Experts love these 2 ASX shares punching above their weight

Everyone loves a business that’s upgrading its results. Here are a couple rated as “buy”.

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Whether the market is up or down, there is one type of ASX stock that investors love — businesses that upgrade their expected results.

If a company finds that it’s doing better than previously thought, or it’s consistently hitting the higher end of its forecasts, it’s a pretty good sign for future returns.

There are 2 ASX shares in particular that have caught the attention of 2 experts, who rate them both as a “buy”.

One only listed on the ASX a few months ago, while the other is a veteran on the bourse:

You have used this ASX share’s product without knowing

Montgomery Investment Management chief investment officer Roger Montgomery rates telco MNF Group Ltd (ASX: MNF) as a buy after its latest bullish results.

“Management have finally committed to their Asian rollout,” he told a Livewire video.

“The megatrends in consumer technology that we’ve all experienced, they demand real-time telecommunication networks, and you’ve got to connect to that as part of the overall solution.”

According to Montgomery, if you’ve done everyday activities in Australia like video conferencing from home or looking for an Uber car, you’ve already used MNF’s software without knowing.

“It’s taken for granted. It isn’t easy,” he said.

“And they do this in Australia, but they’ve re-engineered their software ready to be exported and deployed in new markets. And that’s an opportunity that’s 20 times bigger than their current market. So for us, it’s a buy.”

Investor Mutual senior portfolio manager Simon Conn agreed.

“It’s not really understood by the consumer market, but they are one of Australia’s leading telcos because they facilitate the transfer of voice over the internet,” he said.

“As the copper network’s been deregistered or wound down, more and more voices are going through the internet.”

MNF shares had shot up 4.5% on Friday morning, to trade at $6.72. They’ve gained more than 52% this year.

Another ASX star in the making?

Australian Clinical Labs Ltd (ASX: ACL) debuted on the ASX in May after an initial public offer saw shares sold for $4 apiece.

While it traded below that mark for the first few weeks of its public life, it now has its head above water and Conn rates it as a “buy”.

“Australian Clinical Labs is the number 3 player in the pathology market in Australia. It’s in a very strong, defensive market — and this business generates good cash.”

According to Montgomery, some pundits reckon ACL is another Sonic Healthcare Limited (ASX: SHL) in the making.

“They’ve upgraded their first-half ’22 guidance twice in September. That was mostly attributed obviously to the continued strong demand for COVID testing,” he said.

“But unlike Sonic, where underlying testing is flat, ACL have reported recovery in the underlying or base business. Obviously, the Victoria and NSW outbreaks have been a big kicker with revenue guides upgraded by 10%. I think NPAT [net profit after tax] was upgraded by over 30%.”

Conn also thinks ACL has potential to grow through acquisitions.

“Whilst COVID volumes will decline, the cash on the balance sheet will position them well for further bolt-on acquisitions, which I think they can really then leverage their technology platform,” he said.

“So well led by Melinda McGrath, good board, and really well positioned, I think, in a strong industry.”

ACL shares were trading at $4.35 on Friday morning, up 3.7%.

Should you invest $1,000 in MNF Group right now?

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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended MNF Group Limited. The Motley Fool Australia owns shares of and has recommended MNF Group Limited. The Motley Fool Australia has recommended Australian Clinical Labs Limited and Sonic Healthcare Limited. 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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