Experts are always on the lookout for undervalued S&P/ASX 300 Index (ASX: XKO) shares that may be about to deliver pleasing investment returns.
UBS is a major broker that that looks across the ASX share market for ideas and buy recommendations (and holds and sells).
The businesses that I'll cover below are rated as buys by UBS, but they aren't necessarily the most well-known ASX 300 shares. A smaller business is just as capable as producing good returns as a name like Wesfarmers Ltd (ASX: WES) or Commonwealth Bank of Australia (ASX: CBA).
Let's get into it.
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Vault Minerals Ltd (ASX: VAU)
UBS describes Vault Minerals as an ASX-listed gold miner with three operating assets in Australia and a Canadian development project. This company formed from the merger between Red 5 and Silver Lake, which finalised in June 2024.
One of the key things that UBS is focused on is how Vault Minerals is set to potentially grow production towards 450,000 ounces per annum (in FY28).
UBS says Vault Minerals is undervalued, offering a strong mixture of "attractive valuation, FCF [free cash flow] upside, balance sheet flexibility and multi-asset base", despite a relatively limited production lifespan at some of its assets.
The broker's modelling shows a free cash flow yield of 15% or more once the ASX gold share unwinds its hedge book and continues expansion and optimisation works.
UBS expects the business to close its valuation gap to other ASX gold shares. If the valuation doesn't adjust, the broker thinks the ASX 300 share could be an acquisition target.
The broker has a price target of 55 cents on the business, implying a potential rise of the Vault Minerals share price of close to 30%.
Perpetual Ltd (ASX: PPT)
Another ASX 300 share I'll highlight that UBS rates as a buy is Perpetual. UBS describes Perpetual as a global diversified financial services company that operates three businesses – asset management, private wealth management and corporate trust services.
It manages household and institutional funds in Australian and international shares, diversified funds, mortgages and fixed income. The wealth management business has a high net worth client base, while the corporate trust segment is the leading provider of trustee services in Australia.
UBS noted that the ASX 300 share is still seeing net outflows (clients taking money out from the fund manager), but those outflows are moderating. The broker said that outflow pressures are "likely to persist", but cost controls are the "offset" to help insulate profit impacts. UBS believes Perpetual is "tracking to plan against its simplification program targets".
The broker thinks a catalyst for the business could be the sale of its wealth management segment, with the ASX 300 share still in discussions with interested parties about the business. UBS values the wealth management division at approximately $740 million.
Net proceeds from that sale would largely be used to reduce debt/gearing of the business, in the broker's view. After that, UBS sees scope to consider options for the corporate trust segment.
The broker has a price target of $22.50 on the business, which implies a possible rise of 6% from where it is today, plus a fully franked dividend yield of 5%, implying a double-digit return over the next year.
