You're fired! 6 ASX stocks to fire, 6 to hire

If there’s one thing markets teach us, it’s that loyalty can be expensive.

Some stocks – think Babcock & Brown (for those who remember), Zip, or Appen – haven’t been great long-term investments. But for investors who bought and sold at the right time, they still delivered strong returns.

The lesson? Once a thesis plays out – or doesn’t work out – you need to be the ruthless boss that says, “You’re fired!” Cutting underperformers and redeploying into higher-conviction opportunities can be the difference between mediocre and market-beating returns.

In this wire, six of Livewire’s favourite fundies and analysts share the stocks they’d fire today – and the ones they’d hire instead.

No sugar-coating. No spin. Just straight-up sell and buy ideas from some of the sharpest minds in the market - in their own words.

Joseph McCarthy, Elston

STOCK TO FIRE - Pilbara Minerals (ASX: PLS)

Pilbara Minerals is a company we have been closely evaluating in the aftermath of falling prices. Attracting us initially were all the hallmarks of a high-quality mining company: reliable operations, tier 1 hard rock lithium assets, and strong management.

However, the main risks to its investment case are external. China has and is developing its extensive, high-grade, and low-cost lithium brine resources. Lithium produced from brine is cheaper to convert to battery-grade product than the spodumene Pilbara produces. 

Historical experience has been that profitability for commodity producers is negatively correlated with China’s ability to competitively produce that product domestically.

For Pilbara to deliver sustained, superior returns, it would need market conditions akin to those enjoyed by iron ore majors from 2000–2015. Notwithstanding volatility like the recent jump on sentiment, we think there is a high risk that these conditions are unlikely to materialise given the different market structure, hence being one to avoid.

STOCK TO HIRE – Telstra (ASX: TLS)

We believe the market is overlooking two key growth opportunities for Telstra.

First, 5G fixed wireless is increasingly being positioned as a substitute for home NBN connections. Telcos are ramping up marketing efforts and on offer for consumers are faster speeds, lower prices and better service than the NBN. For Telstra, this shift is financially compelling, with competitors estimating annual cost savings of up to $500 per customer on plans costing $1,000 per year.

Second, Telstra’s intercity fibre network - linking data centres across Australia - presents a source of additional upside not yet reflected in earnings forecasts. While initial guidance calls for $200 million in EBITDA, Telstra’s existing infrastructure uniquely positions it to build this network more cost-effectively than others.

Telstra’s valuation is no anomaly – it trades broadly in line with its average EV/EBIT multiple over the last 5 years. What is abnormal is the genuine growth opportunities ahead of it.

Romano Sala Tenna, Katana Asset Management

STOCK TO FIRE – South32 Limited (ASX: S32)

We are struggling to find a stock in the materials sector that we are negative on, as we believe that the rotation into this space has some way to run, but the closest candidate would be S32. The S32 share price has tracked sideways for nearly a decade, which ultimately says it all.

During this period, the portfolio has undergone extensive culling (some of which we would question).

But the real issue is that there has been virtually no refresh. 

The assets are now considerably more depleted than when they were spun out of BHP in 2015. Without a radical change in tack, we struggle to see where the earnings growth will come from.

STOCK TO HIRE – West African Resources Ltd (ASX: WAF)

We remain bullish on gold, given the ongoing devaluation of the major global currencies. WAF recently produced the first gold from the large-scale, long-life, and low-cost Kiaka mine in Burkina Faso. Kiaka is a low strip, highly homogeneous ore body that will produce gold at industry-leading costs for at least the next two decades.

With the addition of this mine, WAF is on track to produce 500kozpa in the coming years. We model free cashflow yields in excess of 30% per annum from CY26. On current forecasts, WAF’s cash balance will exceed its total market capitalisation by CY28.

Jun Bei Liu, TenCap

STOCK TO FIRE – Lottery Corporation (ASX: TLC)

While we like Lottery Corp’s infrastructure-like qualities, we see near-term earnings risk that’s not reflected in the price. The stock trades on ~27x forward earnings, a premium multiple, but we’re expecting a 2H earnings miss due to softening trading conditions and unfavourable jackpot activity. This could translate into a more meaningful EBITDA shortfall. 

With limited revenue growth and little cost flexibility, it’s going through a tough earnings period that doesn't justify the current valuation.

STOCK TO HIRE – CSL (ASX: CSL)

CSL is a high-conviction holding. Plasma volumes have normalised, margins are recovering, and the pipeline is delivering – particularly with the Vifor integration and upcoming product launches. 

Looking ahead to FY26, we expect a material cost-out program to support double-digit earnings growth. 

There’s also a good probability that CSL will receive tariff exemptions on key products, which would provide further upside support. Trading at ~24x forward PE, below historical averages, this is a rare chance to buy a global healthcare leader at an attractive valuation.

Ben Richards, Seneca Financial Solutions

STOCK TO FIRE – Life360 (ASX: 360)

Life360 is probably the most well-owned stock on the ASX among our fund manager peers (it seems to qualify as a small/mid/large cap all in one!). We can see why. It's scalable, has a large addressable market, and is growing strongly. 

But everybody knows these traits, and they are now (more than) fully reflected in the share price. 

The expected return from owning 360 shares up at this level on over 10x EV/Sales is far lower, in our view. So we've elected to go for a peer in the family safety tech sector – Qoria (QOR, formerly Family Zone).

STOCK TO HIRE – Qoria (ASX: QOR)

Qoria sells software to schools for monitoring kids' cyber safety, which is increasingly a priority for schools and parents in the digital age, where kids have access to the internet via various devices.

QOR has reached the profitability inflection point, while maintaining rapid growth. A bit like Catapult (CAT) in 2023, which ended up re-rating from 2x EV/Sales to 8x currently (we profiled it on Livewire here and here), this inflection is going to become obvious in the next 24 months.

We've been sceptical of Family Zone/Qoria in the past, and so has the market, as the stock has barely traded above the $0.40 cash takeover bid received in April 2024. But the market was also sceptical of CAT in 2023, and the fundamentals for QOR are starting to speak for themselves.

With 25% ARR growth in FY25 and EBITDA margin guidance rising to 20% in FY26 (up from 13% in FY25) driven by flat costs and its new product going gangbusters, Qoria is on track to meet the 'Rule of 40' threshold. 

These companies trade at an average of 7x EV/Sales on the ASX, well above Qoria’s current 4.6x. Crucially, its current growth is organic - not inflated by acquisitions or lower-quality cost-cutting.

Retrospectively, the best time to buy Life360 was in 2023, when its profitability began to accompany strong growth and the market re-rated it from 2x EV/Sales to 10x. We see Qoria following a similar path, having kicked off its own upgrade cycle at the end of 2023, with the multiple already expanding from 2x to 4.6x. 

Analysts are starting to lift their price targets, and while the stock has traded sideways awaiting confirmation, history suggests the biggest returns come over the next 12–24 months - just as they did with Life360.

Henry Jennings, Marcus Today

STOCK TO FIRE – Megaport (ASX: MP1)

Hitting new all-time highs. Its NaaS business has become a key theme in the tech space. The ability to spin up VPNs instantly is valuable, but you’re paying a heady price for that growth. 

Trading on a forward P/E of around 116, it’s priced for perfection. 

Revenue guidance of 14% growth already appears to be factored in. Further investment will be required to lift net revenue retention and annual recurring revenue. Any delays to FY27 targets or execution slip-ups could be punished harshly by the market, given its mammoth rise this year — the stock has doubled to record highs. Take profits. The growth is already in the price. PT back to $12.

STOCK TO HIRE – WiseTech Global (ASX: WTC)

With the current tariff regime, you’d imagine the global logistics chain is more complicated than it has been for some time. WTC is making a substantial acquisition of e2open — its largest to date. The company is no stranger to a buy-and-build strategy, having made 55 acquisitions so far, but this one is the most significant. Importantly, the deal is being funded by hard-nosed bankers who are clearly not swayed by salacious media headlines and simply want to lend money to quality teams. e2open is not a start-up, but a solid business generating around US$600 million in revenue and operating cash flow of US$111 million. 

The total addressable market is enormous — the logistics industry is worth US$11 trillion, with only around 1% currently spent on software. 

It’s a complex environment, and this acquisition looks like a smart way to capitalise on the opportunity. PT $140.

Michael Wayne, Medallion Financial Group

STOCK TO FIRE – Commonwealth Bank of Australia (ASX: CBA)

CBA appears overvalued, trading at a lofty price-to-earnings (P/E) ratio of 28x - well above its historical average and peers both domestically and globally. This premium valuation would typically suggest future earnings growth; however, CBA would appear to be priced as a growth stock despite anaemic growth prospects. 

CBA operates in a mature, low-growth banking market with limited avenues for meaningful expansion. 

Compounding this is the bank's modest 2.7% dividend yield, which is low by Australian banking standards and insufficient to justify the current valuation in our view.

STOCKS TO HIRE – CSL (ASX: CSL) and ResMed (ASX: RMD)

In contrast to CBA, large-cap ASX healthcare looks attractive in our view. When you consider CSL and RMD are trading on a similar valuation to CBA, albeit with far superior earnings growth profiles and more favourable target market dynamics, we feel the potential for a change in market leadership is significant.

Both CSL and RMD are currently trading at, or close to, their most attractive valuations in over a decade, despite maintaining strong fundamentals and robust long-term growth profiles. 

These are high-quality businesses with durable competitive advantages, each compounding earnings at 10–15% per annum. 

Five years ago, CSL traded at over 40x earnings, reflecting the premium investors placed on its defensive growth. Today, that multiple has compressed to around 25x, offering a rare entry point. 

Similarly, RMD has de-rated from a 31.8x multiple to just 25x, despite ongoing operational strength. Notably, both companies have seen an acceleration in earnings growth over recent years, and consensus expects this momentum to continue. In a market where quality is often expensive, CSL and RMD stand out as mispriced growth leaders with strong balance sheets, global footprints, and scalable business models positioned for sustained outperformance.

Quick reference: FIRE! vs HIRE!