Clime Capital Ltd (ASX: CAM) is a listed investment company (LIC) that runs a portfolio that largely targets both large ASX shares and small ASX shares.
Within its top holdings are some growth-focused names such as A2 Milk Company Ltd (ASX: A2M), Altium Limited (ASX: ALU), Bravura Solutions Ltd (ASX: BVS), City Chic Collective Ltd (ASX: CCX), CSL Limited (ASX: CSL) and Macquarie Telecom Group Ltd. (ASX: MAQ) and RPMGlobal Holdings Ltd (ASX: RUL).
Clime is bullish about the following ASX shares:
Macquarie Group Ltd (ASX: MQG)
Macquarie is a global investment bank, it earns around a third of its net income in Australia.
Clime said that the highly stimulatory Australian federal budget and declining COVID-19 case numbers improved the outlook for credit impairment charges and the domestic economy in general.
The fund manager still likes the ASX share with the relatively high returns on capital from the business which generates and the multiple avenues for long term growth, including multiple avenues for long term growth, including recurring asset management income.
Sonic Healthcare Ltd (ASX: SHL)
Sonic is a global pathology business which is involved in diagnosing COVID-19 cases. The ASX share achieved positive growth in the base laboratory business compared to last year, with the exception of the USA and UK. COVID-19 testing growth is on top of that. Total revenue was up 29% in the first quarter of FY21. Cost savings helped Sonic achieve earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 71% for the quarter.
Clime pointed out that COVID-19 testing is likely to remain particularly strong because of the northern winter in the US and Europe.
Audinate Group Ltd (ASX: AD8)
Clime said it benefited from Audinate’s FY21 first quarter trading update. Monthly revenue trended upward over the quarter, reaching pre-COVID levels in September. The fund manager said this was better than expected.
Recent sales resilience reflect the company’s diverse customer base, with stronger demand from corporate and higher education customers offsetting weakness from live music. Industry unit volumes are expected to rise significantly in the coming years, with the company likely to capture a lot of this demand, with an adoption rate that’s eight times higher than the nearest competitor.
Jumbo Interactive Ltd (ASX: JIN)
This ASX share is a digital lottery business.
The company said that first quarter jackpot activity was soft compared to the year before. However, Clime thinks that Jumbo is well positioned should jackpot activity improve over the remainder of FY21.
The fund manager said that the company has over $60 million of net cash and trades at 24 times Clime’s FY21 earnings forecast. Clime thinks this is a reasonable for a business with ongoing growth supported by the continued shift in Australian lottery ticket sales to online from around 28% at the moment.
Jumbo also has the potential international growth option from its early-stage lotteries management software as a service business, ‘Powered by Jumbo’.
Mach7 Technologies Ltd (ASX: M7T)
Clime said that Mach7’s cash flow is significantly affected by the size and timing of contract payments which include one-off license and professional service fees and recurring maintenance fees. The latest quarter update didn’t impress the market.
The fund manager remains positive about Mach7 Technologies’ prospects because of its market-leading product and adoption from leading hospital systems in the US and Hong Kong.
Although the deal flow has slowed due to COVID-19, the ASX has approximately $40 million in active tenders including two significant hospital systems in the US. The company is guiding that it will be cash flow positive in FY21.