You’re fired! 6 ASX stocks to fire, 6 to hire
Small-caps are rallying, but not all will thrive. One to hire & One to fire. Michael Carmody
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.