S&P/ASX 300 Index (ASX: XKO) shares can sometimes present impressive growth opportunities — if we invest in them at the right time.
Businesses that are growing their earnings and expanding operationally can deliver good returns.
The funds management team at Wilson Asset Management has revealed some of the ASX 300 shares in the WAM Capital Limited (ASX: WAM) portfolio that they like. WAM Capital is one of the larger listed investment companies (LICs) on the ASX.
Let's take a look at which two stocks the analysts highlighted.
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HMC Capital Ltd (ASX: HMC)
WAM described HMC Capital as an ASX-listed alternative asset manager.
HMC Capital recently completed a $300 million institutional capital raising to invest in the $1.9 billion purchase of the Sydney data centre owner Global Switch Australia. This will be a 'seed asset' for the new Global DigiCo Platform.
WAM noted there was strong demand from investors who wanted exposure to high-quality digital infrastructure assets. This dynamic led to the capital raising being oversubscribed.
The fund manager said Global Switch has "significant growth opportunities with large-scale development pipeline to expand its existing IT capacity."
Explaining their bull case for the ASX 300 growth share, the analysts said:
We believe this acquisition provides solid exposure to the burgeoning data centre market. HMC Capital's management team is also looking at further data centre opportunities in the US and we expect these acquisitions, along with Global Switch, to drive earnings and valuation growth over the coming years.
Zip Co Ltd (ASX: ZIP)
WAM describes Zip as a buy now, pay later specialist. The Zip share price has risen significantly recently –up 400% in 2024 to date, as shown in the chart below.
The investment team believes the valuation increase has been driven largely by Zip's US segment, which is gaining market share in the country.
WAM noted Zip's latest quarterly update delivered "strong quarterly earnings", with the US business beating expectations. WAM's analysts noted the company processed $2.8 billion of transactions in the three months to 30 September 2024, up 22.8% compared to the first quarter of last year.
Despite the huge rise of the ASX 300 growth share, WAM is still optimistic about the buy now, pay later business and explained why:
We think Zip Co will be a beneficiary of interest rate cuts in Australia with consumer sentiment, spending and credit quality likely to improve. We continue to see strong momentum in the business and see the potential for further earnings upgrades over the course of the year.
