Stock Pick

  • This ASX small-cap share is predicted to deliver market-beating returns

    Male hands holding Australian dollar banknotes, symbolising dividends.

    ASX small-cap shares don’t get a lot of attention, but they could be among the best investment opportunities given how much they could grow.

    Small businesses are usually much earlier on with their growth journeys than ASX blue-chip shares. This means the shares could have a lot of capital growth potential ahead, which is obviously compelling.

    But, on top of that, many ASX small-cap shares aren’t priced for how much growth they could achieve in the long term. In other words, they can be significantly undervalued for their growth outlook.

    One small business to consider is COG Financial Services Ltd (ASX: COG), according to the investment team at Wilson Asset Management (WAM). It’s one of the holdings in the listed investment company (LIC) WAM Research Ltd (ASX: WAX) portfolio, which targets the most compelling undervalued growth opportunities in the Australian market.

    Compelling ASX small-cap share

    WAM describes COG Financial Services as a business that’s Australia’s leading aggregator of finance brokers and equipment leasing brokers. Its net assets financed (NAF) were $9 billion in FY26. It also operates in the salary packaging sector, including novated leases.

    In FY26, total salary packaging customers were 31% higher year over year, to 68,510, and novated lease customers increased by 98%, to 22,281.

    WAM highlighted that the COG Financial Services share price rose 22% in September, following a stronger-than-expected FY26 full-year result and expectations of further earnings upgrades.

    The investment team noted that the ASX small-cap share’s management is targeting at least 10% earnings growth in FY27, supported by momentum in its salary packaging business and contributions from recent acquisitions.

    Wilson Asset Management believes the COG Financial Services share price remains attractive and could improve as salary packaging becomes a larger part of group earnings.

    The positive outlook for the business is also supported by opportunities for further acquisitions and earnings upgrades.

    Over the medium term, improvement in the broader economic environment could benefit the company’s broking and aggregation business, which has a significant presence in the small and medium-sized enterprise (SME) asset finance market.

    How much is the COG Financial Services share price undervalued?

    Other experts are also optimistic about the potential for this ASX small-cap share to deliver good returns.

    According to CMC Invest, there have been three analyst ratings on the business within the last three months, all of which were buy ratings.

    The average price target from those three analysts is $2.10, implying a possible 18% rise over the next year from its level at the time of writing. In other words, it could be one to watch.

    The post This ASX small-cap share is predicted to deliver market-beating returns 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 has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

  • 5 things to watch on the ASX 200 on Thursday

    Man and woman sitting at table with the man looking a bit puzzled at his laptop.

    On Wednesday, the S&P/ASX 200 Index (ASX: XJO) had a disappointing session and dropped into the red. The benchmark index fell 0.65% to 8,727.9 points.

    Will the market be able to bounce back from this on Thursday? Here are five things to watch:

    ASX 200 expected to fall

    It looks set to be a subdued session for Australian investors following a poor night on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 18 points or 0.2% lower this morning. In the United States, the Dow Jones fell 0.1%, the S&P 500 dropped 1.1%, and the Nasdaq sank 1.9%.

    Annual general meetings

    A number of ASX 200 shares are holding their annual general meetings on Thursday and could provide trading updates. This includes 4×4 parts company ARB Corporation Ltd (ASX: ARB), mining giant South32 Ltd (ASX: S32), and wine leader Treasury Wine Estates Ltd (ASX: TWE).

    Oil prices rise

    ASX 200 energy shares Woodside Energy Group Ltd (ASX: WDS)and Santos Ltd (ASX: STO) could have a good session following a positive night for oil prices. According to Bloomberg, the WTI crude oil price is up 1.1% to US$95.15 a barrel and the Brent crude oil price is up 0.4% to US$106.09 a barrel. This follows news of the sinking of a container ship in the Strait of Hormuz.

    Buy Megaport shares

    Megaport Ltd (ASX: MP1) shares could have major upside potential according to Bell Potter. This morning, the broker has retained its buy rating on the cloud infrastructure provider’s shares with a trimmed price target of $26.00. It said: “We continue to have a positive view on the stock due to valuation (FY28 EV/EBITDA of only 6x), strong forecast growth (which is fully funded), track record of execution, high visibility of earnings, AI exposure and differentiated business model (distributed inference).”

    Gold price drops

    It could be a tough session for ASX 200 gold shares Newmont Corporation (ASX: NEM) and Northern Star Resources Ltd (ASX: NST) on Thursday after the gold price dropped overnight. According to CNBC, the gold futures price is down 1.35% to US$4,120.8 an ounce. A hotter than expected US inflation reading has sparked rate hike fears.

    The post 5 things to watch on the ASX 200 on Thursday appeared first on The Motley Fool Australia.

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    Motley Fool contributor James Mickleboro has positions in Megaport, Treasury Wine Estates, and Woodside Energy Group Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ARB Corporation, Megaport, and Treasury Wine Estates. The Motley Fool Australia has positions in and has recommended Treasury Wine Estates. The Motley Fool Australia has recommended ARB Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

  • Why this ASX dividend share is a retiree’s dream for 2027

    Woman with headphones on relaxing and looking at her phone happily.

    Retirees may be looking for ASX dividend shares that can provide a good dividend yield and consistency. I think one of the top stocks investors should consider is WCM Global Growth Ltd (ASX: WQG).

    I regularly highlight this stock because I truly believe it’s one of the best ASX options for passive income in both the short and long term.

    This business operates as a listed investment company (LIC). An LIC invests in shares or other assets on behalf of shareholders, which I think is useful because it provides exposure to shares we may not already own.

    WCM Global Growth is an LIC that owns a portfolio of between 20 and 40 stocks that the investment team believes are quality global companies, primarily in high-growth consumer, technology, and healthcare sectors.

    In my view, there are three great factors for retirees to love this ASX dividend share.

    Appealing portfolio

    I think WCM Global Growth’s investment strategy is really effective at generating returns.

    It goes without saying that past performance is not a guarantee of future returns. Having noted that, the WCM Global Growth portfolio’s net return has been 15.6% per year since its inception in June 2017. That’s strong long-term performance and can support solid dividend income.

    The fund doesn’t just invest in any international company; it only invests in quality businesses that are improving.

    There are two factors WCM looks for when investing.

    First, it’s looking for businesses with a strengthening competitive advantage, which could also be described as an expanding economic moat. Competitive advantages can come in a variety of forms, such as cost advantages, intellectual property (IP), network effects, and so on.

    One of the main ways WCM measures whether competitive advantages are strengthening is by tracking whether return on invested capital (ROIC) is rising.

    The LIC also wants to see that the company has a corporate culture that supports the expansion of the economic moat. WCM thinks culture is the key determinant of a company’s ability to deliver a consistently growing moat. It has developed a proprietary approach to analysing corporate culture.

    By using this strategy, it has built a portfolio that’s spread across the Americas, Europe, and the Asia Pacific.

    Large dividend yield

    WCM Global Growth is very transparent about the dividends it intends to pay, making it easy to see what the dividend yield for the year ahead could be.

    The ASX dividend share has announced it intends to pay quarterly dividends totalling 10.1 cents per share between now and September 2027.

    At the time of writing, that forecast payout translates into a dividend yield of 5% excluding franking credits and 7.1% including franking credits.

    I think most retirees would be happy with that yield, particularly when combined with the pace of growth of the dividends.

    Growing payments

    WCM Global Growth has a stated progressive dividend policy.

    It started paying a dividend in FY19, and it has grown it every year since then. In 2023, it started paying dividends quarterly and has hiked the payment every quarter since then.

    The quarterly dividend for September 2026 was 41.6% higher than the quarterly payment for September 2023. It has guided that the September 2027 payment will be 10.6% higher than the September 2026 payment.

    I believe the ASX dividend share’s payout can continue to grow at a pleasing pace and be very rewarding for retirees.

    The post Why this ASX dividend share is a retiree's dream for 2027 appeared first on The Motley Fool Australia.

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    Motley Fool contributor Tristan Harrison has positions in Wcm Global Growth. 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 no position in any of the stocks mentioned. 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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