Growth stocks attract investors because the stock market tends to value a company on a multiple of its earnings. 

This means earnings growth can be a catalyst for share price appreciation. The faster the earnings growth, the quicker the increase in stock price. 

Beyond profit and revenue, common traits of successful growth shares include extensive market opportunities and robust business models.

It's important to note that on the flip side, this upside comes with more risk than other investment types like ASX ETFs or blue-chip shares.

This ASX growth stock – I believe – is one to watch as it combines earnings growth, a high demand product, and an attractive stock price. 

Austin Engineering Ltd (ASX: ANG)

Austin Engineering engages in the design and manufacture of customised dump truck bodies, buckets, and ancillary products used in the mining industry. 

It operates through Asia-Pacific, North America, and South America.

Its share price is down more than 47% year to date, however it now sits at an attractive stock price relative to fair value. 

ANG released FY25 earnings data in late August, which included promising signs: 

• Group revenue of $376.7 million, up 22.2%
• Underlying NPAT up 70% to $40.4 million
• Full-year fully-franked dividend of 1.5 cents per share (FY24: 1.2 cents)

Not all smooth sailing

Despite mostly positive results, statutory EBITDA was $41.7m, down from $43.5m in FY24. 

Broker Bell Potter said in a report in August this was held back largely by issues in Chile. 

While the plant in Chile was expanded, a large OEM order meant the unit was unable to meet demand, resulting in higher costs and expensive contract staff. This in turn put downward pressure on margins, saw a build-up of working capital, and lead to a reduction in group cash generation.

Upside still in tact 

In Bell Potter's view, Austin Engineering (ANG) shares trade on a lower PE or EV/EBITDA multiple compared to similar mining service companies and manufacturers.

The broker has a buy recommendation and price target of $0.50. 

From yesterday's closing price of $0.28 per share, this indicates an upside of 78.57% for this growth stock. 

The broker sees upside for a few reasons.

Firstly, it notes its leadership position globally in customised truck bodies with strong IP, blue-chip customers, and recurring revenue from its large installed base. 

Additionally, its Austin 2.0 strategy is driving growth and margin expansion (targeting 18% to 20%), while the stock trades at attractive valuations, offering upside from international growth, acquisitions in a fragmented industry, and potential (though unlikely) takeover interest from larger rivals.

Finally, the broker is optimistic on the appointment of a new CEO, Sy Van Dyk, who has put in place an action plan for Chile.

Importantly this is a company with good products that are in demand, and we expect to see profitability improve in FY27.

The post Down 47%, this world-class ASX growth stock now looks very attractive appeared first on The Motley Fool Australia.

The investment team from Wilson Asset Management (WAM) have outlined two of the opportunities in the WAM Research Ltd (ASX: WAX) portfolio. This listed investment company (LIC) aims to find the most compelling undervalued growth opportunities on the ASX share market.

Let's take a look at the two compelling businesses that have been highlighted.

Collins Foods Ltd (ASX: CKF)

WAM describes this ASX share as the largest operator of KFC restaurants in Australia and a growing operator of fast-food restaurants in Europe

The fund manager pointed out that the Collins Foods' share price increased 17% after releasing its FY25 result last month and continued to rally over the rest of month.

WAM noted Collins Foods shares reported a record of $1.52 billion in revenue, strong net operating cash flows of $181.4 million and a reduction in net debt in $137.9 million.

The investment team explained that the key highlight was the better-than-expected profit margins in the second half of the financial year for KFC Australia, as cost deflation and productivity improvements shone through despite challenging market conditions.

Collins Foods' management commentary is underpinning WAM's confidence that there will be a return to earnings growth in FY26. A (potential) recovery in performance is attributed to improving sales growth momentum, continued restaurant expansion, marketing and product innovation and a second-half margin rebound as expected interest rate cuts drive improved consumer sentiment, according to WAM.

Austin Engineering Ltd (ASX: ANG)

This ASX share is a mining equipment specialist. The Austin Engineering share price dropped 16% after releasing a trading update at the start of the month, which saw the business downgrade its FY25 operating profit (EBIT) guidance to $41 million because of margin pressure on a large Chilean truck-body contract that necessitated higher ramp-up costs.

In that update, management lifted its FY25 revenue guidance to approximately $370 million, which is up approximately 18% year-over-year. However, margin pressure was a disappointment.

WAM noted the ASX share is implementing measures to improve the profit margin recovery, including temporarily relocating production to the site in Batam, whilst improving overall plant efficiency.

The WAM investment team believe this is a short-term setback which is reflective of "transitional challenges" that "should normalise" in FY26 as management drive operational improvements and margins recover across a larger revenue base.

The post Here are 2 exciting ASX shares rated as buys appeared first on The Motley Fool Australia.

Then you may want to check out All Ordinaries Index (ASX: XAO) listed Austin Engineering Ltd (ASX: ANG).

That's according to the latest research report from Argonaut analyst Jon Scholtz, who foresees some outsized growth ahead for the global, mining-focused engineering company.

What's been happening with Austin Engineering shares?

In afternoon trade today, Austin Engineering shares are down 0.8%, changing hands for 38 cents apiece.

That sees the ASX All Ords share down 29% in 2025, despite the 7% gains posted since last Thursday's close. The stock also trades on a fully franked trailing dividend yield of 3.7%.

Looking ahead, however, Argonaut forecasts a much stronger 12-month run.

Why this ASX All Ords share is a buy

Argonaut has a buy recommendation on Austin Engineering, with a price target of 68 cents a share. That represents a potential upside of 80.0% from current levels.

Commenting on the bullish outlook for the ASX All Ords share, Scholtz said:

The growing orderbook and global presence drives revenue and earnings growth. Our forecasts remain in line with guidance, which highlight 12% revenue growth YoY and 30% Ebit(a) growth YoY.

Working capital unwind in 2HFY25 should also be a positive for cash flow. We believe ANG is trading at compelling multiples, well below historical averages.

Austin Engineering's revenue guidance for FY 2025 is $350 million. Argonaut tips the company will beat that target by delivering $352 million in full-year revenue, representing 12.4% year-on-year growth.

For the first half of the financial year, the ASX All Ords share reported revenue of $170.2 million, up 18.5% year on year.

The engineering company also expects to achieve FY 2025 earnings before interest and tax (EBIT) of $50 million. Argonaut expects earnings growth to be slightly lower, forecasting full-year EBIT of $46.1 million.

What about the pending leadership change?

Management transitions can sometimes prove problematic for ASX companies. But Argonaut doesn't believe Austin Engineering's pending CEO changeover will negatively impact the ASX All Ords share.

"The CEO and management transition period has commenced, with the hand over to Sy Van Dyk ongoing," Scholtz said. "Sy will officially commence as CEO and MD from 1 July 2025."

Scholtz added:

David Singleton was the key architect of the Austin 2.0 strategy, and we continue to expect growth under Sy. We see his appointment as logical and do not anticipate any major shifts in strategy under his leadership as he would have been actively involved at board level in its establishment.

The post How this undervalued ASX All Ords share could rocket 80% in a year appeared first on The Motley Fool Australia.

Four ASX shares that have failed to follow the market higher today are listed below. Here's why they are dropping:

Austin Engineering Ltd (ASX: ANG)

The Austin Engineering share price is down 3.5% to 41.5 cents. This is despite there being no news out of the mining services provider. However, as it is considered a value stock on a low price to earnings ratio, which have fared better than most during recent volatility, it could have been left behind in today's rally.

Magnetic Resources NL (ASX: MAU)

The Magnetic Resources share price is down 4% to $1.34. This may have been driven by profit taking after its shares raced higher on Wednesday. Investors were buying the company's shares after it revealed strong drilling results. Management advised that a new composite comprising diamond drill core from the deeper section of the deposit demonstrated a 97.5% recovery with the optimised flotation circuit. Management believe that this is a spectacular increase over the potential recovery achieved with conventional gravity/leach of 88%.

Meridian Energy Ltd (ASX: MEZ)

The Meridian Energy share price is down 1% to $5.32. This appears to have been driven by investors rotating out of safe haven assets to take advantage of the market rebound. As a utility stock, Meridian Energy is a popular option for investors when the share market goes through a heightened levels of volatility.

Minerals 260 Ltd (ASX: MI6)

The Minerals 260 share price is down 15% to 11 cents. This follows news that the gold developer has successfully completed a $220 million capital raising to underpin the 100% acquisition and advancement of the Bullabulling Gold Project in Western Australia. Management notes that the capital raise was completed following strong support from new international and domestic institutions, in addition to support from existing shareholders. Each Minerals 260 director and all key management participated in the raising, with total contributions of $12.7 million, including $12 million invested by the company's chairman, Tim Goyder, and his nominees. Goyder said: "The successful completion of this capital raising is a significant achievement for the Company. The raising was strongly supported by both global and domestic institutions and our existing shareholders. Minerals 260 is now in a position to complete the acquisition of the Bullabulling Gold Project, re-commence trading on the ASX and begin our aggressive drilling campaign."

The post Why Austin Engineering, Magnetic Resources, Meridian Energy, and Minerals 260 shares are tumbling today appeared first on The Motley Fool Australia.

Three top ASX shares that leading brokers have named as buys this week are listed below. Here's why they are bullish on them:

Austin Engineering Ltd (ASX: ANG)

According to a note out of Bell Potter, its analysts have retained their buy rating and 85 cents price target on this mining services provider's shares. The broker has reviewed its forecasts and valuation and notes that the company is trading within expectations in FY 2025. And with a strong order book and improving margins, being underpinned by cost and efficiency measures undertaken by management, the broker believes that Austin Engineering is well placed for growth. In fact, it is forecasting mid to high single digit revenue growth in both FY 2026 and FY 2027. Despite this, it highlights that its shares are trading at just over 7x forward earnings. Bell Potter believes this cheap price tag could make it an attractive takeover target in a fragmented global industry. The Austin Engineering share price is trading at 43 cents.

Northern Star Resources Ltd (ASX: NST)

Another note out of Bell Potter reveals that its analysts have upgraded this gold miner's shares to a buy rating with a $22.15 price target. The broker believes that Northern Star is an attractive investment option for a number of reasons. This includes its production growth to 2Mozpa in FY 2026, current capital expansion being strongly supported by record gold prices, and the potential acquisition of De Grey Mining Ltd (ASX: DEG). In respect to the latter, it notes that if successful, the acquisition would enhance Northern Star's portfolio, given the addition of long-life and low operating cost development project. The Northern Star share price is fetching $18.35 on Monday.

Qantas Airways Ltd (ASX: QAN)

Analysts at Goldman Sachs have retained their buy rating and $11.80 price target on this airline operator's shares. According to the note, the broker highlights that Qantas's shares have being impacted by renewed volatility in US airline stocks following recent updates. While there are demand concerns over the Pacific, the broker has been speaking to its US airline analyst, who pointed to industry discipline that should allow for a supply response to protect profits. In light of this, the broker remains positive on Qantas, particularly given how different the two markets are. In addition, it reminds investors that it expects Qantas' sustainably improved earnings capacity to provide a solid foundation for the next stage of growth from its fleet renewal program. The Qantas share price is trading at $9.10 today.

The post Leading brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

Four ASX shares that have failed to follow the market higher today are listed below. Here's why they are falling:

Austin Engineering Ltd (ASX: ANG)

The Austin Engineering share price is down 2% to 41.7 cents. Investors have been selling this engineering company's shares after they traded ex-dividend this morning. Last month, the company released its half year results and revealed a fully franked 0.6 cents per share interim dividend. This will be paid to eligible shareholders next month on 9 April. Based on its last close price, this equates to a 1.4% dividend yield for investors.

DroneShield Ltd (ASX: DRO)

The DroneShield share price is down over 6% to $1.02. This appears to have been driven by profit taking from investors after some strong gains in recent weeks. In fact, the counter drone technology company's shares are still up by 65% since this time last month despite today's pullback. Investors appear to have been betting on increased defence spending giving the growing company's sales a major boost in 2025.

Meridian Energy Ltd (ASX: MEZ)

The Meridian Energy share price is down 1.5% to $4.90. This follows the release of the New Zealand based energy company's monthly update. According to the release, national electricity demand in February 2025 was 5.2% lower than the same month last year. This led to Meridian Energy reporting a 1.9% decline in retail sales volumes compared to the same period in February 2024.

Ramelius Resources Ltd (ASX: RMS)

The Ramelius Resources share price is down almost 1.5% to $2.17. Investors have responded relatively negatively to news that the gold miner is merging with Spartan Resources Ltd (ASX: SPR). The two parties have agreed on a deal that will see Ramelius acquire all outstanding Spartan shares for $0.25 in cash and 0.6957 new Ramelius shares per share. Ramelius' managing director, Mark Zeptner, said: "Ramelius is delighted to be combining with Spartan, which will see Ramelius' Mt Magnet Production Hub supercharged by the integration of Spartan's high-grade Dalgaranga Mineral Resource. The combination will see Mt Magnet deliver higher ounces, at higher grade, with higher margins. With the Spartan Effect, Ramelius has a vision for the Combined Group to be a +500koz/pa producer in FY30."

The post Why Austin Engineering, DroneShield, Meridian, and Ramelius shares are falling today appeared first on The Motley Fool Australia.

Austin Engineering shares closed yesterday at 52 cents. In morning trade on Friday, shares in the global, mining-focused engineering company are trading 1.3% higher at 53 cents apiece. That brings the Austin Engineering share price up 71% over 12 months.

For some context, the All Ordinaries Index (ASX: XAO) has gained 12% over this same period.

The engineering company currently has a market cap of $329 million. Shares also trade on a fully franked 2.3% trailing dividend yield.

And according to Bell Potter this small-cap ASX stock is well-placed to keep on charging higher in 2025.

ASX small-cap stock tipped to outperform again in 2025

Bell Potter believes that Austin Engineering is "undervalued" relative to its peers. The ASX small-cap stock trades on a price-to-earnings (P/E) ratio of around 10.5 times.

According to Bell Potter's Marcus Barnard (quoted by The Australian Financial Review), "features such as lower weight, ability to customise to mine requirements and fabrication proximity to client" provide Austin Engineering with its high customer retention rates, a competitive advantage over its peers and "strong" intellectual property.

"There are several companies competing in Australia," Barnard said. He noted that Austin Engineering "could potentially acquire a competitor and achieve synergies".

Bell Potter initiated a buy rating on the ASX small-cap stock with an 86 cent price target. That represents a potential upside of more than 62% from current levels.

What's been happening with Austin Engineering?

Austin Engineering reported its full-year (FY 2024) results on 27 August.

Highlights included a 21% year-on-year increase in revenue to $313.2 million, with revenue improvements reported across all its operating regions.

Underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of $46.6 million was up 48.9% from FY 2023. And underlying net profit after tax (NPAT) of $31.0 million increased by 71.3%.

At the end of the financial year, the ASX small-cap stock had net cash holdings of $9.6 million.

Looking ahead, the company is forecasting FY 2025 revenue of approximately $350 million, some 11% higher than in FY 2024.

Commenting on the performance that helped drive the ASX small-cap stock's success over the year, Austin CEO David Singleton said at the time:

The results reflect a doubling down on our Austin 2.0 operational strategy, which has led to increases in revenue, forward order book, and a much stronger cashflow position at the end of the year.

Our improved financial performance has been driven by a series of initiatives designed to enhance operating efficiencies and lower costs across our business units, which has led to a continued growth in margins.

The post Why Bell Potter says this under-the-radar ASX small-cap stock has 62% upside in 2025 appeared first on The Motley Fool Australia.

If that sounds like you, then you're in luck. In this article, I'm taking a closer look at three of my current favourite ASX growth stocks. These are all companies that had a bumper FY24 and already look set to back it up again in FY25.

Santa, if you're reading this, here are three shares I'd love to find in my stocking on Christmas morning.

SKS Technologies Group (ASX: SKS)

The first company on my list is SKS Technologies. It's a Melbourne-based audiovisual and information technology company.

SKS helps its clients design and install audiovisual solutions, communications networks, and other electrical technologies, like data centres. Notable recent projects include audiovisual and information technology systems for the State Library of Victoria and a unified communications network for the Eminence, a boutique commercial building in Brisbane.

This was a banner year for SKS. For the 12 months ended 30 June 2024, SKS raked in revenues of $136.5 million and generated net profit after tax (NPAT) of $6.62 million, a whopping ten-fold increase versus the $0.63 million profit it reported in FY23. Its shares are also among the biggest gainers on the ASX so far this year, up an eye-watering 553%!

But next year could be even better. Thanks to some recent data centre contract wins, the company is forecasting revenues of $260 million and net profit before tax of $17 million for FY25.

Nuix Ltd (ASX: NXL)

Nuix is an Australian data analytics company headquartered in Sydney. But it isn't your typical data analysis company – Nuix specialises in investigative analytics. Its software combs through massive data sets looking for signs of fraud and other crimes – even child exploitation and online grooming. The company's motto is A Force for Good.

And being good has paid off handsomely for Nuix this year. In its FY24 results (covering the year ended 30 June), Nuix reported revenue growth of almost 21% year-on-year to $220.6 million. The company also controlled its costs well throughout FY24, resulting in NPAT of $5 million – a significant turnaround versus the net loss of $5.6 million it posted in the prior year.

Speaking at the time of the result, Nuix CEO Jonathan Rubinsztein sounded confident in the company's future growth potential. "In the coming financial year we will continue to invest in our technology, further evolving our offering in line with our strategic vision. The technology and financial base established in FY24 provides a solid foundation for growth in FY25 and beyond."

As of the time of writing, Nuix shares are up a whopping 245% year-to-date at $6.66.

Austin Engineering Ltd (ASX: ANG)

The last share on my Christmas list is Austin Engineering. It designs and manufactures digging, hauling, and other specialised equipment for the mining industry.

Although based in Western Australia, Austin is very much a global company, with a significant chunk of its earnings coming from across the Asia Pacific, North America, and South America. In fact, in FY24, North America was its fastest-growing revenue segment.

The company's FY24 results – for the year ended 30 June 2024 – were impressive. Revenues were up 21% year-on-year to $313.2 million, and statutory NPAT skyrocketed 318% to $29.7 million.

Speaking at the time, company CEO David Singleton attributed the company's strong performance to its revamped operational strategy.

"Our improved financial performance has been driven by a series of initiatives designed to enhance operating efficiencies and lower costs across our business units, which has led to a continued growth in margins," Singleton said.

The outlook for FY25 is also bullish, with earnings before interest and tax expected to grow by 30% to around $50 million. Austin has already made a strong start to FY25: in October, it announced that more than 100 new orders for truck trays (valued at around $35 million) were placed with its business in Chile.

The post 3 ASX growth stocks I want in my Christmas stocking this year appeared first on The Motley Fool Australia.

Names like Altium Limited (ASX: ALU), Pro Medicus Ltd (ASX: PME) and REA Group Ltd (ASX: REA) were all very small businesses over a decade ago. Now they're all multi-billion dollar companies. Not every company will turn out as successful as that, but the small end of the market can be an exciting hunting ground.

Difficult environment for ASX small-cap shares

The market has faced a lot of disruption and volatility over the last two or so years because of elevated inflation and higher interest rates.

Fund manager Monash Investors has suggested over the last two years it has taken the market longer than usual to reward stocks that experience a (positive) step change in their outlook. This is because of a lower risk tolerance due to the "upward momentum in inflation and interest rates".

In this situation, Monash Investors said, the ASX large-cap stocks have tended to do well because of their "strong balance sheets, more stable businesses and better share market liquidity".

Inflation has supposedly largely benefited the revenue growth and profits of large companies, which are "more likely than small companies to have the pricing power to pass on inflationary pressures to preserve, or even grow, their margins".

Is this the time to invest?

Monash Investors certainly thinks so, commenting:

However, now that inflation is moderating and the market is anticipating interest rate cuts, we are moving into a much more favourable environment for small caps. Looking forward the large cap stocks generally have modest growth outlooks, while the headwinds to small cap growth are abating. If history is any guide to the future, investors will increasingly look to invest in the smaller end of the market.

Some of the positions that appeared to be in the Monash Investors Sml Companies Trust (Hedge Fund) (ASX: MAAT) portfolio within the last couple of months included Johns Lyng Group Ltd (ASX: JLG), Credit Corp Group Limited (ASX: CCP), Austin Engineering Ltd (ASX: ANG), NRW Holdings Limited (ASX: NWH) and Monadelphous Group Ltd (ASX: MND).

I recently wrote two articles, here and here, about ASX small-cap shares that I thought (and still think) look like excellent longer-term opportunities for investors. I've already bought two of them for my portfolio.

The post Is it time to start buying up ASX small-cap shares? appeared first on The Motley Fool Australia.

That's according to Shaw and Partners portfolio manager James Gerrish, who said in his Market Matters newsletter that Worley Ltd (ASX: WOR) and Austin Engineering Ltd (ASX: ANG) had recently "caught our eye".

'Double-digit sustainable earnings growth'

Gerrish's team is "long and bullish" on engineering company Worley after an investor day this week showed an impressive outlook.

"[Management] articulated its growth strategy, which they believe will drive double-digit sustainable earnings growth over the medium term – something that has eluded them in the past," said Gerrish.

"Worley is ramping up its capabilities towards battery metals, carbon capture, utilisation & storage & low carbon hydrogen."

The market is already taking notice, rocketing the Worley share price up 11.8% over the past week.

The business will be a beneficiary of a worldwide transition.

"An expected four-fold increase in global energy investment and decarbonisation projects provides a great backdrop to generate revenue," said Gerrish.

"However, it will be their ability to expand the currently thin margins that will provide the real kicker to profits."

Worley has admittedly been a disappointment for past investors, with the stock flat over the last five years.

Gerrish said this week's presentation "was a step in the right direction for this cyclical business".

"Trust has also been a missing ingredient, with the market having been disappointed in the past as targets have fallen by the wayside."

Punished too harshly, and ready to bounce back

The Austin Engineering Ltd (ASX: ANG) share price has crashed 27% since 2 May after a profit guidance downgrade.

According to Gerrish, there was a single source for the change in numbers. 

"The downgrade stemmed from their Perth business unit which was expecting to deliver on a contract before year-end before the order was delayed," he said. 

"As a result, much of the fixed costs associated with the contract will be booked this year, while the revenue won't land until 1Q24."

Even with that nose dive, the stock is 18.75% higher than it was a year ago, which is an enviable performance considering the rest of the market.

The reality is that the rest of Austin Engineering is sound.

"The other business units are progressing well with revenue growth coming through and margins improving as a result."

Thus Gerrish's team is "bullish" on Austin Engineering shares.

"We see Austin Engineering as oversold, given the share price decline was harsh relative to the downgrade."

The post 2 obscure ASX shares to go 'long and bullish' on right now appeared first on The Motley Fool Australia.

WAM operates several listed investment companies (LICs). Some, such as WAM Leaders Ltd (ASX: WLE) and WAM Capital Limited (ASX: WAM), focus on larger companies.

There's also one called WAM Microcap Limited (ASX: WMI) which focuses on small-cap ASX shares with a market capitalisation of under $300 million at the time of acquisition.

WAM says WAM Microcap targets "the most exciting undervalued growth opportunities in the Australian microcap market".

These are the two small-cap ASX shares the fund manager outlines in its recent monthly update.

Austin Engineering Ltd (ASX: ANG)

WAM described Austin Engineering as a designer and manufacturer of customised dump truck bodies, buckets, water tanks, tyre handlers and other ancillary products that are used in the mining industry.

The fund manager pointed out that in January, Austin Engineering reported a surge in global truck-tray orders from December 2022 to January 2023, increasing its order book and improving the revenue outlook for the second half of FY23.

WAM noted that the ASX share is now expecting its revenue for the second half of FY23 to be around $250 million as the pipeline is expected to "remain strong for at least the next 18 months."

The investment team like this because of the "robust outlook for growth and a strong balance sheet". WAM thinks that the Austin Engineering share price is still undervalued.

Healthia Ltd (ASX: HLA)

Healthia has more than 300 clinics, according to WAM, describing it as "one of the leading diversified allied healthcare providers across Australia and New Zealand."

The fund manager noted that at the end of January, Healthia provided guidance for the FY23 half-year result, revealing total sales are expected to be between $122.5 million to $127.5 million, which would be growth of 5.4% on the prior corresponding period.

Earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to be between $17.7 million to $18.3 million, which would be a growth of 4% and higher than analyst expectations.

WAM was positive about the fact that the company confirmed its guidance. The fund manager also suggested that the "strong balance sheet" will allow the ASX share to make acquisitions that can add to earnings in the future.

The post 2 exciting ASX shares that are on course for 'robust growth': expert appeared first on The Motley Fool Australia.

WAM operates several listed investment companies (LICs). Some focus on larger companies like WAM Leaders Ltd (ASX: WLE) and WAM Capital Limited (ASX: WAM).

There's also one called WAM Microcap Limited (ASX: WMI) which focuses on small-cap ASX shares with a market capitalisation under $300 million at the time of acquisition.

WAM says WAM Microcap targets "the most exciting undervalued growth opportunities in the Australian microcap market".

These are the two small-cap ASX shares the fund manager outlines in its recent monthly update.

Austin Engineering Ltd (ASX: ANG)

WAM described Austin Engineering as a business that partners with mining companies, contractors and equipment manufacturers to create engineering solutions such as truck bodies, trays and buckets. The company's headquarters are in Perth.

Last month, the business announced it was buying Australian mining equipment manufacturer Mainetec for $19.6 million.

The fund manager believes that the acquisition will allow Austin Engineering to grow its excavator mining offering for international markets such as the United States at a reduced cost.

August also saw the business release its result during reporting season. FY22 net profit after tax (NPAT) beat the previous guidance provided. Total revenue increased to $203.3 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) was in line with the upgraded forecast of $32.5 million.

Concluding the optimistic case for the small-cap ASX share, WAM said:

With an enlarged order book, strong cash position and increasingly efficient operating base, we believe Austin Engineering is well-positioned to continue to deliver on what has been achieved during FY22.

MMA Offshore Ltd (ASX: MRM)

The other pick is a specialist in providing high-specification marine vessels. It also offers a suite of marine and subsea services to the offshore energy sector, government defence, and wider maritime industries.

In August, the company announced its FY22 result which showed a 19.5% rise in revenue to $283.8 million.

It also improved its balance sheet by reducing its net debt during the year.

The fund manager explained its positivity about this small-cap ASX share:

We remain positive on MMA Offshore as the company continues to trade at a discount to its net tangible asset value despite continuing to see positive market momentum returning to the oil, gas and renewables. Further, we believe the company is well-positioned to take advantage of the exponential growth in offshore wind power developments.

The post 2 small cap ASX shares that are 'exciting': fund manager appeared first on The Motley Fool Australia.

WAM operates several listed investment companies (LICs). Some focus on larger companies like WAM Leaders Ltd (ASX: WLE) and WAM Capital Limited (ASX: WAM).

There's also one called WAM Microcap Limited (ASX: WMI) which targets small cap ASX shares with a market capitalisation under $300 million at the time of acquisition.

WAM says WAM Microcap targets the most exciting undervalued growth opportunities in the Australian microcap market.

The WAM Microcap portfolio has delivered gross returns (that's before fees, expenses and taxes) of 22.2% per annum since inception in June 2017, which is superior to the S&P/ASX Small Ordinaries Accumulation Index average return of 9.5%.

These are the two small cap ASX shares that WAM outlined in its most recent monthly update:

Austin Engineering Ltd. (ASX: ANG)

Austin Engineering manufactures and supplies specialised mining products that improve efficiency and assist decarbonisation efforts for clients globally.

At the moment, Austin Engineering is undergoing a 'three-phase' optimisation plan under the guidance of its newly appointed CEO and Managing Director, David Singleton.

In December 2021, the small cap ASX share reported a five-year contract renewal with Rio Tinto Limited (ASX: RIO).

WAM pointed out that in January 2022, the company announced updated guidance relating to the FY22 first-half earnings before interest, tax, depreciation and amortisation (EBITDA) to $11.5 million and indicated an increase in EBITDA margins across the group, signalling that the company's turnaround strategy is delivering.

Wilson Asset Management is positive that the company will see revenue and EBITDA grow across the Asia-Pacific, North America and South America sites with the execution of its three-phase plan.

Generation Development Group Ltd (ASX: GDG)

Generation Development is the owner of Generation Life. It specialises in investment bond products which provides tax-effective investment solutions.

In January, Generation Development released its December quarter update. It showed its highest-ever sales inflow for the quarter and a 44% increase in funds under management, compared to the previous corresponding period.

Generation Life achieved a 52% market share of annual sales inflows in the three months to September 2021, growing from 40% in the prior corresponding period.

WAM remains positive on the small cap ASX share ahead of its upcoming launch of the investment-linked lifetime annuity, subject to regulatory approval, and the next instalment of investment bonds that the fund manager believes will further bolster the company's customer value proposition.

The post 2 compelling small cap ASX shares rated as buys appeared first on The Motley Fool Australia.

The Austin share price finished Monday's trading session at 17.5 cents. It will be interesting to see how the company's shares perform today as investors digest this latest news.

Strong orders received

Austin Engineering, a global mining equipment designer and manufacturer, reported last night it has received new customer orders for more than 100 of its products. These include truck bodies, water tanks and buckets for large mining companies.

The recent order flow is estimated to comprise more than $35 million in revenue for the company. Furthermore, the recent purchases will support Austin's previous earnings guidance of underlying net profit after tax of above $9 million.

The company's order book now accounts for over 70% of expected revenues, which is on par with the same time last year.

Segment performance

Management said that while the Asia-Pacific region continues to outperform expectations, its North and South American segments are lagging behind.

In the United States market, the intensifying COVID-19 situation, and continued federal election noise are negatively impacting Austin's order flow. Consumer confidence appears to have stunted as businesses refrain from capital expenditure.

Looking ahead however, Austin is forecasting an improvement post January 2021 with annual budgets usually reset for the new year. Currently, the company has already quoted several works in the region, with final customer commitments anticipated in the third quarter of FY21.

Similar to its northern neighbour, South America has seen business activity falter amid COVID-19 restrictions. Tender contracts for long-term supply of equipment, repair and maintenance have become delayed in Chile. Austin advised it is well positioned to weather the storm and sees a number of opportunities in the post-pandemic world.

What did management say?

Commenting on the company's performance, Austin managing director Mr Peter Forsyth said:

The Asia-Pacific region is performing exceptionally well at the moment with a strong line of sight to keeping our two large facilities in Perth and Indonesia close to capacity.

Offsetting this strength, the Americas are currently facing challenging operating environments, and this is a product of the broader economies in those regions. I am heartened by the scale of opportunities in the US, Canada and Chile and we remain confident that the tide will begin to turn early in the New Year in these regions.

Austin share price summary

The Austin share price has had a bumpy road over the past 12 months. Its shares reached a high of 23 cents in January, before falling as low as 10.5 cents in March.

Based on the current Austin share price, the company has a market capitalisation of $101.5 million and a price-to-earnings (P/E) ratio of 19.4.

The post Here's why the Austin (ASX:ANG) share price is on watch today appeared first on The Motley Fool Australia.

These are the 3 small caps I would have on my watchlist this week if you're looking for more speculative opportunities.

IPH Ltd (ASX: IPH)

Intellectual property services firm IPH Limited is faring well from increases in demand for its professional services with positive earnings impetus and consistent revenues driven by the long-life IP cycle, with patent granting work usually taking 3-5 years.

This gives IPH the chance to develop strong relationships with its customers, with patent filing figures across both Australia and Asia on the up.

IPH is bolstered by this industry growth driver, which has been reflected in its share price recovery of late, with today's share price of $4.46 up 37% from a March low of $3.25.

But there could still be plenty of room for growth in share price for IPH as the company romances the growing IP protection market in the Asia region.

A possible buy if you are seeking an experienced player with a unique Asian positioning who seems to be leveraging well off growing market demand for its services.

Austin Engineering Ltd. (ASX: ANG)

Small-cap mining attachment product manufacturer, Austin Engineering Ltd is an emerging company, with a mere $130 million market cap at present.

Austin manufacture, repair, overhaul and supply mining attachment products, general steelwork structures and other associated products and services for the industrial and resource-related sectors.

With the stock currently trading at just 22c per share – up from 20c at this time last year – a buy-in would be a pretty speculative pick and investors might like to keep this one on their watchlist for a while to see if the company can deliver good gains in the medium-term, with management looking fairly prudent in its forecasts.

A niche market space, but one with perhaps some good value as demand increases from bigger mining players.

Hub24 Ltd (ASX: HUB)

Shares in financial services company Hub24 Ltd were up in 52-week high territory back in May, with a May 23 high of $15.08.

Hub24 shares have now dropped back to today's price of $12.65, down 4% at the time of writing, despite releasing an impressive FY18 update today.

Today's report signals Hub24 is primed for some impressive gains for FY18, with underlying EBITDA forecasts at $11.8 million – up from $5.1 million in FY17.

Hub24's funds under administration (FUM) stand at $8.3 billion, with a joint development with Fitzpatricks Private Wealth and its Agility Applications initiative expected to produce a further lift.

Hub24 shares aren't cheap right now, but it looks pretty unstoppable, much like peer Bravura Solutions Ltd (ASX: BVS) who is playing to the needs of the emerging fintech space nicely also.

The post 3 small caps I'm watching this week appeared first on The Motley Fool Australia.

The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has gone virtually nowhere over the past month – losing 2.5% of its value and sinking below 5,300 points. Even the S&P/ASX Small Ordinaries (Index: ^AXSO) (ASX: XSO) has dropped 5%.

But despite the performance of the indices, several companies have seen large jumps in their share prices.

Here are the top 10 gainers over the past month on the ASX (of those that were listed a month ago).

Source: S&P Global Markets Intelligence, Google Finance

Several of the moves are quite self-explanatory.

Brainchip announced in late September that it was rolling out its casino table security technology at one of Los Vegas' biggest casinos following a successful trial. The technology is expected to be rolled out to more of the group's casinos after that. As you might expect, there's plenty of potential with Brainchip's technology.

Yancoal has been rumoured to be interested in Rio Tinto Limited's (ASX: RIO) thermal coal assets, and also benefitting from soaring coal prices.

Karoon Gas saw its share price soar on a potential deal to acquire stakes in two oil projects, including a producing field off the coast of Brazil.

Resource Generation has reported that it expects to have its Boikarabelo coal mine constructed and delivering coal to market in around 2 years.

Hexagon Resources announced that it had excellent stage 1 lithium battery results from its McIntosh project in WA. Lithium companies tend to soar on any positive news these days.

Austin Engineering saw a new CEO appointed in early October, and has probably benefitted from the announced takeover of fellow mining engineering firm Bradken Limited (ASX: BKN) at the start of this month.

Hills Ltd (ASX: HIL) announced that it will receive 3 years of licence fees and cash receipts from Woolworths Limited (ASX: WOW) following the closure of its Masters home hardware business.

UGL received a takeover offer from Cimic Group Ltd (ASX: CIM) hence its share price soaring.

Nearmap had an excellent quarterly update just over a week ago which saw the share price fly.

And finally, Steamships Trading Co is highly illiquid, and its share price jumped because 3,000 shares traded in mid-October pushing the share price from $16.90 to $22.50.

The post The top 10 gainers on the ASX in the past month appeared first on The Motley Fool Australia.

Galaxy Resources Limited (ASX: GXY) has seen its share price rocket 1,200% in the past 12 months, Orocobre Limited (ASX: ORE) is up a measly 158% and Pilbara Minerals Ltd (ASX: PLS) an easy 378%.

But their best gains might be behind them, and investors might want to look at another sector that surprisingly is hotting up.

Having being pummelled into the earth, the mining services sector may be showing signs of a recovery, and companies in that sector reporting reasonably positive outlooks. Some fund managers have already cottoned on to the potential, but most have yet to rediscover it.

Yesterday I wrote about NRW Holdings Limited (ASX: NWH), which saw its share price explode 45% higher to 58 cents and closed even higher at 61.5 cents – after reporting a much-improved result. NRW's commentary also said there were 'signs of stability in resources and infrastructure, with increasing tender opportunities'. Even at current prices, the shares look cheap – trading on a P/E of ~7.7x.

GR Engineering Services Ltd (ASX: GNG) saw its share price jump 15% to $1.63 on August 9, after the resources contractor upgraded its earnings forecasts, as we reported here.

Ausdrill Limited's (ASX: ASL) share price is up 380% so far this year, and 28% in the past month, after selling a number of non-core businesses and being awarded a contract for additional works on Perseus Mining Limited's (ASX: PRU) Edikan Gold mine in Ghana. The contract is worth US$120 million in revenues over 42 months.

Austin Engineering Ltd (ASX: ANG) has seen its share price rise 75% in the past month, despite no price-sensitive announcements in that time.

Maca Ltd (ASX: MLD) has seen its share price rise 72% in the past three months, and Paradice Investment Management increased its holding to 7.192% in July.

Heavy engineering group Bradken Limited (ASX: BKN) also recently announced that it expected an improved second half of the 2016 financial year and reconfirm its previous guidance.

The signs appear to be that the worst is behind the sector and the booming gold price, an iron ore price above US$60 a tonne and other commodity prices rising may be adding to the tailwinds.

Foolish takeaway

The average share price gain across 24 of the largest construction and engineering companies on the ASX is 26% in the past month. More gains could be ahead, with many companies trading on low P/Es and even below book value.

The post Forget lithium, this is the next hot sector appeared first on The Motley Fool Australia.

One Australian listed investment company which ticks all these boxes is Thorney Opportunities Ltd (ASX: TOP). It is managed by billionaire Alex Waislitz, who owns 30% of the fund.

TOP has been trading on the ASX since 2014 and invests alongside the private Thorney investment group which has operated for over 20 years with average annual returns reported to be above 20%.

Thorney is an activist investor, meaning they look for companies they can add value to, and take a more hands on role in their investments – similar to the approach of a private equity fund.

The TOP fund is a high-conviction portfolio, holding less than 10 core small-cap investments which currently include:

AMA Group Ltd (ASX: AMA)

AMA operates in the vehicle smash repair market and wholesales vehicle accessories. TOP holds around 5% of AMA's shares, an investment which represents 18% of its portfolio.

AMA has been generating strong revenue growth through acquisitions as the industry consolidates and has been a good performer for TOP, with a return of around 100% in the last 12 months.

Long term, however, it is worth considering how emerging technologies might reduce the need for crash repairs in the future.

Austin Engineering Ltd (ASX: ANG)

Austin designs and manufactures products for the mining industry – clearly not a good sector to be in lately. Shares in Austin are down over 80% in the last 12 months, now only representing around 1% of TOP's portfolio.

TOP's latest investment update acknowledged the investment "was too early given that the headwinds facing companies operating in the resources sector globally remain strong".

Diversa Limited (ASX: DVA)

Diversa is a financial services company which wholesales superannuation, risk, and investment products to specialist and niche advisors and fund managers. TOP holds over 12% of Diversa's issued shares, representing 4% of its portfolio. Shares are up 30% in the last year.

Money3 Corporation Limited (ASX: MNY)

Money3 is a provider of short term personal loans and vehicle finance. With the sector troubled by regulatory concerns, shares are down over 40% in the last year.

Money3 has announced plans to exit the payday lending industry to focus on secured loans. It reported solid results for the first half of the financial year, with revenues up 45% on the prior period.

Money3 represents 19% of TOP's portfolio.

Service Stream Limited (ASX: SSM)

Service Stream provides network services to utility and telecommunication providers and is involved with the rollout of the National Broadband Network. Around 30% of Service Stream is held by TOP and the private Thorney investment fund.

Service Stream represents 19% of TOP's portfolio and has been the best performing investment, up over 250% in the last year.

TPI Enterprises Ltd (ASX: TPE)

TPI is a licenced processor of poppy straw concentrate for use in legal narcotics products such as morphine and codeine. There are few suppliers globally (around 10) and TPI looks to have superior processing technology. Shares are down 33% in the last 12 months and TOP's investment represents 7% of its portfolio.

With growing global demand for its product, TPI will be an interesting company to watch. Currently at $2.70, Wilson HTM Equities Research has a 12-month price target of $4.55.

Time to invest?

TOP is trading at 54 cents, a slight discount to the value of its underlying portfolio (57.8 cents). In addition to the above investments, the fund currently holds around 20% of its assets in cash.

Given Thorney's unique approach and management team, I consider TOP has a lot of potential and could be a good investment to hold as part of a balanced portfolio. For investors who prefer to manage their own portfolio of individual stocks, TOP's investments deserve a place on your watchlist.

The post Partner with a billionaire to buy these 6 small-cap shares appeared first on The Motley Fool Australia.

Shares were only down about 2% in early trade, but have fallen almost 75% in the last year. At a current market capitalisation of $180 million, it could be argued that the bad news was already priced in.

The reason for the difference between the statutory and underlying result is that the company incurred significant restructuring costs and wrote down the value of its assets during the year.

In particular, manufacture restructure costs were $50.5 million, impairment of property plant and equipment was $55.8 million, impairment of intangibles was $167.2 million and impairment of the group's holding in Austin Engineering Ltd. (ASX: ANG) was $36 million. These were partly offset by a gain on sale of property of $26.6 million.

Except for the restructure costs, all the above charges have no cash impact because the cash was spent when the assets were first acquired. The restructure is expected to deliver $25 million of annual cash savings and involved merging four existing divisions into one, shutting expensive facilities and moving products to low cost locations.

The key reason for Bradken's poor performance is the slowdown in the mining industry which means that the company is selling less goods and services at lower prices. Sales of capital goods such as rail wagons have fallen sharply over recent years but sales of consumable products have been more resilient. Consumables make up the bulk of Bradken's revenues and are worth about $800 million per year providing a floor if conditions deteriorate further.

On 26 June 2015, SK Group and Champ Private Equity approached Bradken over a possible merger with Magotteaux, owned by SK Group. The parties agreed to a 60-day exclusivity period to review the deal which expires on 29 August 2015. Nick Greiner, chairman of Bradken, is also the deputy chairman of Champ Private Equity.

Shortly after the merger was proposed, Bradken issued $70 million of redeemable preference shares (RPS) to Sigdo Koppers and CHAMP Equity. The RPS will pay distributions twice a year and the rate will start at 7.5% increasing to 13% over time. The holders have the option to convert to ordinary shares in Bradken at $2 per share.

The directors have decided not to pay a dividend this year compared with total dividends of 26 cents last year. This appears to be a prudent move given Bradken now has net debt of $398 million after including the recently issued RPS.

Whilst it may be in the best long-term interests of the company, the dividend halt is still bad news for investors and personally, I prefer to invest in companies with defensive qualities that can consistently grow dividends year on year. The name of one such company is included in the free report available by clicking on the links below.

The post Bradken Limited reports: What you need to know appeared first on The Motley Fool Australia.

But these three stocks are not faring that well at all, losing more than 10% in mid-afternoon trading.

Here's why…

Austin Engineering Ltd (ASX: ANG) shares are down 14.5% to $1.29, after the mining equipment manufacturer reported a 97% fall in net profit for the 2014 financial year. Austin reported a $0.9 million profit as revenues fell 27%, thanks to reduced capital spending in the mining sector. The company's CEO Michael Buckland remains positive and expects an emerging recovery cycle. We'd beg to disagree. Capital spending has yet to hit the bottom in our view, and more bad news could be headed Austin's way. Another mining equipment manufacturer, Bradken Limited (ASX: BKN) could also be in the firing line, with managing director Brian Hodges recently noting, "It remains unclear when the mining capital cycle will improve."

Unilife Corporation (ASX: UNS) has seen its shares tumble 10.9% to 45 cents. The developer of injectable drug delivery systems responded today to a share price enquiry from the ASX, after shares had climbed from 42.5 cents on August 26 to 51 cents yesterday, August 27. Unlife says it has no explanation for the jump in the share price – and as a result, shares have fallen back. Those price movements show how irrational Mr Market can be at times.

Seymour White Limited (ASX: SWL) is an engineering and construction contractor focused mainly on infrastructure with low exposure to the resources industry. The company saw its shares slammed down more than 6% before recovering to be down just 2.2% in mid-afternoon trading. Yesterday, Seymour White reported a 15% increase in net profit for the 2014 financial year, a final dividend of 7.5 cents per share, fully franked and $200 million worth of work in hand for this financial year. That doesn't appear to be a bad result, although the market may have overreacted to the company's comments that it was likely to experience a weak first half of the 2015 financial year.

The post 3 stocks being crushed by the market today appeared first on The Motley Fool Australia.