Buy Hold Sell: 6 ASX small caps thriving in a macro storm
Nick Sladen (LSN) and Matthew Nicholas (1851) on the small caps that can weather sticky inflation, rising yields and a sluggish economy.
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Right now, bond markets are front of mind for investors. In this episode of Buy Hold Sell, we explore what that means for small caps.
Sticky inflation and ballooning budget deficits are pushing yields higher, and with the RBA likely to hike rates again, the question isn't just which stocks look cheap; it's which ones can survive and thrive even as the cost of capital keeps rising.
Small caps are particularly exposed in this environment and get hit harder when sentiment turns. But within this universe, there are always names with the earnings quality, balance sheet strength, or structural tailwinds to hold their ground.
To find which ones can weather the storm, Matthew Nicholas from 1851 Capital and Nick Sladen from LSN Capital Partners run the ruler over four small caps, and each share a high-conviction pick each.
This episode was filmed Wednesday 16th September, 2025.
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Episode summary
1 - Integral Diagnostics (ASX: IDX)
Nick Sladen - BUY
His verdict: Strong structural tailwinds across MRI deregulation, GP incentives, and an ageing population. A new CEO can drive higher returns by sweating existing assets and potentially selling the New Zealand business to pay down debt.
What he said: "It trades on sub seven times EV to EBITDA. There's a lot of transactions in the private market going on through 10 and 12 times."
Matthew Nicholas - HOLD
His verdict: Cheap stock with a great new CEO, but rising competition as wider MRI deregulation kicks in, potential doctor remuneration friction, and high leverage keep him on the sidelines.
What he said: "They get a bit of a free kick and a lot of their machines get deregulated ahead of the market. The rest of the market now gets deregulated in 12 months from now and we think competition will begin to increase."
2 - Bravura Solutions (ASX: BVS)
Matthew Nicholas - BUY
His verdict: The market isn't giving management credit for the turnaround. Record-low customer churn, proven pricing power, and deep operational cost cuts set the business up for accelerating top-line growth.
What he said: "If they can show the market that top line is starting to accelerate, we see some meaningful upside from the current multiple."
Nick Sladen - HOLD
His verdict: Impressive profitability turnaround driven by cost-cutting, but top-line growth looks limited and there are better high-growth opportunities elsewhere.
What he said: "It's a hold from our perspective as we've just got other opportunities with probably better top line growth."
3 - Zip Co (ASX: ZIP)
Nick Sladen - BUY
His verdict: Phenomenal momentum in the US market, lower funding costs from a recent refinancing package, and non-discretionary product mix make it resilient despite consumer pressure.
What he said: "We think the business is well positioned... and think the recent selloffs an opportunity to add to the position."
Matthew Nicholas - HOLD
His verdict: Management executed a great balance sheet cleanup, but an untested environment with US interest rate hikes, rising bad debt provisions, and sensitivity to domestic interest rates create near-term risk.
What he said: "They're doing all the right things. We just think there's risk there that it could get tougher for them."
4 - COG Financial Services (ASX: COG)
Matthew Nicholas - BUY
His verdict: Largest portfolio holding. Massively benefits from government policy supporting electric vehicles, driving explosive growth in its salary packaging and novated leasing division.
What he said: "Right now salary packaging is 50% of COG's earnings. In two years time it'll be somewhere between 70 and 80%."
Nick Sladen - BUY
His verdict: Also his largest position. Lower EV prices expand the customer base, novated leasing is seeing strong organic growth, and a fortress balance sheet leaves plenty of room for acquisitions.
What he said: "Lowering of the prices actually making it more economical for lower income earners to our EVs. And you're seeing the addressable target market going up materially for COG."
GUEST PICKS
5 - Cogstate (ASX: CGS) - Nick's pick
His rating - BUY
His verdict: A transformational expansion beyond Alzheimer's into sleep, psychiatric, and rare diseases. Supported by a debt-free balance sheet, active share buybacks, and strong long-term earnings potential.
What he said: "We're very attracted to that one... and we think the outlook's very bright."
6 - FDC Consolidated Holdings (ASX: FDC) - Matthew's pick
His rating - BUY
His verdict: Strong post-COVID tailwinds in office reconfigurations and infrastructure. Driven by a risk-averse management team, wide equity ownership across key staff, and exceptionally high revenue certainty.
What he said: "Earnings certainty, valuation support, good management. It's an easy one for us."
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I'm an Investment Writer and Presenter at Livewire Markets, dedicated to creating content that makes the world of investing more accessible. With a background in story development, I enjoy distilling complex topics into engaging, impactful media that resonates with audiences.
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I'm an Investment Writer and Presenter at Livewire Markets, dedicated to creating content that makes the world of investing more accessible. With a background in story development, I enjoy distilling complex topics into engaging, impactful media...
I'm an Investment Writer and Presenter at Livewire Markets, dedicated to creating content that makes the world of investing more accessible. With a background in story development, I enjoy distilling complex topics into engaging, impactful media...
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