The fund Climate Capital Ltd (ASX: CAM), which operates as a listed investment company (LIC), has outlined some ASX shares that it’s excited about.
Clime looks at a wide range of different ASX shares to find the best opportunities. It’s willing to look at large caps like Westpac Banking Corp (ASX: WBC) and Macquarie Group Ltd (ASX: MQG). It’s also willing to look at much smaller stocks such as Mach7 Technologies Ltd (ASX: M7T) and Electro Optic Systems Hldg Ltd (ASX: EOS).
In the latest monthly update for February 2021, which was reporting season for most of the ASX, it made some comments about some of its positions.
The portfolio returned 2.4% pre-tax net of fees in February, outperforming the S&P/ASX 200 Accumulation Index return of 1.4%. Clime pointed out that materials and financials had a strong performance over the month, outperforming the technology sector significantly.
BHP Group Ltd (ASX: BHP)
The BHP share price was a strong performer during last month as commodity prices performed well. One of the helpful factors for BHP investors was that the dividend declared was well ahead of expectations. The board decided to increase the interim dividend by 55% to US$1.01.
After that large half-year dividend from the ASX share, the market consensus for the full year dividend rose by 20% to $3.04, according to Clime.
Iron ore, BHP’s biggest contributor to profit, saw a 10% price increase during February and the copper price went up by 16%, whilst the oil price increased by 26%.
Clime also noted that the exchange rate didn’t change much during the month, with the US dollar depreciating by 0.8% during the month.
Codan Limited (ASX: CDA)
Another of Clime’s performers during the month was Codan, which the LIC said reported strongly.
Clime noted that the ASX share delivered revenue growth of 14% to $194 million and profit grew by 36% to $41.3 million.
Codan continues to build on its market leadership position within the global metal detection market, supported by a research and development program that exceeds the annual spending of all of its competitors combined, according to the LIC.
Another recent announcement was the acquisition of Domo Tactical Communications for $114 million, funded from existing cash reserves. This deal will add to earnings per share (EPS) immediately.
Clime said that it remains upbeat about the future prospects of the ASX share. Sales for metal detection have remained at record levels and the communications division is expected to have a significantly stronger second half.
Hansen Technologies Limited (ASX: HSN)
The LIC said that Hansen’s result was a standout performance last month.
Whilst revenue only went up slightly, profit jumped significantly by 65% to $29.6 million.
Clime said that the ASX share has a positive outlook and wonderful long term track record that has seen earnings per share grow at a compound annual growth rate of 31.4% per annum since 2006 (to FY21 based on the estimated EPS for the year).
On Clime’s numbers, Hansen currently trades on 12.6x the forward earnings and has a free cash flow yield of 8%.
Clime still thinks that this business represents “excellent value” at the current Hansen share price.