability these days, and so you really do have a wonderful growth engine that, from a scale perspective, can continue to grow for a really long time. We love the dynamic that the business has gotten itself into from a competitive position, in a sense, it is monopolistic in at least a couple of those markets, particularly here in Australia. Incredibly well-run, very long-tenured staff, going through a CEO changeover now at the moment, but a lot of consistency. And so we see it as a core buy.

Tom Stelzer: Brenton, what about you buy, hold, or sell?

Brenton Saunders: (BUY) Yeah, I'm the same. I'm a core buy for CAR and for a lot of the reasons that Tim has mentioned. I just have to say, of the classifieds, for us, it's one of the better ones. It has a deep moat in many respects, one of them being technology, second being incumbency. And it's also one of the very few classifieds that are successfully diversified internationally. The other two, which are very successful in their own rights, have had a much more checkered track record with that. And they have quite a differentiated approach to that international expansion, where they're quite incremental. They'll take a stake in a business, run it for a while, get to know it, get to know the market. And if they like it, they'll take more or all of it at a later stage. Very passionate management, very strong management, and a capital-light structure that we really like. As Tim mentioned, the growth rate is maturing, but it's such a consistent grower because it's got so many levers to pull in terms of attaining that growth that it's worth paying for this company. So, core buy for us.

Endeavour Group (ASX: EDV)

Tom Stelzer: Next contender is Endeavour Group, owner of BWS and Dan Murphy's. But can it play a role in defence? Brenton, I'll come back to you, buy, hold or sell?

Brenton Saunders: (SELL) We're sell at this stage. It's a company that's getting more interesting, not least of all because of the turnover in management. It's had some pretty significant headwinds in pretty much most areas of its business. Be that on the pubs and gaming side, or be that the off-premise Dan Murphy side. I suspect most of those things are either fixable by a cycle or by a management intervention, and that'll probably happen in time. The thing that concerns us right now is that with a new CEO coming in, we just think there's still scope for a downgrade once she arrives, just to set the base. But from there it becomes more interesting, because it's a potential restructuring opportunity. There are a lot of intervention increments that management can bring to improve the business from there. So we are watching it pretty closely, but for now, we still think it's a downgrade risk.

Tom Stelzer: Tim, it's a sell from Brenton. What about you guys, buy, hold, or sell?

Tim Riordan: (SELL) Yeah, I'd echo that. We're also a sell on Endeavour. We've played around with it in the past and tried to really sort of understand, particularly Dan's, which is our favoured part of the business. We feel as though they lost their way there in terms of the value offer and being able to stand out as the lowest price in the market. It is a tricky business, but we think that's how they got their scale. I'd echo a lot of the points that Brenton raised in terms of the key risks around CEO changeover. We're seeing something similar. In a similar part of the market, actually in TWE at the moment, it's a really tricky moment. I guess the challenge that new management is going to have coming in is that what we've found through trying too many of these over the years is that turnarounds tend to take a long time.

They tend to take twice as long as they'd like, cost twice as much as they'd like, that type of dynamic. And so that's why we think we have the time. That's probably compounded a little bit with what's going on in the alcohol market just structurally. I think it's evident for those who've looked through the market. And we've been looking through opportunities in the likes of Aurora and Endeavour as well as TWE, and there really is a lot of cyclical pressure on alcohol consumption. And so, whilst volumes are under pressure, it's tricky. You can't take price in this business, not consistently. And so as a result, you're under a lot of pressure. The last point on Endeavour, which puts us on the back foot, is really the balance sheet. And you're over three times levered, and that's not a great starting point. So, do you risk a downgrade, do you risk some sort of solution to the balance sheet as well? So, we'll stay on the bench on this one.

Guest picks

Tom Stelzer: We've also asked our guests to bring the stock they think offers the best defence in case the market corrects. Tim will come back to you. What have you got for us?

Dalrymple Bay Infrastructure (ASX: DBI) 

Tim Riordan: DBI hasn't had a long listed life, and starting to get to more notoriety now that the groups Brookfield and QIC that brought it to market have exited, and it's gone into a few of the indices. For background, this is a coal terminal in Queensland servicing the Bowen Basin. It's been around since the mid-80s. It started life as a 15 million tonne facility. Their current expansion plans would put them up towards, or just above, a hundred million tonnes. So, it's a really special asset from that expandable nature of it. It's servicing the highest quality, met coal, coal mines that exist globally. And from that perspective, it's been able to establish itself with a framework of contracts that support the financial structures, support a fully contracted profile. Whether the miners use that capacity or not, they pay for it. And so, there's also a cost pass-through structure within the contracts.

And so, DBI investors are fully backed in terms of the returns, and they've obviously been able to grow and deploy capital over time. Some of the challenges from investing in infrastructure we've found over the years have just been around regulation. This is a relatively light-handed regulator structure. And so from that perspective, there's a really good balance between outcomes in terms of the return earned for capital deployed. And so from that perspective, yeah, we really like this one. And the starting point at a circa 6% yield is really quite attractive, so I can see a pathway for it. So, it's a buy for us. 

Metcash Ltd (ASX: MTS) 

Tom Stelzer: Brenton, what about you, what have you got?

Brenton Saunders: So I've got Metcash. Just in the market, it's a very low beta stock, so it doesn't react as strongly as some do when markets get volatile. It has the backing of a relatively compressed and low valuation relative to its own history and in absolute terms. It's groceries for half the business, which is its very nature, quite defensive. And even though there is more price competition going on in groceries at the moment, the other half of the business, which is in hardware, is coming off a really low base into a declining interest rate environment. So, that part of the business should offset any weakness that does eventuate in grocery. The real risk on the grocery side also relates to illicit tobacco, which has affected a number of consumers through the refiners like Ampol, Viva, the grocers, and obviously Metcash. But that's quite a small part of their business, so it's no longer as big a risk. It's a steady-as-you-go, well-run business, and that's why we like it for its defensive properties.

Tom Stelzer: That's all we have time for today. Thanks to Tim and Brenton. Make sure to check out our YouTube channel for more buy, hold, sell.