Company Interview / The opportunity in two stocks heading in opposite directions

Reporting season continues to highlight significant volatility across the ASX, with pronounced movements now affecting the top 20 companies, not just small caps, according to Stephen Wood from Eiger Capital. Wood points to the recent sharp reactions to results from Woolworths (ASX:WOW) and CSL (ASX:CSL), where even relatively minor updates have led to price falls of 15-20%. He attributes this shift to the growing influence of index funds and algorithmic trading, noting that such volatility is now typical, even outside the small caps space.

Wood remains focused on critical minerals, stating rare earths producers stand out in the current market. He singles out Lynas (ASX:LYC) as the most robust operator, noting the company’s completed capital expenditure programme, established know-how, and the potential for stronger price support in global rare earths markets. In contrast, he views lithium and other critical minerals as far more exposed to erratic pricing, largely due to Chinese market influence.

Turning to preferred stocks, Wood highlights Zip (ASX:ZIP) for its strong US growth and higher margins compared to peers, especially in light of Klarna’s proposed US IPO. He also sees value in Telix Pharmaceuticals (ASX:TLX), stating delays in its product pipeline have provided a compelling entry point, underpinned by an existing billion-dollar revenue product.