It's always nice to pick up ASX shares on their way up.
That often means other investors also see bright prospects for the business, and that demand for the shares is strong.
After all, in the purest sense, stock price is a reflection of how many other people want those shares. It actually has nothing to do with how good or bad the business is.
It's a popularity contest.
Of course, if the shares are popular and the business is going well you have a pretty good chance of making some money from the investment.
Here are two such ASX shares that the QVG Opportunities Fund is currently backing:
'Pricing power, cost discipline and customer growth'
If you can believe it, family software provider Life360 Inc (ASX: 360) has doubled its share price over the past year.
Since 21 March the stock has rocketed almost 65%.
According to QVG analysts, the technology company is proving to be popular because of a change in its attitude towards cash flow.
"Family tracking app Life360 has traded strongly over the past couple of months as the market has come to recognise the [company's] pivot to profitable growth," they said in a memo to clients.
"Like many US-listed technology companies, 360 has recently had to [learn] to do more with less."
The massive positive for Life360 is that it's proven to have pricing power.
"Life360 has seen no slowdown in revenue growth and more modest than feared reduction in new customer adds as they raised prices," read the memo.
"This pricing power, cost discipline and a re-acceleration of customer growth bodes well for future earnings and cash flows."
The QVG team is so convinced of Life360's future potential that the tech stock is now its fourth largest holding in the Opportunities Fund.
Strong cash flow allows it to invest in… itself
Fleetpartners Group Ltd (ASX: FPR) — formerly ticker code ECX — shot up more than 18% in June, but for entirely different reasons.
"Government tax incentives for EVs [are] providing a catalyst for future growth while the stock is trading on sub 5x cash flow," read the QVG memo.
"Its fleet being weighted towards small utility vehicles where resale values remain elevated is also helping its strong cash flow."
This regulatory tailwind is the background from which Fleetpartners Group is buying back more than 10% of its issued shares.
"A unique example of the benefits of a strong balance sheet with strong reinvestment opportunities. In this case, in its own shares!"
