Three High-Conviction Stocks Set for Growth in Today’s Market Landscape

Today, we spotlight three stocks that are among our high-conviction buys, standing out in the current market landscape. The Aussie market has been shaped by a blend of key economic data, solid corporate earnings, and global developments. Earnings growth in the mining and energy sectors has also supported the ASX 200. With global factors such as easing inflation fears and commodity price fluctuations adding further complexity, we maintain a cautiously bullish outlook for the near to medium term. Here are the three stocks we believe are set to grow despite the current complex macroeconomic environment. Biome Australia: Focusing on Gut Health, Growth, International Expansion, and Probiotic Innovation – Upside Potential of +51% Biome Australia Limited (ASX: BIO) is at the forefront of developing, manufacturing, and distributing innovative, evidence-based products that link gut health with overall human wellness. Through its owned brands, Activated Probiotics, Activated Nutrients, and AXP, Biome is focused on offering live biotherapeutics (probiotics) and complementary medicines, many of which are backed by clinical research. From a financial perspective, we are highly optimistic about Biome’s growth trajectory. The company reported record quarterly sales revenue of $4.25 million for Q1 FY25, a 12% increase over the previous quarter. Cash receipts surged to $3.89 million, an 84% increase compared to the prior corresponding period (PCP). Biome also maintained a gross margin above 60%, a solid performance indicating operational efficiency. Notably, same-store pharmacy sales in Q1 grew by 68%, underscoring the company’s strong market presence and consumer demand for its products. For the third consecutive quarter, Biome recorded positive EBITDA, with a $122k result for Q1. This performance highlights the company’s ability to generate profit from its core operations, and we expect this positive trend to continue as Biome remains on track to deliver sustainable growth. In line with its Vision 27 strategy, Biome has set ambitious goals, including a cumulative revenue target of $75 million to $85 million for FY25-27. With a cash balance of $2.67 million at the end of Q1, the company is well-funded to pursue its growth initiatives. Biome’s international expansion is a key driver of its future growth. The successful test market launch in Canada has paved the way for a broader market launch in both the health retail and practitioner markets. Furthermore, Biome recently secured approvals for three additional products in Canada, reinforcing its presence in the international market. This aligns with the company’s ongoing European expansion and reinforces its position in the Australian market. We see this international focus as a major catalyst for further revenue growth. Additionally, Biome’s investment in research and development continues to strengthen its competitive advantage. The company recently validated a new probiotic strain, Lactobacillus plantarum BMB18, which has been lodged with the German culture bank DSMZ. This development is expected to protect Biome’s intellectual property and enhance its product offerings, providing a sustainable edge in the highly competitive probiotics market. That said, we view Biome as a high conviction buy, driven by strong financial performance, strategic international expansion, and an innovative product pipeline. The company’s robust growth and successful execution of its Vision 27 strategy position it well for continued success, making it a compelling investment opportunity with substantial upside potential. We have observed solid increased volume since the beginning of the year, with the stock trading around 68.5 cents per share. We expect volatility in the near term, with potential consolidation between 56 cents and 68 cents per share. Accordingly, we suggest that our members employ a dollar-cost-averaging approach to maximize the risk-adjusted entry price. Once the stock breaks out of the consolidation range between 56 cents and 68 cents, we foresee BIO retesting the recent high of 87 cents per share, followed by a rally to 1 dollar per share, which is our long-term target price. NRW Holdings: Strong Growth Potential, Diversified Operations, and Solid Outlook – Upside Potential of 26.75% NRW Holdings Limited (ASX: NWH) is firmly positioned as one of our high-conviction buys, underpinned by its solid growth potential and diversified business model, which continues to deliver strong financial results. For FY24, NRW achieved record revenue of $2.9 billion, reflecting a 9.2% year-on-year increase, while EBITDA rose by 15.9%. With an order book of $5.5 billion and a cash position of $246.6 million, we see significant growth visibility as NRW enters FY25, further solidifying its financial foundation. Looking ahead, NRW’s outlook remains exceptionally robust, supported by its diverse operations across civil construction, mining, and infrastructure. The Civil segment continues to benefit from favourable macroeconomic conditions, including strong demand in both the resources and public infrastructure sectors. NRW is actively engaged in key projects within the resources space, such as iron ore replacement tonnage developments, which require complex infrastructure like haul roads, rail formations, and utilities. Moreover, the company is poised to capitalize on the growing trend of carbon reduction projects within the resources sector. In infrastructure, NRW is well-positioned to benefit from ongoing housing shortages and population growth in regions such as Southeast Queensland and Western Australia, driving significant demand for urban infrastructure and transport projects. In the Mining segment, NRW has already secured over 90% of its expected revenue for FY25, providing a high level of visibility for the forthcoming year. The segment’s exposure to key commodities, such as metallurgical coal, iron ore, and gold, offers further growth opportunities. The disciplined approach to targeting high-return projects ensures that NRW selectively pursues the most profitable ventures. The company’s $16.4 billion pipeline, including $5.5 billion in active tenders, provides a strong basis for sustained growth over the medium term. NRW’s diversified business, solid financial discipline, and strong market positioning give us a high degree of confidence in its continued growth trajectory. The FY25 forecast includes revenue of approximately $3.1 billion, with EBITA expected to range between $205 million and $215 million, reflecting solid performance and the ability to capture further growth in core markets. Additionally, NRW’s consistent dividend policy, underscored by a fully franked final dividend of 9.0 cents per share, reinforces its commitment to delivering shareholder value. Given the company’s strong financial performance, diversified operations, and substantial growth opportunities, we maintain a positive outlook on NRW Holdings. We believe the company is exceptionally well-positioned for the long term and represents a compelling investment within the infrastructure and resources sectors. Looking at the technical chart, we expect NRW to reach a long-term target price of $5 per share. However, price action typically forms a pattern of higher highs and higher lows, so we anticipate a near-term pullback before resuming its rally towards the long-term target. We suggest our members employ a dollar-cost averaging approach to improve the risk-adjusted entry price. We remain cautious of a potential pullback to $3.20 - $3.60 per share, which we consider an optimum entry point. GenusPlus: Strong Growth, Strategic Acquisitions, and Key Positioning in Renewable Energy Sector - Upside Potential +13% GenusPlus Group (ASX: GNP) is one of our high conviction buy recommendations, supported by its strong performance, solid growth prospects, and strategic positioning within the rapidly expanding renewable energy sector. We are particularly impressed by the company’s record revenue and EBITDA performance in FY24, which saw a notable 24.1% increase in revenue, reflecting robust demand for its services and a well-executed business strategy. GenusPlus has also made significant strides in diversifying its revenue streams, with approximately 40% of its income now derived from recurring revenue, underscoring the sustainability of its business model. The company’s growing east coast footprint further reinforces its long-term growth potential. The company has secured several high-profile and strategically important contracts that position it as a key participant in Australia’s renewable energy transition. Notably, GenusPlus has entered into joint ventures with Acciona and Samsung to deliver critical projects, including Transgrid’s HumeLink Transmission project, which is a cornerstone of Australia’s transition to a low-carbon energy future. Additionally, the company is involved in the Melbourne Renewable Energy Hub, showcasing its capability in large-scale, high-value infrastructure projects. These developments not only strengthen GenusPlus’ role in renewable energy but also provide a pipeline of long-term, high-margin opportunities. With an orderbook of $519 million and a tendered pipeline valued at $2 billion, GenusPlus is well positioned to maintain strong growth in FY25, with the company forecasting a minimum 20% increase in EBITDA. In addition to its organic growth, GenusPlus is strategically expanding its capabilities through acquisitions. The acquisition of CommTel Network Solutions will enhance its communications division, enabling the company to provide more comprehensive solutions across essential power and communications infrastructure. With a customer base that spans power utilities, mining, oil and gas, transport, and public sectors, CommTel adds valuable expertise and scale to GenusPlus’ operations. Furthermore, the proposed acquisition of Partum Engineering will strengthen GenusPlus’ engineering design capabilities, bringing critical skills in-house and positioning the company to capture more opportunities within the growing energy and infrastructure sectors. GenusPlus’ solid financial position, coupled with its strong portfolio of high-value contracts and strategic acquisitions, provides a solid foundation for sustained growth. The company’s ability to execute large-scale renewable energy and infrastructure projects, along with its focus on recurring revenue, makes it well-positioned for continued expansion and significant upside potential. We have initially set a target price of $2.50, which has already been reached, and are reiterating an upside potential of 13% from the current market price, with a long-term target price of $3 per share.