The Dirty Dozen and the Pristine Fifteen: Crash-tested stocks to avoid - and to embrace

Share portfolios need a metaphorical flak jacket as this significant threat looms over Australia and the ASX.
Dr David Allen

Plato Investment Management

You don’t have to search far for headlines that would give even the most battle-hardened investor palpitations. 

US Economy Shrank in Early 2025, as Tariffs Sapped Growth, Imports Surged 
- The Washington Post, April 30
Consumer Confidence Craters to Three-Decade Low Amid Trump Tariff Chaos
- Politico, April 26
US-China Trade Collapse Threatens Supply Chains and Jobs
- The Wall Street Journal, April 25
Wall Street’s ‘Fear Gauge’ Soars to a Rare Crisis Level
- MarketWatch, April 8

As part of our risk management process at Plato, our team is regularly applying macro and geopolitical stress tests. We consider scenarios that could impact stock markets and ensure our downside exposure to these events is limited.

A big part of this involves identifying companies that would experience outsized impacts should these events take place.

This provides our investors a metaphorical flak jacket in a world of significant uncertainty.

With 35% of Australia’s exports (or $190 billion), headed to China, Australia may be the developed world’s most exposed economy in the event of a protracted trade war between the China and the United States.

So, right now it’s only natural, indeed prudent, to ask: which ASX stocks are most likely to suffer should the trade war accelerate. 

ETF
Plato Global Alpha Complex ETF (PGA1)
Global Shares
Managed Fund
Plato Global Alpha Fund
Global Shares

The Dirty Dozen

At Plato, we’ve identified the twelve ASX stocks we believe are most vulnerable to a sharp equity market selloff.

To qualify for our Dirty Dozen, a company must meet two criteria:

  1. Twelve or more of Plato’s 150 proprietary Red Flags (spanning forensic accounting, financial distress, executive remuneration, and governance)
  2. A beta greater than 1.5 (indicating heightened sensitivity to market movements)


Our research shows that companies with eight or more Red Flags underperform the market by an average of 20% over the following 12 months.


Small cap battery technology company Novonix (ASX: NVX) tops the list with 22 Red Flags. 

Based on our analysis, if the ASX 200 were to decline by 20%, we estimate the battery technology company could fall by approximately –42%

Boss Energy (ASX: BOE) comes in second with 14 Red Flags, and a projected drawdown of 40%, reflecting the heightened risk profile of the fledgling uranium miner. 

Silex Systems (ASX: SLX), also has 14 Red Flags. With a fabrication facility in Beijing, we estimate the uranium enrichment technology company would similarly fall –40% in a sharp market selloff. Not surprisingly this list is peppered with resource companies that are sensitive to a slowdown in the Chinese economy. To update a well-worn truism: If China sneezes, Australia gets COVID.

Rank

Name

RBICS Industry Group

Plato Red Flags

Predicted fall in 20% ASX crash

1

NOVONIX Ltd

Consulting/Business Process

22

-42%

2

Boss Energy Limited

Uranium Mining

14

-40%

3

Silex Systems Limited

Factory Automation Equipment

14

-40%

4

Vulcan Energy Res.Ltd.

Other International Wholesale Power

13

-39%

5

BrainChip Holdings Ltd.

Specialized Semiconductors

13

-38%

6

Lotus Resources Limited

Uranium Mining

13

-38%

7

Wildcat Resources Ltd.

Base Metal Mining

13

-38%

8

Mesoblast Limited

Transplantation Biopharmaceuticals

14

-37%

9

Syrah Resources Limited

Nonmetallic Mineral Mining

13

-34%

10

Titomic Ltd

Factory Automation Equipment

13

-34%

11

DroneShield Limited

Defense Manufacturing

17

-32%

12

Sayona Mining Ltd.

Base Metal Mining

17

-32%

The most resilient Aussie stocks

It's not all doom and gloom. In parallel, we’ve also modelled the ASX companies we expect to be most resilient in a major downturn.

Fifteen stocks stand out, with:

  • Zero Plato Red Flags
  • Beta below 0.6 (indicating low sensitivity to market volatility)

At the top of the list is Ricegrowers Limited (ASX: SGLLV), the company behind the popular SunRice brand. 

In a 20% market downturn, we estimate the Riverina-based food producer would fall just –3%. After all, people still have to eat, and rice is a go-to staple in tough times. 

Next is Shine Justice (ASX: SHJ), although somewhat a falling angel after flying high in the mid 2010's, personal injury claims have proven remarkably resilient during economic downturns. 

And in third place is Endeavour Group (ASX: EDV), owner of Dan Murphy’s, BWS, and Jimmy Brings. It’s hardly surprising that during periods of market stress, demand for Dutch courage tends to rise—particularly among fund managers.

The Pristine Fifteen

Rank

Name

RBICS Industry Group

Plato Red Flags

Predicted fall in 20% ASX crash

1

Ricegrowers Ltd. Class B

Food Production

0

-3%

2

Shine Justice Ltd.

Personal Services

0

-7%

3

Endeavour Group Ltd

Beverage and Specialty Foods Stores

0

-8%

4

Spark New Zealand Limited

Pan-Asia/Pacific Mixed Telec.

0

-8%

5

Cogstate Ltd

Contract Research Organizations

0

-9%

6

Carindale Property Trust

Equity REITs

0

-9%

7

Finbar Group Limited

Other Real Estate Investment and Services

0

-9%

8

Cedar Woods Properties Limited

Other Real Estate Investment and Services

0

-9%

9

Dexus Convenience Retail REIT

Equity REITs

0

-10%

10

Shape Australia Corporation Limited

Specialty Contracting Services

0

-10%

11

Servcorp Limited

Administrative Services

0

-11%

12

Fisher & Paykel Healthcare Corporation

Specialized Medical Devices

0

-11%

13

Schaffer Corporation Limited

Textile Products

0

-11%

14

Aurizon Holdings Ltd.

Road and Rail Transportation Operators

0

-12%

15

Insurance Australia Group Ltd

Property and Casualty Insurance

0

-12%

While predicting market corrections is notoriously difficult, being prepared for one doesn’t have to be. 

Whether you’re hunting for resilience or avoiding fragility, Plato’s quantitative Red Flags framework offers a data-driven lens to assess risk—before it shows up in your P&L.

Learn more about the Plato Global Alpha Fund 

The Plato Global Alpha Fund aims to generate “all-weather alpha” by investing in value, growth and quality ideas from across global markets while also taking short positions in companies expected to underperform. 

The Fund has delivered 22.7% p.a. after fees since inception in September 2021  (to 31 March 2025).

The Plato Global Alpha Fund is also accessible on the ASX via the Plato Global Alpha Complex ETF (ASX: PGA1). Click here to go to the PGA1 website.

........
Past performance is for illustrative purposes only and is not indicative of future performance. This communication is prepared by Plato Investment Management Limited (‘Plato’) (ABN 77 120 730 136, AFSL 504616) as the investment manager of the Plato Global Net Zero Hedge Fund (ARSN 654 914 048) (‘the Fund’). Pinnacle Fund Services Limited (‘PFSL’) (ABN 29 082 494 362, AFSL 238371) is the product issuer of the Fund. PFSL is not licensed to provide financial product advice. PFSL is a wholly-owned subsidiary of the Pinnacle Investment Management Group Limited (‘Pinnacle’) (ABN 22 100 325 184). The Product Disclosure Statement (‘PDS’) and Target Market Determination (‘TMD’) of the Fund are available via the links below. Any potential investor should consider the PDS and TMD before deciding whether to acquire, or continue to hold units in, the Fund. Link to the Product Disclosure Statement: https://plato.com.au/wp-content/uploads/Plato-Global-Net-Zero-Hedge-Fund-PDS.pdf Link to the Target Market Determination: https://plato.com.au/wp-content/uploads/Plato-Global-Net-Zero-Hedge-Fund-TMD.pdf For historic TMD’s please contact Pinnacle client service Phone 1300 010 311 or Email service@pinnacleinvestment.com This communication is for general information only. It is not intended as a securities recommendation or statement of opinion intended to influence a person or persons in making a decision in relation to investment. It has been prepared without taking account of any person’s objectives, financial situation or needs. Any persons relying on this information should obtain professional advice before doing so. Whilst Plato, PFSL and Pinnacle believe the information contained in this communication is reliable, no warranty is given as to its accuracy, reliability or completeness and persons relying on this information do so at their own risk. Subject to any liability which cannot be excluded under the relevant laws, Plato, PFSL and Pinnacle disclaim all liability to any person relying on the information contained in this communication in respect of any loss or damage (including consequential loss or damage), however caused, which may be suffered or arise directly or indirectly in respect of such information. This disclaimer extends to any entity that may distribute this communication. Any opinions and forecasts reflect the judgment and assumptions of Plato and its representatives on the basis of information available as at the date of publication and may later change without notice. Any projections contained in this presentation are estimates only and may not be realised in the future.

1 stock mentioned

Dr David Allen
Head of Long Short Strategies
Plato Investment Management

David has more than two decades’ experience investing in global equities. Prior to joining Plato Investment Management he worked for JP Morgan Asset Management in London for fifteen years becoming one of the youngest managing directors in the...

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