You’re fired! 6 ASX stocks to fire, 6 to hire (small-cap edition)

“You’re fired!” isn’t just a corporate punchline – it’s a survival tactic in small-cap investing.

At this end of the market, swings are wilder, risks are higher, and the line between hero and zero is razor-thin. After our all-cap edition of Hired/Fired struck a chord, readers, advisers and fundies came back with one clear request: “give us a small-cap version!”

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You're fired! 6 ASX stocks to fire, 6 to hire (all-cap edition)

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It couldn’t be timelier. The S&P/ASX Small Ordinaries Index jumped 8.8% through reporting season, easily outpacing the ASX 200’s 3.6%. And with rates now falling, many fund managers say the sun is shining on small-caps once again.

Selectivity, of course, is critical. So we asked six small-cap specialists which companies deserve the axe - and which deserve the promotion. Here’s what they told us, in their own words.

Emanuel Datt, Datt Capital

STOCK TO FIRE - BAPCOR (ASX: BAP)

Bapcor (BAP) has transitioned from a high-quality automotive aftermarket retailer to a potential value trap.

The core investment thesis: defensive earnings from trade parts, stable growth in retail and optionality in Asia, has eroded under poor execution and excessive management churn.

The July downgrade, cutting NPAT guidance to $31–34m, has crystallised long-held concerns about cost control and strategic clarity.

On valuation, even at ~$3.50 per share, BAP trades on an EV/EBIT multiple in the mid-teens despite a significant negative total shareholder return over five years in contrast with peers.

We believe that intrinsic value lies closer to $2.50 per share, implying the stock remains overvalued at current prices with limited positive catalysts on the horizon.

STOCK TO HIRE - Pexa (ASX: PXA)

Pexa offers a rare combination of monopoly economics, new leadership discipline, and emerging growth optionality. The appointment of a refreshed management team has sharpened strategic focus, with clearer capital allocation priorities and increasing traction in its offshore expansion push.

The core Australian exchange remains a cash generative near monopoly, with >90% market share and resilient margins. The company trades at an attractive multiple despite its infrastructure-like revenue profile.

Pexa is well positioned to integrate AI across workflow automation, fraud detection, and data services, which should enhance scalability and unlock new revenue streams in property analytics.

We recently increased our position, due to the combination of stronger management discipline, prudent capital stewardship and imminent UK expansion optionality as catalysts for a re-rate over the medium-term.

Phillip Li, SG Hiscock & Company

STOCK TO FIRE - Domino’s Pizza Enterprises (ASX: DMP)

The stock has struggled to regain momentum with FY25 results again underwhelming, as ANZ same-store sales slipped into negative and early FY26 trends remain soft. This comes at a time when franchisee profitability is well below the ~$130k/store required for sustainable growth.

Management is attempting a major strategic reset, moving away from coupon-heavy discounting towards “everyday value” pricing, but such a shift risks further near-term sales disruption. Leadership turnover adds another layer of uncertainty, with the long-time founder Jack Cowin stepping back into an executive role despite the demands of running what is now a complex global franchise network. 

While cost-outs and marketing reinvestment provide some support, execution risk appears high, and so we remain cautious on Domino’s ability to restore sustainable franchise profitability.

STOCK TO HIRE - Centuria Capital Group (ASX: CNI)

The stock de-rated in recent years as we went through what was the most aggressive rate rise cycle in the past decade. 

During this period, whilst battling the headwinds of asset devaluation and fund outflows, management focused on being match-fit by actively diversifying the funds platform whilst also managing to deliver positive earnings growth. 

As we now enter what is perhaps a more normalised interest rate environment, we believe market participants have automatically crowded into other larger fund platform peers and perhaps forgotten about the capability of this management team. 

The company have said they’re targeting $1bn in gross acquisitions for FY26, and though market conditions are only just starting to improve, it’s worth noting that in the prior cycle peak they managed to deliver close to $2.5bn (gross). 

With headwinds dissipating and with multiple levers to drive growth, I think this stock could be worth closer examination.

Donny Buchanan, Lakehouse Capital

STOCK TO FIRE - ARB CORPORATION (ASX: ARB)

ARB Corporation, admired for its strong brand and proven management, faces challenges from a tough macroeconomic environment and global tariff uncertainties. Manufacturing cost pressures from a strong Thai Baht and softer sales in some core vehicles in Australia (55% of revenue) add further headwinds.

To the credit of management, they have navigated these challenges well to date, including FY26 price increases, however the risk-reward at 30x forward earnings does not offer compelling risk-reward in our view.

We prefer to wait for a more attractive price or stronger proof of US market success.

STOCK TO HIRE - SITEMINDER (ASX: SDR)

SiteMinder, a leading ASX-listed global software business, dominates hotel distribution and revenue management. In comparison to travel peers, it boasts resilient, high-quality earnings, proven during COVID and recent U.S. travel slowdowns

In its latest results, annual recurring revenue growth accelerated, unit economics improved, and the business inflected into free cash flow positivity.

In numerical terms, the business delivered 27% ARR growth, strong unit economics with 6.2x LTV/CAC, and a shift to positive free cash flow (2.1% of revenue, up 5.5 percentage points).

With a clean balance sheet, early-stage products driving accelerated revenue, strong unit economics, and growing profitability, SiteMinder’s 6x enterprise value to ARR valuation is attractive for a fast-growing global software company - and a rare offering on the ASX.

Steve Johnson, Forager Funds

Stock to Fire - Fineos CORPORATION (ASX: FCL)

Forager owned Fineos for a number of years before the disappointments became one to many. This Irish insurance technology company, with most of its customers in North America, is a strange candidate for an ASX listing.

That’s not our issue though - we’ve had a lot of success buying orphans over the years. And it’s exactly the type of software company we have had enormous success with: entrenched software solutions with institutional customers that are very difficult to lose.

The problem is Fineos hasn’t been winning anywhere near enough new customers to justify its $1bn valuation. Although the share price suggests otherwise, up 50% over the past six months, there was nothing in its recent results to suggest our exit was unjustified. Revenue increased just 4% for the first half of the year and the all important subscription revenue grew just 6%.

Full year guidance was lowered to the low end of the previous range provided. It needs to grow a lot faster than that to justify its 7x recurring revenue valuation and, with a lack of new customer wins, signs of accelerated growth remain absent.

STOCK TO HIRE - CUSCAL (ASX: CCL)

This was the highlight of reporting season for Forager.

Cuscal’s robust 2025 results fulfilled prospectus promises and were accompanied by a significant acquisition announcement. Cuscal is set to acquire fellow banking infrastructure company Indue for $75 million in cash.

Although Indue is not currently highly profitable, Cuscal anticipates substantial cost efficiencies by migrating Indue’s customers to its own infrastructure, projecting elevated earnings growth for at least the next 4-5 years.

The existing business is expected to maintain healthy growth itself, and we believe this combination can lead to a re-rate alongside the projected earnings growth over this four-year period.

Today’s $700m market capitalisation places it on the cusp of ASX300 index inclusion and the traded volume should improve dramatically over the coming years as founding shareholders (regional banks and credit unions) sell down.

It has all the ingredients to become a reliable, dividend paying safe haven for small and mid-cap investors.

Michael Carmody, Centennial Asset Management

STOCK TO FIRE - Guzman Y Gomez (ASX: GYG) 

Guzman Y Gomez delivered an FY25 result that was below market expectations.

Lower share-based payments improved the headline number but diluted the quality of the result. However, investors remain primarily focussed on the growth outlook for the stock. On that front, the store roll-out target was in-line but the YTD trading update and the FY26 margin guidance was softer than expected.

YTD growth in the Australian business has had a slower start to the next year. Like for like (LFL) sales growth was well below the FY25 level and market forecasts for the full year. In the absence of an acceleration in top line growth, the business risks falling short of sales and earnings expectations in FY26. 

The investment and valuation risks at GYG appear to be increasing. The competitive environment in the US and Australia continues to increase and aspirational store count and margin targets are looking challenging. 

Post the result, the market has revised down GYG’s profitability and valuation. It’s rare for a company to only miss once. The GYG valuation at 31x EV/EBITDA leaves little room for error. Expensive. Sell.

STOCK TO HIRE - WAGNERS (ASX: WGN)

Wagners is a company that is exposed to the forecast improvement in the housing and infrastructure construction cycle in southeast Queensland.

The founder led company is a producer of construction materials including cement, concrete, aggregates and reinforcing steel. The company is leveraged to the facility building growth associated with the 2032 Brisbane Olympic games.

In recent FY25 result, the business exceeded market forecasts and delivered margin expansion. Pricing increases, volume growth and operational improvements contributed to the performance.

The business delivered robust growth in two core segments, Construction Materials and Composite Fibre Technologies. During the year, the company reinvested in its concrete production facilities and retired debt.

Management outlook commentary was strong, in line with forecast growth for the housing construction market. Ongoing RBA interest rate cuts in 2026 are expected to boost growing domestic housing demand.

Over the next year, revenue growth will be delivered by further quarry volume growth and ongoing margin expansion.

We see upside risk to consensus earnings and believe the stock at 11.9x EV/EBIT in FY26 is compelling value at current levels.

Rudi Filapek-Vandyck, FNArena

STOCK TO FIRE - CETTIRE (ASX: CTT)

Rather than being blinded by price action or the next ruling narrative, I have become a true believer in corporate quality and governance; the things that do not matter, until they do.

Shares in “online luxury goods retailer” Cettire have made a sizeable jump in August but all I can muster is five seconds of little interest (with the emphasis on ‘little’).

The controversies around this company and its business model in years past are simply too much to summarise, including revenue recognition in accounts, customer service practices and VAT handling. 

Foremost, any new tariff or import change thought of at the White House can instantly create the next crisis at the Cettire headquarters.

In simple terms: Computer says No. Just noticed I’ve already allocated more than five seconds. Naughty Rudi!

STOCK TO HIRE - DICKER DATA (ASX: DDR)

A good investment doesn’t always involve spectacular growth ahead. Specialist hardware distributor and SME services provider Dicker Data (DDR) beat admittedly low expectations in August and its controversial founder has now sold his remaining equity, effectively removing the proverbial Sword of Damocles.

The irony here is Dicker Data’s core bread and butter customers, small and medium sized enterprises, aren’t genuinely spending just yet. But if Harvey Norman, JB Hi-Fi et al are a Buy because Australian households are responding to easier financial conditions (on the back of RBA rate cuts), than surely SMEs will be following suit next.

Updated forecasts are pointing towards 9% growth by February next year (financial year 2025) and a similar pace for 2026. The shares are currently implying dividend yields of 4.8% for this year and 5.2% next year.

Analysts’ price targets vary between $9.45 and $11. I see the share price around $10.50 by mid next year for a return of circa 7% plus dividends (in quarterly instalments). And if economic conditions surprise on the upside, I expect Dicker Data to surprise positively too. The stock is held in the All-Weather Model Portfolio.

Quick reference: Fire vs Hire

Final words

Small-caps can make or break portfolios. They’re volatile, prone to hype, and can disappoint spectacularly when execution slips. But they can also be the market’s best wealth creators when catalysts align.

The pros aren’t sentimental. When management churn, slowing growth or stretched valuations creep in – they fire. When the combination of leadership, execution and valuation lines up – they hire.

The lesson is the same across market caps, but sharper in smalls: Be ruthless. Cut losers quickly. Back winners with conviction.