Leading fund manager Wilson Asset Management (WAM) has named two ASX shares in its portfolios that it thinks are buys.
Every month, WAM talks about some of the businesses that have performed well and outlines the bullish factors for thinking about the stocks.
Two of the featured ASX shares this month comes from WAM Research Limited (ASX: WAX) and WAM Active Limited (ASX: WAA), which targets opportunities from the smaller end of the ASX, like these two:
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Vulcan Steel Ltd (ASX: VSL)
Vulcan Steel is the only pure, value-add steel distributor and processor in Australia and New Zealand, operating as a key link in the steel value chain between steel producers and end-users across a broad range of market segments.
WAM initially participated in the initial public offering (IPO) of the company in November 2021 at $7.10 per share.
The fund manager points out that the ASX share is a founder-led organisation, has long-standing leadership which, in WAM's eyes, are highly capable with significant 'skin' in the game.
In December, WAM noted that Life360 provided a trading update, highlighting a stronger-than-anticipated performance across all business units. This resulted in a upgrade to its forecast net profit after tax (NPAT) at the time of the IPO of 26% to 35%.
The Wilson Asset Management investment team expects growth to be underpinned by cyclical tailwinds, expansion into new products and geographies and business improvement initiatives, while opportunistic mergers and acquisitions also provides a catalyst. Vulcan Steel is well positioned to continue to sector consolidation, according to WAM.
Life360 Inc (ASX: 360)
WAM describes Life360 as a family safety platform that allows parents to track the whereabouts of their children, with over 33 million users globally.
The initial catalyst identified for the investment in Life360 was the appointment of Randi Zuckerberg, sister of Meta (previously Facebook) founder, CEO and Chair Mark Zuckerberg and the belief that the company would upgrade revenue expectations.
The fund manager also noted that in November, the ASX share made its second hardware acquisition for the year, buying a Bluetooth tracking device company, called Tile, for US$205 million.
WAM said that the combination of Life360 and Tile creates an integrated market leader in location solutions, making Life360 the only vertically integrated, cross-platform solution of scale in the market and well-placed to take advantage of the growing location solutions market.
According to the fund manager, Life360 remains "catalyst rich", including potential mergers and acquisitions and a dual listing in the US in the pipeline.
