High-performing fund manager Wilson Asset Management (WAM) has revealed two ASX shares that it rates as buys within the WAM Research Limited (ASX: WAX) portfolio.
WAM operates several listed investment companies (LICs). Two of those LICs are WAM Capital Limited (ASX: WAM) and WAM Leaders Ltd (ASX: WLE).
One of the LICs is called WAM Research, which looks at smaller businesses on the ASX.
WAM describes WAM Research as a LIC that invests in the most compelling undervalued growth opportunities in the Australian market.
The WAM Research portfolio has delivered gross returns (that’s before fees, expenses and taxes) of 16.1% per annum since the strategy changed in July 2010, which is superior to the S&P/ASX All Ordinaries Accumulation Index return of 9% per annum.
These are the two ASX shares that WAM outlined in its most recent monthly update:
Maas Group Holdings Ltd (ASX: MGH)
MAAS Group was listed a few months ago. It provides construction materials, equipment and services across the civil, infrastructure, mining and real estate markets.
WAM Research pointed out that in the company’s first interim result, it revealed a 30% revenue growth on the prior corresponding period.
There was “significant” growth in the ASX share’s civil construction and hire business division according to WAM Research.
The fund manager expects continued growth over the next four to five years as both state and federal governments have committed to large amounts of infrastructure spending, including record expenditure committed by the NSW state government for regional areas.
WAM Research also believes that low interest rates, government support and improved consumer confidence should also benefit regional housing markets in 2021.
Link Administration Holdings Ltd (ASX: LNK)
In Link’s own words, it administers financial ownership data and drives user engagement through technology.
There are five segments that Link says it services: retirement and superannuation solutions, corporate markets, fund solutions, banking and credit management, and technology and operations.
What the fund manager is particularly attracted to about the ASX share is Link’s 44% investment in Property Exchange Australia (PEXA). PEXA is the leading electronic property settlement provider.
In the Link Group FY21 half-year result, PEXA saw transaction volumes grow 28% on the prior corresponding period and contributed $18.7 million to Link’s operating net profit after tax and amortisation.
The fund manager said that PEXA has a 75% market share of conveyancing in the domestic market here in Australia. However, the fund manager is positive on the ability of PEXA’s technology to expand globally. This could be pretty beneficial for Link Group.
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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 Link Administration Holdings Ltd. The Motley Fool Australia has recommended Link Administration Holdings 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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