The ASX share market is full of good opportunities if we look in the right places. Fund managers are always on the lookout for ideas that could beat the market and Wilson Asset Management (WAM) has highlighted two that could perform.
Both of the businesses below are tapping into strong demand tailwinds that could help their earnings in the coming years.
Let's look at what makes them appealing buys today.
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GenusPlus Group Ltd (ASX: GNP)
The first ASX share I'll talk about is a national power and communications infrastructure contractor.
WAM noted that the GenusPlus share price rose in April, as investors gained confidence in the company's near-term earnings upgrade potential and exposure to large-scale energy infrastructure projects.
The fund manager said that GenusPlus Group has approximately $2.5 billion in confirmed orders and continues to bid for major transmission projects, including the Hunter, Gippsland Offshore Wind and New England Renewable Energy Zone (REZ) developments.
Potential contract awards through 2026 remain "important near-term catalysts".
The fund manager concluded with the following:
We believe the April share price performance reflects growing confidence in GenusPlus Group's earnings outlook, supported by a strong pipeline of work linked to Australia's energy transition.
Nextdc Ltd (ASX: NXT)
Nextdc is a major data centre builder, owner and operator. WAM noted that in April, the ASX share announced a record 250MW contract win at its S4 data centre.
For data centres, megawatts (MW) explain how much power capacity is available to run customers' IT equipment (servers and infrastructure), which is the primary driver of how much customer demand a facility can support.
WAM noted that this contract win lifted total contract utilisation to 667MW, a 60% increase in a single quarter. The company expects existing contracts to generate over $1 billion in operating profit (EBITDA) once these convert into billing by FY30.
To support an accelerated build program, Nextdc brought forward an additional $1.5 billion of S4 capital expenditure into FY27. It also launched a $1.5 billion capital raising, an upsized La Caisse hybrid securities facility to $1.7 billion and raised $750 million in subordinated debt.
The fund manager said that these steps de-risk the near-term pipeline and provide sufficient liquidity to build through FY27 and beyond.
WAM said:
We see the company as well-positioned to benefit from strong demand for computational power, with valuations not yet reflecting the earnings potential being secured through investment grade hyperscale customers.
