Vocus and 1 other ASX share to buy in July

Here are 2 ASX shares to potentially add to your portfolio this month. Both have strong market positions and solid growth potential.

Phil Harpur

Phil Harpur has been contributing to Motley Fool Australia as a Freelance Writer since late 2019. Phil has spent the last 25 years working as a Senior Technology Analyst for some of the leading global technology research firms. Over the years, his market insights have been quoted in publications such as the AFR, SMH and the Australian, and he has appeared on business TV programs including Bloomberg, CNBC, Fox Business and the ABC. Phil is passionate about the share market and investing. He has post-graduate qualifications in Applied Finance and Investment from the Securities Institute of Australia. In his spare time, Phil likes to chill out listening to his favourite jazz artist or hanging out at the beach.

Published July 10, 2020 3:23 pm AEST

If you are looking to build on your share portfolio this month, I believe that Vocus Group Ltd (ASX: VOC) and Nearmap Ltd (ASX: NEA) are two ASX shares that are well worth considering.

Here's why both these companies are in my buy zone right now:

person handing a folder entitled portfolio to another person — Image source: Getty Images

Vocus

Local Australian telco, Vocus specialises in providing fibre and networking solutions. Its services also include fixed broadband, data centre services and Unified Communications. Vocus has a small presence in the residential sector for fixed broadband. However, it mainly targets the enterprise, government, wholesale and small business markets.

Vocus' retail division has struggled in recent years due to the tight margins associated with wholesaling fixed broadband services under Australia's National Broadband Network. However, I believe a three-year turnaround strategy is positioning Vocus well for solid, long-term growth. The telco is now beyond the mid-point of this growth strategy.

Last month, Vocus reiterated its FY 2020 guidance with EBITDA anticipated to be in the range of $359 million to $369 million. On another positive note, the company anticipates that its core Network Services business will see EBITDA growth of 10% during FY 2020.

Vocus is also well positioned to capitalise on the rollout of 5G services over the next few years. This is due to its market position as a specialist fibre and network services provider. This, I believe, will further strengthen Vocus' growth potential over the next few years.

The Vocus share price has risen more than 60% from its March low and is currently trading at $2.96. This is still considerably less than its pre-pandemic high of $3.86.

Nearmap

Another company I think could make a good addition to your ASX share portfolio this month is Nearmap.

Nearmap is an Australian aerial imagery and specialist location data company. It provides geospatial map technology for enterprise and government customers across Australia, New Zealand, the United States, and Canada. It has been growing strongly over the past few years, especially in the US market.

Nearmap's customer base, in particular, continues to climb higher. This ASX tech share is now anticipating closing FY 2020 with an actual cash value (ACV) portfolio of between $103 – $107 million, on a constant currency basis. Customer churn for Nearmap is now below 10% on a 12-month rolling basis. This is a pleasing reduction from the 11.5% that it reported at the end of 2019.

I believe there is strong growth potential for Nearmap over the next three to five years, especially in the massive US market.

This growth will be assisted by the recent launch its new artificial intelligence (AI) product, which targets a range of industries including insurance, utility and local government. The Nearmap share price is currently trading at $2.37 which is 175% up from its March low but well below the highs of over $3 seen last year.

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