Buy Hold Sell: 5 ASX small-cap ideas and the hot sectors driving them

When it comes to small caps, investors tend to fall into two camps: those who see risk and those who see opportunity. With a small-cap comeback underway, the latter camp might just be onto something. While this part of the market can be volatile and under-researched, it’s also fertile ground for stock pickers with a sharp eye and thick skin.

In this episode of Buy Hold Sell, Livewire’s Anna Dadic is joined by Matt Griffin from Maple-Brown Abbott and Luke Laretive from Seneca Financial Solutions to uncover where they’re spotting value in today’s small-cap landscape.

From sector-level trends to the traits that separate a potential winner from a flop, these two fundies share how they’re navigating a dynamic market full of hidden gems and hopefuls.

We put three small-cap names under the microscope, with our guests weighing in on which ones still have room to run and which might have already had their moment. They also each share a high-conviction pick they believe could outperform over the next 12 months.

Please note that this episode was filmed on October 8, 2025.

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Edited transcript

Anna Dadic: Hello and welcome to Buy Hold Sell. I'm Anna Dadic. Small caps are often seen as riskier and less researched than the broader market, but that's exactly what creates opportunity for the active and savvy investor. Joining me today are Matt Griffin from Maple-Brown Abbott and Luke Laretive from Seneca to run the ruler over five small-cap stocks across different sectors that are catching their eye. Luke, let's start broad. Where are you seeing opportunity at a sector or thematic level?

Luke Laretive: Yeah, we don't do much thematic investing at Seneca. It's against the way that we think about the world working. We're just a bottom-up, fundamental investor. I think when we look back at things ex post, we typically can bucket or group our ideas into some themes or some styles. 

Certainly, I think the first one that's most prevalent in our portfolio right now is these semi-distressed recurring revenue businesses. I think about the likes of an Audinate or a SiteMinder last reporting season. They've been market darlings, they've been highly prized. They've actually got pretty good underlying growth but have been thrown out for one reason or another. So it's throwing up an opportunity for us. 

In the second bucket would be very typical Seneca inflecting profitability. If we can find a business that can surprise the market with just how much cash it can print in a half or in a year, typically that's been a significant driver of alpha for us. And I think whether it's a Catapult, RPM Global, Energy One, there's probably five or 10 of these we've owned over the last 12 or 24 months. That's really the two themes I suppose, that we are making money out of at the moment.

Anna Dadic: Okay. Matthew, what about you?

Matt Griffin: We actually run a very similar process to Luke. So we're bottom-up stock pickers, don't try to pick macro themes or sectors or anything like that. Having said that, where I see groupings of stocks in the portfolio at the moment, firstly would be mining and industrial services. That's been long held overweight for us. That sector has really come good in the last couple of years. 

I would say there are still some stocks that are lagging there that the market hasn't really turned their attention to. So Macmahon's being a good example of one that we think over the next 12 months could play a bit of catch-up, has some good catalysts available. Broadly, in that sector, valuations are looking fair by historical levels. 

I think what people are overlooking is just how strong the order books are. Contract terms have really moved in favour of the contractors, so there's much lower risk of project blowups than there have been in the past and the balance sheet is in very good shape. So all these companies have good opportunities to deploy cash, grow the business organically or via acquisition or ramp up dividends and buybacks. So we think that's well-positioned.

Anna Dadic: All right. Matt, staying with you, what's at the top of your checklist when it comes to stock selection?

Matt Griffin: Yeah, two things. So our whole process is earnings-based. We say earnings drive share prices. Regardless of whether a stock's a growth stock, a value stock, a mining stock or industrial stock, as long as it has a growth profile that we like the look of, and has potential to beat consensus numbers, we will invest in that stock. That matters more to us in valuation than a number of other metrics, which are secondary considerations to us. 

Secondly, management is very important and look, everyone will come on the show and tell you management is the most important factor in small caps, for good reason. I would say we take it a bit more of a broad approach. So we look at corporate governance as a whole, spend a lot of time looking at who's on the board, what the skills are like, are board members incentivised through stockholding and what are management incentives, their short-term and long-term incentive packages? Is that driving the right behaviour? We tend to find that bad corporate governance will sharpen share prices sooner rather than later.

Anna Dadic: Luke, what about you, what are your characteristics that you look for?

Luke Laretive: Yeah, I think not dissimilar to Matt, I think there's a range of things that run true regardless of the stock you want to buy. I think for us, management and understanding incentives really drives everything. So if you can find what's in the management's KPI, you can normally find out what the company's going to achieve and you can normally figure out where the share price is going to be. So those things are important. 

I think also, you've got to be able to identify value in a number of ways. That might be a sum of the parts asset play type opportunity where it's a one plus one equals three. Other times, you will be focused on earnings like Matt was talking about, and that might be earnings that are really well appreciated and understood by the market, but their strategic valueis missed.

Or it might be more a case of the market's got really bearish about the growth prospects of this business and you can buy something that's quite good for a very discounted price. So I think the key thing that's working for us, and I think works for all good fund managers, is flexibility, being able to make money 4, 5, 6, 7, 10 different ways. 

And I think being able to identify what a good business looks like at various points in the business journey, for lack of a better word, and different points of the business cycle. That's really what's key for us.

Bravura Solutions (ASX: BVS)

Anna Dadic: Okay. Alright. Let's get into some stocks now. First up, Bravura Solutions. This is a software company for the financial services industry. It's been through a turnaround phase recently and they announced a new CEO starting in the new year. Luke, is it a buy, hold or sell?

Luke Laretive: (SELL) It's a controversial sell for me. I know this is a fundie favourite. A lot of my peers, colleagues think this is a great stock. I'm going to put my advisor hat on and say, I don't think many of those people have actually used the Midwinter product and I don't think it's a very good product yet. 

I agree that it's got potential to be a good product. I agree that this stock is doing a cost-out driven strategy here, but at five and a half times EV to sales, to me this thing's now priced like it’s a high-quality, top-line growth business and when in reality it's just a cost-out story from our perspective. 

So if it was a better product, if it wasn't in such a competitive marketplace, and I think if the market actually understood the product application better, they wouldn't prize it so richly.

Anna Dadic: Okay. Matt, what's your take? Buy, hold or sell?

Matt Griffin: (BUY) I'm taking the opposite view. I think it's a buy. Look for us, it's had a number of earnings upgrades over the past year. It has already had one for FY26 a couple of weeks ago. Importantly, that was driven mostly by top-line growth. So while it's been a cost-out story to date, we're actually starting to see a bit of sales momentum come back. I think they've cycled through the contracts they've lost and they're getting a bit of momentum back on the top line. So that's very important. 

While there is still some cost-out opportunities there, importantly, if you look at that business now, it's being run by a bunch of people who are ex-Constellation Software and encourage everyone to look at the Constellation Software story in Canada. It's been an incredible story over the last 20 to 30 years and if they can replicate a fraction of what they've done with Constellation at Bravura, I think there's a long way to go in this stock. 

I also spoke about incentives before, management here is incentivised on revenue growth and EBITDA margin expansion. Two simple metrics that they can get those up - management makes more money, shareholders do very well. We like that.

NRW Holdings (ASX: NWH)

Anna Dadic: Next up we've got NRW Holdings, a diversified mining services company. Matt, I'll stay with you. Buy, hold or sell.

Matt Griffin: (HOLD) It's a hold for us. I do like the whole space. I do think NRW has probably got a bit of earnings upside, and you'd be hard-pressed to find a management team in the space that's got a better acquisition track record than they do. They've really done an incredible job. The reason it’s a hold is because NRW is primarily exposed to coal and iron ore as its commodities. 

I want gold at this point in the cycle. I think the contractors who have gold clients are going to have more work available and easier opportunities to push through price-wise and get margin, and potentially have better growth outlooks on similar or low multiples. So nothing wrong with NRW, I just think there are better options in the space.

Anna Dadic: Luke, what's your take?

Luke Laretive: (HOLD) Yeah, Matt and I saw these guys both at Euroz Hartleys in February last year. I think the stock was two bucks-ish and they had Whyalla as the big thing that was hanging over the business. It would've been a really good buy. You probably bought it. We weren't smart enough to buy it. 

So in hindsight, that was a really good time to buy the stock. I think, like Matt pointed out here, there's less appeal now at the current share price. I think the incremental gain above market consensus here is maybe harder to get. 

I think mining services is a great space. Agree that there's a lot of opportunity there. For us, Emeco is probably our pick in the sector at the moment. I think - Imdex, XRF - these are all businesses that, like what Matt's talked about, have got exposure to base metals and precious metals, which is probably where the cream is, I suppose, in the earnings at the moment. So yeah, there's lots to like in mining services, but NRW probably not the pick for us. Another hold.

Anna Dadic: Okay. And finally, Integral Diagnostics, one of Australia's leading radiology networks. Luke, I'll stay with you: buy, hold or sell?

Luke Laretive: (SELL) You'd think that if you go by the rule of thumb that everyone rolls around - an ageing population and everything in health makes money - you’d think diagnostic imaging would be a better sector to be in. It's actually been a pretty average return sector. They do 5% growth and 5% return on equity. It's pretty mediocre in the grand scheme of things. Not a huge fan of this one. 

They've had labour force inflation. They're a roll up, so some of the best practitioners maybe don't want to work as part of a big corporate. They're facing these boutique challenges and offshoots. There might be some regulatory tailwinds here. I'm not a political animal. I'm not the best on forecasting that stuff, so maybe I'll leave that for brighter minds, but yet probably not for us at the moment, IDX. I know why everyone likes it. I get it. But yeah, it doesn't really fit with the way that we're looking to invest at the moment at Seneca.

Anna Dadic: How about you, Matt?

Matt Griffin: (BUY) Yeah, I think it's a buy. I will say I agree with Luke. It's had a very chequered history. The share price has halved over the last few years. There have been a number of missteps by old management. 

I'd say, where it's positioned now, though, is you're seeing the industry data come back for radiology. So the industry growth numbers have actually bounced back quite strongly, which I think was a long COVID hangover, which is finally rectifying itself now. There are some regulatory tailwinds, so deregulation of MRI licences, national lung cancer screening should be a good volume kick over the next few years. 

So there's some good top-line aspects there. On the cost side, I think there's more cost out through the Capital Health acquisition, in terms of synergies than what people realise. On valuation there’s quite a good basis. There have been a number of private equity-type deals in the space over recent years. They've all been priced well above where Integral is trading at. So I think that tells you the stock’s cheap and we think earnings have reached the inflexion point now.

Guest picks

Anna Dadic: So I've also asked each guest to bring along one small cap stock each that they like for the next 12 months, ideally tied to one of the themes that were mentioned earlier. Matt, what's your pick?

Meeka Metals (ASX: MEK) 

Matt Griffin: Yeah, I've gone for a gold stock. It's one that's flying a little bit under the radar. One of the smaller developers moving into production. Meeka Metals, MEK is the ticker. This stock has just commissioned their mine, which is a restart of an old mine. So they'll go through the usual commissioning ramp-up issues that people have. But importantly, I think they've got a very good team in place to manage those issues. 

So I think we should expect a fairly smooth ramp-up. They should be cashflow positive pretty soon, so that will potentially see a rerate as they trade on a producer-type multiple. And there are two areas of upside there over the next few years, which I don't think are priced into the people's numbers yet. 

Firstly, I think the geologists have been quite conservative in the way they've done the resource. So there should be a fair bit more material there than they thought - more gold in the ground. 

And secondly, there's quite a logical plant expansion project, potentially double production over the next few years, which I don't think is in some people's numbers. So this is a stock that absent the commodity price, we still think it can double over the next few years just on those drivers alone.

Anna Dadic: OK, Luke, what's your pick?

Regal Partners (ASX: RPL)

Luke Laretive: Yeah, I'm going to go with one of these semi-distressed situations, I suppose, in Regal Partners, RPL. So they're a big global fund manager based here in Australia, one of the largest, probably biggest payer of brokerage, I think, in Australia among the stockbrokers. But they had a few investment missteps - Opthea - on the front page of the AFR. Huge story, lost 220 million bucks. Stock got kind of thrown out. 

But the reality is Regal are focused on all the right areas, Aussie small caps, water rights, royalties. We think these are all far better, I suppose, exposures for a fund manager or funds management house than say a Pinnacle, who are more focused on private credit, which is where they're getting most of their fund flows from, which we think is probably at peak or maybe even past it now. 

So I think from our perspective, Regal's still cheap relative to Pinnacle, relative to historical multiples. It's growing quite well and probably got some upsides still to growth. So we think that's a pretty good stock at the moment to own. And while the small cap rally is going to continue, no reason why Regal shouldn't be spitting off fat performance fees and hopefully surprising to the upside.

Anna Dadic: Plenty of variety there. If you enjoyed that episode of Buy Hold Sell, give it a like, and don't forget to subscribe to our YouTube channel. We release new content every week.