If you want better returns than the market average, then you need to buy ASX shares that others haven't yet bought.
Fortunately, the team at Celeste Funds Management this week named two stocks it has in its portfolio that are absolute sleeping giants.
Although they have not impressed with their recent returns, the Celeste analysts explained why they're bullish about these ASX shares:
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The first ASX-listed health insurer
ASX-listed health insurance providers have been in the headlines for all the wrong reasons in recent weeks.
Out of all of them, NIB Holdings Limited (ASX: NHF) was the first to float on the ASX, back in 2007.
While the stock grew exponentially in the first 10 years, the ensuing five have not been flattering. The share price has inched up only 0.15% over the last half-decade.
To rub short-term salt into the long-term wound for shareholders, the NIB share price took a 10.2% hit last month.
Celeste analysts attributed this to the company's foray into a new business area.
"The company raised $150 million as part of [its] previously flagged expansion into NDIS plan management, with the acquisition of Maple Plan becoming the first of many," read a Celeste memo to clients.
"Maple Plan is the seventh largest plan manager, with 7,000 participants."
NIB is aiming to hit a target of 50,000 NDIS participants by 2025, according to the Celeste team, and will possibly achieve this through more takeovers.
"Additionally, strong student visa and work visa grants for the quarter (up 47% and 31% respectively) bodes well for NIB's international business, while the cybersecurity breach at competitor Medibank Private Ltd (ASX: MPL) might see NIB show above-system member growth."
NIB shares are currently paying out a dividend yield of 3.16%.
Don't call them Event Cinemas
EVT Ltd (ASX: EVT) is the cinema operator formerly known as Event Hospitality & Entertainment Ltd.
The Celeste team was impressed with what it heard at the company's recent annual general meeting.
"EVT Limited announced at the AGM that 1q22 performance had been strong with group earnings of $70.6 million, exceeding the previous comparable quarter of a loss of $15.5 million and even exceeding $53.3 million earned in 1q19, a pre-COVID comparable."
The EVT share price has risen only 6% over the past five years.
However, the arrival of the pandemic forced some serious soul-searching with cinemas sitting empty — and burning cash — for months.
"Strong cost control driven by the COVID lockdown has now enabled revenue growth to translate to significant earnings leverage."
The AGM also revealed that a significant legal headache has now been dealt with.
"EVT also announced they have settled their dispute with Vue over the failed 2020 takeover of the EVT German cinema assets," read the Celeste memo.
"Vue, currently in receivership, paid $11.6 million to [expedite] bondholder assumption of ownership."
The meeting was also when the company commenced its rebranding to EVT to "better reflect the spread of businesses", as it also operates hotels and resorts.
