The fund manager Wilson Asset Management (WAM) has picked out a few ASX shares that could be strong picks for returns.
WAM is in charge of a number of listed investment companies (LICs) such as WAM Capital Ltd (ASX: WAM), WAM Microcap Ltd (ASX: WMI) and WAM Active Ltd (ASX: WAA).
The investment team in charge of the WAM portfolios have picked out a few stocks that could be among the most exciting ideas on the ASX with a possible catalyst that could send the share price higher.
Let's look at two of those ideas.
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Artrya Ltd (ASX: AYA)
WAM described Artrya as a medical technology company that uses AI to assist clinicians in the diagnosis and management of coronary artery disease.
The fund manager noted that the Artrya share price declined during July, which WAM suggested reflected a "knee-jerk" reaction from investors to the pace of revenue conversion from customer deployments, a view management has subsequently clarified.
WAM also said that market sentiment towards AI-related growth companies during the period weighed on the Artrya share price.
The investment team highlighted that Artrya has continued to progress in its US commercial rollout, with the company announcing that it has begun generating revenue from its second active US commercial customer and that its Salix platform was deployed in a major US healthcare network.
WAM believes the company continues to make strong progress on building a pipeline of further potential customers, while progressing FDA approval of its second blood flow module, which of which represent "key near-term catalysts" along with potential inclusion inside the S&P/ASX 300 Index (ASX: XKO).
Advanced Innergy Holdings Ltd (ASX: AIH)
Another ASX share that could be an attractive investment right now is the ASX share Advanced Innergy. This company designs, manufactures and installs specialised insulation, fire protection, buoyancy and cable protection systems for the global energy, marine and industrial sectors.
WAM suggested that the Advanced Innergy share price went backwards during July as the market digested the earnings and balance sheet implications of its $90 million acquisition of Matrix Composites & Engineering.
The fund manager thinks the acquisition is strategically attractive, combining the second and third largest participants in the sector.
However, the market reacted negatively, reflecting concerns about the earnings multiple paid for the acquisition, the expected near-term earnings contribution from Matrix and the increase in debt levels due to the acquisition. The timing of Middle East projects and higher input costs also contributed to near-term uncertainty.
WAM then said that synergies are expected to build over time as the businesses are integrated.
The fund manager concluded:
We remain confident in Advanced Innergy Holdings as it continues to benefit from a strong order book and favourable industry fundamentals, which should support earnings growth as the acquisition is integrated and synergies are realised over time.
