Here are 6 stocks that got promoted in the ASX quarterly rebalance, and 6 that got demoted

Nick Sundich, September 11, 2024

On Monday September 23, the ASX quarterly rebalance will be effective. Stocks will be promoted into new indices, while others will be demoted. This will trigger mandatory institutional buying and selling of such companies, something that can cause an impact on the share price. They also garner attention from investors who may buy the stock in the future.

You can find a full list right here, but we thought we’d highlight a handful of the most noteable stocks to get a promotion or demotion.

6 stocks that got promoted in the ASX quarterly rebalance

Hub24 (ASX:HUB) into the ASX 100

In a difficult era for the wealth management industry, this stock has somehow gained 70% in the last 12 months. It has 3 platforms – Hub24, Class and myprosperity – to help money management professionals do their job better, by providing quicker access to investment products, enabling portfolio management and compliance services. The company’s platforms had $15.8bn of net inflow during FY24, up 62% in 12 months, taking its Funds Under Administration (FUA) over the $100bn mark. It delivered $118m EBITDA and a $47.2m profit (up 15% and 24% respectively).

Capstone Copper (ASX:CSC) into the ASX 300

A non-gold miner performing well? Yes, you read it right. The TSX-listed company listed on the ASX as a secondary listing in February and has taken just over 6 months to make it into the ASX 300. Capstone owns and operates:

- The Pinto Valley copper mine located in Arizona, USA,
- The Cozamin copper-silver mine located in Zacatecas, Mexico,
- The Mantos Blancos copper-silver mine located in the Antofagasta region, Chile,
- 70% of the Mantoverde copper-gold mine, located in the Atacama region of Chile.

Amonst exploration assets, Capstone owns the fully permitted Santo Domingo copper-iron-gold project, located approximately 30 kilometres northeast of Mantoverde in the Atacama region, Chile, as well as a portfolio of exploration properties in the Americas. Copper hasn’t performed as well as gold this year, but arguably has the best outlook of any commodity because of the demand/supply imbalance that is forthcoming.

Metals Acquisition (ASX:MAC) into the ASX 300

This is another dual-listed stock, only this one came from the NYSE originally. And it has a link to Australia with the 6-decade old Cornish, Scottish and Australia (CSA) copper mine, which it bought from Glencore in June 2023. The name comes from the nationality of its first owners, in case you were wondering. The company is taking the mine to the next level, from 37.3k tonnes of copper in 2022 to 50ktpa by 2026. Arguably what is just as exciting is the potential for future assets to be acquired. After all, this company was originally founded as a SPAC.

Nuix (ASX:NXL) into the ASX 300

For so long, investors in Nuix have hoped things would turn around…and their dreams are becoming a reality. We knew it had a decent product – it was used in the Panama Papers after all; but it was bogged down by legal dramas and the shock of a downgrade within 6 months of its IPO. The troubles are not entirely behind it, but the company’s financials are continuing to improve. In FY24, the company delivered $211.5m in Annualised Contract Value (ACV) and a $5m profit (turned around from a $6m loss in the year prior). In FY25, it is targeting ~15% growth in the former figure.

Opthea (ASX:OPT) into the ASX 300

You might have forgotten about this one, but other investors haven’t – sending it up over 50% this year. 5 years ago, its wet-AMD drug (Sozinibercept) passed a Phase 2 trial with flying colours. It has taken longer than expected to get it into Phase 3 and through the trial, but the end of the wait is near. Initial results are expected in the March quarter of 2025. The recent case studies of Telix Pharmaceuticals and Neuren passing Phase 3 clinical trials (and coming into market in the case of Telix) illustrates what it could achieve so far as a re-rating is concerned, even prior to regulatory approval. Moreover, even prior to the results, it is plausible that a licensing deal could be secured. Just ask Dimerix (ASX:DXB).

Guzman y Gomez (ASX:GYG) into ASX 200

No surprises here – it was a matter of when and not if it was going to enter an index in the ASX quarterly rebalance. The fast Mexican food chain has not looked back since its listing in June, raising capital at $22 a share and now sitting over $40 per share. Not content with 200+ restaurants in 4 countries, it is aspiring to have over 1,000 stores in the next 20 years in Australia alone. Its customers are putting cost of living concerns aside and seeking out the chain because of its value for money, its online ordering system and availability during breakfast time. Investors have cast concerns about its high EBITDA multiples aside because of its track record of growth and being founder-led.

6 that got demoted in the ASX quarterly rebalance

Domain Group (ASX:DHG) from ASX 200

Domain has shed over a quarter of its value in 12 months, stands barely a tenth of REA Group (ASX:REA) on a market capitalisation basis, and is being punished through this demotion. House price growth has moderated from strong levels seen during the pandemic, leading to a moderation of housing ads, and costs have substantially increased. There has been speculation that it might be sold, either in full or in part by its largest shareholder (and business partner) Nine (ASX:NEC).

Dominos Pizza Enterprises (ASX:DMP) from ASX 100

For so long, Dominos Pizza Enterprises has been a story of substantial growth in Asia, particularly Japan. After a boom in sales during the pandemic, when locked down consumers ordered pizza for dinner, the company has faced intense competition and increased costs that it has struggled to pass onto consumers without hitting demand. Shares have gone down by more than 75% since mid-2021. It has recently abandoned its ambition to double its store count to 7,100 by 2033.

Arcadium Lithium (ASX:LTM) from ASX 100

See the word lithium, and anyone can probably guess why this company has fallen. This company, the world’s leading chemical producer and owner of the Mt Cattlin hard rock mine in WA, has been the victim of falling prices. Prices fell in 2023 due to EV oversupply, and things have not improved in 2024 – in fact, prices have continued to fall.

GDI Property (ASX:GDI) from ASX 300

You may not have heard of this company before, but we think it is worth singling out as a company to get demoted in the quarterly rebalance. It is a property stock that specialises in the Perth CBD office market. Its key assets include Westralia Square and the new WS2 building that is the city’s first timber and adaptive re-use office building. The Perth market has never been as bad as its East Coast peers in the last 5 years with slightly less working from home. Nonetheless, it is still seeing a ‘flight to value’ and there is an overall vacancy rate of 15.9%. Moreover, although its FFO increased, it was modest growth, hit by its net interest expense from $9.2m to $15.8m.

Terracom (ASX:TER) from ASX 300

The coal boom of 2022 is finally coming to an end. Coal prices are coming off all time highs, and it has seen production delays due to supply chain issues and downtime on the dragline. Sales from the company’s totally-owned and co-owned assets fell from 8Mt to 7.32Mt. Its revenue more than halved from $660m to $259m and Its post-tax profit was only a tenth of what it was the year before.

Strike Energy (ASX:STX) from ASX 200

Remember 5 years ago when Strike (and its then JV partner Warrego which it has since acquired) made a discovery at West Erregulla? Those were the days. It has continued to drill away at West Erregulla, but investors have been less excited about gas discoveries than they were a couple of years ago. The West Coast just doesn’t have the same gas shortage that the East Coast does.