Some of the best opportunities within S&P/ASX 300 Index (ASX: XKO) shares can be found at the smaller end of the market capitalisation list.
Fund manager Wilson Asset Management is always on the lookout for opportunities that could outperform for one of the portfolios of the listed investment companies (LICs) that it operates. WAM Capital Ltd (ASX: WAM) looks for the most compelling undervalued growth opportunities in the Australian market.
Two of the businesses that WAM has picked out are a specialist engineering and construction services company, and the other is an automotive retail group. Let's dive in.
Image source: Getty Images
SRG Global Ltd (ASX: SRG)
WAM described SRG Global is a diversified infrastructure services contractor with exposure across the engineering, construction and maintenance sectors.
The fund manager noted that the SRG Global share price increased after the company announced a confirmed and binding bid to acquire Total AMS (TAMS), a leading marine infrastructure services business, for $85 million.
WAM highlighted that the acquisition was received positively by the market given the complementary marine capability and potential for higher recurring revenue.
The investment team also said that the ASX 300 share's momentum was reinforced by the formal completion of the acquisition at the end of the month, which supported sentiment through October.
WAM finalised its comments on the company with the following:
Longer term, we see the enlarged platform broadening SRG Global's addressable market and strengthening opportunity for growth across resources, energy and public infrastructure.
Eagers Automotive Ltd (ASX: APE)
The other ASX 300 share that WAM highlighted is the leading automotive retail group in Australia and New Zealand.
In October, the company announced a "transformational move" into North America, agreeing to acquire a controlling stake in CanadaOne and funding it through a capital raising that includes Mitsubishi Corporation.
WAM noted that Mitsubishi Corporation also took a 20% stake in Eagers Automotive's easyauto123 business for $70 million. An investor day later in the month outlined the strategic rationale and runway for growth.
The investment team then highlighted why they think Canada is an exciting opportunity for the ASX 300 share, commenting:
We see Canada's fragmented market, where leading players each have only around 2% market share, as a fertile landscape for expansion, with Eagers Automotive's proven integration playbook a clear advantage. Optionality in easyauto123 is underappreciated and core Australia and New Zealand operations continue to deliver. Overall, we retain high conviction in the company's management quality and multi-year growth path.
