WAM Research Limited (ASX: WAX) has revealed some of the best ASX shares to own for strong returns for your stock portfolio.

What is WAM Research?

WAM Research is a listed investment company (LIC). The job of a LIC is to invest in other shares on behalf of shareholders.

Some LICs invest in large ASX shares, others target smaller ones. Then there’s another group of LICs that look for the best internationally-listed shares to buy for their portfolios.

WAM Research is looking for ASX shares that are the most exciting undervalued growth opportunities in the Australian market.

Why follow what ASX shares this LIC invests in?

It’s true that anyone can name some shares that it thinks are worth buying. Over time a fund manager can create a track record of choosing great ASX shares at the right price. If they’re right, the results will speak for themselves.

Wilson Asset Management is one of the most respected fund managers in Australia with a great track record.

WAM Research changed its investment strategy in July 2010. The LIC’s investment portfolio performance since then, before fees and expenses, has been 14.1% per annum. The S&P/ASX All Ordinaries Accumulation returned 7.6% per annum in that same timeframe. So WAM Research’s gross performance has been better by 6.5% per annum.

I think it’s worth following what this investment team is doing with ASX shares if WAM Research can outperform by that much.

May 2020 update

At the end May 2020, WAM Research’s portfolio had outperformed the index by 5% in FY20 to date. During the May 2020 update WAM Research said that significant contributors to the solid investment portfolio outperformance in the month included auto parts business Bapcor Ltd (ASX: BAP), education placement provider Idp Education Ltd (ASX: IEL) and home furnishings retailer Adairs Ltd (ASX: ADH).

The reason behind owning Bapcor was an anticipation of an increase of car usage as the coronavirus lockdown measures began to reverse. During the month Bapcor raised $56 million from a share purchase plan, adding to the $180 million institutional placement completed in April. This put the balance sheet in a strong position. 

During May 2020 the LIC invested more into ASX share IDP Education. The idea here is that WAM Research expects international students’ tertiary education to recommence faster than expected by the market.

In May’s trading update Adairs said that online sales had beaten expectations and more than made up for the lost revenue from closed stores. Online sales grew 221% in the period. WAM Research also pointed out that the company is managing its working capital and reducing costs across the company. The company’s update today proves it’s still on a good track. 

The WAM Research team stated that they continue to see opportunities in undervalued companies such as Adairs that are able to shift their focus to growing online demand.

What are some of the ASX shares that WAM Research owns now?

At the end of May, its top 20 holdings still included Adairs, Bapcor and IDP Education.

Other ASX shares it owned included gambling machine and gaming business Aristocrat Leisure Limited (ASX: ALL), shipbuilder Austal Limited (ASX: ASB), appliance company Breville Group Ltd (ASX: BRG), natural beauty business BWX Ltd (ASX: BWX), plus-size clothes retailer City Chic Collective Ltd (ASX: CCX), Codan Limited (ASX: CDA), Cleanaway Waste Management Ltd (ASX: CWY), agri business Elders Ltd (ASX: ELD), real estate portal business REA Group Limited (ASX: REA), telco TPG Telecom Ltd (ASX: TPM) and energy business Viva Energy Group Ltd (ASX: VEA).

My own take

I agree that the lifting of COVID-19 restrictions and the shift to online shopping opens up some exciting opportunities for ASX shares like Adairs. City Chic was already selling a good proportion of items online before the pandemic hit. City Chic is one of my top long-term small cap picks. BWX seems to have turned a corner, so that could be one to watch in FY21.

More reading

• Why Adairs, Nick Scali, SEEK, & Splitit shares are storming higher
• Adairs share price soars 16% on trading update and FY20 guidance
• Why I would buy Telstra and these ASX 200 blue chip shares
• ASX 200 falls 0.9%, Afterpay share price hits new record
• What are the best ASX shares for dividends?

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Austal Limited and Idp Education Pty Ltd. The Motley Fool Australia owns shares of and has recommended Bapcor and BWX Limited. The Motley Fool Australia has recommended Elders Limited and REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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In late morning trade on Friday the S&P/ASX 200 Index (ASX: XJO) is on course to end the week on a positive note. At the time of writing the benchmark index is up 1% to 5,996.8 points.

Four shares that have climbed more than most today are listed below. Here’s why they are storming higher:

The Adairs Ltd (ASX: ADH) share price has jumped 15% to $2.40. Investors have been buying the homewares retailer’s shares after the release of a positive trading update. According to the release, second half to date, Adairs’ brick and mortar sales are up 5.3% on a like-for-like basis. The company’s online sales have been growing even quicker. They are up 92.6% so far during the second half. Sales for the recently acquired Mocka brand were up 52.1% over the same period.

The Nick Scali Limited (ASX: NCK) share price has jumped 23% to $7.08. This has also been driven by a positive trading update this morning. The furniture retailer revealed that its fourth quarter sales are up 20.4% compared to the prior corresponding period. In light of this, the company expects to report a 15% to 20% increase in second half profit. This has allowed the board to bring forward the payment of its 25 cents interim dividend to 29 June 2020. In March Nick Scali deferred it until October.

The SEEK Limited (ASX: SEK) share price is up almost 5% to $21.82. Investors have been buying the job listings giant’s shares after analysts at UBS upgraded them to a buy rating with a $23.00 price target. The broker believes that the worst is behind the company now and expects job volumes to start their recovery.

The Splitit Ltd (ASX: SPT) share price has continued its positive run and raced 23.5% higher to $1.70. Investors have been fighting to get hold of the buy now pay later provider’s shares after it announced a partnership with Mastercard. However, it is worth noting that Splitit has warned that it is not able to determine the economic materiality of the partnership. This is due to the contingent nature of results that may be generated.

More reading

• ASX tech shares: 2 exciting small caps to watch closely
• Top fund manager reveals some of the best ASX shares to own
• Adairs share price soars 16% on trading update and FY20 guidance
• 3 quality ASX shares to buy now to get rich later
• ASX 200 falls 0.9%, Afterpay share price hits new record

Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia has recommended SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why Adairs, Nick Scali, SEEK, & Splitit shares are storming higher appeared first on Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) is on course to end the week on a positive note. In late morning trade the benchmark index is up a sizeable 0.7% to 5,977.2 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

The Air New Zealand Limited (ASX: AIZ) share price is down a further 2% to $1.42. Investors have been selling the airline operator’s shares since the release of its earnings guidance on Thursday. Air New Zealand advised that revenue and earnings will still be significantly lower than expected in FY 2020 because of the pandemic. It is expecting to report an underlying loss before significant items and tax of up to NZ$120 million.

The Evolution Mining Ltd (ASX: EVN) share price is down 1.5% to $5.22. This morning the gold miner released an update on its Mt Carlton operation. According to the release, recent drilling is indicating a reduction in approximately 75,000 ounces from the life of mine plan. As a result, production at the operation is now expected to be 60,000 ounces in FY 2020 (down from 70,000 to 75,000 ounces) and then 50,000 in FY 2021.

The Orora Ltd (ASX: ORA) share price has crashed 16% lower to $2.30. This decline has driven by the packaging company’s shares trading ex-dividend this morning for its special dividend. Eligible shareholders can now look forward to receiving the 37.3 cents per share dividend in their bank accounts on 29 June 2020.

The Suncorp Group Ltd (ASX: SUN) share price has fallen almost 1.5% to $9.63 despite there being no news out of the insurance and banking giant. This may be down to profit taking after a decent gain over the last 30 days. Prior to today, Suncorp’s shares were up 11% since this time in May.

More reading

• Why Air NZ, Carsales, Pendal, & Star shares are dropping lower
• 5 things to watch on the ASX 200 on Thursday
• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 jumps almost 4%, Webjet share price soars
• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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