If you are on the lookout for ASX shares, then it could be worth hearing what Bell Potter is saying.
It recently named a number of smaller companies that it believes offer attractive upside.
Here are three ASX shares that have been given the thumbs up:
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AMA Group Ltd (ASX: AMA)
This accident repair business is one of Bell Potter's preferred smaller ASX shares.
The broker sees value in AMA Group as the company continues to improve following a difficult period, with its scale and integration capability giving it leverage to better conditions.
Commenting on AMA Group, Bell Potter said:
AMA Group is the largest accident repair group in Australia with approximately 138 vehicle panel repair shops. The company also has a presence in New Zealand with 5 vehicle panel repair shops. AMA sold its manufacturing business in 1HFY21 and its remanufacturer of automatic transmissions – called Fluid Drive – in 1HFY23 so is now almost a pure play accident repair group. The only part of the company outside of panel repair is the Supply business – called ACM parts – which sells a range of new, aftermarket and recycled parts and consumables.
This business now, however, is flagged for sale. The company has a strong track record of successful integrations, and any announcements could trigger a rerating from where it currently trades at a discount to its long-term valuation average.
Nick Scali Ltd (ASX: NCK)
This furniture retailer is another ASX share that Bell Potter is positive on.
It likes Nick Scali due to its store rollout plans and expansion opportunities, particularly in the UK. Bell Potter explains:
Nick Scali is an Australian retailer specialising in household furniture and related accessories, operating under the core Nick Scali brand as well as the Plush banner. >90% of sales are completed in-store, with the company maintaining a substantial physical presence with over 100 showrooms across Australia and New Zealand, and has recently expanded into the UK, which now contributes around 8% of total revenue.
Looking ahead, the key growth drivers include the continued roll-out of Nick Scali stores in the UK, supported by the refurbishment of acquired Fabb locations, and the ability to leverage the group's established supply base to drive scale efficiencies and margin expansion.
Universal Store Holdings Ltd (ASX: UNI)
This youth fashion retailer is also rated positively by the broker. Bell Potter sees appeal in Universal Store's rollout strategy, quality metrics, and valuation. The broker said:
Universal Store Holdings is a leading youth focused apparel, footwear and accessories retailer in Australia. UNI will continue to increase store numbers over the next few years, supporting earnings growth of 11% p.a. Valuation looks attractive, trading on a forward P/E of ~13.4x. UNI is a quality small cap (ROE ~26%) that is executing on its rollout strategy.
