Beers and planes: 3 ASX shares killing it right now

One portfolio manager has picked out a trio of businesses he proudly holds in his fund that are going great guns at the moment.

| More on:
Two men standing on a balcony cheers their bottles.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

While the general S&P/ASX 200 Index (ASX: XJO) has moved upwards confidently over March and April, just a couple of sectors are driving the recovery.

While finance and mining, dominated by large caps, have made hay over the past few weeks, it's still a volatile and uncertain time for small-cap ASX shares.

So it's worth being selective about smaller businesses before buying into them.

Cyan Investment Management portfolio manager Dean Fergie recently presented three ASX shares he's holding that are going gangbusters right now:

Australians have higher expectations about deliveries now

Delivery services platform Zoom2u Technologies Ltd (ASX: Z2U) gained a tidy 24% over March, and Fergie expects more growth to come.

"The delivery marketplace is well overdue to be disrupted with the incumbent, Australia Post, not being able to offer competitive delivery times, nor services such as driver tracking (due to union rules)," he said in a memo to clients.

"Zoom2U is well established in this market with a proven commercial driver network and user deployed tracking software. And we expect the news-flow and positive financial results to continue for this exciting business."

Like most tech stocks, Zoom2u has suffered a correction in recent months, dipping more than 29% for the year so far.

For Fergie, the company can take advantage of a recent cultural shift in Australia.

"We believe there is a step-change in customer expectations of delivery times, with the likes of Inc (NASDAQ: AMZN) and the food delivery platforms offering next day, same day or one-hour delivery windows."

A massive contract with Jetstar

Quickstep Holdings Limited (ASX: QHL) is an unusual business that not many investors may have heard of.

But Fergie has held this ASX share for a long time and feels like its time has come after the share price rocketed up 17% last month.

"Quickstep manufacturers composite parts for the F35 fighter jet and C130 bomber, provides commercial aerospace maintenance services, and produces high-end composite products for drone manufacturers."

The Cyan team recently visited Quickstep's Melbourne facilities in person and was told of "significant tailwinds" in all three of its business units.

"Indeed, post the end of March, Quickstep has announced a milestone three-year $30 to $35 million maintenance contract with Jetstar," said Fergie.

"We view this as both financially and strategically significant as Quickstep has dislodged offshore incumbents to bring the maintenance work to Australia."

Cheers to this ASX small-cap

The Mighty Craft Ltd (ASX: MCL) share price remained flat during March, but Fergie feels like it made the "most significant" announcement out of all his holdings.

"On the 30th March, it upgraded its medium-term ambitions for beer production from 12 million to 25 million litres," he said.

"Mighty Craft is having some phenomenal success with its Better Beer brand which is expected to sell four million litres in FY22 despite only launching in November 2021."

As a brewing and distillation company, Mighty Craft is a natural beneficiary of the post-pandemic life as customers flood back into pubs and clubs.

But even considering that, Fergie reckons the business is outperforming.

"It is enjoying an outstanding recovery from the challenges of COVID," he said.

"We currently see a real disconnect between the current share price and true value of the Mighty Craft group of assets and brands, and expect [a] material re-rate when market conditions improve for emerging companies."

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tony Yoo owns Amazon. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Amazon. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Broker Notes

A male sharemarket analyst sits at his desk looking intently at his laptop with two other monitors next to him showing stock price movements
Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

rising asx share price represented by man with arms raised against blackboard featuring images of dollar notes
Broker Notes

Why these 3 ASX 200 shares just earned substantial broker upgrades

Top brokers just increased their share price forecasts for these three ASX 200 shares. But why?

Read more »

Two smiling men in high visibility vests and yellow hardhats stand side by side with a large mound of earth and mining equipment behind them smiling as the Carnaby Resources share price rises today
Broker Notes

See why this broker just upgraded South32 shares to a buy

Commodity prices continue to create tailwinds for ASX stocks.

Read more »

Keyboard button with the word sell on it.
Broker Notes

Sell these ASX 200 stocks now: Goldman Sachs

The broker is warning investors that these stocks could tumble from current levels.

Read more »

A man rests his chin in his hands, pondering what is the answer?
Broker Notes

Can Soul Patts shares beat the market over the next 12 months?

One leading broker believes the investment house could deliver good returns.

Read more »

A female ASX investor looks through a magnifying glass that enlarges her eye and holds her hand to her face with her mouth open as if looking at something of great interest or surprise.
Broker Notes

3 under the radar ASX shares to buy this month

Analysts at Bell Potter think these lesser known shares could be top options.

Read more »

Happy man working on his laptop.
Broker Notes

Why these 2 ASX 200 shares just scored broker upgrades

Top brokers have increased their share price forecasts for these two ASX 200 stocks.

Read more »

A man in his office leans back in his chair with his hands behind his head looking out his window at the city, sitting back and relaxed, confident in his ASX share investments for the long term.
Broker Notes

Top brokers name 3 ASX shares to buy today

Here's what brokers are recommending as buys this week.

Read more »