The fund managers at Wilson Asset Management (WAM) are always on the lookout for ASX share opportunities. They have outlined a few ideas within the WAM Capital Ltd (ASX: WAM) portfolio that could be appealing buys.
WAM Capital is a listed investment company (LIC) that targets "the most compelling undervalued growth opportunities in the Australian market".
In other words, it's searching largely beyond the 100 largest businesses on the ASX for potential buys. Let's look at two of the companies it thinks are good ideas right now.
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Codan Ltd (ASX: CDA)
WAM describes Codan as a manufacturer and supplier of communications, metal detection and mining technology.
The fund manager highlighted that in January the company announced a trading update regarding its FY26 first-half.
That update included $394 million total revenue and an underlying net profit after tax (NPAT) that's likely to be more than $70 million, representing increases of 29% and 52% year-over-year, respectively.
The ASX share's overall revenue included approximately $222 million from the communications segment, which was up 19% year-over-year. The rest of the revenue came from approximately $168 million of metal detection sales, primarily from gold detector sales in Africa.
The fund manager explained that the scale of the earnings upgrade and strength across both divisions were the key drivers of the market's positive view on the Codan share price.
WAM said that the team "remain positive on the outlook, underpinned by defence sector and gold price tailwinds."
Life360 Inc (ASX: 360)
The fund manager described Life360 as a location-based tracking software and safety company.
WAM noted that the Life360 share price has been caught up in the broader sell-off across the technology sector due to perceived fears about disruption from artificial intelligence (AI).
This decline has occurred despite the ASX share providing a "strong" preliminary FY25 trading update in January. Key metrics that the market had concerns about came ahead of expectations, such as monthly active users (MAU) and paying circles both growing strongly.
WAM said this performance suggested a "robust runway" for ongoing penetration growth remains within the core US market. The fund manager noted that the Life360 share price increased 27% on the day of the announcement but subsequently gave up those gains.
The fund manager suggested that the current sentiment within the technology sector is "weak" and draws similarities to others such as the Resmed (ASX: RMD) worries about GLP-1 in 2023 or when the market was concerned about online competition for JB Hi-Fi Ltd (ASX: JBH) in 2017 and 2018.
While WAM said it's difficult to identify a particular catalyst that will shift market confidence on the technology sector, it's focused on identifying those technology companies where it believes the perceived threats of AI disruption are being overstated as the fund manager expects valuations and share prices to "rebound strongly" over time.
