22% Returns and Counting: Inside Our Winning ASX Stock Strategy for 2025

Market Extends Rally on Global Rate Expectations, but Domestic Data Could Reframe the Narrative Australian equities begin the week on a strong footing, with the ASX 200 notching its fifth consecutive weekly gain, the longest stretch since December 2023. Much of the recent momentum has reflected growing confidence in the likelihood of monetary easing from major central banks, particularly the Federal Reserve. However, attention now shifts to a series of key domestic indicators that could reshape expectations around Australia’s own policy trajectory. Labour market data will be a focal point, with employment growth expected to slow to 15,000 from April’s exceptionally strong 89,000. The unemployment rate is forecast to remain at 4.1%, while the participation rate may edge down to 67.0%. Meanwhile, the services PMI, expected to moderate to 50.1, will provide a timely snapshot of business activity. Any significant surprises in these readings could prompt a reappraisal of the RBA’s policy stance and introduce greater uncertainty into market positioning. Technical Indicators Signal Overextension as Caution Builds Around Recent Market Highs While the broader trend remains constructive, technical indicators suggest the market may be approaching a critical inflection point. The daily RSI-14 has remained above 70 for nearly two weeks, a level often associated with overbought conditions. Thursday’s bearish engulfing candle, printed on trading volume approximately 30% above the 20-day average, has raised concerns among technical observers. A bearish pin bar near the all-time high of 8,650, alongside negative delta volume and a declining cumulative volume delta, points to underlying selling pressure even as prices climb. Shorter-term charts continue to show a bullish pennant formation, with potential upside targets near 8,631 and 8,651. However, this is tempered by early signs of exhaustion in U.S. indices, suggesting that any breakout could prove short-lived. Should momentum falter, key support levels to watch include the 10-day moving average at approximately 8,500 and the next support zone near 8,350. Balancing Optimism and Macro Reality: How to Strategically Position for Incoming Volatility Cautious Optimism Fades as Macro Signals Send Mixed Messages With markets delicately balanced between residual bullish momentum and growing macro uncertainty, we believe a more selective investment stance is appropriate. Much of the recent strength in equities appears driven by anticipation, particularly around expectations of near-term RBA rate cuts, rather than firm confirmation in the data. However, several domestic signals suggest a disconnect between market sentiment and economic fundamentals. Consumer inflation expectations have jumped to 5%, while confidence readings remain weak, pointing to a fragile backdrop. If the upcoming labour report disappoints materially, it could reinforce expectations for monetary easing. Yet such weakness would also cast doubt on the sustainability of Australia’s economic recovery. On the other hand, if data surprises to the upside, it could stabilise macro sentiment but weaken the case for rate cuts, putting renewed pressure on rate-sensitive names. In this environment, we favour trimming exposure to overextended cyclical stocks, rotating into higher-quality defensive names, and preserving liquidity to respond swiftly to sharp price adjustments. The week ahead, in our view, is less about chasing upside and more about preparing for a broader set of outcomes. Geopolitical Shocks Shake Global Markets, With ASX Masking Underlying Turbulence That cautious tone is further reinforced by escalating geopolitical risks. The direct military confrontation between Israel and Iran has sent shockwaves through global markets, sparking a classic flight to safety. Oil surged, gold approached record highs, and equity markets around the world sold off. Yet on the surface, the ASX 200 posted only a modest decline. Beneath that, however, was a sharp sector rotation, one that rewarded energy producers and gold miners such as Newmont, while punishing sectors more vulnerable to rising input costs and a global slowdown. For portfolios, this has created a striking divergence, amplifying the importance of active risk management and timely sector rotation. We also note an emerging disconnect between the price of gold and the lagging performance of smaller-cap gold miners, which could present tactical opportunities for investors as capital continues to shift defensively. Stagflation Risk Emerges, Complicating RBA Outlook Amid Oil Shock Concerns Beyond the immediate market reaction, the broader economic implications are becoming harder to ignore. The conflict introduces a stagflationary risk to Australia’s outlook, with higher energy prices threatening to reignite cost-push inflation just as growth moderates. This could significantly complicate the Reserve Bank’s path forward, especially if the inflationary impulse delays or derails the expected rate-cut cycle. Looking ahead, much will hinge on whether tensions escalate, particularly if the conflict spills into the Strait of Hormuz, a vital artery for global oil shipments. Any disruption there could push oil prices sharply higher, and further strain both household budgets and corporate margins. We’ll be closely monitoring these developments as they unfold, with an eye on how they impact sector dynamics and influence the RBA’s policy calculus in the weeks ahead. Portfolio Review Our portfolio has delivered a solid return exceeding 22% over the past 12 months, comfortably outperforming the broader ASX 200. This performance reflects disciplined stock selection and a balanced allocation across growth, mining, and income sectors. Standout contributors such as Car Group (CAR) and Orica (ORI) have been instrumental in driving gains. As we navigate a market sensitive to interest rate expectations and economic data releases, this strong track record provides a firm foundation as we prepare for upcoming developments. Source: Investor Pulse, Aggregated Portfolio Performance vs. ASX200 TTM (%) [2] Sector Developments in Growth, Mining, and Income Stocks Will Shape Near-Term Portfolio Performance Looking ahead, the sectors within our portfolio are likely to respond distinctly to incoming economic data and evolving rate expectations. Growth stocks like Universal Store (UNI) and CAR may gain support if inflation pressures ease or if the RBA signals a more accommodative stance, though consumer confidence remains a key consideration. Mining stocks, including Orica (ORI) and Emerald Resources (EMR), remain sensitive to commodity prices and global industrial demand. Their recent FY25 results, such as Orica’s strong 1H EBIT growth and Emerald’s solid cash flow, suggest robustness amid potential volatility. Income stocks like QBE Insurance (QBE) and Bank of Queensland (BOQ) are affected by interest rate movements; BOQ’s stable 1H25 net interest margins are encouraging, yet any significant rate cuts could impact profitability. Dividend payout ratios remain healthy, BOQ at 65.1% and Orica at 49%, supporting income stability. Portfolio Stability Supported by Diversification, Strong Fundamentals, and Active Monitoring of Market Risks The portfolio’s broad diversification across growth, mining, and income sectors continues to provide a degree of stability against shifting market conditions. Companies such as SRG Group (SRG), with record 1H FY25 results, and Servcorp (SRV), benefitting from steady demand for flexible office space, underpin this strength. Meanwhile, holdings like Qantas (QAN), while delivering solid earnings, remain exposed to fuel cost fluctuations and travel demand trends. Momentum remains a positive factor. Source: Investor Pulse, Research (2025) [1] Let’s now take a close look at each of these stocks, and why they remain key holdings in our portfolio. Orica (ASX: ORI) - Mining Sector Source: ORI, weekly chart (2025) Orica’s first-half results for FY25 revealed a strong earnings trajectory, reflecting the company’s ability to capitalise on growing market demand and its technological edge. Sales revenue rose by 8% to $3.94 billion compared with the same period last year, while Earnings Before Interest and Tax (EBIT) surged 34% to $472 million. Net profit after tax, before significant items, also climbed 40% to $251 million, underpinning a 32% increase in the interim dividend to 25 cents per share. The payout ratio stands at a balanced 49%, highlighting a thoughtful approach to rewarding shareholders while retaining financial flexibility. Orica’s balance sheet remains sound, with leverage comfortably within target at 1.45 times and a return on net assets of nearly 13%. The announcement of a renewed on-market share buy-back programme of up to $400 million signals confidence in the company’s financial health and a clear commitment to shareholder value. The strong performance was widespread, with every region and business segment contributing to growth. Notably, Orica’s advanced technology offerings showed significant gains, Blasting Solutions EBIT climbed 29%, while Digital Solutions EBIT rose 31%. The recent acquisition of Cyanco delivered a substantial boost, with the Specialty Mining Chemicals segment’s EBIT expanding by 72%. Looking ahead, Orica expects full-year EBIT to surpass last year’s results, with a positive outlook for 2026 driven by continued demand for premium products, expanded specialty chemical production, particularly for gold, and broader adoption of digital solutions. Crucially, Orica’s push into technology and digital services is more than a diversification effort. By integrating advanced analytics and innovative solutions, the company is reshaping its value proposition, helping clients improve efficiency and safety, justifying premium pricing, and strengthening customer loyalty. This transition from a traditional explosives supplier to a tech-enabled service provider is improving margin resilience and positioning Orica to better weather commodity cycles. Car Group (ASX: CAR) - Growth Sector Source: CAR, weekly chart (2025) In the first half of FY25, Car Group’s Australian domestic business continued its impressive growth momentum. Domestic revenue rose by 9%, while the EBITDA margin edged up slightly to around 65%. Online advertising across its product lines hit roughly $207 million, marking a 9% increase, and dealer revenue climbed 10%, supported by higher lead volumes, improved yields, and deeper market penetration. Over the trailing twelve months, Car Group reported revenue of $ 1.15 billion and profits of $256.42 million, with earnings per share at $0.68. The balance sheet remains conservatively managed, with a net debt to equity ratio of 1.8x as of December 2024. A notable strategic move was the launch of a new consumer-to-consumer platform in Australia in October 2024, which could unlock further yield growth. Meanwhile, the international segment, led by Trader Interactive (TI) in North America, saw a slight slowdown in revenue growth to 9% in constant currency terms, down from 11% in the second half of 2024. This moderation largely reflects a deliberate postponement of a planned price increase, now expected in the fourth quarter of FY25, and is unlikely to materially affect the full-year revenue outlook. Car Group’s domestic operations remain a highly profitable and stable base, but future growth hinges increasingly on its international ventures like TI. The recent softening in TI’s growth, while tactical and temporary, highlights the challenges inherent in international markets, balancing dealer relationships during price adjustments and contending with fierce competition, including from platforms such as Facebook Marketplace in the U.S. private seller space. Investors will be watching closely to see if TI can regain momentum and deliver on its medium-term promise of double-digit growth, which is critical to supporting Car Group’s growth-focused valuation. SRG Group (ASX: SRG) - Mining/Industrials Sector Source: SRG, weekly chart (2025) SRG Global Limited (ASX: SRG) has delivered an impressive first half for FY25, setting new records across its key financial metrics. Revenue rose sharply to $619.7 million, marking a 21% jump compared with the same period last year. Underlying EBITDA climbed even more strongly, up 31% to $59.0 million, while underlying EBIT(A) saw a robust 48% increase to $42.1 million. What stands out in these results is SRG’s excellent cash generation, with an EBITDA-to-cash conversion rate hitting 120%. This strong cash flow helped the company swing to a net cash position of $9.1 million, a marked turnaround from the proforma net debt it held after acquiring Diona. Reflecting this solid financial footing, SRG announced a fully franked interim dividend of 2.5 cents per share, a notable 25% rise on the previous year. On the operational side, SRG’s order book, or Work in Hand (WIH), hit a record $3.4 billion. While $1.0 billion of this came from the Diona acquisition, SRG’s organic growth remains encouraging. The addition of Diona, which focuses on water and energy transition infrastructure, appears to be trading ahead of expectations, generating $66 million in revenue and $6.9 million in profit before tax in just four months. Buoyed by this momentum, SRG has upgraded its full-year EBITDA guidance to between $125 million and $128 million. The Diona acquisition is clearly a key driver in SRG’s ongoing strategic shift towards a more diversified infrastructure services business. Early results suggest the due diligence and integration planning have been effective, though the usual challenges of melding large businesses, from cultural fit to operational synergies remain. Looking ahead, the market will be watching closely to see if SRG can sustain Diona’s performance while maintaining its strong cash flow and delivering on synergy targets. The acquisition has undoubtedly improved SRG’s scale and exposure to growth sectors like water and energy. However, the real test will be how seamlessly the business integrates and whether it can convert this expanded footprint into lasting value for shareholders. Universal Store Holdings (ASX: UNI) - Growth Sector Source: UNI, weekly chart (2025) Universal Store Holdings (ASX: UNI) delivered a solid set of underlying results for the first half of FY25, reflecting steady growth across key metrics. Group sales climbed 16.1% year-on-year to $183.5 million, while underlying EBIT increased by nearly 15% to $35.4 million. Gross margins also improved, rising by 90 basis points to 60.6%, and underlying NPAT grew 16% to $23.2 million. This strong performance underpinned a 33.3% lift in the fully franked interim dividend to 22.0 cents per share. The balance sheet remains healthy, with the group holding net cash of $37.7 million. However, statutory NPAT told a different story, falling 45.6% to $11.3 million due mainly to a $13.6 million goodwill impairment related to the CTC (Thrills) brand. Looking deeper, the Universal Store brand shone through, posting a 17.2% sales increase with like-for-like growth of 14.4%. Perfect Stranger also impressed, nearly doubling sales with a 92.3% jump and strong like-for-like gains. In contrast, the CTC segment struggled, with overall sales down 12.4%, hurt by a 16.4% decline in wholesale sales despite a modest rise in direct-to-consumer revenue. The group expanded its footprint with seven new stores in H1, now operating 109 locations, and early H2 trading shows ongoing strength in direct-to-consumer sales across all brands. While the underlying profit momentum from Universal Store and Perfect Stranger is encouraging, the significant goodwill write-down at CTC highlights persistent challenges in that business, especially in wholesale. Management remains optimistic about CTC’s long-term prospects, pointing to fresh leadership and planned store openings. Yet investors will be watching closely for concrete signs of a turnaround. Ultimately, the group’s medium-term outlook hinges on resolving CTC’s issues or the continued outperformance of its core brands offsetting any drag. QBE Insurance (ASX: QBE) - Income Sector Source: QBE, weekly chart (2025) QBE Insurance Group (ASX: QBE) opened 2025 with a solid performance update for the first quarter, highlighting steady top-line growth. Gross Written Premium (GWP) increased 7% on a reported basis, or 8% in constant currency, compared with the prior corresponding period. Adjusting for premium rate rises of 3.4%, underlying GWP growth remained healthy at 7%, or 8% if the run-off of non-core lines in North America is excluded. This momentum was primarily driven by strong contributions from its International and North America divisions. On the investment side, QBE generated approximately $410 million in income for the four months to April, with the exit core fixed income yield edging down slightly to 4.1% from 4.3% at the end of FY24. The underwriting environment proved more challenging, with net catastrophe claims reaching roughly $420 million over the same period. This compares with a first-half catastrophe allowance of $549 million and reflects losses from significant events such as the LA wildfires, Queensland flooding, Cyclone Alfred, and convective storms in North America. Despite these challenges, QBE reaffirmed its full-year FY25 guidance, anticipating mid-single-digit constant currency GWP growth, including an estimated $250 million drag from North America’s non-core run-off, and a combined operating ratio (COR) near 92.5%. For insurers like QBE, effectively managing the financial impact of natural disasters remains critical. Having utilised approximately 76.5% of its catastrophe budget within four months reduces the buffer for further substantial events through the first half. While this does not necessarily indicate the budget will be exceeded, the inherent unpredictability of catastrophe claims means investors will be closely monitoring developments. The company described its underwriting performance as “resilient in light of a challenging quarter for catastrophes,” yet any additional significant insured losses in May or June could place pressure on maintaining its targeted COR. Qantas Airways (ASX: QAN) - Growth/Income Sector Source: QAN, weekly chart (2025) Qantas Airways (ASX: QAN) delivered a solid set of financial results for the first half of FY25 (ended December 31, 2024). Revenue rose to $12.13 billion, up from $11.13 billion a year earlier, while underlying Profit Before Tax (PBT) increased to $1.385 billion from $1.245 billion. Statutory Profit After Tax (PAT) came in at $923 million, compared to $869 million in the prior period. The airline maintained a strong balance sheet, with net debt of $4.13 billion, and generated robust operating cash flow of $2.07 billion. Recent share price data showed the stock at $10.73, with a trailing twelve-month P/E ratio of 12.70 and a dividend yield of 1.55% based on past payments, though future dividends remain subject to Board approval. On the operational side, Qantas expanded capacity with Available Seat Kilometres (ASKs) up 10.3%, while Revenue Passenger Kilometres (RPKs) rose 12.7%. Passenger numbers increased 8.8% to 28.3 million, and the group’s seat factor improved by nearly two percentage points to 85.5%. However, overall unit revenue (RASK) declined 2.9%, reflecting divergent trends: domestic RASK grew 5% on the back of stronger business travel, while international RASK fell 7% as global capacity returned to more normal levels. Unit costs excluding fuel climbed 3.1%. Qantas is investing in fleet renewal and enhancing customer experience, with new A321LRs and A220s entering service. The company also booked a $65 million increase in legal provisions related to a Federal Court case over ground handling outsourcing. The airline industry remains in a phase of normalization following the disruptions of the pandemic. Qantas’s domestic unit revenue strength contrasts with international challenges as competition and capacity ramp up, tempering the exceptionally high yields enjoyed during constrained capacity periods. Meanwhile, persistent cost pressures outside of fuel, including labour and maintenance, are pushing unit costs higher. This creates a challenging environment where managing the balance between normalizing revenues and rising costs will be crucial for sustaining profitability. Bank of Queensland (ASX: BOQ) - Income Sector Source: BOQ, weekly chart (2025) Bank of Queensland (ASX: BOQ) released its first-half FY25 results (ended February 28, 2025), reporting a statutory net profit after tax of $171 million, up 13% from the previous year. Cash NPAT also saw growth, rising 6% to $183 million. Total income remained steady at $793 million, while the net interest margin held firm at 1.57% compared to the second half of FY24 , a notable achievement given the competitive banking landscape. Operating expenses eased slightly by 1% to $520 million, reflecting early benefits from the bank’s simplification efforts. The interim dividend was declared at 18 cents per share, fully franked, with a payout ratio of 65.1% of cash earnings. BOQ is clearly steering a strategic transformation focused on streamlining operations and targeting specialist, higher-return sectors. This was evident in the deliberate $1.5 billion reduction in home lending during the half, prioritizing economic return over volume in a crowded mortgage market. Meanwhile, business lending expanded by $624 million, concentrating on specialist areas such as healthcare and agriculture. The bank is also advancing its digital agenda, migrating ME customer deposits to a new platform and trialling a digital mortgage product. With a robust Common Equity Tier 1 ratio of 10.87%, comfortably above target, BOQ’s “shrink to grow” strategy marks a meaningful shift, pulling back from lower-margin home loans to deepen its foothold in more profitable business lending niches. The steady NIM offers early signs that this approach is working, though its ultimate success will depend on the bank’s ability to grow these specialist segments enough to offset the reduced home loan book while enhancing overall returns. Servcorp (ASX: SRV) - Income/Growth Sector Source: SRV, weekly chart (2025) Servcorp Limited (ASX: SRV) reported a strong start to FY25, with underlying operating revenue rising 7% to $158.8 million in the first half ending December 31, 2024. Underlying net profit before non-cash impairment and tax (NPBIT) hit a record $34.4 million, marking a 19% increase on the previous year. The company generated solid free cash flow of $40.5 million and announced an interim dividend of 14.0 cents per share, predominantly sourced from conduit foreign income. Statutory net profit after tax also saw a notable lift, up 76% to $34.6 million, while balance sheet strength was maintained with unencumbered cash of $131.4 million. Growth in the period was driven by improved revenue efficiency, higher service conversion rates across most regions, and strong client retention. Performance was especially robust in Europe and the Middle East, alongside a steady recovery in Australia, New Zealand, and Southeast Asia. During the half, Servcorp expanded its footprint with three new floors opening. Looking ahead, the company provided underlying NPBIT guidance of $61 million to $65 million for FY25 and is considering a potential listing of its Middle East operations. Servcorp’s focus on the premium segment of the flexible workspace market stands out in a landscape increasingly shaped by hybrid working models and intense competition. By prioritising a high-end client experience, prestigious locations, and superior service standards, Servcorp appeals to a discerning clientele that values quality over cost. This strategic positioning not only supports client loyalty but also allows the company to maintain pricing power, helping to shield it from the price pressures affecting lower-tier operators. This premium approach remains central to Servcorp’s resilience and sustained profitability in a crowded sector. Bluescope Steel (ASX: BSL) - Mining/Industrials Sector Source: BSL, weekly chart (2025) Bluescope Steel Limited (ASX: BSL) posted a notable dip in earnings for the first half of FY25, reflecting the tough conditions in the steel market. Underlying EBIT fell sharply to $309 million, down from $718 million in the same period last year, while reported NPAT dropped to $179 million from $439 million. Despite the earnings setback, Bluescope raised its interim dividend to 30 cents per share, up from 25 cents a year earlier, and maintained a solid net cash position of $88 million. Return on Invested Capital softened to 8.1%, from 13.4%, and the company’s trailing twelve-month Return on Equity stood at 5.5%, with net income growth over the past five years lagging the industry average. Looking ahead, Bluescope expects a rebound in the second half of FY25, with underlying EBIT projected between $360 million and $430 million. This improvement is anticipated to come from a better spread environment in the US, stronger domestic volumes in Australia, and the ongoing benefits of a $200 million group-wide cost and productivity program. The company is also targeting longer-term growth, aiming to add $500 million in EBIT by 2030 through initiatives such as the North Star plant debottlenecking in the US and expansion in Australian value-added products. While the steel sector’s cyclical nature is clear in these results, Bluescope is taking a proactive approach, focusing on cost control and strategic investments rather than simply riding the cycle. The board’s decision to lift the dividend amid lower profits signals confidence in Bluescope’s financial footing and prospects. Success in its cost-saving measures and growth projects will be key to improving returns like ROE and delivering the sustained earnings growth needed to close the gap with industry peers. Emerald Resources (ASX: EMR) - Mining Sector Source: EMR, weekly chart (2025) Emerald Resources (ASX: EMR) reported a weaker March quarter from its Okvau Gold Mine in Cambodia, with production falling to 19,100 ounces, down from 31,900 ounces in the December period. Cost pressures also crept higher, with All-In Sustaining Costs rising to US$1,321 per ounce from US$855. Despite the operational dip, Emerald delivered solid cash flow, selling 23,600 ounces at a strong average price of US$2,861 per ounce. This translated to pre-tax operating cash flow of A$66.1 million (US$41.5 million), helping the company end the quarter with A$209.5 million (US$131.6 million) in cash and bullion. Most notably, the company completed final repayments on its debt facility after the end of the quarter, leaving it debt-free and better positioned for its next phase. Operationally, the Okvau plant continues to show resilience. Gold recoveries were maintained at 85.6%, even as the plant processed lower-grade ore. Looking ahead, Emerald has guided for a June quarter rebound, targeting 25,000–30,000 ounces at a lower AISC of US$900–1,000 per ounce. FY26 production guidance stands at 110,000–125,000 ounces. Longer term, Emerald appears to be pivoting from a single-mine operator to a broader growth platform. An updated Okvau Ore Reserve has added 245,000 ounces, while exploration and development efforts are gaining momentum at Memot and Dingo Range. With Okvau now self-funding and unencumbered by debt, the company is deploying its balance sheet into a pipeline of growth opportunities. This strategy, using cash flow from a cornerstone asset to seed a multi-asset portfolio, is well-trodden among junior and mid-tier miners. Execution will be key, and the market will likely shift its focus from Okvau’s quarterly metrics to the pace and success of new discoveries and project developments. Emerald reported trailing twelve-month revenue of $434.35 million and net income of $100.62 million, or earnings of $0.15 per share. The company does not currently pay a dividend, but with gold prices remaining elevated, its capital deployment strategy will be closely watched.