With COVID-19‘s Delta variant raging and China reasserting its authority domestically and internationally, it’s an uncertain world at the moment.
Even among ASX shares, investors are debating whether stocks are nearing the top or whether they have more legs in them.
So it can be worth listening when an expert has a “high-conviction” ASX share pick.
If they’re that sure about something in volatile conditions, then the company must have a lot going for it.
Lucky for The Motley Fool readers, Wilson Asset Management fund managers have offered up not just one high-conviction selection, but 3.
NBN competitor ready to bust out
Equity analyst Sam Koch told a Wilson webinar he liked the look of Swoop Holdings Ltd (ASX: SWP).
“Swoop competes with the NBN by offering greater speeds and service in under-served areas.”
Koch’s team is estimating organic revenue growth of 10% to 15% per annum, plus 1% to 2% margin expansion, over the next several years.
He likened Swoop to a “mini” version of Uniti Group Ltd (ASX: UWL) — but perhaps with more upside due to its far-smaller valuation.
“Uniti Group… has a market cap of over $3 billion, and Swoop’s only at $300 million at this stage,” said Koch.
“The catalyst is deploying their balance sheet into accretive acquisitions into a highly fragmented market.”
Swoop shares are up 64% for the year, trading at $2.05 on Thursday afternoon.
Operational recovery comes for free at current share price
Wilson portfolio manager Oscar Oberg singled out Event Hospitality and Entertainment Ltd (ASX: EVT) as his high-conviction pick.
He said the company has been around for over 100 years and owns hospitality assets like QT, Rydges, Thredbo ski resort and Event Cinemas.
Wilson bought into it as a recovery stock in May 2020, but it dipped again the next month when Melbourne went through its second wave of coronavirus.
That’s when Oberg’s team found a nice catalyst.
“In particular, $2 billion of property on Event’s balance sheet at the time,” he said.
“The major catalyst we saw at the upcoming August result was the fact that the property was undervalued and it would have a revaluation.”
That catalyst then played out, and Wilson has since done well out of its Event holding. But Oberg reckons there’s more to come.
“We think this business will have a materially lower cost-base going forward. We think it’ll earn more money than what it did pre-COVID for its operating businesses,” he said.
“So we’re very bullish on this stock. We think it can get over $20 a share, which is a 30% upside.”
Event shares went for $14.58 on Thursday afternoon, up almost 52% for the year.
15% upside for this ASX share with a realistic catalyst
Intellectual property services group IPH Ltd (ASX: IPH) has a 15% upside on its current stock price, according to senior equity analyst Shaun Weick.
His team started monitoring the stock at around $6.50. IPH shares traded at $9.20 on Thursday afternoon.
“Our research [pointed] to a rebound in R&D spend, which we expected to support an uptick in patent filing trends.”
Easing of pressure on the US dollar and a plan to pursue expansive acquisitions were tailwinds for the business, Weick said.
“IPH’s management team is very well-regarded. They’ve got a proven track record of executing earnings-accretive acquisitions and extracting synergies.”