Here are our top 5 contrarian stock ideas on the ASX – is it time to buy?

Many investors are looking for contrarian stock ideas on the ASX. After all, Warren Buffett said to be greedy when others are fearful, and investors certainly are fearful now.

Amidst all this market volatility, it could be a great time for contrarian investors to find a bargain. There are plenty of good companies that have been sold off unreasonably, just because of market conditions, or because of unreasonable fears with these stocks. And with markets recovering from the sell off over Trump’s tariffs, now might be the time to take a contrarian mindset and buy before everyone else does.

Nonetheless, there is the risk investors catch a falling knife in searching for contrarian ideas. We’ve taken a hard look at the ASX, and thought we would share our top 5 contrarian ideas right now.

 

5 contrarian stock ideas on the ASX

 

Johns Lyng Group (ASX:JLG) – down 62% in 12 months

Despite being contrarian on this one, we’d like to firstly state that it might not be time to buy until later in the year when it releases FY25 results, at which point we might see guidance for FY26.

Johns Lyng Group (ASX:JLG) is a restoration services company, repairing properties after damage by insured events, including weather and other impact incidents. This company has a long-term track record of earnings growth, and it could be one of the few companies that may be a beneficiary of climate change. That was why shares surged in 2022 and it would’ve been contrarian to go in the other direction.

But it has been difficult times recently due to concerns over inflation, a hit to its reputation after it was named in an ABC investigation into the strata industry. The company was expecting revenue and EBITDA growth for FY25 but now expects things to be flat. But it has promised things are turning around, having bought insurance building and restoration services provider Keystone last year, and having some of its existing contracts extended or expanded.

But keep in mind other companies (such as Medibank) have recovered from reputational hits caused by far more adverse reasons than JLG. Analysts have a mean target price of $3.23, which suggests nearly 40% upside. They expect flat revenue and earnings…but they expect a return to growth in FY26 with 6% revenue growth and 11% EBITDA growth followed by 5% revenue growth and 8% EBITDA growth in FY27.

 

CSL (ASX:CSL) – down 22% since August 2024

The ASX’s largest biotech stock just might be the best contrarian idea right now. We’d be lying if we said things were going perfectly for it right now, although we think investors have gone too far in selling it off.

Investors have some legitimate concerns such as that CSL paid too much for Vifor, that it will have lower margins in its blood collection business…and all this was before Trump’s tariffs and concerns that the company might be effected. As a company that barely put a foot wrong in the last decade, perhaps investors leaving weren’t leaving because they thought there were better opportunities.

In FY24, delivered US$14.8bn in revenue and a $2.9bn post-tax profit, both up 11% from FY23. It paid a total dividend of US$2.64 per share, or A$4.

The company anticipated its profit to be $3.2-3.3bn for FY25 and for revenues to be 5-7% higher. CEO Paul McKenzie proclaimed the company was in a strong position to deliver annualised double-digit earnings growth.

This was reaffirmed at its 1H25 results in February where revenues were $8.5bn and its profit was just over $2bn, up 5% and 6% respectively. If this company can achieve these promises, there’s potential for a re-rate. Analysts expect 29% upside from there.

 

Pexa (ASX:PXA) – down 20% since September 2024

This may not stand out as a contrarian idea because its decline isn’t as bad as we’ve seen for other companies on this list. Pexa has a near monopoly over the Australian market with its conveyancing platform. Nonetheless, its fortunes can fluctuate with the property market, and we think it can record revenue and profit growth as interest rates decline.

But more importantly, we think it can expand into the UK. The company asserts there are no competitors providing the same offering in the Old Dart. And to achieve the same revenue and profit, Pexa would only need a third of the market given the UK market is thrice as large.

It has been trying since late 2021 to little avail and it may still be a couple of years. But it has made some acquisitions to aid it in its endeavours.

Analysts covering the company don’t appear too fussed about the struggles, placing a target price of $15.68 – a >25% premium. They’re expecting $401m revenue and $132.2m EBITDA – 17% and 15% growth respectively for FY25. Then for FY26, they expect $450.5m revenue and $168.6m EBITDA – up 12% and 28%.

 

Liontown Resources (ASX:LTR) – down >70% since September 2023

Yes, lithium prices have been terrible over the past couple of years. Our contrarian theory here is that lithium prices will recover and investors will swing back into this one – there’s no other way and we don’t know when exactly it is…but we are confident it will happen.

Liontown’s Kathleen Valley project is one of the most significant new, long-life lithium projects in production anywhere in the world.  Yes, it still is producing having started last year. Kathleen Valley has a current Mineral Resource Estimate of 156Mt at 1.4% lithium and could produce over 500ktpa over a 23-year life of mine. The project’s economics, outlined in the 2021 DFS include an NPV of A$4.2bn and a 57% IRR after tax.

The risk with this one is that prices persist at current levels and it may be forced to mothball the project as Core Lithium did at its Finniss Project. But just look at what happened when that company announced plans to re-start the project and a refining of its feasibility study to deliver lower cost – shares gained 35% in a day even though there’s no idea as to just when the project will re-start.

 

Neuren Pharmaceuticals (ASX:NEU) – down 38% in the last 12 months

Neuren has made strides with Trofinetide/Daybue in the US for Rett syndrome, there’s no denying. In the last 2 years, it has sold over US$500m and this has led to over A$85m in royalties. For CY25, licensee Arcadia has guided to US$380-405m in the US alone, which would lead to A$62-67m in royalties for Neuren

But where to next? The answers are two-fold. First, more jurisdictions for Trofinetide. Canadian sales are due to start in Q3 of 2025 and European approval is expected in Q1 of 2026. There could be even more milestone payments to come, the most likely next one will be US$50m for exceeding US$500m in sales.

Secondly, a new asset that got investors excited last month – NNZ-2591. NNZ-2591 has undergone multiple clinical trials for multiple neurological diseases that are larger than the market for Rett syndrome. These include Pheland McDermind Syndrome, Angelman syndrome and Pitt Hopkins syndrome. The company has obtained top-line Phase 2 results for all three in the last 24 months and will pursue Phase 3 in the first of those (PMS) in 2025.

 

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