Here Are 4 Dogs of the ASX that will Bounce Back With a Vengeance in FY26, and 4 That Won’t

Have you ever heard the term Dogs of the ASX? It can either allude to the worst stocks in the ASX generally, or perhaps the investment strategy of buying these worst performing shares at the start of a new year (either a calendar or financial year), thinking they will rebound.

Many will be considering this strategy, whether or not they’ve heard of the term Dogs of the ASX before. For the sake of those investors, here’s 4 such underperforming companies that we think will recover, and 4 that won’t.

 

4 Dogs of the ASX that we think will recover in FY26

Propel Funeral Partners (ASX:PFP)

Since the exit of Invocare, PFP has been the only option for local investors seeking exposure to the first of life’s two certainties. It is down over 20% in a year, a decline that started in February when it released its 1H25 results. Despite revenues growing 12% and its profit by 21%, one bit of news was hated by investors. Namely, that co-founder Albin Kurti would be retiring at the end of August. Investors also didn’t like that in May, it expected flat EBITDA for the full year – although revenues would be 5-8% higher. Ultimately PFP has announced Kurti would be succeeded by his 2 fellow co-founders.

Beyond FY25, the company thinks it has a big opportunity with a mere 9% market share now and it expects a death boom in the coming years – 2.6% CAGR growth for the rest of the decade and 2.9% in the 2030s. This would be well ahead of the 1.1% CAGR in 1990 to 2024.

 

Capstone Copper (ASX:CSC)

Capstone is in a commodity that has big long-term potential but has short-term pricing issues. It has 4 operating copper mines across the Americas and expects to produce 220,000-255,000t of copper in 2025.

Copper is a critical industrial mineral, both in respect of ‘conventional industrial technologies’ like in wiring, but also decarbonisation technologies such as in renewable energy systems and in electric vehicles. But there is a forthcoming copper crunch that we expect to push prices up in the years ahead.

 

Liontown Resources (ASX:LTR)

All lithium stocks have been underperforming, there’s no shying away from that fact. And it is unlikely things will get better until prices improve. But our thesis here, and generally in the market, is that FY26 will be the year lithium emerges from the doldrums with recovering pricing and continuing growth in demand for lithium. Wood Mackenzie estimated that lithium demand grew by 25% in 2024, and that it’ll grow by 20% in 2025 and then a 10% CAGR up to 2035 which would see 3,545kt LCE demand, up from 1,237 in 2025.

And Liontown will be one of the first to benefit, being a major producer. Its Kathleen Valley Project has a current Mineral Resource Estimate of 156Mt at 1.4% lithium and could produce over 500ktpa over a 23-year life of mine.

 

Bellevue Gold (ASX:BGL)

Bellevue is one of the few gold stocks to have performed poorly and made it to the dogs of the ASX club. After giving its namesake gold mine a new lease of life, operational difficulties led to lower production in FY25 and lowered expectations for future years. It raised $300m in capital to stay afloat.

Investors have had hope though. The company is in the middle of a strategic review that could lead to a takeover offer – we’re not just speculating, the company has reported interest and hired UBS to examine this interest. Since then, the company reported that it had a better than expected end to the year and was thus well positioned to FY26.

 

4 Dogs of the ASX that we think won’t recover in FY26

Monash IVF (ASX:MVF)

If you can think of a greater mishap a business could do to its customers than impregnating a client with someone else’s embryo, let’s hear about it. This happened in 2023, but only was uncovered when the birth parents asked to transfer their remaining embryos to another provider.

What is more is that the company withheld this from investors thinking this was not price sensitive. Turns out (when this became public) it was price sensitive. Think about it, if there’s a risk you could end up pregnant with someone else’s baby – why would you choose that provider? You could just say it was a one-off mistake…except it wasn’t. On June 10, investors were informed of an incident the past Thursday where a patient’s own embryo was incorrectly transferred to that patient, contrary to the treatment plan which designated the transfer of an embryo of the patient’s partner.

It’ll take more than a year for customers to regain confidence in this company, and thus investors. Until then, it’ll firmly deserve the tag as one of the dogs of the ASX.

 

IEL Education (ASX:IDP)

IDP is an international student recruitment and English training company. After some months of investors brushing off the increasing scapegoating and derision of international students, they could no longer do so because the impact was showing in IDP’s results.

FY25 was the year the company felt the pinch and became one of the dogs of the ASX. Its half-yearly revenue fell 18% and profit fell 39%. In its full year results, the company expects placement volumes to fall 28-30% and language testing volumes to fall 18-20%. The revenue impact was promised to be mitigated by strong average fee growth, although only time would tell.

Investors were warned that uncertainty would continue into FY26 and that the company was now undertaking a ‘detailed review on longer-term cost, productivity, investment and commercial levers’, more of which would be revealed at its annual results in August.

 

Spark (ASX:SPK)

It is good to be a dominant provider in utilities…unless of course your market has a basket case of economy and so it is with Spark. Spark has been underperforming lately, with its 1H25 profit down 77% to NZ$35m.

The company blamed the tough economic conditions in New Zealand – Chair Justine Smyth did not shy away from the fact that they were impacting the company.

New Zealand is in the worst economic downturn since the 1990s recession. Unemployment is at a 4-year high, the number of people in work declined the most in a year since 2009 and companies are going under at the fastest pace in over a decade. And as a result, Spark customers were downgrading to lower priced plans with Spark or switching telcos.

Stay clear of this dog of the ASX until/unless the New Zealand economy turns around.

 

Star Entertainment (ASX:SGR)

Yes the casino operator has staved off extinction, but just how will it rebound to the glory days? We think the only hope of upside in FY26 is if Bally’s and/or Bruce Mathieson opt to take it private. Enough said.

 

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