The two ASX shares in this article might be worth looking at over the weekend.
These businesses are generating underlying growth and have been creating returns for shareholders.
Here are two ideas to think about:
VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)
This is an exchange-traded fund (ETF) that is offered by the provider VanEck.
The idea is that it gives exposure to a diversified portfolio of the largest and most liquid companies involved in video game development, e-sports and related hardware and software globally.
It has a total of 25 holdings. The top 10 holdings might be recognisable to some of readers that are gamers: Nvidia, Sea, Tencent, Advanced Micro Devices, Nintendo, Activision Blizzard, Netease, Bilibili, Take Two Interactive Software and Electronic Arts.
According to VanEck materials, the competitive video gaming audience is expected to reach 646 million people globally in 2023, driven in part by the rising population digital natives.
E-sports revenue has grown by an average of 28% per year since 2015. Video gaming revenue has seen an average annual growth of revenue of 12% since 2015.
The e-sports industry has created new potential revenue streams from game publisher fees, media rights, merchandise, ticket sales and advertising.
VanEck believes that video gaming can be a long-term growth story. This portfolio gives access to a diversified portfolio across countries and companies, away from the names like Apple, Amazon, Facebook, Google and Microsoft.
Past performance is not an indictor of future performance. Over the last three years, the index that this ETF tracks has delivered an average return per annum of around 29%.
Kogan.com Ltd (ASX: KGN)
The Kogan share price has fallen 49% since 25 January 2021. That has pushed the forward valuation lower according to the earnings forecast on Commsec. At the current Kogan share price, it’s valued at 23x FY23’s estimated earnings.
As Kogan explained, as the company rapidly grew in the first half of FY21, it has experienced some operational challenges. It significantly expanded its inventory holding and grew its logistics footprint to 31 facilities.
This resulted in supply chain inefficiencies and inventory planning challenges. It has been suffering from demurrage costs over the last few months.
With the excess inventory, management are looking to deal with it by increasing promotional activity, which has led to lower near-term gross margin and higher near-term marketing costs.
The company said it is expected to return to normal inventory levels (relative to the size of the business) and marketing spend as the current inventory is progressively reduced over the coming months.
Regarding the future outlook, Kogan said:
The longer term fundamentals for Kogan.com remain very attractive given the company’s position in the Australian and New Zealand online retail markets, and with online retail sales currently only accounting for a small change of total retail sales in Australia and New Zealand.