The investment team at Wilson Asset Management (WAM) have shared two undervalued All Ordinaries Index (ASX: XAO) shares in one of their fund portfolios.
WAM operates several listed investment companies (LICs). While one targets larger companies, WAM Capital Limited (ASX: WAM) targets "the most compelling undervalued growth opportunities in the Australian market".
How much of a claim of stock-picking pedigree does WAM have? The WAM Capital portfolio has delivered an investment return of 14.9% 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 8.3% per annum over the same timeframe.
With that in mind, here are the two All Ords ASX shares WAM Capital has outlined in its recent monthly update.
oOh!Media Ltd (ASX: OML)
This ASX share is described as one of Australia's largest out-of-home media companies with a network of over 37,000 digital and static asset locations.
WAM noted that last month, the company announced its financial result for the year to 31 December 2022, which showed an adjusted net profit after tax (NPAT) of $56.2 million, an increase of 343%.
The fund manager also noted that oOh!Media's earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 64% to $127.1 million year over year.
In other words, the All Ords ASX share is currently achieving a lot of profit growth. WAM's concluding thoughts on the business were:
We believe that out-of-home media continues to have a strong runway of structural growth, and we remain positive on oOh!Media.
NRW Holdings Limited (ASX: NWH)
The fund manager described NRW Holdings as a civil and structural engineering company that is focused on the mining and government infrastructure sectors.
It was reporting month in February 2023 for NRW as well. This result was the FY23 half-year report, which showed earnings before interest, taxes and amortisation (EBITA) of $80.1 million.
The All Ords ASX share's result was "below market expectations" and was "largely due to poor weather" surrounding its East Coast operations and "increased tendering costs."
WAM called this first-half result "disappointing" but pointed out that NRW Holdings maintained its full-year earnings guidance of $162 million to $172 million of EBITA.
The fund manager explained its investment in the business:
We believe that the business is well-placed to win new contracts over the coming months which will boost earnings into the next financial year.
