These 2 ASX shares are ‘compelling opportunities’: fund manager

A group of people in suits watch as a man puts his hand up to take the opportunity.A group of people in suits watch as a man puts his hand up to take the opportunity.

The leading investors from Wilson Asset Management (WAM) have told investors about two compelling All Ordinaries Index (ASX: XAO) ASX shares on their radar.

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

WAM Capital Limited (ASX: WAM) targets “the most compelling undervalued growth opportunities in the Australian market”.

Does WAM have a claim of stock-picking pedigree? The WAM Capital portfolio has delivered an investment return of 15.3% per annum since its inception in August 1999. That’s before fees, expenses, and taxes. This gross return outperformed the All Ordinaries Total Accumulation Index (ASX: XAOA) return of 8.5% per annum over the same timeframe.

Here are the two ASX shares WAM Capital has outlined in its recent monthly update.

Codan Limited (ASX: CDA)

WAM describes Codan as a technology company that develops a range of radio and detection products.

The fund manager pointed out that in May 2022, the company provided a “positive” market update. The update showed that it’s expecting to generate a record full-year profit in FY22, thanks to its strategy to diversify revenue.

The ASX share also says that the increase in profitability of its communications division contributed to the potential for Codan to match its record FY22 first-half profit of $50 million in the second half of the financial year.

WAM says that the company noted the expanding opportunity pipeline for Domo Tactical Communications and Zetron businesses are tracking “ahead of schedule”. Codan acquired the two businesses in 2021. The expectation is that both companies will deliver a strong result for the six months to June 2022.

The fund manager is positive about the upcoming Codan FY22 report and believes in management’s ability to sustain profits.

Johns Lyng Group Ltd (ASX: JLG)

This business continues to be one of the preferred picks by WAM.

Johns Lyng is an integrated building services group delivering building and restoration services across Australia and the United States.

WAM points out that last month, the ASX share announced its managing director and CEO Scott Didier and executive director and chief operating officer Lindsay Barber each sold 1 million shares in the company. The reason provided was to “manage their personal asset portfolios”.

As the fund manager noted, the share sales represented a small percentage of their holdings in the company, but this still led to a decline in the Johns Lyng share price after the update.

But, the ASX share did say that it’s on track to reach its FY22 guidance. Those targets are sales revenue of $802.4 million and earnings before interest, tax, depreciation and amortisation (EBITDA) of $78.7 million.

The fund manager calls Johns Lyng a quality business with an “important role” in managing ongoing catastrophes. As an example, WAM referred to the appointment to lead New South Wales’ flood recovery response earlier this year. WAM thinks that further projects will increase its profits in the future.

The post These 2 ASX shares are ‘compelling opportunities’: fund manager appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now

See The 5 Stocks
*Returns as of January 12th 2022

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

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 positions in and has recommended Johns Lyng Group Limited. The Motley Fool Australia has recommended Johns Lyng Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/bNdLqfw

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s