Fund manager rates these 2 undervalued ASX All Ords shares as buys

The fund manager Wilson Asset Management (WAM) has named two exciting All Ordinaries Index (ASX: XAO) shares with compelling futures.

These stocks may not be the largest, but they have been called out as opportunities that could deliver good returns.

The biggest listed investment company (LIC) that WAM manages is WAM Capital Limited (ASX: WAM), which looks for undervalued growth companies where there’s a catalyst that could send the share price higher.

These are two stocks that the investment team picked out.

Nick Scali Limited (ASX: NCK)

WAM described Nick Scali as one of Australia’s largest furniture retailers.

The company recently reported its FY24 first-half result which supposedly beat market expectations. Nick Scali achieved a net profit after tax (NPAT) of $43 million for the six-month period, which was above the $40 million to $42 million guidance given in late 2023.

Nick Scali’s trading update also pleased the investment team. The company reported a 3.6% increase in sales orders in January year over year, which was more than what analysts were expecting from the ASX All Ords share.

The WAM team said:

We are pleased to see a solid half-year result from Nick Scali and we are positive on its ability to execute its long-term target of establishment 86 Nick Scali stores and 90 to 100 Plush stores. We also see the potential for earnings accretive acquisitions outside Australia given the company’s strong balance sheet.

SG Fleet Group Ltd (ASX: SGF)

This business provides fleet management, vehicle leasing and salary packaging services,

ASX reporting season saw the company reveal its FY24 first-half result, which “materially beat” analyst estimates.

In the FY24 first-half result, the ASX All Ords share reported an 8.5% increase in its NPAT year over year. This growth was driven by record delivery volumes and improved supply of new vehicles.

Why is the WAM investment team positive on the business? They said:

We remain positive on SG Fleet Group’s ability to maintain its positive momentum over the next 12 months as it finalises the completion of the Leaseplan acquisition made in 2021.            

The company is trading on an attractive price-to-earnings multiple valuation of 9 times compared to its peer which trades on 15 times, therefore we see the potential for a re-rating of the share price.

The post Fund manager rates these 2 undervalued ASX All Ords shares as buys appeared first on The Motley Fool Australia.

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• Why Cettire, Fletcher Building, Lake Resources, and Nick Scali shares are falling today

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 recommended Nick Scali. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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