Wilson Asset Management (WAM) is one fund manager that likes to hunt for smaller ASX shares that could have solid investment outlooks.
WAM runs a number of different listed investment companies (LICs) including WAM Capital Limited (ASX: WAM), WAM Active Limited (ASX: WAA), and WAM Research Limited (ASX: WAX).
The fund manager likes to look for compelling, undervalued growth opportunities on the ASX share market. The below companies are two investment ideas that WAM recently highlighted.
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IPH Ltd (ASX: IPH)
WAM described IPH as Asia Pacific's leading intellectual property (IP) services group with a network of member firms and clients in more than 25 countries.
Last month, IPH announced that it was buying Canadian IP agency Smart & Biggar for a total of $387 million.
The fund manager noted the acquisition will extend IPH's international secondary markets network beyond the Asia Pacific region for the first time and lift IPH "towards being a global leading IP services group".
IPH expects that the transaction will result in adding to underlying earnings per share (EPS) of approximately 10% in the first year of ownership and deliver access to more growth opportunities.
August was also reporting season. Last month, the company announced its full-year result, revealing a 14% year-over-year increase of underlying net profit after tax (NPAT) to $86.7 million as well as an 11% rise in underlying earnings before interest, tax, depreciation and amortisation (EBITDA).
Here is what WAM had to say about the company:
We remain positive on IPH and believe the business has a strong runway for organic and acquisition-led growth over the medium term.
Capitol Health Ltd (ASX: CAJ)
Capitol Health is described by the fund manager as a diagnostic imaging provider to the Australian healthcare market.
Last month, the ASX share announced the full-year result for its 2022 financial year which was better than the market was expecting. It also included the acquisition of Future Medical Imaging Group, a diagnostic imaging services provider, for a total cost of $56.1 million.
WAM pointed out the acquisition is expected to add to EPS in the high single digits. The fund manager said:
With a strong balance sheet and continued investment in well-defined growth opportunities, we believe the outlook for Capitol Health remains strong as diagnostic imaging providers recover from the coronavirus pandemic.
