A key to successful investing in asx stocks is finding undervalued companies offering bright prospects in a challenging and ever-changing world. Successful investing requires research and understanding of why a particular company in any given sector should outperform after considering the risks. Today, four experienced sharemarket experts narrow down their selections to which stocks they believe should outperform in 2025 and why investors can consider adding them to their portfolios.
Elio D’Amato, Daylight Financial Group
TechnologyOne (TNE)
TechnologyOne is a leading provider of enterprise resource planning (ERP) software.
D’Amato says TechnologyOne’s software-as-a-service model delivers 90 per cent recurring revenue. Total annual recurring revenue reached $470 million in fiscal year 2024, a 20 per cent increase on the prior corresponding period.
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He says annual recurring revenue is projected to exceed $500 million in the first half of fiscal year 2025. The company has set an ambitious long term goal of achieving $1 billion in annual recurring revenue by fiscal year 2030, reflecting its confidence in sustained growth.
“TNE is set to excel in 2025, driven by its strong financial performance and strategic growth initiatives,” D’Amato says. “TNE’s profitability underscores its strength, with net profit before tax of $153 million in fiscal year 2024, up 18 per cent on the prior corresponding period. Operating margins averaged 29 per cent.”
D’Amato says strategic investments, including 25 per cent of revenue allocated to research and development, lead to innovations, such as SaaS+ and the digital experience platform.
He says the company has cash reserves of $280 million and no debt. Strategic acquisitions, such as CourseLoop, position it for robust expansion. “Additionally, a 70 per cent surge in annual recurring revenue in the UK highlights its international momentum,” D’Amato says. “TNE’s blend of innovation, financial health and market leadership ensures its trajectory as a top performer.”
Xero (XRO)
Xero is an online accounting software provider. D’Amato says XRO’s exceptional growth trajectory and innovation position it as a top performer in 2025.
First half 2025 revenue of $NZ996 million was up 25 per cent on the prior corresponding period. Annualised monthly recurring revenue of $NZ2.2 billion was up 22 per cent. EBITDA of $NZ312 million was up 51 per cent, reflecting what D’Amato describes as “strong operational execution”.
“The company balances growth with profitability,” D’Amato says. “Xero’s strategic investments drive its market leadership, with 4.2 million subscribers and a 15 per cent rise in average revenue per user to $NZ43.08.”
D’Amato says key innovations include tap to pay, artificial intelligence powered tools, such as JAX, and expanded global capabilities in payroll and payments. The recent acquisition of Syft Analytics enhances its advanced reporting and insights offering.
“With a robust $NZ2 billion cash position amid plans to double its business size while maintaining profitability, Xero’s strategic initiatives and disciplined capital allocation ensure its resilience and growth,” D’Amato says.
Michael Gable, Fairmont Equities
Macquarie Group (MQG)
Macquarie is a diversified global financial services group. Some of its operations include retail and business banking, asset and wealth management, commodity trading, specialist advice, leasing and asset financing and renewables development.
Gable says Macquarie has a long and proven track record of success. In November, it announced a first half 2025 net profit of $1.612 billion, up 14 per cent on the prior corresponding period.
“However, this was 3 per cent below consensus,” Gable says. “Also, analysts were expecting a brighter outlook than what management provided. From my experience, Macquarie tends to under promise and eventually over deliver, which means soft share price reactions after results can lead to good buying opportunities.
“We believe global economies will experience strong growth in 2025 to the benefit of Macquarie.
“We’re also optimistic about the outlook for the commodities sector due to renewed stimulus in China. This should boost Macquarie’s profitable commodities trading division.
“The Macquarie stock chart remains in a long-term uptrend.”
Perseus Mining (PRU)
Market capitalisation of this African focused gold producer was about $3.68 billion on December 19. The company delivered record financial results in fiscal year 2024.
Profit after tax was up 14 per cent compared to the prior corresponding period. EBITDA rose 13 per cent and revenue increased 7 per cent. The company had cash and bullion of $US587 million and no debt.
“Financial results saw cash margins increase, costs come in at the lower end of guidance and production numbers beat market expectations,” Gable says. “It was a strong result that’s led to an on-market share buy-back of up to $100 million.”
Gable says the Perseus Mining outlook is bright. It forecast group gold production of between 468,400 ounces and 508,400 ounces for calendar year 2024.
Jed Richards, Shaw and Partners
WiseTech Global (WTC)
WiseTech develops and provides software solutions to the global logistics industry. More than 17,000 logistics organisations across the globe use its software solutions.
Richards says WiseTech’s core platform CargoWise helps customers execute highly complex logistics transactions amid managing operations.
“This company’s software is gaining a reputation as the best in the industry,” Richards says.
At its fiscal year 2024 results, WiseTech announced it had rolled out its CargoWise product to 52 large global freight operators, including more than half of the world’s top 25 freight forwarders.
CargoWise revenue grew 33 per cent in fiscal year 2024 when compared to the prior corresponding period. The company lifted total revenue by 28 per cent in fiscal year 2024. Statutory net profit after tax was up 24 per cent.
“Growing revenue and net profit reflect WiseTech’s operational efficiency and successful partnerships with major customers,” Richards says.
“WiseTech’s positive momentum and its capacity to introduce artificial intelligence into its products presents strong growth potential.
“Recent changes in top level management will also be the catalyst for a strong year ahead.”
Block Inc. (SQ2)
Richards says buy now, pay later (BNPL) company Afterpay was one of Australia’s best growth stories of the past decade. Afterpay is now part of US technology giant Block, which is a leader in the BNPL space, with a recent market capitalisation of about $A85.7 billion on December 19. Block is dual listed on the New York Stock Exchange and the ASX.
Richards says the BNPL sector generated incredible growth when interest rates were low. But as interest rates rose, the sector came under immense pressure due to the capital intensive nature of operating a BNPL business.
“The little players didn’t survive and only a handful of BNPL companies still exist,” Richards says.
“The survivors are now moving forward again at a great rate. US consumers were slow to start, but are now embracing BNPL transactions.
“In calendar year 2023, Block Inc subsidiary Square generated $US228 billion in payments and is well placed to provide the products required by retailers and restaurants to meet growing demand.
“Afterpay has been successfully integrated into Block Inc and the financial results have flourished in the past 12 months. Block revenue was up 25 per cent in calendar year 2023 to $US21.92 billion. In calendar year 2024, we expect higher revenue than in 2023.”
Mark Gardner, MPC Markets
BHP Group (BHP)
Gardner expects 2025 to be a much better year than 2024 for some resource companies.
“China is recovering and the race to build artificial intelligence data centres should lift demand for copper, steel and uranium,” he says.
BHP is the world’s largest mining company. It produces iron ore, metallurgical coal, copper, nickel and potash. The company operates in 90 locations throughout Australia, the US, Canada and Chile.
BHP’s share price has fallen from $50.54 on January 2 to trade at $40 levels in December 2024.
“We believe the company is trading at a steep discount,” Gardner says. “BHP has world-class, low-cost assets. It has a strategic focus on future-facing commodities, and is well positioned to benefit from megatrends, including artificial intelligence data centres, urbanisation, electrification and the clean energy transition.
“The company’s strong market position in iron ore, coupled with its growing copper and potash businesses provides a balanced portfolio, with exposure to traditional and emerging markets.
“BHP’s disciplined capital allocation, robust balance sheet and commitment to shareholder returns, including a minimum 50 per cent dividend payout ratio, offer attractive value for investors.
“Trading at a discount to historical averages, BHP shares are undervalued given the company’s growth prospects and operational excellence.”
Newmont Corporation (NEM)
Gardner expects this gold producer to outperform in 2025. He also expects the gold price to rise. Newmont also produces copper, silver, zinc and lead.
“As the world’s largest gold mining company, Newmont benefits from a diverse portfolio of tier 1 assets in favourable jurisdictions, ensuring stable long term production, robust free cash flow and high profit margins,” Gardner says.
Gardner says Newmont offers a strong balance sheet. He says cost saving synergies of $500 million by the end of calendar year 2025 should expand margins and increase free cash flow.
“We are very positive about the outlook for gold and copper,” Gardner says. “Gold due to the increasing US debt, lower interest rates and the rise of Brazil, Russia, India, China and South Africa (BRICS).
“And copper due to growth in artificial intelligence data centres and the transition to cleaner energy.
“The lack of copper mine development in the past decade has led to increasing demand for copper now and in the future.”