Buy Hold Sell: 5 Aussie companies ahead of the competition (and 2 big buys)

Airlie Funds Management's Will Granger and IML's Marc Whittaker analyse 5 stocks with strong financials and healthy competitive advantages.
Buy Hold Sell

Livewire Markets

When markets take a dive like they did recently, the use of the word "quality" increases dramatically. 

Suddenly, everyone is hunting quality stocks that can withstand whatever is being thrown at them by the economy and by the market. 

But what exactly is quality? Well, it has many faces, but companies with strong financial metrics, like high return on equity and strong competitive advantages, are high on the list.  

So, which ASX companies exhibit these traits and how do the pros rate them? 

To answer those questions, Livewire's Anna Dadic was joined by Will Granger from Airlie Funds Management and Marc Whittaker from IML.

In this episode, they analyse five ASX names that fit the bill and each outline the bull case on one company they believe is set to thrive. 

Please note this episode was filmed on 7 May 2025.

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Edited Transcript

Anna Dadic: Hello and welcome to Livewire Markets' Buy, Hold, Sell. I'm Anna Dadic. While the word "quality" has many facets, for most investors, it means a strong competitive edge and strong returns. So which companies on the ASX exhibit these traits? To answer that question, I'm joined by Will Granger from Airlie Funds Management and Marc Whittaker from IML. Thanks for joining us. Let's dive in. 

5 ASX companies delivering on "quality"

First up, we're discussing diagnostic imaging business Integral Diagnostics. Marc, is it a buy, hold or sell?

Integral Diagnostics (ASX: IDX)

Marc Whittaker (BUY) It's a very strong buy for me, Anna. One of the leading radiology businesses in the country. When we think about the ageing population and the demographic that's moving into more acute healthcare, diagnostic imaging is a key service. Over time, it's become more of an early-stage form of intervention in healthcare, identifying issues before people get too sick. That saves money for governments and health insurance companies.

Integral Diagnostics recently acquired Capital Health, making it the second-largest provider in the radiology space. It has scale and a predominantly regional footprint, where competition is less intense. The company is well-placed. Its balance sheet is not too bad and has grown through acquisition. Given its positioning and outlook, it's very attractively priced - about 8x EBITDA including Capital.

When we look at acquisitions in the space, especially by private equity, we're seeing deals at 12–13x EBITDA. So this business is effectively on sale but still very high quality.

Anna Dadic: Okay. Will, how about you? Is it a buy, hold or sell?

Will Granger (HOLD): For us, it's just a hold. As Marc said, I like the longer-term thematics around the ageing population. And if margins recover to pre-COVID levels, there's good upside. But we think the balance sheet is a bit stretched, and we have concerns over cash flow conversion. That keeps us on the fence - just a hold. 

 

Anna Dadic: All right. Next up, we're discussing intellectual property services business IPH Limited. Will, staying with you - is it a buy, hold or sell?

IPH Limited (ASX: IPH)

Will Granger (HOLD): It's another hold for us. It’s a capital-light business with a solid track record and strong cash flow. But we don't typically like businesses that are very acquisitive, especially people-based ones. There's a risk that you acquire a firm and then the partners leave post-escrow and start competing businesses. So, it's just a hold.

Anna Dadic: Okay. Marc?

Marc Whittaker (HOLD): I agree - it's a hold. The acquisition strategy, especially recent moves in Canada, has taken them out of their comfort zone. So while it might look reasonably valued, we don’t think the business quality is what it used to be. It's just a hold for us.

 

Mader Group (ASX: MAD)

Anna Dadic: We'll shift gears now to mining services - Mader Group. Marc, is it a buy, hold or sell?

Marc Whittaker (HOLD): It's a hold for me. I do like companies that dominate a niche. Mader’s provision of diesel mechanics in mining and industrial services is a nice niche. I like that it’s founder-led. But it's expensive. It’s a contracting business at the end of the day, and its current multiple suggests it’s more than that. We'd like to own it, but at a lower price.

Anna Dadic: Okay. Will, how about you - buy, hold or sell?

Will Granger (BUY): We think it's a buy. It's founder-led with a long track record of great returns on capital employed. They operate in a part of the mining services sector that's more resilient than people think. Their North American business has had ups and downs, but long-term it's an exciting opportunity—and we don't think that's fully reflected in the price. So it's a buy for us.

 

Anna Dadic: Sticking with another founder-led company, one of the highest quality retailers on the ASX - Nick Scali. Will, buy, hold or sell?

Nick Scali (ASX: NCK)

Will Granger (BUY): It’s a buy for us. We own Nick Scali in the fund. It's been a great business with a phenomenal track record. At current levels, you're not paying much of a premium above the value of the Australian business. So we think you're getting a near-free option on their UK expansion. And while overseas expansions are always risky, this management team has proven they can create value through acquisition. It's a buy.

Anna Dadic: Marc, same for you - buy, hold or sell?

Marc Whittaker (HOLD): It's a hold for us. Will talked about the growth strategy, and I'm a bit sceptical—particularly in the UK. In Australia, Nick Scali has strong brand recognition, but overseas, it’s much harder to replicate that. Also, UK consumers tend to be more frugal, so I’m not sure a $4,000 lounge is going to fly there. Still a quality business, but at 25x earnings, we’d prefer to wait. It’s a hold.

 

Cuscal (ASX: CCL)

Anna Dadic: Now we’ll round out this part of the episode with a perhaps lesser-known payments company, Cuscal. Marc, is it a buy, hold or sell?

Marc Whittaker (BUY): Cuscal is a player in the digital payments infrastructure space, dominating the non-big four bank segment with a 25% share. It's debt-free, trading at about 12x earnings, and well-positioned with optionality for M&A. It's got a strong management team and a long track record. It’s very cheap and a strong buy for us.

Anna Dadic: Will, how about you - buy, hold or sell?

Will Granger (HOLD): It's just a hold for us. We like its defensive qualities and infrastructure-like characteristics. But they need to hold a lot of regulatory capital, and that drags down returns. So while it looks cheap, low returns keep us at hold.

 

2 ASX stock picks - solid numbers and a competitive edge

Anna Dadic: So, we've just run the ruler over five names on the ASX. I’ve also asked the guys to bring along a stock pick of their own. Will, what’s your pick?

Sigma Healthcare (ASX: SIG)

Will Granger: Our pick is Sigma, which recently merged with Chemist Warehouse. We've talked a lot about quality and competitive advantage - and Chemist Warehouse has one of the strongest economic moats on the ASX. The rollout is still quite nascent, both internationally and even within Australia. So it's a strong buy for us.

Anna Dadic: Excellent. Marc, last but not least - what’s your pick?

Cleanaway Waste Management (ASX: CWY)

Marc Whittaker: I really like Cleanaway. It's a bit boring and predictable but that’s exactly why I like it. It’s a leader in waste services, dominating both collection and post-collection. Think curbside bins and what happens to waste afterward. With the focus on recycling and waste-to-energy, Cleanaway is a key player. It’s been making small acquisitions to build capability in post-collection. I think Mark Schubert and the team are doing a great job - driving cultural change, focusing on returns, and being very disciplined with capital expenditure.

 

Anna Dadic: That’s all we have time for today. If you enjoyed that episode of Buy, Hold, Sell, make sure to give it a like, and don’t forget to subscribe to our YouTube channel - we release new content every week.

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