Leading 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 16.8% per annum since the strategy changed in July 2010, which is superior to the S&P/ASX All Ordinaries Accumulation Index return of 9.6% per annum.
These are the two ASX shares that WAM outlined in its most recent monthly update:
Webjet Limited (ASX: WEB)
WAM says that Webjet is a digital travel business and an online travel agent for flights, hotels, car hire, insurance and motorhomes in the domestic market and internationally.
The fund manager noted that the Webjet share price went to an 18-month high on investor sentiment that domestic and international travel will return after headlines of borders reopening.
Webjet itself gave a trading update where it said that its strategy coming out of COVID will mean it can be cashflow positive in the first half of FY22.
WAM said that Webjet’s management have positioned the ASX share to exit the COVID-19 era to capitalise on opportunities to significantly increase market share gains while operating a structurally lower cost base, which will lead to higher profit margins.
Whilst the Delta variant has impacted ASX travel shares significantly, the fund manager is positive on certain travel companies like Webjet and believe the company see “significant upside” as conditions normalise and more international markets reopen.
Maas Group Holdings Ltd (ASX: MGH)
The other ASX share that was named was MAAS Group, which is a vertically integrated construction materials, equipment and services provider with a property development segment.
WAM noted that in September, the ASX share revealed it had signed an agreement to buy the Earth Commodities hardrock quarry operation in Gladstone. This will enable the company to achieve synergies within its Central Queensland Construction Materials business and improve its growth opportunities over the year ahead.
The fund manager says that with strategically located quarry assets, significant unutilised capacity and a substantial pipeline of infrastructure spend expected over the coming there years to five years, WAM believes the organic growth outlook for the business is compelling. MAAS Group is expected to be further enhanced by bolt-on acquisitions and WAM sees potential for corporate action within the property arm.