Author: openjargon

Collins Foods Ltd (ASX: CKF) shares are slipping today.

Shares in the S&P/ASX 300 Index (ASX: XKO) KFC fast food restaurant operator closed yesterday trading for $8.43. In early morning trade on Tuesday, shares are swapping hands for $8.36 apiece, down 0.8%.

For some context, the ASX 300 is down 0.7% at this same time.

Here’s what’s happening.

Collins Foods shares slip despite growth plans

Investors are running their slide rules over Collins Foods shares after the company announced that is has completed the acquisition of eight KFC restaurants, located in the German state of Bavaria.

Collins Foods acquired the eight fast food outlets from JJ Restaurant GmbH & Co.

The acquisitions form part of Collins Food’s growth plans in the nation, with Germany touted as its second core growth pillar. The new restaurants roughly double the company’s portfolio in Europe’s top economy.

Management noted the eight new restaurants “strengthen the company’s position in Germany and deliver a meaningful increase in scale in one of the country’s most populous and economically significant regions”.

Citing the ongoing potential benefits of the acquisition, Collins Foods noted:

In addition, the acquisition unlocks further development opportunities in Bavaria — an attractive and affluent market that includes Munich, one of Germany’s largest and wealthiest cities. Germany remains an underpenetrated and attractive market for the KFC brand, offering significant long-term growth potential.

The company first announced its agreement to purchase the eight KFC restaurants after market close on 11 March. It listed the purchase price as 31.1 million euros, plus working capital. And it anticipated revenues from the acquired restaurants of around $28.2 million euros.

Collins Foods shares closed up 5.2% on the news when markets opened the following day. That enthusiasm may have been driven by forecasts that the acquired restaurants will operate at higher margins than Collins Foods’ existing German restaurants.

Commenting on the completed deal today, Collins Foods managing director & CEO Xavier Simonet said:

This acquisition marks another important milestone in our German growth strategy. The additional scale created enhances our operational presence and positions us well to accelerate growth further in this key market.

The company said it will consolidate the contribution from the acquisition in its financial results from 1 June.

What is the ASX 300 fast food stock planning in Germany?

Collins Foods shares could have a sizeable growth path in Germany.

In March, the company revealed that it is targeting 45 to 90 new restaurants over four years.

“The KFC brand has substantial potential in Germany with approximately a fifth of the store footprint of the largest competitor, McDonald’s,” Simonet said on the day.

The post Buying KFC owner Collins Foods shares? Here’s what’s happening in Germany appeared first on The Motley Fool Australia.

More reading

• Which 3 ASX fast food operators are going cheap at current levels according to Morgans?
• Brokers say these 2 ASX shares are highly undervalued — here’s why I agree

Motley Fool contributor Bernd Struben 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 Collins Foods. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

SRG Global Ltd (ASX: SRG) shares are having a strong session on Tuesday despite the market weakness.

At the time of writing, the ASX 200 share is up 17% to a record high of $3.68.

This compares favourably to the performance of the S&P/ASX 200 Index (ASX: XJO), which is down 0.5% in early trade.

Why is this ASX 200 share outperforming?

Investors have been bidding the diversified infrastructure services company’s shares higher today after it announced material contract wins.

According to the release, the ASX 200 share has secured $1.85 billion of contracts with blue-chip clients across a diverse range of sectors.

One of those is an eight-year term contract with Gympie Regional Council in Queensland to deliver program management services under an alliance contract model.

It notes that the scope covers the planning, design, and delivery of key water infrastructure, including a new water treatment plant, trunk water and wastewater networks, and the renewal and upgrade of ageing regional assets. The contract has commenced and will complete in January 2034.

Another contract is a seven-year term contract with Origin Energy Ltd (ASX: ORG) to provide asset integrity and advanced inspection services across its operations in central Queensland. The contract has commenced and will complete in December 2033.

In the industrial and resources sector, the ASX 200 share has secured an eight-year term contract with Fortescue Ltd (ASX: FMG). This will see it provide multi-disciplinary maintenance services across its operations in the Pilbara region of Western Australia.

There is also a two-year term contract with the BHP Group Ltd (ASX: BHP) and Mitsubishi Alliance to provide asset integrity and reliability services across its central Queensland operations.

Lastly, another contract is for the Maddington Data Centre (Stage 1) with CTC in Perth.

Guidance upgrade

In light of this success, the ASX 200 share has upgraded its FY 2026 EBITDA guidance to the top end of its previously provided range of $164 million to $168 million.

It has also initiated its FY 2027 EBITDA guidance in the range of $190 million to $200 million, which it notes is above current consensus estimates.

Commenting on the update, the company’s CEO, David Macgeorge, said:

We are pleased to have secured these significant contracts across Australia in a broad range of sectors with blue-chip repeat clients. These contract awards are a further demonstration of our market-leading capabilities as a truly diversified infrastructure services company.

I am also pleased to advise that we have upgraded our FY26 guidance to the top end of the previously provided EBITDA range of $164m to $168m, and that our FY27 EBITDA guidance will be a range of $190m to $200m, which is above current market consensus. This reflects the strength of our diversified operating model, the quality of our client base and our strong track record of delivering and exceeding market expectations. The Company is exceptionally well positioned to continue to deliver long-term sustainable growth.

The post Guess which ASX 200 share is jumping 17% on earnings guidance upgrade appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro 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 BHP Group and Srg Global. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Atlas Arteria Group (ASX: ALX) share price is in focus after the company lodged its Supplementary Target’s Statement rejecting IFM’s takeover offer, which independent directors say undervalues the business and is below the current market price.

What did Atlas Arteria report?

• The independent directors unanimously recommend Atlas Arteria securityholders reject the $4.75 per security takeover offer from IFM.
• The Independent Expert’s Report values Atlas Arteria at $5.39–$6.20 per security, higher than the current offer.
• The offer price is below Atlas Arteria’s recent closing price of $5.04 (as at 1 June 2026).
• The IFM offer remains highly conditional and may extend up to 12 months.
• Bidder retains the right to increase the offer up to $5.10 within 12 months after the offer closes.

What else do investors need to know?

The Supplementary Target’s Statement responds directly to IFM’s Third Supplementary Bidder’s Statement, reiterating that the offer is “too low, opportunistic and highly conditional”. Atlas Arteria’s independent directors maintain that the terms do not provide an appropriate premium for control or reflect the long-term value of its international toll road portfolio.

The Board highlights that accepting the offer now would prevent shareholders from selling on market for potentially higher prices during the lengthy offer period. Securityholders are encouraged to read the full Target’s Statement and seek independent advice if considering their options.

What’s next for Atlas Arteria?

Atlas Arteria’s board will continue actively engaging with shareholders and monitoring developments related to IFM’s bid. Investors can expect ongoing updates if circumstances change or if a revised offer is made.

The company also remains focused on disciplined management and sustainable long-term value creation through its established portfolio of toll road assets in France, Germany, and the United States.

Atlas Arteria share price snapshot

Over the past 12 months, Atlas Arteria shares have declined 5%, trailing the S&P/ASX 200 Index (ASX: XJO) which has risen 4% over the same period.

View Original Announcement

The post Atlas Arteria responds to IFM with “reject” on takeover offer appeared first on The Motley Fool Australia.

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• TPG Telecom posts mobile growth and strong free cash flow in 2026 update
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Motley Fool contributor Laura Stewart 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. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

Megaport Ltd (ASX: MP1) shares were among the best performers on the Australian share market in May.

During the month, the network-as-a-service provider’s shares rocketed an incredible 70%.

This compares very favourably to a gain of 0.75% by the benchmark S&P/ASX 200 Index (ASX: XJO).

Why did Megaport shares smash the market?

Investors were scrambling to buy the company’s shares after it followed up a big announcement late in April with an even bigger announcement in the middle of May.

Late in April, Megaport revealed that its Latitude.sh business had secured a major new customer contract for compute and storage. The customer signed a 36-month contract with a total value of approximately US$25.1 million (A$35.4 million). It notes that this represents approximately US$8.4 million (A$11.8 million) in annualised recurring revenue (ARR).

That announcement was already giving investor sentiment a boost early in May, but the announcement that followed a couple of weeks later is what really put a rocket under Megaport’s shares.

That announcement revealed that the Latitude.sh business had secured three major GPU, CPU, network, and storage contracts across two customers. Management stated its belief that this reinforced its position as a critical infrastructure partner in the accelerating artificial intelligence (AI) ecosystem.

According to the release, the contracts represent a combined total contract value (TCV) of approximately US$182.9 million (A$254 million), representing approximately US$65.2 million (A$90.6 million) in ARR.

Two of the contracts, representing approximately 90% of the TCV, have 36-month initial terms, while the third contract has a 24-month contract term.

Megaport’s CEO, Michael Reid, commented:

We are at the forefront of an accelerating inflection point across the industry. As use cases shift from AI foundation models to inference and the edge, Megaport is becoming an essential platform for powering the applications of tomorrow with globally distributed, automated infrastructure.

Whether supporting AI, edge compute, or anyone requiring instant global reach and performance, Megaport is a one-stop platform for the AI ecosystem, providing on-demand, software-enabled performance of dedicated hardware with the flexibility of a global network.

Positive broker response

In response to the news, a number of leading brokers upgraded their earnings estimates and valuations accordingly.

Arguably the most bullish was the team at Macquarie Group Ltd (ASX: MQG), which retained its outperform rating with an improved price target of $26.30. The good news is that even after its heroics in May, this price target still implies potential upside of almost 60% for Megaport’s shares over the next 12 months.

This may bode well for its performance in June.

The post Why did Megaport shares rocket 70% in May? appeared first on The Motley Fool Australia.

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

I love owning ASX shares that offer investors a pleasing combination of dividends and capital growth. The combination allows our portfolios to grow in value, while delivering rising cash payments to our bank account.

We don’t necessarily need to look at the biggest businesses for ideas that can deliver good performance – I’d prefer to look at businesses further down the market capitalisation list because they are earlier on with their growth plans than major ASX blue-chip shares.

I believe there’s plenty of growth to come for the following two businesses.

Universal Store Holdings Ltd (ASX: UNI)

It owns a portfolio of premium youth fashion brands, with both retail and wholesale businesses. Universal Store’s main businesses are Universal Store and Perfect Stranger. It also has CTC (trading as THRILLS and Worship brands).

This business currently operates 121 physical stores across Australia as well as online channels.

The company says its strategy is to grow and develop its premium fashion apparel brands and retail formats targeting fashion-focused customers.

It’s still growing revenue at a strong pace – it gave an update that said that retail sales for the first 43 weeks of FY26 showed 14% growth, with Universal Store growth of 11.8%, Perfect Stranger growth of 39.8% and CTC growth of 14.5%.

The company’s mid-point of its FY26 guidance suggests the business could grow sales by 11.5% and operating profit (underlying EBITA) is expected to grow by 15.4%. It’s a great sign for a business when profit is rising faster than sales, as it’s usually the net profit that investors value a business on, rather than its revenue growth.

The ASX share has grown its annual dividend each year since 2021 when it first started paying a dividend. According to the forecast on CMC Invest, it’s projected to pay an annual dividend per share of 41.7 cents in FY26, which translates into a grossed-up dividend yield of 8.8%, including franking credits.  

Propel Funeral Partners Ltd (ASX: PFP)

Propel is the second-largest funeral provider in Australia and New Zealand. It operates from 208 locations, including 41 cremation facilities and nine cemeteries.

While morbid, the business is exposed to long-term growth tailwinds because of Australia’s ageing and growing populations.

According to Propel, the number of deaths in Australia is expected to rise by an average of 2.9% per year between 2026 to 2035, and then another 2.4% per year between 2036 and 2045. That’s not the biggest growth rate, but the steady progression could lead to solid compounding over time.

Propel can benefit from both the rising number of funerals, as well as growth of the average revenue per funeral, which is roughly in line with inflation.

Additionally, the business is steadily growing its geographic presence through acquisitions – helping grow its top line and scale.

According to the forecast on CMC Invest, the Propel dividend per share could climb to 16.6 cents by FY28. That translates into a possible grossed-up dividend yield of 6.5%, including franking credits, at the time of writing.

The post 2 ASX shares that I rate as buys today for both growth and dividends appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Propel Funeral Partners. 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 Universal Store. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Arguably, no single economic data point moves ASX resource stocks more reliably than China’s manufacturing PMI.

When Chinese factories are firing, steel mills consume more iron ore, copper demand rises, and the big three Australian miners capture the benefit.

This week, China’s PMI data landed, and the picture it painted was more positive than markets had expected.

What the PMI data showed

Two separate measures track Chinese manufacturing activity each month.

The official NBS PMI, which surveys larger state-owned firms, came in at exactly 50.0 in May, down 0.3 points from April but still technically in expansion territory.

The Caixin PMI, which surveys smaller private sector manufacturers and is more closely watched by commodity markets, came in at 51.8, beating the 51.4 consensus forecast.

These figures signal a healthier expansion in the private sector than economists had expected.

Why this matters for BHP, Rio Tinto, and Fortescue

The direct link between Chinese manufacturing activity and ASX resource stock performance is well established.

The iron ore price topped US$111 per tonne earlier in May and is currently trading above US$109 per tonne. This is well above the US$90 to US$100 range that many analysts had forecast for 2026.

BHP Group Ltd (ASX: BHP) shares are at all-time highs, with copper earnings exceeding iron ore contributions for the first time in the company’s history.

Rio Tinto Ltd (ASX: RIO) has also climbed this year as the ASX 200 rallied broadly on US-Iran peace deal optimism.

Fortescue Ltd (ASX: FMG), however, has been the outlier, lagging both peers in 2026 despite the supportive commodity price environment.

The three miners are not equal in this environment

BHP and Rio Tinto are both benefiting from the PMI tailwind, but through different channels.

BHP’s growing copper exposure means it captures the manufacturing upswing through two commodity channels simultaneously: iron ore for steel production and copper for industrial and electrification demand.

Rio Tinto benefits from its diversified portfolio spanning iron ore, copper, aluminium, and lithium. All of these commodities tend to perform well when Chinese industrial activity is expanding.

Fortescue remains the most China-leveraged of the three, with a product mix skewed to lower-grade ore, which is more sensitive to Chinese steel mill profitability.

In a world where Chinese mills face pressure and environmental standards are tightening, higher-grade ore becomes more valuable, creating a relative disadvantage for Fortescue compared with its peers.

That dynamic explains why Fortescue has lagged BHP and Rio Tinto in 2026, even as iron ore prices have held up well.

What the CMRG tells us

Beyond the PMI, investors in BHP, Rio Tinto, and Fortescue should also be watching the China Mysteel Raw Materials and General Index, which tracks steel mill restocking demand on a weekly basis.

The CMRG has been rising for three consecutive weeks, signalling that Chinese steel mills are actively rebuilding inventory, a precursor to increased iron ore orders.

That trend, combined with today’s stronger-than-expected Caixin PMI, provides the most constructive short-term backdrop for ASX resource stocks in several months.

Foolish Takeaway

China’s manufacturing PMI can reverse quickly if geopolitical conditions deteriorate or if Beijing’s fiscal stimulus disappoints.

However, two consecutive months of above-consensus Caixin readings, rising CMRG inventory data, and a copper price that reacted immediately to today’s release all point in the same direction.

For investors already holding BHP, Rio Tinto, or Fortescue, today’s data is encouraging.

For those yet to invest, it is a timely reminder that the China growth story is far from over.

The post China’s PMI data beat forecasts. Investors should be looking at these ASX resource stocks appeared first on The Motley Fool Australia.

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Motley Fool contributor Mark Verhoeven 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 BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Job ads rose 1.8% month-on-month in May 2026, according to ANZ-Indeed data.

This follows a 3.7% decline over the prior two months and rising 2% year on year.

That is not a dramatic number on its own.

But in the context of a labour market that has been softening since mid-2022, it represents a potential inflection point.

Senior economist Callam Pickering noted that Victoria and New South Wales recorded the strongest growth for the month, and that Queensland and Western Australia have been the two best performers over the past year.

Three ASX shares in particular stand to benefit from an improving jobs market, each through a different mechanism.

Seek Ltd (ASX: SEK)

The most direct beneficiary of rising job ads is Seek.

Australia’s dominant online employment marketplace earns revenue primarily from employers paying to advertise job vacancies.

When ad volumes fall, Seek’s revenue growth slows. When they rise, the trend goes in the other direction.

Seek shares are down approximately 47% year to date in 2026, battered by the prolonged decline in ad volumes since mid-2022.

Despite those volume headwinds, Seek’s first-half FY 2026 result demonstrated resilience.

Revenue grew 21% to a record $765 million, driven by AI-enabled product innovations that boosted pricing and yield even as raw volumes softened.

Seek’s placement share in the Australian recruitment market stands at 4.9 times its nearest competitor, a dominance that gives the company significant pricing power regardless of short-term volume fluctuations.

Today’s data, combined with a second consecutive month of trend improvement per SEEK’s own May employment report, is the first tangible evidence that the ad volume trough may be approaching.

Citi carries a buy rating on Seek with a price target of $26.

This would imply significant upside from current levels. Citi describes the stock as meaningfully undervalued given its dominant market position.

Xero Ltd (ASX: XRO)

Xero benefits from a rising labour market through a less obvious but equally important channel.

When Australian businesses hire more staff, they need payroll software to manage those employees.

Xero is the payroll and accounting platform of choice for the vast majority of Australian small businesses.

Every new employee added to an Australian small business payroll is a potential trigger for an existing Xero customer to upgrade their subscription tier or add payroll module functionality.

That dynamic makes Xero’s revenue growth positively correlated with Australian employment activity in a way that few investors fully appreciate.

Xero shares are down 56% over the past twelve months, battered by a combination of sector-wide software selling and concerns about Melio acquisition costs.

Nevertheless, the underlying business continues to deliver.

In FY 2026, Xero reported operating revenue of $2.75 billion, up 31% on FY 2025, with adjusted EBITDA growing 18% to $757.4 million.

The board also authorised a $550 million share buyback for FY 2027, a clear signal of management confidence in the business at current prices.

For patient investors, the combination of a recovering labour market, a dominant small business platform, and a buyback-supported share price makes Xero one of the more interesting beaten-down technology stocks on the ASX today.

Peoplein Ltd (ASX: PPE)

For investors prepared to accept higher risk in exchange for a more direct earnings link to the jobs market, Peoplein offers the most leveraged exposure of the three.

Formerly known as People Infrastructure, Peoplein is an ASX-listed workforce solutions company operating across healthcare and community, professional services, and industrial and specialist services.

The company directly places contract workers with clients, meaning its revenue rises and falls with employment activity.

Hospitality, education and training, and nursing were among the sectors contributing the most to job advertisement growth in May. Peoplein operates directly across these three verticals, with its 26 brands across Australia and New Zealand.

Foolish Takeaway

It may be too early to say whether improving job ads data signals a full labour market recovery.

Despite the uptick in May, figures remained 2% below the recent February peak, and ANZ economist Madeline Dunk expects the economy to slow over the coming months, with the unemployment rate gradually rising.

However, for Seek, Xero, and Peoplein, even a stabilisation in labour market conditions removes a meaningful headwind that has weighed on each business throughout 2026.

This week’s data is the first positive macro signal these three ASX shares have received in some time.

The post Job ads rose for the first time in three months. Here is why that is good news for these ASX shares appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of Motley Fool Money. Motley Fool contributor Mark Verhoeven 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 Peoplein and Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool Australia has recommended Peoplein. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The TPG Telecom Ltd (ASX: TPG) share price is in focus after the company provided a first half 2026 trading update at its Investor Day, highlighting continued growth in mobile service revenue and a strong operating free cash flow outlook.

What did TPG Telecom report?

• FY25 pro forma EBITDA: $1,637 million; FY26 guidance: $1,665m–$1,735m
• FY25 capex (additions basis): $771 million; FY26 guidance: approx. $750 million
• Operating free cash flow (FY25): $1,137 million
• Return on invested capital (FY25): 5.42%
• Dividend per share (FY25): 18 cents; intention to increase as profits grow
• Mobile service revenue growth in FY25: +4.2%

What else do investors need to know?

TPG Telecom continues its transition to a leaner, mobile‑first business, following the merger with Vodafone and peak network investment. The company is delivering solid subscriber growth, especially across its digital‑first and value segments, with around 70,000–80,000 new mobile subscribers forecast for the first half of FY26, led by strong demand for digital brands and MVNOs.

Cost control remains a priority, with TPG targeting $100 million in operating cost savings by FY29. Capex is forecast to decline as major investment projects wind down, with further reductions anticipated from FY27. Management reiterated its intention to maintain an investment grade credit rating while funding future spectrum renewals from strong cash flow and borrowing headroom.

What’s next for TPG Telecom?

Looking ahead, TPG Telecom expects EBITDA growth to outpace revenue growth, supported by ongoing cost reductions and a greater customer shift toward digital-first brands. The business is well positioned to benefit from its simplified brand portfolio and improved network capabilities, targeting further market share gains in both consumer and business mobile.

Dividend growth is expected to continue in line with sustainable profit and cash flow growth. The company is also keeping a close eye on regulatory and technological changes, particularly spectrum renewal costs from 2028, and is leveraging digital and artificial intelligence to enhance customer experience and operating efficiency.

TPG Telecom share price snapshot

Over the past 12 months, TPG Telecom shares have declined 23%, trailing the S&P/ASX 200 Index (ASX: XJO) which has risen 4% over the same period.

View Original Announcement

The post TPG Telecom posts mobile growth and strong free cash flow in 2026 update appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart 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. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

The Australian share market is home to a number of ASX shares with exposure to artificial intelligence (AI).

One of those is probably flying under the radar for most investors but could be well worth getting better acquainted with.

Which ASX AI share?

The ASX AI share that could be worth a look according to the team at Bell Potter is Artrya (ASX: AYA).

It is a Perth-based medical technology company using AI powered image-analysis software to improve the detection and management of coronary artery disease (CAD).

CAD is driven by soft plaque that builds up silently in the arteries and can rupture without warning, causing a fatal heart attack.

Bell Potter highlights that this condition affects around 126 million globally each year.

Artrya’s cloud-based software, Salix, uses proprietary AI algorithms to interpret data from coronary computed tomography angiography (CCTA) scans, to deliver results in a single point-of-care solution.

Bell Potter has been reviewing industry trends and believes they are favourable for the ASX AI share. It said:

The investment thesis for AYA inherently relies on the rise of using the Coronary Computed Tomography Angiography (CCTA) to evaluate coronary artery disease (CAD), and the associated AI powered image analysis software. We review the trends in modalities used to evaluate CCTA and show that CCTA is in strong growth mode with increasing modality market share.

The structural shift which occurred in 2021 due to guideline changes has turbo charged CCTA adoption, becoming the fastest growing image modality in cardiology with 4-year CAGR of c.30%, and modality share at >10%, heading toward c.30% by 2030.

The broker also highlights its belief that hospital economics will drive adoption. It adds:

Payer mix is critical to hospital economics, and with commercial payers typically c.35% of the hospital reimbursement profile, the cost of competing image analysis providers becomes pivotal. We illustrate the relatively favourable economics of a typical hospital using AYA v a leading competitor based on our channel checks.

AYA’s revenue sharing arrangement model could result in a c.US$1.4m turnaround in a hospital that performs c.5,000 scans pa. This is in addition to the clear operational efficiencies that Salix’s near-real time outputs can deliver across, volume, clinician productivity, labour efficiency and lower re-admissions and penalty rates.

Should you invest?

According to the note, the broker has retained its buy rating and $6.10 price target on the ASX AI share.

Based on its current share price of $4.79, this implies potential upside of 27% for investors over the next 12 months.

Commenting on its investment thesis, it said:

The recognition of CCTA image analysis by CMS and Physicians to efficiently and effectively detect and diagnose CAD is a huge growth driver for image analysis providers. CCTA utilisation is surging and this provides a strong foundation for AYA’s superior product features to capture material market share over our forecast horizon.

The post Why this ASX AI share could be a top buy in June appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro 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.

Some of my favourite ASX shares to own are ones that are compounding in scale at a fast pace. When revenue is increasing rapidly, that’s almost certainly going to come with scale benefits as time goes on.

We’re going to look at two of the most highly rated businesses on the ASX right now. It’s interesting when one analyst likes a business, but its an even better sign when numerous experts think a business is a buy. Of course, forecasts are not guaranteed.

For me, I like how both of the businesses are among the leaders in the local market, with successful overseas expansion that could suggest a significant growth runway in the long-term.

Xero Ltd (ASX: XRO)

Xero is one of the leading ASX tech shares with its accounting, business analysis and taxation reporting software.

The company has carved out a significant market share in New Zealand and Australia. It’s also growing in places like the UK, South Africa, Singapore, the US and so on. It has an extremely loyal subscriber base, which gives the company the confidence to hike its subscription price.

A rising average revenue per user (ARPU) helps a number of metrics including annualised monthly recurring revenue (AMRR), the total lifetime value (LTV) of subscribers and obviously operating revenue.

In the FY26 result, Xero reported that its total number of customers rose 11% to 4.9 million, ARPU grew 23% to $55.44, AMRR grew 37% to $3.27 billion and LTV increased by 17% to $21 billion. Operating revenue increased by 31% to $2.75 billion.

The ASX share’s net profit decreased in FY26, but I think it will rise rapidly for the foreseeable future now that the Melio acquisition has been concluded and integrated.

According to CMC Invest, there have been nine different analyst ratings on the business in the last three months, with eight of them being a buy. The average price target of those nine ratings is $126.57, which at the time of writing suggests a possible rise of close to 70% in the next year.

Guzman Y Gomez (ASX: GYG)

GYG is a Mexican food business, which has proven a big hit in Australia to date. It already has well over 200 locations in Australia and it’s aiming for over 1,000 locations within the next 20 years.

On top of that, the business has a presence in both Singapore and Japan. It now has 24 restaurants in Singapore and it had five locations in Japan at the end of the FY26 third quarter.

The FY26 third-quarter showcased its excellent growth rate, with network sales growth of around 20% in Australia and growth of 15% in Asia.

It recently took the decision to end its growth efforts in the US because of the expected cost of reaching good profitability for that market. But, this should help the company’s bottom line for the foreseeable future.

The ASX share expects the Australia and Asia division to generate $85 million of underlying operating profit (EBITDA), representing 29% growth year over year.

According to the forecast on CMC Invest, GYG could generate 64.2 cents of earnings per share (EPS) in FY28 putting it at just over 30x FY28’s estimated earnings.

On CMC Invest, there have been 10 analyst ratings on the business within the last three months, with eight of those being a buy. The average price target of those 10 ratings is $24.33, suggesting a possible rise of 23% over the next year.

The post 2 ASX shares highly recommended to buy: Experts appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Guzman Y Gomez. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.