ASX energy shares are have started the trading day on a positive footing as the oil price steadies at a more than two-year high.

The crude price jumped on Friday on a bullish report from the International Energy Agency (IEA), reported Reuters.

The Brent oil price benchmark rallied to over US$73 a barrel and is up by over around 85% from a year ago when COVID-19 devastated the market.

Despite this bullish backdrop, ASX energy shares aren’t shooting the lights out.

Muted ASX energy shares despite high oil price

The Woodside Petroleum Limited (ASX: WPL) share price increased by 0.7% to $23.78, Oil Search Ltd (ASX: OSH) share price added 0.5% to $4.12 and the Santos Ltd (ASX: STO) share price gained 0.4% to $7.70 in early trade.

In contrast, the S&P/ASX 200 Index (Index:^AXJO) improved by 0.7%. The lacklustre performance of the sector may be due to two countervailing factors.

Firstly, US shale oil production is on the increase thanks to higher commodity prices.

Supply increase counters bullish outlook

Unconventional oil output from the US crumbled along with the oil price in 2020. It is more expensive to produce oil from shale and most US producers could not do this profitably with the oil price under US$50 a barrel.

But with the commodity price hovering over US$70 a barrel, that’s a totally different matter.

The US Energy Information Administration is predicting that shale production will rise by around 38,000 bpd in July to 7.8 million bpd, according to Reuters.

Shale accounts for more than two-thirds of total US production.

COVID still haunting oil markets

What’s more and the UK and Victoria reminds us that economies can open and shut quickly. UK Prime Minister Boris Johnson just delayed plans to lift most of the country’s COVID restrictions by a month.

This is to combat the rise of the more infectious and deadly Delta strain of the virus. Ongoing restrictions dampen demand for oil.

These factors have taken some wind out of the ASX energy’s sails this morning. But investors should still be pleased that demand for oil is rebounding strongly.  

Oil price rise supports ASX energy shares

The IEA said last week that it is expecting global oil demand to recover to pre-COVID levels by end of 2022. This is faster than originally forecast.

Vehicle usage and the return of the dreaded peak hour traffic-jams are a testament to how quickly things are bouncing back. Air travel is also on an upward, although patchy, path to recovery.

Seasonal supply off-line

The seasonal refinery maintenance shutdowns in Canada and the North Sea are also supporting oil prices.

Rystad Energy estimates about 330,000 barrels of oil a day (bpd) of oil and condensate supply is offline at Canada oil sands projects, along with another 370,000 bpd offline in the North Sea.

The tug-of-war between bulls and bears will only add to the volatility in ASX energy share prices. The silver-lining is that the stagnation or easing in the oil price will take some of the edge off inflation worries.

The post Why ASX energy shares could outperform this morning appeared first on The Motley Fool Australia.

More reading

• 2 top ASX 200 shares that might be buys today
• ASX 200 Weekly Wrap: ASX edges even higher, led by tech rebound
• Quarterly rebalance: Appen kicked out of ASX 100, Uniti added to ASX 200
• 5 things to watch on the ASX 200 on Tuesday
• The ASX stock market is not open today, here’s why

Brendon Lau owns shares of Santos Ltd. Connect with me on Twitter @brenlau.

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 Bruce Jackson.

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The Suncorp Group Ltd (ASX: SUN) share price is pushing higher in morning trade.

At the time of writing, the insurance giant’s shares are up 1% to $11.34.

Why is the Suncorp share price pushing higher?

Investors have been buying the company’s shares this morning following the release of an update on recent severe weather affecting regions across metropolitan and regional Victoria.

According to the release, as at 6:30pm on Monday, Suncorp had received approximately 3,750 claims predominantly for property damage.

But it doesn’t expect the claims to stop there. Management notes that as the full extent of damage caused by the heavy rain, severe winds and flash flooding is still unfolding, claims are expected to rise further in the coming days and weeks.

Suncorp’s CEO Steve Johnston said: “Victorians have already been through a lot, and we are moving as quickly and as safely as we can to help our customers and communities affected by this severe weather. Our customer support teams are on the ground in Traralgon providing face-to-face support to all our affected customers including AAMI, Apia and GIO, and we have scaled up our flexible claims team to manage the increase in claims and calls from customers.”

Natural hazard costs

Suncorp’s total natural hazard costs across Australia and New Zealand year to date to 31 May 2021 were $955 million. This was approximately $40 million above the year to date allowance of $915 million. These estimates exclude any associated risk margin or claims handling expenses.

Positively, though, the company has a comprehensive reinsurance program in place and given its remaining covers, the maximum potential loss from this event will be $50 million.

What now?

Mr Johnston believes more needs to be done to prevent events like this from happening.

He concluded; “What we’re seeing in Victoria should again act as a reminder to the devastation which can be caused by severe weather events. More needs to be done to better protect homes in flood-prone regions across the country, including improved town planning and government investment in mitigation infrastructure.”

The Suncorp share price is up 15% since the start of the year.

The post Suncorp (ASX:SUN) share price pushes higher on claims update appeared first on The Motley Fool Australia.

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James Mickleboro does not own any shares 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 Bruce Jackson.

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The Bank of Queensland Limited (ASX: BOQ) share price is pushing higher on Tuesday morning.

In morning trade, the regional bank’s shares are up 1% to $8.86.

Why is the Bank of Queensland share price on the move?

The catalyst for the rise in the Bank of Queensland share price this morning has been the release of an announcement.

According to the release, the company’s imminent APRA Basel III Pillar 3 report for the period ending 31 May will include a decrease in its collective provision.

Bank of Queensland revealed that it expects to reduce its collective provision by a further total of $75 million. This is being driven primarily by Australia’s improved economic outlook, leading to improvements in data quality relating to collateral.

Pleasingly, the releases may not stop there. The bank advised that it continues to monitor the ongoing economic impacts resulting from COVID-19 and will assess its collective provision accordingly.

Bank of Queensland’s Managing Director and CEO, George Frazis, notes that business and consumer confidence continues to strengthen and drive Australia’s economic recovery.

He said: “Today, Australia is experiencing strengthening business and consumer confidence driving our economic recovery, supported by strong housing growth, lower unemployment rates and increasing business investment.”

“The reduction in the collective provision during the quarter reflects this improvement in the current economic environment. We continue to prudently manage our provisions to ensure we are well covered for any potential lifetime losses arising from COVID-19,” Mr Frazis added.

Are the company’s shares good value?

According to a recent note out of Goldman Sachs, which hasn’t taken into account today’s news, the broker has a buy rating and $9.83 price target on the company’s shares.

Based on today’s Bank of Queensland share price, this implies potential upside of 11% over the next 12 months. And if you include dividends, this stretches to over 15%.

The post Why the Bank of Queensland (ASX:BOQ) share price is pushing higher appeared first on The Motley Fool Australia.

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James Mickleboro does not own any shares 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 Bruce Jackson.

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Are you interested in adding some ASX shares to your portfolio in June?

Four ASX shares that could be worth considering this month are listed below. Here’s what you need to know about them:

Appen Ltd (ASX: APX)

Appen has a team of over one million crowd sourced experts preparing the data that goes into artificial intelligence (AI) and machine learning models. It does this for some of the biggest tech companies in the world such as Google and Facebook. And although demand has softened during the pandemic, it is expected to rebound once the crisis passes. Especially given how spending on AI is forecast to grow materially over the next decade. Ord Minnett currently has a buy rating and $24.75 price target on its shares.

Cochlear Limited (ASX: COH)

Cochlear is one of the world’s leading hearing solutions companies. It has a long track record of delivering solid earnings growth thanks to its world class portfolio of products, ageing populations, and its high level of investment in research and development. Positively, all these drivers remain in place today, which appears to have put Cochlear in a position to continue its growth over the next decade. Macquarie has an outperform rating and $245.00 price target on its shares.

IDP Education Ltd (ASX: IEL)

Another ASX share to look at is IDP Education. It is a provider of international student placement services and English language testing services. While the company has been hit hard by the pandemic, it is expected to come out of the crisis in a stronger position and win further market share. It has also been tipped to resume its rapid growth once trading conditions return to normal. Last week, UBS put a buy rating and $28.25 price target on its shares.

Kogan.com Ltd (ASX: KGN)

Kogan is an ecommerce company which has been benefitting greatly from the shift to online shopping. And while inventory issues have brought its earnings growth to an abrupt end recently, this is only expected to be a short term headwind. After which, Kogan and its acquired Mighty Ape business appear well-placed to benefit from the structural shift online. Credit Suisse has an outperform rating and $17.93 price target on its shares.

The post 4 buy-rated ASX shares for June appeared first on The Motley Fool Australia.

More reading

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• Quarterly rebalance: Appen kicked out of ASX 100, Uniti added to ASX 200
• 5 things to watch on the ASX 200 on Tuesday
• 2 ASX tech shares that could be good value
• Up 25% in a month: Is the Appen (ASX:APX) share price still good value?

James Mickleboro does not own any shares mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Appen Ltd, Cochlear Ltd., Idp Education Pty Ltd, and Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended Appen Ltd and Kogan.com ltd. The Motley Fool Australia has recommended Cochlear Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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On Tuesday 8 June 2021, an article was published on Fool.com.au titled iCar Asia (ASX:ICQ) share price tumbles 6% on AGM Presentation.

It has been brought to our attention that this article contained factual errors regarding the EBITDA performance of iCar as referenced in slide 5 of the AGM Presentation as per this ASX release: https://www.fool.com.au/tickers/asx-icq/announcements/2021-06-08/3a568567/icar-asia-agm-presentation/

The Motley Fool incorrectly noted the company’s EBITDA loss as well as iCar Asia’s EBITDA performance.

The release actually states:

EBITDA losses improved by 34% to a loss of 1.8 million against FY20’s January to April period which saw a loss of $2.7 million. The EBITDA margin also improved to minus 31% in 2021, an improvement in EBITDA loss of 51% between the two timeframes.

Motley Fool Australia apologises for the error, and has removed the article from Fool.com.au.

The post Article Correction – iCar Asia (ASX:ICQ) appeared first on The Motley Fool Australia.

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• Here are 3 ASX shares that are cashed up
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• Why this leading broker rates the Premier Investments (ASX:PMV) share price as a sell

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 Bruce Jackson.

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The S&P/ASX 200 Index (ASX: XJO) shares in this article could be interesting ideas to look at.

Businesses in the ASX 200 might be market leaders in their category in Australia or even the world.

Here are two that might be worth thinking about:

TPG Telecom Ltd (ASX: TPG)

TPG is one of the largest telecommunications businesses in Australia. It’s the combined business of the old TPG as well as Vodafone Australia.

It’s currently rated as a buy by five brokers including Morgans.

Morgans believes that the short-term TPG share price decline is a possible opportunity, with a price target of $7.17. That suggests the potential upside is more than 25% over the next 12 months.

Over the last six months the TPG share price has fallen 22%.

TPG management said that the business is building momentum, continuing its merger integration plans, its 5G mobile network is on track to reach scale in the top six cities by the end of the year. It will begin offering 5G fixed wireless services in this half year period.

The ASX 200 share has made solid progress on merger integration activities and is targeting $70 million of cost synergies across the group in 2021, which excludes the contribution from fixed wireless services and revenue synergies from cross-selling.

While the business is in a stronger position to respond to aggressive competition in the market and mitigate headwinds, it will continue to be impacted by global travel restrictions, NBN margin erosion and the new RBS levy.

Morgans has projected that TPG is trading at 21x FY21’s estimated earnings.

Xero Limited (ASX: XRO)

Xero is a cloud accounting software ASX 200 share with a global subscriber base.

The company is growing at a healthy double digit rate in all of its major markets. In FY21, Australian subscribers grew 22% to 1.15 million. The UK saw subscriber numbers increased 17% to 720,000. New Zealand subscribers went up 14% to 446,000. North American subscribers rose 18% to 285,000. The rest of the world subscribers saw 40% growth to 175,000, with the largest growth in South Africa and Singapore.

A global subscriber base means that Xero has a larger total addressable market.

Xero continues to invest in its product as Xero balances short-term customer needs and investing for the long-term. Product spend increased from 31.4% of operating revenue in FY20 to 36.7% in FY21.

The ASX 200 share has been making acquisitions to improve its offering to clients. Recent names include Planday, Tickstar and Waddle. A key trait of the Xero offering is a large ecosystem of services and tools for business owners and accountants.

Xero CEO Steve Vamos said in the release of the FY21 result:

The past year has brought home to many people in small business the need to understand in real-time their financial position and how it may change. The value and importance our customers place on their subscription and connection to the broader Xero community is increasing.

In FY21, Xero saw operating revenue rise 18% to NZ$848.8 million, with annualised monthly recurring revenue increase 17% to NZ$963.6 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) went up 39% to NZ$191.2 million in FY21, demonstrating operating leverage.

The post 2 top ASX 200 shares that might be buys today appeared first on The Motley Fool Australia.

More reading

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• Second “imminent” Vale dam collapse will sweep these ASX shares off their feet

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. owns shares of and has recommended Xero. The Motley Fool Australia owns shares of and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Following my article last week covering 3 ASX shares with high debt levels, this week I’m taking a look at 3 shares that have a reasonable chunk of cash on their balance sheets.

Last week’s piece highlighted some companies that are at higher risk when it came to balance-sheet health. As I said in that article, a company with a good balance sheet is often better positioned to weather economic storms. When challenging times do hit, a business with spare cash is often more likely to survive, and sometimes thrive, through hardship.

Let’s take a look at a few companies that might be able to ride out turmoil better than others.

ASX shares that have plenty of moolah

Life360 Inc (ASX: 360)

Life360 brings parenting to the digital age. It offers a range of features, such as location sharing and driving reports, to ultimately provide increased peace of mind for parents. The company’s proprietary platform had 28 million global monthly active users at the end of March 2021. This platform operates a freemium model – meaning that many customers opt for the no-cost option. However, there are paid tiers available.

At the end of December 2020, Life360 held US$56 million in cash on its balance sheet. Additionally, not a single dime of debt was in sight. This is useful for a company like Life360, given it is still loss-making.

Furthermore, that cash might come in handy in the future if this ASX share identifies more acquisition opportunities.

Temple & Webster Group Ltd (ASX: TPW)

Furniture e-commerce company Temple & Webster sprang to prominence on the back of the COVID-19 online boom. While the business was already growing steadily, the pandemic was like nitrous oxide to the e-commerce engine. Sure enough, revenue quickly roared higher – from $126.4 million at the end of 2019 to $263.8 million by the end of 2020 for this ASX share.

Over this time, Temple & Webster’s profit margin lifted from 2.9% to 8.8%. The higher margins meant the company was adding to its cash reserves rapidly. At the end of last year, cash and cash equivalents came to $38 million. Giving its balance sheet that extra shine, Temple & Webster also had no debt as well.

Temple & Webster is already profitable, so it can use its cash to push heavier marketing, acquire other companies, or simply hold on to it for a rainy day.

Redbubble Ltd (ASX: RBL)

Redbubble is an e-commerce company with a twist. Rather than simply selling its own products, it offers the world’s largest marketplace for independent artists. According to its first-half trading update, approximately 570,000 artists made sales through the marketplace during the half-year period.

It has been a challenging 5 to 6 months for Redbubble, which has been dogged by margin contraction and reduced growth. However, unless the company swings to unprofitability again, the cash reported at the end of December should still be there – all $129.7 million of it.

Considering Redbubble also held no debt at that time, it might be able to tap into its cash reserves to fund future growth initiatives.

The post Here are 3 ASX shares that are cashed up appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Temple & Webster Group Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Life360, Inc. The Motley Fool Australia has recommended Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Technology shares have taken a considerable tumble since the market turned on them a few months ago.

Despite a rebound this month, the S&P/ASX All Technology Index (ASX: XTX) is still about 10% off its February high.

The trouble is that most high-flying tech companies are considered future-potential growth shares. The market is currently fearing a rise in inflation from the post-COVID economic recovery.

A rise in inflation can lead to higher interest rates, which are poison to stocks relying on the power of future earnings.

But despite this climate, there are still pockets of tech that Wilson Asset Management portfolio manager Tobias Yao has faith in.

“We still have a little bit of tech exposure, but our ideas are now concentrated on companies with reasonable PE multiples,” he told a Wilson video.

“And these companies aren’t COVID beneficiaries.”

Yao looks after the portfolios of listed investment vehicles WAM Capital Limited (ASX: WAM), WAM Research Limited (ASX: WAX), WAM Microcap Ltd (ASX: WMI) and WAM Active Limited (ASX: WAA).

He named 5 stocks that fit the “reasonable” price-to-earnings criteria that these Wilson funds still hold:

Aristocrat Leisure Limited (ASX: ALL)

The company best known for its poker machines is these days earning significant revenue out of more modern channels.

“Actually over 50% of its business now is now online digital gaming,” said Yao.

Aristocrat stocks were down 0.18% to trade at $40.84 on Friday afternoon. It started the year at $31.39.

Carsales.Com Ltd (ASX: CAR)

Yao was positive on the Australian online marketplace last month acquiring the US business Trader Interactive.

“We really like the recent acquisition, but also we like the transition [of] the transaction model going forward,” he said.

“We think that’s going to permanently lift the revenue growth profile over the medium term.”

Carsales stocks were trading at $19.38 on Friday afternoon, which is down 2.66% on the year.

Codan Limited (ASX: CDA)

Wilson funds have “a large holding” in Codan, according to Yao.

“[It’s] one of the global leaders in metals detection and communications hardware.”

The company this month announced a deal to sell-off its resources technology provider brand Minetec to Caterpillar Holdings Australia.

Unfortunately, the market wasn’t a big fan of the $14 million transaction, sending the shares down from its 52-week high reached in late May.

Codan stocks were going for $18.54 on Friday afternoon, which was down 1.38%.

Atomos Ltd (ASX: AMS) and Vista Group International Ltd (ASX: VGL)

In the small cap space, Yao revealed these were the two technology companies that survived his PE ratio cull.

“Atomos is an innovative monitor recorder business and Vista Group… is the leader in software solutions for cinemas.”

Atomos shares are up 1.55% this year, while Vista has risen a whopping 35.7%.

“So there are definitely still pockets of opportunities, but it’s fair to say we’ve become a lot more selective in where we deploy our capital.”

The post Carsales (ASX:CAR) and 4 other ASX tech shares still worth holding: analyst appeared first on The Motley Fool Australia.

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Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Atomos Ltd and Vista Group Intl. The Motley Fool Australia owns shares of and has recommended Vista Group Intl. The Motley Fool Australia has recommended Atomos Ltd and carsales.com Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Premier Investments Limited (ASX: PMV) share price climbed to a record high on Friday.

This followed the release of a trading update by the retail conglomerate.

What was in the update?

According to the update, Premier Investments’ total global sales for the first 18 weeks of the second half were up 70% compared to the prior corresponding period. This was also up a decent 15.8% against the corresponding period in 2019, which was pre-pandemic.

Management advised that its strong growth was driven by a particularly strong performance during the all-important Easter School Holiday period. It also reported a record Mother’s Day and May result.

In light of this, management expects its FY 2021 earnings before interest and tax (EBIT) to be in the range of $340 million and $360 million. This will be an increase of 82% to 92% year on year and 103% to 115% against FY 2019’s EBIT.

Can the Premier Investments share price go higher?

According to a note out of Goldman Sachs, it believes the Premier Investments share price is overvalued at the current level.

This morning the broker retained its sell rating but lifted its price target to $21.10.

Based on the current Premier Investments share price of $27.44, this implies potential downside of 23% over the next 12 months before dividends.

What did Goldman say?

Goldman commented: “PMV has reported sales growth for the 18 weeks of 2H21 to be at 70% versus pcp and +15.8% vs. 2H19. This compares favourably to prior GSe of c.30.7% and +7.1% respectively for the half.”

“We revise our earnings forecasts to reflect the stronger higher margin sales, more than expected number of stores in Smiggle and gross margin expansion in FY21. However, we expect this increased margins to normalize into FY22/23. Our revised FY21 forecast implies a pre-AASB16 EBIT of A$358.6mn at the upper end of the revised guidance range of A$340-360mn,” it added.

Unfortunately, Goldman doesn’t expect this earnings momentum to last. It is forecasting Premier Investments to deliver earnings per share of $1.68 in FY 2021, but then just $1.04 per share in FY 2022.

The latter means the Premier Investments share price is trading at a reasonably expensive 26x FY 2022 earnings today.

The post Why this leading broker rates the Premier Investments (ASX:PMV) share price as a sell appeared first on The Motley Fool Australia.

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James Mickleboro does not own any shares 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 owns shares of and has recommended Premier Investments Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Despite worries about rising inflation, the ASX has been on fire in recent weeks.

On Thursday, the S&P/ASX 200 Index (ASX: XJO) closed above 7,300 for the first time in history. On Friday, it pushed ahead a further 0.13%.

But does this mean the share market is on the verge of an indelicate correction? The bears, like Jeremy Grantham, obviously think so.

Even though the general market is at record highs, however, there are still rising companies on the Australian bourse that aren’t as well-known to investors.

Perhaps they’re not in glamorous industries, or they’re just playing the tortoise to quietly win the long race.

Fortunately, there are professional fund managers whose job is to find businesses that are being underrated by everyone else.

“There’s a lot of cheap companies out there,” Wilson Asset Management portfolio manager Oscar Oberg told a company video.

“You just got to find them… We’re very bullish [on] small caps and micro caps going forward.”

Oberg and his colleague Tobias Yao revealed 3 shares held by Wilson funds that he feels the market doesn’t fully appreciate yet:

Ardent Leisure Group Ltd (ASX: ALG)

In the US, Ardent owns the chain of Main Event ten-pin bowling and arcade centres in 43 locations. The company in Australia is best known for running theme parks, such as Dreamworld on the Gold Coast.

“The US recovery is actually going really well on the back of strong government support for consumers and the much more relaxed COVID restrictions,” said Yao.

He added that at the current valuation, the risk-reward trade-off is “really appealing” for his team.

“Our view is that at the current share price, you’re not paying anything for the theme parks division, which is over $100 million on the balance sheet.”

Ardent shares closed Friday at precisely $1, meaning a 40.85% gain for the year to date.

Virtus Health Ltd (ASX: VRT)

Virtus is one of the large IVF providers in Australia, with a market capitalisation of around $516 million.

Yao’s team bought the stock 12 months ago on the COVID recovery prospects, but the reasons for holding it now have evolved.

“Our current investment thesis is premised on the new CEO’s ability to find new revenue streams — precision fertility, genetics testing, and also digitisation services that they can use for companies overseas.”

Virtus stocks finished Friday at $6.42, which is 17.15% up from the start of the year.

The price is still attractive, according to Yao, who works on the WAM Capital Limited (ASX: WAM), WAM Research Limited (ASX: WAX), WAM Microcap Ltd (ASX: WMI) and WAM Active Limited (ASX: WAA) funds.

“It’s trading on 14 times price-to-earnings ratio, so we think a lot of these additional optionalities are not being priced into the current share price.”

Seven West Media Ltd (ASX: SWM)

Oberg picked out one of the 3 free-to-air television networks in Australia as his example of a hot bargain.

“Seven West Media, which we own in WAM Capital and Microcap, that’s trading on a price-to-earnings multiple ratio of 3.5 times earnings right now. It’s less than half of what Channel Nine [Nine Entertainment Co Holdings Ltd (ASX: NEC)] trades on,” he said. 

“A company like that is sitting right now in our wheelhouse — it’s a company we like to invest in.”

Seven West shares finished last week at 42 cents, which is 15.3% up just this year.

The post 3 unloved ASX shares set to take off: analysts appeared first on The Motley Fool Australia.

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• Top fund manager names these 2 ASX shares as buys
• Wilson Asset Management thinks these 2 small cap ASX shares are a buy
• Top brokers name 3 ASX shares to sell today
• ASX 200 drops, Nine rises and Centuria Industrial REIT falls

Tony Yoo 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 Virtus Health Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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