2 All Ords ASX shares this fund manager thinks are compelling

a woman sits in her home with chin resting on her hand and looking at her laptop computer with some reflection with an assortment of books and documents on her table.

a woman sits in her home with chin resting on her hand and looking at her laptop computer with some reflection with an assortment of books and documents on her table.Wilson Asset Management (WAM) is a fund manager that manages billions of dollars across various listed investment companies (LICs). It often likes to go hunting for ASX All Ordinaries (ASX: XAO), or All Ords, shares.

The company manages one of the largest LICs on the ASX, WAM Capital Limited (ASX: WAM). Another is WAM Leaders Ltd (ASX: WLE), which looks at the bigger ASX shares.

Each month, the fund manager likes to tell investors what’s going on in its portfolio.

Sometimes it outlines an investment that has gone well (and could keep going well), whereas other examples may be something that has seen a decline but could still be an opportunity.

With that in mind, let’s look at two of the latest All Ords ASX shares that WAM thinks are opportunities.

Smartgroup Corporation Ltd (ASX: SIQ)

WAM described Smartgroup as a business that provides salary packaging, fleet management, and a range of other employee benefit services for organisations across Australia.

The fund manager noted the Smartgroup share price suffered in June after the company announced the Department of Education and Training Victoria would not be renewing its contract.

WAM noted this was a rare occasion where the company was unsuccessful against its competitors. The contract is expected to end in the coming months with an estimated earnings impact of “less than 5%” in the 2023 calendar year.

While this announcement hurts short-term earnings and market sentiment, WAM pointed to a number of reasons to remain positive. Those factors were: a recovery in new vehicle supply, a robust pipeline of novated leases, and a cost-out targeted under the company’s smart future program. All are expected to underpin Smartgroup’s earnings growth over the medium term, WAM said.

Carsales.Com Ltd (ASX: CAR)

The fund manager describes Carsales as a business that operates the largest online automotive, motorcycle, and marine classified advertising business in Australia. It also operates Trader Interactive (TI), a US-based marketplace business that has a leading position in the recreational vehicle, powersports, commercial truck, and equipment markets.

WAM noted that, in June, the All Ords ASX share announced it would exercise its call option to acquire the remaining 51% interest in TI that it doesn’t already own for $1.2 billion. This will be funded by a capital raising.

The transaction is expected to be completed in the first quarter of FY23, with the acquisition providing “immediate low double-digit earnings per share (EPS) accretion”, including tax and interest benefits.

WAM likes the deal because owning all of the TI business is expected to unlock a “range of additional growth options” for the business.

The company also provided a trading update during June 2022, with FY22 earnings guidance in line with analyst expectations.

Despite uncertainty in the wider economic environment, Carsales noted “strong momentum” across all markets going into FY23. WAM thinks the All Ords ASX share’s earnings will be more resilient than the market is expecting.

The post 2 All Ords ASX shares this fund manager thinks are compelling appeared first on The Motley Fool Australia.

3 Stocks for Runaway Inflation

As the world suffers price shocks… and the cost of everything seems to be ticking higher…
These 3 ASX stocks could be the answer to runaway inflation. Boasting key qualities companies need to not only survive but actively thrive when costs surge.
Act fast – because in times of inflation, the worst thing you can do is… nothing.

Learn More
*Returns as of July 1 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(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘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 no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended SMARTGROUP DEF SET. The Motley Fool Australia has recommended carsales.com 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/Ha7u9yV

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