The Xero Limited (ASX: XRO) share price was a poor performer last week.

The cloud accounting platform provider’s shares dropped a disappointing 6% over the period to end at $142.26.

Why did the Xero share price tumble?

Investors were selling down the Xero share price last week after its half year results fell short of expectations.

For the six months ended 30 September, Xero reported a 23% increase in operating revenue to NZ$505.7 million but a 19% decline in EBITDA to NZ$98.1 million.

The former was softer than the market was expecting, which means it’ll need a big second half to reach consensus estimates. Management blamed this partly on COVID-19 lockdowns.

Is this a buying opportunity?

The team at Citi believe investors should be buying the Xero share price dip.

While its analysts acknowledge that the first half result was weaker than expected, it saw enough to upgrade the company’s shares.

According to the note, the broker has upgraded its shares to a buy rating and lifted the price target on them to $160.00.

Based on the current Xero share price, this implies potential upside of 12.5% for investors.

What did Citi say?

Citi commented: “Xero’s core accounting growth in 1H22 was a bit weaker than expected (partly a function of lockdowns) and North American subscriber growth missed our expectations. However, with AMRR growth accelerating to 29% from 17% in FY21 (26% excl. acquisitions), we upgrade to Buy ($160 target price) as we expect solid growth over the medium term as Xero increases penetration of existing markets (~18% penetration excl. North America), enters new markets (e.g. Europe) and increases ARPU. Our Buy call is not dependent on success in the US, with our forecasts assuming 2.2 million subs in North America in FY31e (~7% penetration).”

The post Xero (ASX:XRO) share price sinks: Citi says buy the dip appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Xero. The Motley Fool Australia owns shares of and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The fund manager Wilson Asset Management (WAM) has recently identified two top small cap ASX shares that it owns in its portfolio that could be ideas.

WAM operates several listed investment companies (LICs). Some focus on larger companies like WAM Leaders Ltd (ASX: WLE) and WAM Capital Limited (ASX: WAM).

There’s also one called WAM Microcap Limited (ASX: WMI) which targets small cap ASX shares with a market capitalisation under $300 million at the time of acquisition.

WAM says WAM Microcap targets the most exciting undervalued growth opportunities in the Australian microcap market.

The WAM Microcap portfolio has delivered gross returns (that’s before fees, expenses and taxes) of 25.2% per annum since inception in June 2017, which is superior to the S&P/ASX Small Ordinaries Accumulation Index average return of 12.2%.

These are the two small cap ASX shares that WAM outlined in its most recent monthly update:

Superloop Ltd (ASX: SLC)

WAM described Superloop as a leading telecommunications provider that owns and operates metropolitan fibre networks in Australia, Singapore and Hong Kong, connecting the regions’ key data centres and bandwidth intensive buildings.

During the month of October 2021, it announced the sale of its Hong Kong business and certain Singapore assets for $140 million, a 30% premium to the carrying value of the assets.

The fund manager said that this sale will allow the company to redeploy the proceeds generated from the sale in acquisitions that can add to earnings or capital management initiatives.

Superloop also said that in connection with the sale, it will maintain operations in Singapore and Hong Kong and enter into a 15-year indefeasible right of use on the existing or future expanding networks. This will allow the company to continue to participate in these markets and provide end-to-end connectivity services to Superloop’s INDIGO submarine customers in the region.

Praemium Ltd (ASX: PPS)

Praemium was described as a global leader in the provision of technology platforms for managed accounts, investment administration and financial planning.

The fund manager pointed out that the small cap ASX share services 300,000 investor accounts and manages over $170 billion in funds globally for more than 1,000 financial institutions and intermediaries.

In October, Praemium reported a record inflow of $1.7 billion for the three months ending 30 September 2021. That was 37% higher than the previous quarter. It also achieved record total funds under administration (FUA) of $45.6 billion.

Then, in early November 2021, the fintech company announced that it had received a takeover merger proposal from the financial services and technology business Netwealth Group Ltd (ASX: NWL).

If the takeover goes ahead, Praemium shareholders would be entitled to receive one new Netwealth share for every 11.96 Praemium shares, or receive a cash alternative.

The fund manager believes that the proposed merger, if implemented, will create substantial value for Praemium shareholders due to the compelling synergies it will produce.

The post Wilson Asset Management believes these 2 leading small cap ASX shares are a buy appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison owns shares of WAM MICRO FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Netwealth, Praemium Limited, and SUPERLOOP FPO. The Motley Fool Australia owns shares of and has recommended Netwealth. The Motley Fool Australia has recommended Praemium Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There are a large number of ASX shares to choose from on the Australian share market.

Five that come highly rated are listed below. Here’s why these ASX shares are being tipped as buys:

Bapcor Ltd (ASX: BAP)

The first ASX share to consider is Bapcor. It is the Asia Pacific region’s leading provider of vehicle parts, accessories, equipment, service and solutions. While the name may not be familiar to all, its brands are likely to be. Bapcor is the name behind a number of retail brands including Autobarn, Burson Auto Parts and Midas. It has been tipped for solid growth over the long term thanks largely to its expansion plans.

Citi is bullish on Bapcor and has a buy rating and $8.75 price target on its shares.

Healius Ltd (ASX: HLS)

Another ASX share to look at is Healius. It is one of Australia’s largest pathology and diagnostic imaging providers offering services. Thanks largely to elevated demand for COVID-19 testing, it is poised to deliver another very strong result in FY 2022. For example, during the first quarter, Healius reported a 43.7% increase in group quarterly revenue over the prior corresponding period to $689.9 million.

This went down well with the team at Macquarie. The broker has an outperform rating and $5.65 price target on its shares. It also expects a dividend yield of close to 5% in FY 2022.

Life360 Inc (ASX: 360)

Another share to look at is Life360. With its eponymous Life360 app, the company operates in the digital consumer subscription services market. It has a focus on products and services for digitally native families, where all members of the household are connected by smartphones. A whopping 33.8 million monthly active users are using its app, which is underpinning stellar recurring revenue growth. The company also has significant opportunities to monetise its user base further in the future.

Morgan Stanley is bullish on Life360. Last week it retained its overweight rating and lifted its price target to $14.20.

SEEK Limited (ASX: SEK)

This job listings company could be an ASX share to buy. SEEK was hit hard by the pandemic but bounced back very strongly in FY 2021. It delivered a 1% increase in revenue to $1,591 million and a 58% jump in net profit after tax (excluding significant items) to $141 million. Pleasingly, more of the same is expected in the coming years as the Australian economy recovers from COVID-19.

Macquarie is a fan and has an outperform rating and $37.00 price target on its shares.

Temple & Webster Group Ltd (ASX: TPW)

A final ASX share to look at is this online furniture and homewares retailer. It appears well-placed for growth over the long term thanks to the ongoing structural shift online, which is only really getting start. For example, management estimates that just 7% to 9% of category sales were made online in 2020. This is significantly lower than the US, which has ~25% of category sales online. This bodes well for Temple & Webster given its leadership position online.

Morgan Stanley currently has an overweight rating and $16.00 price target on Temple & Webster’s shares.

The post 5 fantastic ASX shares to buy right now appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Life360, Inc. and Temple & Webster Group Ltd. The Motley Fool Australia owns shares of and has recommended Bapcor. The Motley Fool Australia has recommended SEEK Limited and Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The TPG Telecom Ltd (ASX: TPG) share price has fallen around 8% in the last month. Could it be an opportunity that’s calling out to investors to consider?

TPG is one of the largest telecommunication businesses in Australia after the merger between the old TPG and Vodafone Australia. It now operates a number of brands including Vodafone, TPG, iiNet, Internode, Lebara, AAPT and Felix.

Since listing in July 2020, the business has seen its share price decline by more than a quarter.

What do analysts think of the TPG share price?

Some analysts are pretty confident on the TPG share price.

UBS currently rates TPG as a buy, with a price target of $7.60, suggesting that the shares could rise around 20% over the next 12 months if it’s right.

The broker believes that earnings can grow in FY22 and that it could also do something with its towers.

Readers may remember that a few months ago, Telstra Corporation Ltd (ASX: TLS) announced it was selling a 49% stake of its towers business for $2.8 billion. Telstra’s towers business is the largest mobile tower infrastructure provider in Australia with approximately 8,200 towers.

Telstra sold its towers stake to a consortium comprising the Future Fund, the Commonwealth Superannuation Corporation and Sunsuper.

Morgan Stanley also thinks that the TPG share price is a buy, with a price target of $9.50. That suggests a large increase of TPG shares – an upside of approximately 50%. The broker thinks that the merger between the businesses will help over the longer-term terms.

FY21 half-year result

The TPG financial year is the 12 months to December 2021, so the latest report that investors have seen is for the six months to 30 June 2021.

TPG said that it had made strong progress on the integration and strategic priorities and that it was ahead of its 2021 5G coverage target. It’s aiming to reach 85% 5G population coverage in ten of Australia’s largest cities and regions by the end of the year, supporting growth in mobile and home wireless.

The telco’s total fixed broadband subscriber base increased to 2.2 million in the half-year. It launched 5G home wireless and tripled its 4G home wireless customer base.

TPG’s merger synergy program is on track, with $38 million of cost synergies delivered in six months.

In terms of the financial numbers, its reported revenue was $2.63 billion, earnings before interest, tax, depreciation and amortisation (EBITDA) generated was $886 million and net profit after tax (NPAT) came to $76 million.

Management did acknowledge that it is undertaking a strategic review of its tower assets. It operates a mobile network of 5,800 rooftops and towers and owns the passive infrastructure of around 1,200 of those sites – the majority of those are in metro areas and have a high average tenancy ratio.

TPG share price valuation

Morgan Stanley has the more optimistic estimate for earnings. TPG is valued at 34x FY21’s estimated earnings and 27x FY22’s estimated earnings.

UBS thinks that TPG is going to pay a grossed-up dividend yield of 4% in FY22, suggesting a growing dividend.

The post Is the TPG (ASX:TPG) share price an opportunity calling? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Corporation Limited. The Motley Fool Australia has recommended TPG Telecom Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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