I have been surprised by how deeply negative market sentiment has become over the past two months or so.
At least one advisor went 100% in cash (and made a lot of hullaballoo about it) and the number of messages on social media that assures us all markets are ready to implode has only gathered more pace.
I don’t think I’ve ever been on the ‘still positive’ side of market commentary while so many voices are so deeply negative. It’s a complete new experience.
But let me explain how this works inside the (tiny) Australian media landscape.
The choice between publishing a supportive story or analysis about megatrend AI and today’s share market or a sharply negative critique is choosing for a few hundred readers versus many thousands.
That’s not hyperbole. Such is the situation in Australia today. Feedback and observations from other publications confirm this.
So if I am looking to increase readership or to chase eyeballs, what do you think the next story’s angle will be?
And this is how general anxiety feeds upon itself and becomes the new trend.
Indeed, as the finance sector is always ready to serve whatever becomes popular, investors are their own worst enemies.
Sorry, ladies & gents, but FNArena is nowhere near ready to join in with the doom & glooming elsewhere.
This by no means equals us saying there are no risks out there, but we do feel general anxiety levels have likely ramped up too much, too soon.
Way too much, way too soon.
A brief pull back in the current up-trend, whenever it occurs, would be nothing unusual and virtually nothing at this stage suggests such event will mark the end of AI development or the ongoing bull market for equities.
As is so often the case, perspective and context have gone badly missing amidst fear and anxiety gripping investors’ minds.
FNArena has published two counter-punching, well-documented and researched, blatantly supportive stories these past few days.
As said, today’s AI megatrend is not without its risks and detractors, but a little bit of proper context and perspective goes a long way.
Identifying Quality Opportunities
It’s a commonly heard phrase around investors and market commentators: sometimes a stock looks ‘cheap’ for good reason.
Eternally struggling car parts distributor Bapcor ((BAP)) comes to mind, but equally so Treasury Wine Estates ((TWE)), Fletcher Building ((FBU)) and Endeavour Group ((EDV)).
It’s not that those stocks can never ever see the return of better times, but good investments they have not been and many that thought to add a cheap looking bargain to their portfolio are today left licking their wounds.
One does not hear it as often, but the opposite holds true too; sometimes a stock looks ‘expensive’ for good reason.
In some cases, that reason is strong operational momentum with yet more upside to follow-through.
As long as the trend remains strong and supportive, such expensive looking shares continue to defy the skeptics and their calls of ‘grossly overvalued’.
Think Life360 ((360)), but also Zip Co ((ZIP)) and Hub24 ((HUB)), to point out a few examples.
For investors comfortable with riding the uptrend, amidst general skepticism and day-to-day volatility, the ‘art’ is to stay focused on the operational momentum, and to trust its robustness and durability.
This is always easiest in hindsight. Audinate Group ((AD8)) was once such a highflyer, but that seems a long time ago today.
The same observation can be made about Tyro Payments ((TYR)), as well as the above mentioned Bapcor and Treasury Wine.
Good news stories don’t last forever. We all pay homage to that lesson eventually.
Which should not distract us from the fact there are companies out there that seem to have a lot of growth potential up for grabs.
Sometimes, such companies combine this potential with supportive industry dynamics, or an effective moat, market leadership, exceptional management, a unique product to sell, etc; in other words: they have what makes them ‘special’.
Long-time shareholders in companies such as Cochlear ((COH)), Macquarie Group ((MQG)), TechnologyOne ((TNE)) and Wesfarmers ((WES)) know first-hand what it means to be on the register of such special (out)performers.
For those not yet on board, however, the dilemma is always the same: when does one jump on board?
Share prices seldom look genuinely ‘cheap’ and, outside of true misery and share market sell-offs, any pullbacks might not be deep enough for buying-in comfort.
Before we get to address that dilemma, we must first identify which companies might be of the special kind.
Below is a list of some of tomorrows potential All-Weathers, high quality growers ready to generate plenty of sustainable rewards for shareholders over an elongated period of share ownership.
Maybe, if/when that long-awaited share market sell-off finally arrives, this also provides better entry points in what are usually (and consistently) above-average valuations.
1. Sigma Healthcare ((SIG))
The reverse take-over of Sigma Healthcare by Chemist Warehouse (conveniently marketed as a ‘merger’) has created a true retail-wholesale leader in Australia, ready to use scale and reach to further its market dominance.
Apart from ongoing benefits from synergies and network optimisation, management is targeting growth through expansion of the discount chemist’s footprint.
International expansion includes plans to enter the UK (which apparently has no peer and a local market leader everyone likes to critique), as well as active store roll-outs in Ireland, New Zealand and the UAE.
Last week’s AGM update surprised to the upside and revealed sales of GLP-1s are starting to contribute to the already robust-looking growth story.
Trading on 49x times upgraded FY26 EPS forecasts, ‘cheap’ and ‘undervalued’ are not words that spring to mind, also showing the market’s confidence this company remains ready to deliver.
Continued success can potentially come with ramifications for Wesfarmers and Ebos Group ((EBO)) who both run competing businesses.
For shareholders in the latter two businesses, a close eye on further developments is required.
2. Generation Development ((GDG))
The past two years have been nothing other than transformational for Melbourne-based financial services provider Generation Development, others might also use the term ‘spectacular’.
Some of us might remember the old name of Austock which disappeared in late 2017, but the present business is no longer comparable.
Todays $3bn market capped powerhouse is the domestic market leader for selling investment bonds, fully owns Lonsec for research and ratings of fund managers and financial products, while Evidentia Group has brought in a large distribution capability for financial advisors.
Then there’s a strategic alliance with international giant Blackrock to develop a ‘holistic retirement solution’.
It is difficult to not consider this company as at the epicentre of a growing demand for lower-risk superannuation solutions and dependable income.
This is exactly why the share price looks so steep over the past two years. Similar as with Sigma Healthcare, this month’s AGM update proved yet again better-than-forecast and management remains as confident as ever.
3. Cuscal ((CCL))
Carrying the ASX-code that once belonged to Coca-Cola Amatil (am I showing my age?), Cuscal only listed in November 2024, but it has managed to attract attention from many an under-valued opportunity seeker, in particular post the recent August results season.
Even after an almost doubling in share price year-to-date, the forward-looking PE is still only 18x times (the market average is closer to 20x).
But then, most investors have yet to get acquainted with what Cuscal is and does.
Cuscal is a payments and regulated-data infrastructure provider that enables banks, mutuals and fintechs to move money and connect to real-time rails, including NPP services such as PayID, Osko and PayTo.
The company (market cap circa $800m) also provides card issuing and acquiring (Visa/Mastercard), supports digital wallets, and offers fraud/financial-crime solutions, underpinned by its status as an APRA-regulated Authorised Deposit-taking Institution (ADI) with direct settlement access.
Through Basiq, Cuscal supplies Open Banking (CDR) connectivity so clients can securely share and consume data.
Strategically, it has exited non-core rediATM and is scaling via the proposed acquisition of Indue.
There’s a limited track record as a public entity and it should not be forgotten this means higher risk too, but maybe Cuscal is one to keep on one’s radar?
The two daily monitored brokers in the FNArena universe have price targets still double digits above the present share price, with growth projections to match.
4. Codan ((CDA))
The corporate transformation of Codan over the past two years has at least been as spectacular as for the companies mentioned above.
Year-to-date the share price is up more than double, eclipsing even the $34 price target set by the most bullish among brokers covering, UBS.
The latter’s optimism is based on Codan’s exposure to three key favourable macro themes: gold price strength, global defence investment, and public safety.
In particular gold and defence are magical memes in 2025.
Minelab remains the global leader in handheld detectors (the kind you see people wandering around with around beaches and elsewhere) with mining prospectors in Africa especially keen to use them.
Increasingly, the Communications business is driving group profits as its unmanned systems are finding favour among military forces.
Here the key challenge is to distinguish hot inflows from momentum followers from true afficionados of a company reborn into an upgraded version of itself.
5. Objective Corp ((OCL))
Let’s start with the negative news: Objective Corp is no equal of TechnologyOne.
But then few companies listed on the ASX –technology services providers or otherwise– can truly stand up in comparison with the track record and achievements since 2004 of what might well be Australia’s highest quality achiever.
Objective Corp (market cap less than $2bn) shares many similarities, including low customer churn and a high ratio of recurring revenues.
August results convinced those still in doubt and the share price surged to an all-time record high, from which it has (slightly) retreated since.
PE ratios are not as high as those of Tech1, but then again, higher dependability and quality deserves a higher multiple.
At 50x times FY26 prospective EPS and 43.5x times FY27 forecast EPS nobody calls this share price a bargain.
There is potential for positive surprise from international expansion, but this can also translate into higher risk.
6. Telix Pharmaceuticals ((TLX))
A biotech remains a biotech and CSL’s prominent success until the covid epidemic cannot be taken as a true benchmark for smaller cap peers because plasma collecting provides for a more infrastructure-alike, less speculative groundwork.
But Telix Pharmaceuticals’ achievements over the two years past has parts of the local investment community genuinely in awe leading to declarations of this potentially becoming ‘the next CSL’.
Whether the big promise can be delivered upon might well be decided in the weeks ahead.
As Citi analysts explained in their recent update, safety run-in data from 30 patients in the phase 3 ProstACT Global trial for TLX591 in metastatic castrate-resistant prostate cancer will be released.
The trial includes three treatment groups and results will determine whether the main phase of the study proceeds.
The second catalyst is the FDA re-submission of Pixclara, a brain imaging agent. While this is not viewed as a major valuation driver, maintaining progress on near-term milestones is seen as important for sustaining investor confidence.
For those not yet familiar, Telix Pharmaceuticals (nowadays also listed on Nasdaq) develops radiopharmaceuticals for cancer diagnosis and treatment.
Revenue is anchored by a PSMA PET imaging franchise for prostate cancer (Illuccix and next-generation Gozellix), supported by a growing European roll-out and an owned radiopharmacy network that strengthens distribution and margins.
The pipeline spans kidney (Zircaix) and glioma (Pixclara) diagnostics plus therapeutics including TLX591 (beta), TLX592 (alpha) and TLX101, offering a second act beyond imaging.
The sell-off earlier in the year is a reminder that risk remains tangible for a young and upcoming business dealing with health departments and government budgets and regulations, not to mention the always unpredictable outcome of trials even if this business could develop into a ‘special one’ longer term.
The list doesn’t stop with these six.
I’d also nominate Washington H Soul Pattinson ((SOL)) which is equally re-inventing and transforming itself through full ownership of Brickworks and Milton Corp.
Soul Pattinson already had a commendable track record as a wily long-term investor, but today management is building a true multi-asset manager.
The share price has come under pressure recently which I suspect stems from homebuilders being out-of-fashion in the US (see: Brickworks), on top of regulatory and growing investor worries about corporate credit markets (more “bubbles”).
I suspect these concerns will evaporate as time passes by.
Pinnacle Investment Management ((PNI)) is successfully building a unique funds management distribution platform and its weaker share price is likely also related to corporate credit concerns.
Others to consider include ARB Corp ((ARB)), Breville Group ((BRG)), Pro Medicus ((PME)), SiteMinder ((SDR)), and Supply Network ((SNL)).
Contrary to the first five mentioned, share prices have been weaker in 2025, which suggests longer-term opportunity to add more quality to the portfolio, all else remaining equal.
Paying subscribers have 24/7 access to my curated lists for All-Weathers and related categories:
Following today’s update, and for the reasons explained, Ebos Group will be removed from my selection of Potential All-Weather Performers, together with Steadfast Group ((SDF)).
Review All-Weather Model Portfolio
The financial year ending on June 30th 2025 featured the return of Donald Trump in the White House and of extreme market volatility.
The second half of the year also saw doubt creeping into general sentiment towards AI and demand for data centres.
All in all, a gain of 13.85% (pre-fees) for the twelve months is not something to be unhappy about, right?
This section appears from now on every Thursday morning in a separate update on the website. See Rudi’s Views for the archive going back to 2006 (not a typo).
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A subscription to FNArena (6 or 12 months) comes with an archive of Special Reports (21 since 2006); examples below.
(This story was written on Monday, 27th October 2025. It was published on the day in the form of an email to paying subscribers, and again on Wednesday as a story on the website).
(Do note that, in line with all my analyses, appearances and presentations, all of the above names and calculations are provided for educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions. All views are mine and not by association FNArena’s see disclaimer on the website.
In addition, since FNArena runs a Model Portfolio based upon my research on All-Weather Performers it is more than likely that stocks mentioned are included in this Model Portfolio. For all questions about this: contact us via the direct messaging system on the website).
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The content of this information does in no way reflect the opinions of FNArena, or of its journalists. In fact we don’t have any opinion about the stock market, its value, future direction or individual shares. FNArena solely reports about what the main experts in the market note, believe and comment on. By doing so we believe we provide intelligent investors with a valuable tool that helps them in making up their own minds, reading market trends and getting a feel for what is happening beneath the surface. This document is provided for informational purposes only. It does not constitute an offer to sell or a solicitation to buy any security or other financial instrument. FNArena employs very experienced journalists who base their work on information believed to be reliable and accurate, though no guarantee is given that the daily report is accurate or complete. Investors should contact their personal adviser before making any investment decision.
