The leading investors from Wilson Asset Management (WAM) have shared two undervalued ASX shares on their radar.
WAM operates several listed investment companies (LICs). Some, like WAM Leaders Ltd (ASX: WLE), focus on larger companies.
Meanwhile, WAM Capital Limited (ASX: WAM) targets "the most compelling undervalued growth opportunities in the Australian market".
But does WAM have a claim of stock-picking pedigree? The WAM Capital portfolio has delivered an investment return of 15% per annum since its inception in August 1999. That's before fees, expenses, and taxes. This gross return outperformed the All Ordinaries Total Accumulation Index (ASX: XAOA) return of 8.5% per annum over the same timeframe.
With that in mind, here are the two ASX shares WAM Capital has outlined in its recent monthly update.
Myer Holdings Ltd (ASX: MYR)
Myer is a retailer that operates 57 department stores; it also has an online offering as well.
WAM noted that Myer recently revealed details of its FY23 half-year result, which showed total sales growth of 24.8%. This was its "strongest sales result on record for the first five months of a financial year".
The fund manager noted that Myer said its sales following Christmas had "continued to outperform strongly" compared to the prior corresponding period.
Myer is expecting its net profit after tax (NPAT) for the 26 weeks to 28 January 2023 to be between $61 million to $66 million. This would represent year-over-year growth of between 89% to 104%, which was more than the market's expectations.
WAM thinks that a tougher economic environment will impact Myer over the next 12 months. But, more foot traffic in its city stores and increases in inbound tourism will "allow the business to maintain its strong momentum".
Fisher & Paykel Healthcare Corporation Ltd (ASX: FPH)
The other ASX share that the fund manager picked out was Fisher & Paykel. It's described as a leading designer, manufacturer, and marketer of products and systems for use in respiratory care, surgery, and the treatment of obstructive sleep apnoea.
WAM pointed out that Fisher & Paykel Healthcare upgraded its revenue guidance for FY23. The ASX healthcare share is expecting full-year operating revenue to be between $1.55 billion to $1.6 billion.
Why did the company bump up its expectations? It was because of higher COVID-19 cases in China and an earlier-than-expected start for the flu season in the US, which contributed to a "rapid surge" in demand for the company's products.
The fund manager finished with the following optimistic view on the ASX share:
We believe Fisher & Paykel Healthcare Corporation's runway for growth remains strong with falling freight and logistics costs providing greater confidence that the company can achieve its 30% operating margin target in the medium-term.
