Where valuation resets are creating opportunity on the ASX

This interview was first published on Livewire markets and was recorded on Monday, 2 February 2026.

TIME CODES

00:03 – Introduction: Valuations, volatility, and why markets are de-rating
00:42 – The de-rating of market darlings: PE spreads compressing
01:40 – The outlook for value: Why the market still looks expensive
03:52 – How the base case could be wrong: US growth, Trump, and rates
05:11 – Portfolio positioning: Defensive setup and sector tilts
06:52 – Gold and silver: Why sell-offs still don’t equal value
07:35 – When quality gets mispriced: CSL and Woolworths
09:22 – Capital discipline and value traps: Leverage risks
11:29 – Where alpha came from: ANZ and Amcor
14:14 – A stock sold: Why Brambles no longer stacked up

Valuations are easing and opportunities are emerging. Here’s where a value investor is putting capital to work.

Whilst factors such as growth and momentum have dominated markets in recent years, anyone paying attention will have observed that things are starting to change.

There is a rotation happening literally as you read this, with hot money flowing out of tech and certain commodities. But it’s more than that. The market is waking up to the idea that what has worked in the past won’t work ad infinitum.

To put it more succinctly;

“…Value is already starting to emerge…” says Dougal Maple-Brown, Head of Australian Value Equities at Maple-Brown Abbott

After a powerful rally through late 2025, Australian equities entered 2026 trading near 20-year valuation highs. While headline multiples have come off modestly, Maple-Brown argues the more important development is what is happening beneath the surface. Several of the market’s most popular stocks are already being de-rated, narrowing the valuation gap between expensive and unloved names and reopening the opportunity set for patient, valuation-driven investors.

As he explains, this shift is measurable and already underway:

“…We monitor PE spreads between the rich and the poor. Those spreads have been coming in. You can see stocks like CBA, which peaked at 30 times middle of last year, are now down at 24 or 25. So the de-rating is definitely underway.” 

For Maple-Brown, this matters because valuation cycles rarely stop neatly at fair value. Markets that unwind from extremes often overshoot, creating opportunities for investors who remain disciplined as sentiment adjusts to fundamentals.

In our conversation, he explains why Australian equities still look expensive in aggregate, why value has further to run over the next 12 months, and where opportunities are already emerging after years of valuation discipline being tested. Just as importantly, he is clear on where value still does not exist, despite recent pullbacks, and why paying too much for perceived safety remains one of the biggest risks investors face today.

Interview summary

The de-rating of the darlings is already underway

One of the clearest signs that value is beginning to re-emerge is what Dougal Maple-Brown describes as the “de-rating of the darlings” – a framework he uses to track how far the market’s most popular stocks have already unwound from post-COVID valuation extremes.

Rather than looking only at headline indices, Maple-Brown compares peak valuations since early 2020 with where those same stocks trade today. Across a number of former market favourites, valuation compression has already been meaningful.

“…We also monitor PE spreads between the rich and the poor. Those spreads have been coming in… so the de-rating is definitely underway…”

Source: FactSet, MBA. Peak P/E: highest since Jan 2020. Current P/E: as at 31 Dec 2025

Several former market favourites have seen material valuation compression since their post-COVID peaks, though not all now represent value.

The chart provided by Maple-Brown Abbott illustrates this clearly. CSL has fallen from a peak multiple in the mid-40s to the mid-teens. Cochlear (ASX: COH) has de-rated from roughly the high-60s to the mid-30s. REA Group (ASX: REA) has come back from the high-50s to the low-30s. Even traditionally defensive names such as Woolworths and Wesfarmers have seen valuation resets.

While many of these stocks are no longer priced at the extremes reached in the post-COVID period, Maple-Brown is careful to distinguish between valuation compression and true value, noting that not every falling multiple creates an opportunity.

Value is re-emerging, even if the market is not cheap

At the market level, valuations have eased but remain elevated. The ASX peaked around 20 times forward earnings and has since fallen closer to 18, still well above the long-term average of roughly 14.

History suggests valuation adjustments rarely stop neatly at average levels:

“…Whether it be a market level or a stock level, they rarely come back to average and stay there. If they’re coming from 20, they generally keep going down…” 

That dynamic underpins Maple-Brown’s confidence that value still has room to run as dispersion between expensive and cheap stocks continues to narrow.

Portfolio positioning reflects valuation, not forecasts

The portfolio remains defensively positioned, but that defensiveness is a by-product of valuation rather than a macro call. Maple-Brown holds elevated cash, is underweight banks and high-growth stocks, and favours businesses that can hold up if market risks materialise.

“…It’s based on valuation, but it’s got the added benefit that if one of the risks comes to fruition, the underlying businesses that we own are pretty defensive…”

This approach preserves flexibility while allowing the portfolio to capitalise on valuation dislocations as they emerge.

Energy stands out as the clearest commodity opportunity

Energy is the only commodity sector where Maple-Brown sees clear long-term value. While iron ore, copper, gold and rare earths all trade well above his assessment of long-term prices, energy stands apart.

“…Energy was the only commodity trading a long way below our long-term price, whereas iron ore is about $40 above where we think it is long-term…” 

Despite weak sentiment, demand remains near record highs, supporting the medium-term investment case.

When de-rating turns into opportunity: CSL, Woolworths, ANZ and Amcor

In some cases, valuation compression has been sufficient to create genuine opportunity. CSL Limited (ASX: CSL) is the clearest example.

“…CSL peaked at almost 55 times and today it trades on 16 or 17 times. Quite unbelievable. Not surprisingly, we have bought CSL…” 

That magnitude of de-rating has fundamentally altered the risk-reward profile, turning a former market darling into an attractive value opportunity.

Woolworths (ASX: WOW) has also been added after a significant valuation reset. In both cases, the investment decision was driven not by a change in business quality, but by a sharp reduction in expectations.

ANZ Group Holdings (ASX: ANZ) remains a core holding on a relative basis. While it has re-rated from the low-teens to the mid-teens, Maple-Brown still sees it as attractive versus peers.

“…CBA was on 33 times forward earnings and ANZ was on 12 or 13. That gap has closed, but ANZ still looks cheap relative to its peers…” 

Amcor (ASX: AMC) is viewed as a low-growth but attractively priced business trading on 10–11 times earnings, with limited disruption risk and manageable acquisition execution.

Where value still does not exist

Despite recent pullbacks, Maple-Brown remains cautious on stocks where valuations still imply optimistic growth assumptions. Commonwealth Bank (ASX: CBA), for example, has de-rated from around 30 times to the mid-20s, but remains expensive given modest earnings growth.

“…For a stock with minimal earnings growth, that still looks pretty rich to us…” 

Similarly, Wesfarmers (ASX: WES) has come back from the high-30s to the low-30s, but Maple-Brown sees little justification for paying more than 30 times earnings for low-single-digit growth.

Gold and silver also remain well above levels that would constitute value, even after sharp short-term corrections.

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