Buy Hold Sell: 5 ASX names with strong balance sheets (and 2 big buys)

No matter which factor you like, clear-cut winners are hard to find. Why? Because quality is rarely cheap and value can be anything but. So in this episode, we're going to keep it simple by running the ruler over five ASX names with strong balance sheets.

These are companies that boast robust financial foundations: low debt, consistent cash flows, and disciplined capital management. 

Such businesses typically not only weather economic storms but often emerge stronger on the other side. But that does not mean they are automatic 'buys' if the valuation doesn't stack up. 

Applying their respective lenses are Dougal Maple-Brown from Maple-Brown Abbott, and Hamish FitzSimons from AllianceBernstein.

For good measure, they also share one ASX name that they like right now. 

Please note this episode was filmed on 2 July 2025.

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Edited Transcript

Chris Conway: Hello and welcome to Livewire’s Buy, Hold, Sell. My name is Chris Conway. No matter which factor you like, clear-cut winners are hard to find. Why? Because quality is rarely cheap and value can be anything but. So today we're going to pare things back and run the ruler over a handful of stocks with strong balance sheets. To help me do that, I'm joined by Dougal Maple-Brown from Maple-Brown Abbott and Hamish FitzSimons from AllianceBernstein. Gents, welcome.

Hamish FitzSimons: Thank you.

Dougal Maple-Brown: Thanks.

Wesfarmers (ASX: WES)

Chris Conway: First up, we're going to talk about Wesfarmers, owner of Bunnings, Kmart, Officeworks, well-known household brands. Also with interests in chemicals, health and industry. Dougal, buy, hold or sell for you.

Dougal Maple-Brown (SELL): It's a sell Chris and a pretty clear one. Great company, great businesses, great management team, great balance sheet, but look at the price. On our numbers is on 33, 34 times earnings, several standard deviations higher than where it has traded in the past. No, a clear sell for us.

Chris Conway: Hamish, Wesfarmers. It's had a strong 12 months up circa 30%. For you, is it a buy, hold or sell?

Hamish FitzSimons (SELL): It's a sell for us. We're a defensive equities manager. We're trying to beat the market when the market goes down and Wesfarmers is a stock that has a lot of those defensive characteristics, but the valuation is just too rich for us. Look, it's a good company but it's pretty much the same company it was 18 months ago. It's just 50%, more expensive and I'm not interested in paying 50% more than I could have 18 months ago.

Woolworths (ASX: WOW)

Chris Conway: Hamish, I'll stay with you. We're talking Woolworths next. Probably winning over Coles in the battle of the supermarkets. Buy, hold or sell for you?

Hamish FitzSimons (BUY): Well, I think the Coles people would differ with you. I'll let you have that argument with them. No, look, we have that as a buy. Woollies, it's come back a fair way and then they've had some problems. New Zealand's gone poorly for them. Big W's gone poorly for them. Politicians have been giving them a hard time. They've had a CEO transition. All of these things have pulled the price back. But the core of their business, 90% of it is Australian supermarkets. That's a good business. They're winning online. ALDI's really given up online. Metcash are struggling online. Amazon can't do fresh or frozen. So it's a good business. It's come back a fair way. We think, particularly in a defensive equities portfolio, this is going to give us some good, stable returns looking forward.

Chris Conway: Dougal down 6% over the past year, as Hamish was talking about. What do you make of it? Buy, hold or sell?

Dougal Maple-Brown (HOLD): Yeah, I'll sit on the fence on this one and I really do that - hold. To be clear, it's not in the portfolio. We've owned Coles the last few years. That's been excellent. Coles has done well. Woollies has done poorly. That discrepancy initially, as always the case from me, is valuation driven. Five years ago you were paying 30 plus times for owning Woolworths. Coles, when it listed about five years, ago was 23, 24 times. Coles has executed better and I would argue are still executing better. If you look at like-for-like sales, Coles are still beating Woollies. Woollies multiples have been smashed for the reasons Hamish alluded to. It's been derated 8, 9, 10 PE points. It's come back to almost the same as Coles today. They're very similar businesses. If I own one - and Woollies has come back a long way - I'll sit on the fence and have a hold on Woollies.

Brambles (ASX: BXB)

Chris Conway: Next up gents, we're going to talk about Brambles. Now, I was looking at some international fund data recently and BXB is the most widely held ASX stock, out of a 320-strong cohort of international funds. So not CBA, which I found quite interesting. Dougal, buy, hold or sell for you?

Dougal Maple-Brown (SELL): Brambles, today's a sell. It's a bit like the flip of Woollies. We have owned this the last couple of years and it's been excellent, so that's good. Why do I think it's a sell today? Two reasons. Effectively, earnings have grown very nicely and that's a good thing. So let's not knock them for that. But again, we've covered this stock for decades and just mind your eye, after they grow earnings for three or four years, because there'll be too many pallets in Mexico or the price of lumber will go up in Canada or they'll lose pallets. They're very good at losing pallets. So earnings are very high and then we brought the stock, again on a mid to high teens multiple. On our numbers today, on those quite high earnings, you're paying 25 times for the privilege. So it's a great business. We think earnings are pretty peaky and multiples are high. So today for us it's a sell.

Chris Conway: Hamish up 65% in the last 12 months. Buy, hold, or sell?

Hamish FitzSimons (HOLD): Yeah, we are a hold. We've held it for quite a while. It's been great. We still see it actually as quite diversifying. We do a lot of analysis. Is it going to help us if things go down? It still will and I think I'm a little bit more optimistic than Dougal about their earnings growth going forward. I think what everyone missed and why it outperformed is they spend a lot of time investing in their business, and for a few years, everyone's going, "Where's all the money going?" And they're going, "Trust us, trust us." And then the last couple of years, we've seen this sort of CapEx come to bear. Their costs have been better, their losses have been better. So I feel like there might be a little bit more left to run of the quality they've put into the business. So we are a hold at this point in time, but you can sort of see we've held it for quite a while. It's not as good as when it was two years ago, that's for sure.

Aristocrat Leisure (ASX: ALL)

Chris Conway: Next up we're going to talk about Aristocrat Leisure, maker of physical pokie machines as everyone knows, but also increasing its digital presence as well. It's been doing that for a while now. Hamish, staying with you. Buy, hold or sell?

Hamish FitzSimons (BUY): We are a buy on that. We've got some in it and the multiple is not a low multiple, right? I'm not going to sit here and argue and say it's the cheapest stock in the ASX. But for what it is, it's in that bucket. I think with some of these healthcare companies, it's a very high-quality business, generates a lot of cash. They're doing a buyback right now. So a couple of things to think about it. Very defensive: gambling is very defensive through the cycle. The second thing is, I think it's a lot better business now than it was two or three years ago. They've always been very good at highly regulated gambling, which is a high return, very hard to enter business, doing pokie machines, things like that. They tried to get into first-person shooters, which is just anyone can play.

They weren't very good at it. They've sold that, they've exited it and I think that means that the business you have these days is just a lot better business. And they're looking at businesses like sports betting in the US, right in their wheelhouse. It's state-by-state regulation, all these different laws, you've really got to be on top of your regulatory settings. Not everyone can enter that. It's a narrow field. So I feel like they're a good company. They pulled back a bit on their recent result too, so that created a bit of an opportunity. Had a little bit of a rally since then. Some of the short-term numbers weren't good, but interestingly, our view looking at it was look, actually, things were going to be better in the medium term, right? They were planting a lot of seeds for your future growth. So we've got a reasonable sized position in that and we're pretty happy with it.

Chris Conway: Dougal, any value there for you? Buy, hold or sell?

Dougal Maple-Brown (SELL): That's to sell for us. I can't argue with Hamish's comments on the company and we've owned it in the past, and I fully believe it's a better business today than it was previously. But again, on our numbers, it's on a Wesfarmers-ish multiple. It's low 30 times forward earnings. We haven't got any, and dare I say it, no stocks in the portfolio on those sort of racy multiples. So a sell for us.

REA Group (ASX: REA)

Chris Conway: Fair enough. Next up we'll talk about REA Group. Now, of course, the owner of realestate.com, which a lot of people would know, but increasingly owning ancillary businesses that plug into the platform that they can leverage. Dougal, staying with you. Buy, hold or sell?

Dougal Maple-Brown (SELL): Yeah, this one's going to be even shorter, Chris. If I didn't like Aristocrat on 33 times, I'm not going to like REA on 48 or 49 times. Again, I'm not against the business. We've owned Domain, it's number two player, both directly Domain, the stock, and also indirectly through NEC/Channel 9. So I like the businesses. I actually think the new owner of Domain is going to be pretty aggressive, so that could shake the market up. You're paying say 48, 49 times for earnings. Wow. Yeah. Mind your eye if that market gets ugly.

Chris Conway: Yeah. Hamish, what about you? What are you seeing? Buy, hold or sell?

Hamish FitzSimons (SELL): I agree strongly. I think it's about to get pretty rough out there.

Guest picks

Chris Conway: Very good. All right, let's get focused on some stocks that you guys do like - a higher quality name that you think has the opportunity to outperform over the next 12 months. Hamish, what have you got for us?

ResMed (ASX: RMD)

Hamish FitzSimons: Look, I think ResMed's a very interesting, quality name. What they do is they're a medical device company that make devices that treat sleep apnea, which is when you have obstructed airways at night when you are sleeping. And the part of the reason they've come back is there has been a lot of noise around weight loss drugs. People say, "Oh, weight loss is highly correlated to, or weight is highly correlated to having sleep apnea. That's going to be bad for ResMed." I think the data's starting to emerge that actually that's not strictly true. There are a lot of factors between the clinical trials for Wegovy and sleep apnea. There are differences in gender. There are differences in diabetes presence in customers. There's differences in persistence of issues. There's differences in exercise patterns.

We're actually starting to see that Wegovy may actually be, and those sorts of drugs may be good for sleep apnea because a lot more people go to their doctor, get assessed and sleep apnea is a very under-diagnosed condition. All of these things add up to ResMed being in quite a good space. The other thing is that their major competitor globally is a company called Philips. They're in the midst of a recall that they just can't seem to get themselves out of. So I look at ResMed paying market-ish multiples, maybe a bit higher, for a really high-quality company with a lot of growth with a very strong competitive position. I think that's going to give you some good returns in the future years.

Chris Conway: ResMed for you, Hamish. Dougal, what have you brought for us today?

Treasury Wine Estates (ASX: TWE)

Dougal Maple-Brown: Well, not today, Christopher, but I'm a value guy. So the number of quality companies we're looking at is pretty small, obviously. We're normally fishing in what they'd call a fallen angel basket, and my fallen angel for you today is TWE, so Treasury Wine Estates. So they're the owner of the iconic Penfolds wine brand. We've followed that company for decades. It's been owned by various different listed companies in this country, including a beer company once.

When it's on its own two legs, it's traded pretty ritzy multiples for long periods of time, mid-twenty times. It, like ResMed to some extent, has had a few stumbles over the last little while. Some of those were out of its hands. So when China banned Australian wine, that wasn't helpful to Penfolds. And then more recently, they've had a big acquisition in the US. We weren't a shareholder then, but that was not taken well by the market. To be fair to the company, it's not clear yet whether that's been good, bad or ugly. In that process, the stock's been massively derated from mid-20 times, I don't know, maybe on 12 or 13 times earnings today. Those earnings are still forecast to grow. If a company on 12 or 13 times earnings can grow earnings, that could be a significant outperformer.

Chris Conway: Dougal, do you do a bit of customer research every now and again on the Penfolds?

Dougal Maple-Brown: Just occasionally... The shorter this goes for the quicker I'll get into it.

Chris Conway: Well, there you have it… what a fantastic note to end on. If you enjoyed that 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.