The ASX 200 has followed US equities lower, with the index now down ~8% since mid-February, which represents the largest drawdown since late 2023.
Risk-off sentiment has been fuelled by escalating trade tensions led by the US against its major trading partners, which has driven macro concerns around the outlook for global economic growth, inflation, and interest rates.
Following the pullback, the risk/reward of the ASX 200 has become increasingly attractive, with valuations now broadly in line with the historical average. However, we expect volatility to remain elevated over the near-term, with the prospect of tariffs remaining a market overhang until at least 2 April, when the US Department of Commerce is scheduled to release its comprehensive trade review.
The largest drawdowns have been experienced by the IT, Financial Services and Banks sectors, while the traditionally defensive sectors – including Utilities, Telcos and Consumer Staples – have unsurprisingly held up reasonably well.
Meanwhile, the Materials sector has outperformed despite escalating trade risks, as sentiment towards iron ore and base metals (e.g. copper) has been buoyed by China’s latest stimulus measures. The standout commodity continues to be gold, which has rallied to all time highs of US$3,000/oz amidst growing 'safe haven' demand. (explored below).
Looking through the near-term macro uncertainties, taking a medium-term view, the market pullback has created attractive buying opportunities in a number of high quality businesses, which we explore in this report. We also reiterate our cautious stance towards the banks, where headline valuations remain unattractive despite the pullback. We also explore how gold miners and defensives are providing a degree of downside protection to the Focus Portfolio amidst the market volatility.
Screening the ASX for Buying Opportunities
To identify attractive buying opportunities, we have screened the ASX 200 according to the following criteria:
- Share price drawdown of >10% from 2025 highs.
- No direct exposure to tariff/global trade risks.
- No significant (>5%) consensus downgrades to 12-month forward EPS forecasts and no material changes to medium/long-term company/industry fundamentals.
- 12-month forward PE multiple has de-rated >10% from 2025 highs and is on a discount to the 5-year average (where applicable).
- Double-digit earnings growth expected over the medium-term (FY26-27 EPS CAGR).
| Name | Ticker | Share price | 12 mth fwd PE | Consensus EPS | ISG View | |||||
| Last | Drawdown from 2025 peak | Current | Discount vs 5yr avg* | De-rate from 2025 high | Revisions (NTM) - last 3 months | 3yr CAGR (FY25-27) | ||||
| Large Caps (ASX 50) | ||||||||||
| WiseTech | WTC | 84.5 | -35% | 59.6 | -25% | -35% | -1.2% | 34% | At a PE of ~60x, WTC trades at its lowest PE multiple in ~two years, offering highly attractive value on a growth-adjusted basis (3yr PEG of ~1.7x). WTC has pulled back following slight delays to the launch of Container Transport Optimisation (CTO). Despite the near-term downgrades, the medium/long-term earnings growth trajectory is broadly unchanged and remains attractive. WTC's 3 year EPS CAGR of >30% will be underpinned by 1) new customer wins, 2) large freight forwarder rollouts, and 3) the rollout of CTO (set to be launched initially in Australia in 2H25). |
Focus Portfolio holding |
| Goodman Group | GMG | 30.9 | -20% | 24.1 | -2% | -17% | -3.2% | 11% | GMG has pulled back largely due to last month's ~$4.4n capital raise to fund its data centre strategy. Notwithstanding the near-term equity dilution from the raise, GMG's EPS growth outlook remains attractive, underpinned by its data centre pipeline which will benefit from strong sector tailwinds from cloud migration and AI. We expect GMG to fund future developments with recycled capital (existing liquidity, retained earnings, equity sell-downs) and a modest amount of leverage. |
Focus Portfolio holding |
| CAR Group | CAR | 33.3 | -19% | 31.0 | -1% | -15% | -0.8% | 12% | CAR's qualitative guidance for FY25 was slightly softer than expected due to softness in the US RV market. However, despite some macro weakness, we remain confident in CAR’s competitive positioning, its pricing power, its margin expansion potential, and its long runway for growth offshore, which should support mid-teens EPS growth over the medium/long-term. Considering this, CAR's valuation is attractive at a PE multiple of ~31x, which represents a slight discount to its five-year average. |
Focus Portfolio holding |
| Xero | XRO | 159.0 | -15% | 76.4 | -64% | -14% | -2.8% | 35% | XRO has pulled back in absence of company-specific news, driven by the market's rotation out of high-growth tech stocks. XRO's long-term earnings growth outlook remains highly attractive, underpinned by continued growth in the subscriber base, pricing, and operating leverage as costs are rationalised. We still see scope for XRO's consensus earnings upgrade cycle to continue over the medium-term as XRO lifts its ARPU (average revenue per user) by raising its prices and driving customer migration to higher value plans. |
Focus Portfolio holding |
| ResMed | RMD | 34.9 | -14% | 21.5 | -32% | -12% | 1.3% | 14% | RMD has pulled back despite its strong Q2 EPS beat which drove consensus EPS upgrades. In the result management pointed to strong fundamentals as it highlighted 'once in a generation' tailwinds supporting CPAP demand over the medium-term (wearables, GLPs). At a PE of ~22x, RMD trades on a ~30% discount to its five-year average, which represents attractive value considering double-digit consensus EPS growth over the medium-term. |
Focus Portfolio holding |
| Mid Caps (ASX Mid Cap 50) | ||||||||||
| Telix Pharmaceuticals | TLX | 27.4 | -12% | 46.1 | nm | nm | nm | high | TLX has pulled back despite company-specific news remaining overwhelmingly positive. The company's FY25 revenue guidance (ex new product launches) was >20% above consensus expectations, which has resulted in large consensus revenue and EBITDA upgrades. Guidance for ILLUCCIX also seems conservative, which represents leaves room for further consensus upgrades. The catalyst pathway over 2025 remains attractive with FDA decisions expected across prostate, kidney and brain cancer. |
Focus Portfolio holding |
| Small Caps (ASX 200 ex ASX 100) | ||||||||||
| Siteminder | SDR | 4.6 | -29% | nm | nm | nm | nm | nm | While SDR's 1H25 result was slightly soft, the stock has been materially oversold (in our view) driven by the market rotation out of high beta growth stocks amidst the recent tick up in bond yields. However, from a bottom-up perspective, our research team's conviction in the business remains high. SDR's looming 'Smart Product' launches (C+, DR+, SD) should enable it to accelerate growth to ~30%. If SDR executes in line with our expectations, there are upside risks to consensus over the medium-term. Wilsons Advisory Research target price: $7.22/share. |
Wilsons Research: O/W rating |
| Pinnacle Investment Management | PNI | 18.8 | -28% | 25.8 | -2% | -32% | 8.8% | 25% | PNI has been caught up in the market rotation out of high-beta growth companies, however, bottom-up news flow remains overwhelmingly positive. PNI's 1H25 result was a solid EPS beat driven by an acceleration in new inflows. The business remains poised to benefit as affiliates grow their FUM, with the group having significant long term FUM capacity within the network across a number of investment strategies. In addition, we expect meaningful operating leverage over time from recent Horizon 2 investments within affiliates. Wilsons Advisory Research target price: $28.95/share. |
Wilsons Research: O/W rating |
Data is accurate as of 17/3/2025 market close. Source: Refinitiv, Wilsons Advisory.
The Banks have Sold-Off, but Remain Expensive
Despite the pullback in the banks over the last month, the sector’s valuation remains excessive at current levels, which keeps us comfortable maintaining an underweight exposure.
Valuations remain elevated, with the sector’s forward PE multiple still one standard deviation above its five-year average in both absolute and relative terms (compared to the ASX All Industrials). This is despite a still uncompelling growth outlook, with low-single digit consensus EPS growth expected over FY26/7.
However, we note the headline picture is skewed by index heavyweight CBA, which has by far the most extreme valuation out of the majors. When stripping out CBA, the valuations of the other banks are more reasonable on both an absolute and relative basis.
From an earnings perspective, a mixed set of updates in reporting season (with NAB being the key disappointment) has raised questions around the sustainability of the sector’s upgrade cycle. While only modest, the sector's upgrade cycle had supported its share price momentum over the last ~12 months.
In summary, with headline valuations still demanding and consensus earnings momentum stalling, we are comfortable retaining an underweight exposure to the banks in the Focus Portfolio.
Our preferred exposures are ANZ and Westpac, where the risk/reward is the most compelling (compared to CBA and NAB).
Gold Miners - Shining Bright
Gold miners have outperformed this year to date, which has provided a useful portfolio hedge against equity market weakness. The gold price itself has risen 13% this year (in USD terms), which has seen the precious metal recently hit a new all-time high of US$3,000/oz.
Demand for gold is being supported by ‘safe haven’ buying amidst the uncertain macro environment (driven by the escalating trade war), alongside continued structural increases in global central bank buying (led by China) as countries seek to reduce their reliance on the USD.
Notwithstanding the extent of the rally so far, we retain a positive outlook for gold in the current macro environment.
With elevated macro and geopolitical uncertainty likely to be an ongoing feature of Trump’s presidency, we expect key demand drivers to remain intact over the medium-term, which leaves the balance of risks for the gold price skewed to the upside in our view.
Evolution Mining (EVN) remains our preferred gold mining exposure given its strong operational execution, its superior free cash flow yield over CY25/26 (as production lifts and capex eases), and the latent consensus upgrade potential from its leverage to the ongoing rally in the gold price.
Defensives - Supported by the ‘Flight to Safety’
Defensives have unsurprisingly outperformed in this market pullback, which has highlighted the key role they play in providing downside protection in periods of market volatility.
We define defensives as businesses with acyclical demand profiles that are relatively agnostic to the macro environment, well capitalised balance sheets, pricing power, and market betas below 1. This category includes companies in the Consumer Staples, Infrastructure, Healthcare and Telco sectors.
In light of the increasingly uncertain macro environment, we recently increased the Focus Portfolio’s exposure to defensives with the addition of Brambles (BXB), which complements our other low beta exposures of The Lottery Corp (TLC), ResMed (RMD) and CSL (CSL).
Brambles – Quality Defensive With Compelling Bottom-Up Story
Brambles was recently added to the Focus Portfolio to provide a degree of downside protection against macro uncertainties. Critically, however, we are also attracted to BXB from a bottom-up perspective, with the business being well placed to generate low double-digit EPS growth over the medium-term. Our investment thesis can be summarised into 3 key points:
- Defensive mid-single-digit revenue growth –
the ‘mission critical’ nature of BXB’s services, its defensive customer base (~85% consumer staples), and its ability to raise prices as required, have together supported consistent mid-single digit revenue growth through the cycle historically. - Margin expansion from automation and digitalisation –
BXB’s automation and digital initiatives should lower unit costs and improve asset efficiency, which we expect to drive structural improvements in its EBIT and free cash flow margins over the long-term. Margin expansion, in conjunction with defensive top-line growth, underpins consensus expectations of a 10% EPS CAGR over FY25-7. - Attractive valuation with upside risks to consensus –
at a forward PE of ~19x, BXB offers attractive value in the context of low double-digit consensus EPS growth over the medium-term. There are also upside risks to consensus, which only factors in modest margin expansion over the medium-term.
| Ticker | Company Name | Valuation multiples | Fundamental metrics | ||||||
| 12mth fwd PE | +/- vs avg | +/- vs ASX All Industrials | Beta | 3yr EPS CAGR | ROIC | 12 mth fwd dividend yield % | Net Debt / EBITDA | ||
| BXB | Brambles | 19.4 | 5% | 1% | 0.43 | 10% | 19% | 3.2% | 0.95 |
Source: Refinitiv, Wilsons Advisory.
Written by
Greg Burke, Equity Strategist
Greg is an Equity Strategist in the Investment Strategy team at Wilsons Advisory. He is the lead portfolio manager of the Wilsons Advisory Australian Equity Focus Portfolio and is responsible for the ongoing management of the Global Equity Opportunities List.
About Wilsons Advisory: Wilsons Advisory is a financial advisory firm focused on delivering strategic and investment advice for people with ambition – whether they be a private investor, corporate, fund manager or global institution. Its client-first, whole of firm approach allows Wilsons Advisory to partner with clients for the long-term and provide the wide range of financial and advisory services they may require throughout their financial future. Wilsons Advisory is staff-owned and has offices across Australia.
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