I think it's always a good idea to look at ideas that can outperform the ASX share market. Fund managers have highlighted one particular small ASX share that could be a compelling buy: Kogan.com Ltd (ASX: KGN).
The investment team from the listed investment company (LIC) WAM Microcap Ltd (ASX: WMI) believe the online retailer is one of the most exciting and undervalued growth opportunities in the Australian microcap market.
At the end of May, Kogan.com was one of the largest 20 positions in the WAM Microcap portfolio. Let's take a look at why it's so appealing to the experts from Wilson Asset Management.
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Ongoing growth for the ASX share
WAM noted that in May, the business released a business update for the 10 months to 30 April 2026, which demonstrated continued sales growth in the core Kogan.com business and improved operating leverage.
The fund manager said that Mighty Ape, the New Zealand-based online retailer acquired by Kogan in 2020, has made significant progress to profitability through strategic shifts and the progressive implementation of the Kogan operating model across the business.
In the four months to 30 April 2026, Mighty Ape's gross profit margin improved by 8.4% to 37.8%, while the adjusted operating profit (EBITDA) losses reduced by 52.8% compared to the prior corresponding period.
For the overall business, the ASX share reported gross sales growth of 13.2% to $875.6 million, driven by 18.2% growth in Kogan.com.
Group active customers increased by 4% to 3.5 million as at 30 April 2026, with Kogan.com active customers increasing by 9%.
Group revenue rose 6% to $433.7 million, with 18.1% growth for Kogan.com. This helped adjusted operating profit (EBITDA) rise 17.4% to $37.5 million and adjusted EBIT grew 25.4% to $26.9 million.
Why the fund manager likes Kogan.com shares
WAM said that these improvements reflect a transition towards a simpler, more profitable operating model.
The fund manager concluded:
We see scope for continued earnings recovery in Mighty Ape and expect the company's price leadership will continue to win market share in the current tougher macro environment. We also believe Kogan will be a beneficiary of artificial intelligence (AI), with respect to both revenue and cost savings.
In a world with a higher cost of living, the outlook seems promising for the business and its revenue and earnings growth reflects this. Operating leverage is a very powerful force for a business like this ASX share. But, Kogan.com isn't the only attractive opportunity out there, of course.
