Then you may wish to run your slide rule over Integral Diagnostics Ltd (ASX: IDX), the second largest diagnostic imaging provider in Australia.

That's according to the analysts at Macquarie Group Ltd (ASX: MQG) following their latest deep dive into May's Medicare statistics.

In early afternoon trade today, Integral Diagnostics shares are up 4.0%, changing hands for $2.62 apiece.

For some context, the All Ordinaries Index (ASX: XAO) is up 0.2% at this same time.

While the ASX All Ords healthcare stock still remains down 1.3% over a year, not including those dividend payouts, the next 12 months could usher in a significant rebound.

Here's why.

ASX All Ords healthcare stock eyeing strong demand growth

In a research report released by Macquarie on Thursday, the broker noted that Medicare volumes for all services in May increased year on year on a days-adjusted basis, with pathology volumes up more than 14%.

And in potentially good news for this ASX All Ords healthcare stock, Macquarie said that, on a benefits basis, imaging and pathology "grew strongly in May". Pathology was up 15% while imaging was up more than 10% year on year (days adjusted).

Macquarie said its "key pick remains Integral Diagnostics, which we expect to benefit from cost synergies related to the CAJ merger, leading to significant EPS [earnings per share] accretion".

The broker has an outperform rating on Integral Diagnostics shares, with a $3.20 12-month price target. That represents a potential upside of 22.1% from current levels. And it doesn't include those upcoming dividend payouts.

On the risk front, Macquarie added:

Key downside risks to our thesis on IDX primarily relate to weaker-than-expected volume growth and/or operating cost growth ahead of our expectations. Downside from the potential merger would be less than expected cost synergies from the group.

The Capitol Health merger

The ASX All Ords healthcare stock first announced its now completed merger with Capitol Health Limited (ASX: CAJ) in June 2024.

Commenting on that merger at the company's half year results presentation in February this year, Integral Diagnostics CEO Ian Kadish said:

The merger with Capitol Health provides us with increased scale that will improve margins and growth in metropolitan areas.

The merger synergies of at least $10.0 million before tax annually are on track, and going forward the company is ideally positioned to materially benefit from the merger synergies, MRI deregulation and the NLCSP.

The post Why Macquarie forecasts a 22% upside for this ASX All Ords healthcare stock appeared first on The Motley Fool Australia.

Which companies are we talking about?

I'm glad you asked!

Despite slipping today, the PYC Therapeutics Ltd (ASX: PYC) share price is up 18.2% since last Friday's closing bell.

The Capitol Health Ltd (ASX: CAJ) share price has flown even higher, up 20.0% for the week.

And Pantoro Ltd (ASX: PNR) is also amply rewarding shareholders this week, with shares up 18.8% over the five trading days.

Here's why investors have sent the ASX All Ords stocks flying higher.

What's boosting these ASX All Ords stocks?

The last price-sensitive news out of PYC Therapeutics was back on 7 June.

At the time the clinical-stage biotechnology company reported on promising progress with its drug discovery program. That program is directed towards a severe neurodevelopmental disorder, Phelan McDermid Syndrome, which is caused by a loss of one functional copy of the SHANK3 gene.

Investor interest in the ASX All Ords stock was stirred when PYC Therapeutics said it had successfully restored the deficient protein and would now progress towards human trials, expected to start in 2025.

"This is a big step forward in this body of work. This is the data that the clinicians have been asking us to generate before we push into the clinic" PYC's CEO Rohan Hockings said on the day.

Which brings us to the second ASX All Ords stock leading the charge this week, diagnostic imaging provider Capitol Health.

The Capitol Health share price gained 10.2% on Monday and another 9.3% on Tuesday after the company reported its board had accepted a takeover offer from Integral Diagnostics Ltd (ASX: IDX).

With the takeover offer representing a premium of some 33% to last Friday's closing price, investors sent the stock soaring.

Commenting on the proposed acquisition, Capitol Health managing director Justin Walter said:

Today's proposed merger announcement with Integral, represents an exciting opportunity for all our valued radiologists, technicians, and staff to be part of Australia's largest pure-play publicly listed imaging company.

Ian Kadish, Integral CEO added, "The merger would create a scalable platform that would unlock significant value for stakeholders of both Integral and Capitol, including patients, doctors and shareholders."

Which brings us to the third ASX All Ords stock shooting the lights out this week, Pantoro.

Shares in the Western Australian gold producer and explorer are marching higher for the fourth consecutive day today following the company's growth announcement.

With a growth budget of $25 million, the miner said it could double the size of its exploratory drill campaign following initial drilling results. Management flagged 85,000 meters of combined diamond and reverse circulation (RC) drilling over four key targets in FY 2025 at the company's Norseman project.

Commenting on the growth plan that put the ASX All Ords stock in the top gainers list this week, Pantoro managing director, Paul Cmrlec, said:

This is a very exciting period in the development of the Norseman goldfield. For the first time we are in a position to re-develop the Norseman Mainfield with an outstanding balance sheet position, and operations generating strong cashflow.

The post Why these three ASX All Ords stocks are leading the charge higher this week appeared first on The Motley Fool Australia.

Four ASX shares that are rising more than most today are listed below. Here's why they are pushing higher:

Capitol Health Ltd (ASX: CAJ)

The Capitol Health share price is up 10% to 29.7 cents. On Monday, this diagnostic imaging company announced that it had accepted a merger offer from Integral Diagnostics Ltd (ASX: IDX). The latter made an offer with an implied exchange ratio of 0.12849 Integral Diagnostics shares for every Capitol Health share. This equated to 32.6 cents per share at the time, which was a 33% premium to Friday's closing price. Ord Minnett notes that the proposed merger will establish a clear number three player in the Australian diagnostic imaging sector.

Infratil Ltd (ASX: IFT)

The Infratil share price is up almost 4% to $10.43. Investors have responded positively to the infrastructure investment company's capital raising. It has raised NZ$1 billion at a 6.8% discount of NZ$10.15 per new share. Infratil CEO, Jason Boyes, said: "We are very pleased with the strong level of support for the Placement, particularly from our existing shareholders. We are also excited to welcome several high quality institutional investors onto our register. The capital raised will create significant capacity to fund growth investments at our Trans-Tasman data centre platform, CDC, and across the broader Infratil portfolio."

Newmont Corporation (ASX: NEM)

The Newmont Corporation share price is up almost 2.5% to $62.51. This appears to have been driven by a broker note out of UBS this morning. According to the note, the broker has upgraded the gold miner's shares to a buy rating with a $75.00 price target. This implies potential upside of 20% for investors from current levels.

Race Oncology Ltd (ASX: RAC)

The Race Oncology share price is up 18% to $2.08. Investors have been buying this clinical stage biopharmaceutical company's shares after the United States Food and Drug Administration (FDA) extended Rare Paediatric Disease Designation (RPDD) to RC220 bisantrene for the treatment of childhood subtypes of acute myeloid leukemia (AML). This qualifies a sponsor eligible to receive a Priority Review Voucher (PRV) from the FDA at the time of marketing approval or authorisation for drug in the paediatric rare disease area. PRVs are transferable and very valuable. Management notes that two PRVs have been sold in recent times for US$110 million.

The post Why Capitol Health, Infratil, Newmont, and Race Oncology shares are charging higher appeared first on The Motley Fool Australia.

Four ASX shares that are not letting that hold them back are listed below. Here's why they are rising today:

Capitol Health Ltd (ASX: CAJ)

The Capitol Health share price is up 15% to 28.2 cents. This morning, this diagnostic imaging company announced that it had accepted an offer from Integral Diagnostics Ltd (ASX: IDX). The latter tabled a merger offer with an implied exchange ratio of 0.12849 Integral Diagnostics shares for every Capitol Health share. This equated to an offer of 32.6 cents per share, which represented a 33% premium to Friday's closing prices. Management intends to recommend the offer to shareholders, subject to a number of conditions.

Capricorn Metals Ltd (ASX: CMM)

The Capricorn Metals share price is up 4.5% to $4.66. This appears to have been driven by a broker note out of Bell Potter. According to the note, the broker has retained its buy rating on the gold miner's shares with an improved price target of $6.53. Bell Potter made the move in response to news that Capricorn Metals has reduced its gold hedge book by 52,000 ounces. Bell Potter notes that the buyback of approximately half of its remaining hedge book mirrors the successful strategy of 2023, which resulted in a relative cash benefit of ~$13 million.

Credit Clear Ltd (ASX: CCR)

The Credit Clear share price is up 5% to 25.2 cents. This morning, this technology and debt collection provider announced that it was upgrading its guidance again. FY 2024 revenue is now expected to be at the upper end of the $40 million to $42 million guidance range. Whereas FY 2024 underlying EBITDA guidance is up from in excess of $3 million to in excess of $3.7 million. Management notes that this represents a ~23% increase in minimum expectations. It also notes that the guidance upgrade "reflects an improving underlying EBITDA margin, which is a key focus and expectation in the company's continued growth."

Telix Pharmaceuticals Ltd (ASX: TLX)

The Telix Pharmaceuticals share price is up 3.5% to $17.18. This may also have been driven by a broker note out of Bell Potter. At the end of last week, the broker upgraded the radiopharmaceuticals company's shares to a buy rating with a $19.00 price target. It believes that recent share price weakness has created a buying opportunity. The broker said: "The pullback represents an opportunity to buy the stock ahead of an exciting period of news flow over the second half of the CY24 which will include potential FDA approvals for Zircaix and Pixclara."

The post Why Capitol Health, Capricorn Metals, Credit Clear, and Telix shares are storming higher appeared first on The Motley Fool Australia.

In morning trade, the Capitol Health Ltd (ASX: CAJ) share price is up 20% to 29.5 cents.

Why is this ASX All Ords stock rocketing?

Investors have been scrambling to buy the diagnostic imaging modalities provider's shares this morning after it accepted a merger offer from rival Integral Diagnostics Ltd (ASX: IDX).

According to the release, the two parties have entered into a process and exclusivity deed that will see Integral Diagnostics acquire 100% of Capitol Health via a scheme of arrangement.

The offer that was tabled was an implied exchange ratio of 0.12849 Integral Diagnostics shares for every Capitol Health share. Based on Friday's close prices, this equates to an offer of 32.6 cents per share, which represents a 33% premium.

Capitol Health's chair, Andrew Demetriou, commented:

The Indicative Proposal reflects attractive value for Capitol shareholders and the Board has determined that it is in the best interests of shareholders to engage with Integral.

Capitol Health advised that that each director intends to recommend shareholders to vote in favour of the proposed transaction. This is subject to entry into the implementation deed, the absence of a superior proposal, and the independent expert's report.

Not the first offer

The release notes that this indicative proposal was not the first. It follows an unsolicited approach from Integral Diagnostics in late March regarding a potential combination.

However, while that was not accepted, the ASX All Ords stock's board decided that it was in the best interests of shareholders to engage with Integral Diagnostics and provide non-public information on a confidential and non-exclusive basis to conduct a two-way value based due diligence process.

Following the conclusion of the process, Integral Diagnostics submitted the improved indicative proposal, which has now been accepted.

The ASX All Ords stock's managing director, Justin Walter, commented:

Today's proposed merger announcement with Integral, represents an exciting opportunity for all our valued radiologists, technicians, and staff to be part of Australia's largest pure-play publicly listed imaging company.

This opportunity is a result of their dedicated hard work, particularly over the last five years. The merger will create further value for our shareholders by realising significant benefits through scale, enhanced internal capability, and organic growth.

All underpinned by market leading clinical standards and service to our referrers and their patients.

As things stand, Capitol Health shareholders do not need to take any action regarding the proposal. However, the company warned that it cannot be certain that the proposal will result in a binding transaction.

The post This ASX All Ords stock is rocketing 20% after accepting a takeover offer appeared first on The Motley Fool Australia.

That's because in exchange for higher risk, investors have the potential for higher rewards.

For example, the small-cap ASX share in this article has been tipped to provide investors with a return that is more than double the historic market return.

Let's see what analysts at Bell Potter are saying about this small cap.

Which small-cap ASX share is a buy?

According to a note out of Bell Potter, following a change of analyst, the broker has reaffirmed its buy rating and 29 cents price target on Capitol Health Ltd (ASX: CAJ) shares.

Based on its current share price of 24.5 cents, this implies a potential upside of 18% for investors over the next 12 months.

In addition, the broker is expecting the medical imaging company to pay fully franked dividends of 1 cent per share in FY 2024, FY 2025, and FY 2026. This will mean dividend yields of 4.1% each year, boosting the total potential return to over 22%.

To put that into context, a $10,000 would be worth approximately $12,200 in 12 months if Bell Potter's recommendation proves accurate.

It is also more than double the historical return of the share market, which sits at around 10% per annum.

Why is it bullish?

The note reveals that Bell Potter has boosted its revenue estimates for the coming years. This is to reflect the normalising of volumes and pricing growth rates. And while the broker expects inflationary pressures to weigh on margins in the near term, it appears to believe that this is more than priced into the small-cap ASX share's valuation at present. It commented:

On the transfer of coverage, we have reviewed our earnings estimates. Across FY24e – FY26e, we have increased our revenue estimates by c.1.6% / c.4.7% / c.7.9% driven by normalising volume and pricing growth rates across DI Services and Benefits. However, we expect inflationary pressures to dampen the recovery in operating margins and a lower plateau than previous estimates with margins levelling out at c.22% by FY28e.

This leads to a cut in earnings expectations of c.-8% / c-4.8% / c.- 13.4%. We have upgraded our blended DCF / EV / EBITDA valuation by c.3.6% to $0.29 / sh, reflecting adjustments in our valuation parameters. Catalysts for the share price include continued positive momentum in the Medicare data and M&A activity.

The post Buy this cheap small-cap ASX share for a very big return appeared first on The Motley Fool Australia.

Goldman Sachs has been running the rule over the market and has picked out a number of ASX shares as having the potential for positive and negative earnings surprises.

Among its positive surprise candidates are the ASX shares listed below. Let's check them out.

Which ASX shares could positively surprise?

There are total of nine ASX shares that the broker has tipped to positively surprise. They are:

• Capitol Health Ltd (ASX: CAJ)
• Data#3 Limited (ASX: DTL)
• Endeavour Group Ltd (ASX: EDV)
• Judo Capital Holdings Ltd (ASX: JDO)
• Megaport Ltd (ASX: MP1)
• QBE Insurance Group Ltd (ASX: QBE)
• Santos Ltd (ASX: STO)
• Qantas Airways Limited (ASX: QAN)
• Woolworths Group Ltd (ASX: WOW)

Let's narrow things down and focus on a few of these ASX shares to see why Goldman is so positive.

For Qantas, the broker is expecting strong travel demand to underpin a stellar result. It believes this will leave Qantas with debt levels notably lower than its targets. As a result, the broker suspects that an $800 million share buyback could be coming.

In respect to Santos, the broker expects "momentum to build on recent oil prices rises."

For Woolworths, the broker believes the company's margins will be stronger than expected "compared to key competitor COL."

Finally, for Endeavour, the broker feels the market is being too negative on its performance. It said:

We expect Q4 retails sales to grow +1.8% compared to 0.2% in Q3 as pass through of part of Alcohol excise increase takes affect. We expect Dan Murphy's will achieve market share above market expectation as consumers have become more price conscious and favour price leaders such as Dan Murphy's.

Time will tell if Goldman has made the right calls.

The post 9 ASX shares Goldman Sachs tips to positively surprise this earnings season appeared first on The Motley Fool Australia.

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

Capitol Health Ltd (ASX: CAJ)

According to a note out of Goldman Sachs, its analysts have retained their buy rating on this radiology provider's shares with a trimmed price target of 31 cents. This follows the release of a market update which revealed an encouraging top-line recovery. Looking ahead, the broker believes Capitol Health is well-positioned to benefit from the industry's volume recovery/mix tailwind from shift to higher acuity modalities. In light of this, it feels its current valuation is attractive on a growth-adjusted basis and relative to recent transaction multiples. The Capitol Health share price is trading at 25.7 cents today.

Jumbo Interactive Ltd (ASX: JIN)

A note out of Macquarie reveals that its analysts have retained their outperform rating on this lottery ticket seller's shares with an improved price target of $17.45. Macquarie is expecting a solid result from Jumbo next month and an even stronger one in FY 2024. Given this positive outlook, which is being supported by jackpot activity and the shift to online ticket buying, the broker sees scope for its shares to re-rate to higher multiples in the near future. The Jumbo share price is fetching $14.15 on Wednesday.

Megaport Ltd (ASX: MP1)

Analysts at UBS have retained their buy rating on this elastic interconnection services provider's shares with an improved price target of $12.50. UBS notes that Megaport has increased its earnings guidance for FY 2023 and expects to do the same for next year's guidance once its budget is finalised. The broker believes this is a sign that customer churn has been lower than expected since increasing prices. And with the company now cash flow positive, UBS feels the risk of another capital raising has dropped materially. The Megaport share price is trading at $9.40 this afternoon.

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

The reasoning is that health is a type of spending that consumers are reluctant to cut back even in times of economic stress. 

But like many things on the stock market, this thesis hasn't gone according to script.

The cold could rejuvenate the health sector

Last month was especially brutal.

"Investors looking for comfort in healthcare so far this winter have yet to find it, with the sector falling 6.6% in June, its worst month since January 2022," said eToro market analyst Josh Gilbert.

"CSL Limited (ASX: CSL) was a big contributor to the losses, falling by 10% after it announced a profit warning for its upcoming full-year results."

Indeed the biotechnology giant could be a microcosm of the broader industry, with the share price just going sideways ever since COVID-19 hit three years ago.

To this day, the CSL share price has not yet reached its pre-pandemic high in the $330s. It now languishes in the $270s after a shocking June.

Gilbert, however, has some great news for those willing to buy the dip.

"There may be some opportunity for contrarian investors, with the ASX healthcare sector climbing by an average of 9.5% in the previous five years over Australia's winter period, offering portfolios protection from the cold."

So if you're now willing to give healthcare a bash, the analysts at LSN Capital Partners have a suggestion.

The hot small-cap tip in the health industry

Similar to CSL, Capitol Health Ltd (ASX: CAJ) shares tumbled 5% in June.

LSN analysts, in a memo to clients, blamed this on an update from the imaging provider that fell "below expectations" because of "increased labour costs, disrupted GP network and underutilisation of radiologists".

But with the shares now trading more than 15.6% lower than where they started 2023, it's a long-term buy for the team.

"Looking ahead into FY24 and beyond, the company is expected [to] deliver strong growth as a normalised operating environment returns, evidenced in late 4Q, and we don't believe the current valuation reflects these growth prospects."

The other potential windfall is the current corporate tension within the health industry.

"Their assets are highly strategic in an industry which attracts regular corporate activity where larger transactions (>$200 million enterprise value) have been completed at >11x EV/EBITDA, versus Capitol Health currently trading on 7x EBITDA (FY24)."

A nice bonus for Capitol Health investors is that it pays out a 3.7% dividend yield, which is fully franked to boot.

Encouragingly, five out of seven analysts currently surveyed on CMC Markets rate Capitol Health as a buy.

The post The disappointing ASX sector now ready for a MASSIVE winter revival 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:

Bega Cheese Ltd (ASX: BGA)

The Bega Cheese share price is down 7.5% to $3.14. This morning, analysts at Bell Potter downgraded this diversified food company's shares to a hold rating with a reduced price target of $3.50 (from $4). It said: "We downgrade our NPAT forecasts by -50% in FY24e and -40% in FY25e, reflecting a higher FMP and higher lease costs, reflecting both the timing and value of the Vegemite Way sale."

Capitol Health Ltd (ASX: CAJ)

The Capitol Health share price is down 7% to 26 cents. Investors have been selling this diagnostic imaging provider's shares following the release of a trading update. Capitol Health advised that it expects to deliver revenue over $208 million in FY 2023 with operating EBITDA of $39.3 million to $40 million. This appears to be short of expectations.

Centaurus Metals Limited (ASX: CTM)

The Centaurus Metals share price is down 5% to 86.5 cents. This is despite the release of a presentation at the Macquarie Critical Minerals Forum this afternoon. That presentation spoke positively about its plans to develop the world's next significant green nickel project.

Seek Ltd (ASX: SEK)

The Seek share price is down 1.5% to $21.16. This is despite there being no news out of the job listings giant. However, its shares have been on a downward trend this month. So much so, they are now down over 12% since this time last month.

The post Why Bega Cheese, Capitol Health, Centaurus Metals, and Seek shares are falling appeared first on The Motley Fool Australia.

It has been looking at the services side of the sector and has picked out two ASX healthcare shares as buys.

The two companies in question are Capitol Health Ltd (ASX: CAJ) and Integral Diagnostics Ltd (ASX: IDX), which the broker notes provide exposure to structural growth in radiology at attractive valuations.

In respect to valuations, Goldman highlights:

Lowest growth-adjusted valuations across our coverage. We forecast 3Y EBITDA CAGRs (FY23-26E) of 12%/16% for CAJ/IDX respectively (vs ANZ HC coverage +12%). CAJ/IDX trade at growth adjusted multiples of 0.7x/ 0.6x, and screen as the mostly attractively valued across our coverage (1.9x).

Goldman also notes that the industry is highly fragmented, which provides consolidation opportunities. This could see both companies become either acquirers or takeover targets. It adds:

Long-term outperformers are those with leading operating efficiency and capital deployment strategies. A fragmented industry (top 6 players account for c.57% of market) provides opportunities for consolidation (given the scale benefits and potential revenue/cost synergies) as both an acquirer and target.

Strong returns on offer with these ASX healthcare shares

Now let's see what returns Goldman thinks could be on offer with these ASX healthcare shares.

For Capital Health, the broker has initiated coverage with a buy rating and 33 cents price target on its shares. This implies potential upside of 18% from current levels. Goldman is also forecasting a 3.7% dividend yield in FY 2024. Goldman adds:

CAJ is the sixth largest player in a structurally attractive industry and is a low cost community-based provider of radiology (underpins stable and defensive cash flows that are 77% government backed). A healthy balance sheet provides flexibility, and we believe its 7x NTM EBITDA multiple is attractive on a growth-adjusted basis (and relative to recent transaction multiples at c.13-14x).

As for Integral Diagnostics, its analysts have a buy rating and $3.70 price target on its shares. This suggests potential upside of 14% for investors. It also expects a 3.4% dividend yield in FY 2024. The broker adds:

We believe the market is under-appreciating the recovery in margins given our positive outlook on price/mix tailwinds/cost discipline. We forecast EBITDA margins of 20% in FY23E, recovering to 25% by FY26 (+180bps above consensus). IDX trades on 9x NTM EBITDA, vs our forecast 16% 3Y CAGR (most attractive vs coverage 21x/12%).

The post Goldman Sachs has just slapped buy ratings on these ASX healthcare shares appeared first on The Motley Fool Australia.

After all, even when high inflation or rising interest rates eat into spending power, consumers still want to take care of their physical and mental well-being.

According to LSN Capital Partners director Nick Sladen, there are also longer-term demographic forces at play.

"The healthcare industry has always been an attractive sector for investors given its defensive earnings stream that has compounded over the long term," Sladen told Livewire.

"The structural tailwinds from an [ageing] population that is spending an increasing amount on their health needs is a key driver of this earnings growth."

This structural growth, unfortunately, took a pause during the COVID-19 era, as even private health resources were diverted to fight the pandemic.

But now that the world is well and truly in the post-COVID epoch, it could be a case of everything old is new again.

"Looking ahead… we believe that current operating conditions will prove to be cyclical in nature, and we expect to see a return to long-term growth levels in the period ahead," said Sladen.

"Demand is further supported by the pandemic-related backlogs that require more intensive medical services as a result of late diagnosis of chronic illness."

So here are the three ASX shares from the health sector that Sladen's team loves right now:

Three 'compelling investment opportunities'

Sladen is particularly interested in the federal government's anti-inflation initiative to allow annual fee indexation in excess of 3.6% for certain health services.

"This covers most GP service items, and diagnostic [imaging] and will provide a revenue uplift for participants from the 1st of July 2023," he said.

"Given this favourable backdrop, we see some compelling investment opportunities in the healthcare space."

This leads to his first two picks.

"Capitol Health Ltd (ASX: CAJ) and Integral Diagnostics Ltd (ASX: IDX) are diagnostic imaging companies that are well positioned for a return to more normalised trading conditions."

Capitol Health, with branches in suburban Melbourne, commands about a 4% market share in the diagnostic imaging sector, according to Sladen.

"Over the past three years, it has successfully rolled out nine greenfield sites (three per year), integrated two major transactions and executed well on a cost-out program," he said.

"With a return to more normalised operating conditions, the company is on the cusp of delivering earnings growth in excess of 50% over the next two years and yet trades at a discount to historical averages."

The Capitol share price is down 17.7% over the past 12 months, while paying out a 3.6% dividend yield.

The imaging industry is hot for takeover activity too, Sladen noted, citing last year's acquisition of PRP Diagnostic by a consortium of private equity and superannuation funds.

The LSN Capital team's third pick is dental centre operator Pacific Smiles Group Ltd (ASX: PSQ).

According to Sladen, the company is set for "significant earnings growth".

"[The stock] is trading at a valuation that does not reflect the earnings momentum, strategic nature of the assets and growth opportunities ahead," he said.

"The group recently reported strong revenue trends (+17% pcp) from improving attendance levels and average spend per visit, which has had a positive impact on profitability for the 2H23."

Pacific Smiles shares have plunged 22% over the past year.

The post 'Highly sought-after': 3 ASX healthcare shares ready to roar again appeared first on The Motley Fool Australia.

However, veteran ASX investors would know that in reality that's not necessarily true.

Sometimes the market just fails to fully appreciate the merits or the cons of a company and the stock becomes under- or overpriced.

Shrewd investors can take advantage of this "inefficiency", assuming that eventually the rest of the market wakes up and the stock price will "catch up".

'A lot more value' in business than the current valuation

One such candidate is diagnostic imaging provider ​​Capitol Health Ltd (ASX: CAJ).

The share price has fallen almost 17% over the past 12 months, and is actually trading at 21% below what it was in the middle of 2018.

However, Sequoia Wealth senior wealth manager Peter Day noted last month that Capitol Health reported pleasing results.

"First half 2023 revenue of $98.1 million was up 3.4% on the prior corresponding period," said Day.

"In the near term, we forecast a recovery in face-to-face general practitioner consultations as a catalyst for improving imaging volumes."

Shaw and Partners portfolio manager James Gerrish acknowledged that life as a Capitol Health investor hasn't been easy.

"I know Capitol Health has been a frustrating position," he said on a Market Matters Q&A.

"However, we do think there is a lot more value in their business than is being ascribed by the market, something more like 45, 50 cents."

Compared to the Tuesday trading price of 28 cents, a rise to 50 cents would represent a whopping 78.5% upside.

"For that reason, we are remaining patient — pardon the pun!"

The stock pays out a dividend yield of 3.64%, which could soothe the pain while you wait for the share price to climb.

Day also thinks the stock is a prudent buy.

"We believe Capitol Health is well positioned relative to peers given strong specialist recruitment and exposure to recovery locations in Victoria."

The post 79% upside: The 'frustrating' ASX share waiting to take off appeared first on The Motley Fool Australia.

If not, then you might as well just buy passive ETFs and be done with it. The whole point of owning a basket of company-specific stocks is because you want better returns than the average.

So if that's the case, then there is no point in buying ASX shares that everyone has. If you're just buying the 100 biggest stocks then that is the market.

Somewhere within the portfolio, it could be an idea to hold some more obscure stocks that make your investment different to what everyone else is doing.

With that spirit in mind, here are a couple of buy suggestions:

'Well positioned' company in defensive industry

Capitol Health Ltd (ASX: CAJ) is a diagnostic imaging services provider, in a sector that still sees demand during tougher economic times.

Sequoia Wealth senior wealth manager Peter Day was a fan of what he saw during reporting season.

"First half 2023 revenue of $98.1 million was up 3.4% on the prior corresponding period," Day told The Bull.

"In the near term, we forecast a recovery in face-to-face general practitioner consultations as a catalyst for improving imaging volumes."

The more than 17% drop in the share price so far this year is not putting off Day.

"We believe Capitol Health is well positioned relative to peers given strong specialist recruitment and exposure to recovery locations in Victoria."

Capitol Health shares currently pay out a dividend yield of 3.8%.

Higher inflation is actually good for this business

Steadfast Group Ltd (ASX: SDF) is also lucky enough to be in an industry that doesn't suffer too much through tougher parts of the economic cycle.

"Steadfast has the biggest general insurance broker network in Australasia," Seneca Financial Group investment advisor Tony Langford told The Bull.

Accordingly, the stock price has risen 22.6% over the past 12 months.

But Langford, who rates Steadfast as a buy, believes there's more to come.

"Underlying net profit after tax and amortisation of $111.1 million in the first half of fiscal year 2023 was up 18.8% on the prior corresponding period," he said.

"Expect higher inflation to lead to increasing insurance premiums and higher commissions."

Steadfast shares currently pay out a dividend yield of around 2.3%.

The post 2 ASX shares to buy that no one talks about appeared first on The Motley Fool Australia.

The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, 1851 Capital portfolio manager Martin Hickson names three ASX shares investors should buy that drove strong returns for his fund.

Investment style

The Motley Fool: How would you describe your fund to a potential client?

Martin Hickson: I'm Martin Hickson, portfolio manager at 1851 Capital, a reasonably newly established business and fund. 

We launched the fund back in February 2020. Both Chris Stott, who's my partner in the business, worked together previously at Wilson Asset Management for a decade together before setting up this business. 

Our style is we're a long-only small and micro-cap fund manager. We've got restricted capacity. We soft-closed the fund at $400 million back in August last year. From the launch, that was always the plan, to soft-close the fund once we got to that level. It's our belief that as you grow your funds under management past a certain point, it starts to inhibit performance, so that's why we've restricted the capacity of the fund. 

We invest in companies ex-S&P/ASX 100 Index (ASX: XTO) industrial companies, ASX-listed only. There's no pre-IPO or overseas companies, [no] unlisted assets. Our style is we're looking for growth companies with attractive valuations and a catalyst that can re-rate the share price.

MF: This year's been a tough time for smaller caps, hasn't it? How do you see things at the moment, and where do you see them going?

MH: Yeah, it has been a volatile time. The area of the market that we invest in, the small industrials, since we launched the fund just under three years ago, our area of the market's actually down by 15% over the first 33 months of launching the fund. [But] the fund's done okay. As of the end of October… from memory, it's up around 35%. 

It's been a tough 12 months, and it's been a very volatile almost three years for markets. Since we've launched the fund, we've been through two bear markets now, and a potential recession coming. We've been through the COVID pandemic, obviously a war, so there's a lot that's occurred in the first three years of the fund.

Hottest ASX shares

MF: What are the three best stock buys right now?

MH: The three stocks that I'll talk about, they're all companies that we own within the portfolio and at the smaller end of the overall market.

The first one is a company called IPD Group Ltd (ASX: IPG). A reasonably new entrant to the ASX, so listed back in December last year. It's been a strong performer. The share price has more than doubled over the last 12 months. 

What they do is they're an electrical equipment distributor and services company. If you go into a big apartment building or an office, you look at the electricity distribution room, and you see all the equipment in there, a lot of the equipment has likely come from a company like IPD Group. So power distribution, power monitoring, industrial control products.

It's been a very successful position for us. Despite the strong performance in the share price, it still trades at an attractive valuation — so they're 15 times price-to-earnings ratio, so quite cheap, below what the overall market's trading at. Their earnings are growing at over 20%. So very, very strong growth, but still trading at that cheap price. 

They extended their agreement with ABB Ltd. ABB is one of the largest electrical equipment manufacturers globally, with 30% market share. [IPD is] distributing all of those products in Australia on behalf of ABB.

The other thing we like about it is that they've got a growing EV business. They sell the equipment to install EV chargers in both residential homes but also in EV charging stations. They're one of the only ways to get exposure to that growing electronic vehicle thematic in the industrial space. There's obviously lithium, but this is one of the only ways to play it on the ASX in the industrial space. 

That's one that's performed strongly for us, but we still think there is further upside to that company.

Thirdly, they've got a strong balance sheet. They've got $25 million of net cash on the balance sheet, and that provides flexibility to potentially deploy that cash into acquisition opportunities.

MF: Fantastic performance, isn't it? It's not an energy company or a mining company, but it's more than doubled this year when everything else has flopped.

MH: Yeah, that's right. It's doubled in a period where the overall market's down just over 20%, so a lot of good tailwinds for that business.

MF: Great, your next stock to buy right now?

MH: Next one's a company called Atturra Ltd (ASX: ATA). They're an IT services company.

Similar to IPG, really. There's a lot of similar characteristics. They also listed around 12 months ago. We participated in the [initial public offering] IPO. It trades at a price-to-earnings ratio of 15 times, earnings rate 20% as well. And again, [a] very strong balance sheet — $30 million net cash on the balance sheet, similar to IPG. It gives them flexibility to potentially deploy that cash into accretive acquisitions. 

They've also given earnings guidance to the market back in August of $15 to $16 million of EBIT. We think that looks conservative. We think their earnings are growing at a very fast rate, but again, it's still trading at quite a reasonable multiple.

MF: You would think listing at the end of last year would be absolutely terrible timing, but both those companies have done really well.

MH: Yeah. If you look at the overall list of companies that IPOed in the second half of last calendar year, in that December half, there aren't many of them that have performed strongly. A lot of them are well underwater, but both IPD Group and Atturra have bucked the trend. They're up significantly since their IPO. 

Even in any market, in the micro-cap and small-cap space, there are always opportunities to find these gems that grow irrespective of what's happening in the overall economy.

MF: And your third pick, I think, is a bit more of a mature player?

MH: Yeah, the third is Capitol Health Ltd (ASX: CAJ). They're a radiology company. There's a couple of reasons why I like it. 

Firstly, their earnings are recovering post the COVID disruptions of the last couple of years. Their business is primarily in Victoria, so they were significantly impacted by the lockdowns there over the last few years, so they've seen a tailwind for their earnings this financial year. 

Justin Walter, the CEO there, who's been CEO for three years, has changed the business a lot since he joined. He's taken significant costs out of the business, he's improved the culture of the organisation, and also, in August this year, they acquired one of their competitors in Victoria, a business called Future Medical Imaging Group. That was an accretive acquisition for them, and it really reinforced that dominant position in the Victorian radiology market.

The other attraction is that it trades on a low EBITDA multiple of 7.5 times. We've seen, over the last couple of years, there have been private transactions where companies have been taken over at EBITDA multiples of 12 to 13 times. So based on those numbers, Capitol Health is trading a lot cheaper than a lot of those private companies were taken over at. That gives it very strong valuation support.

MF: The health industry is also defensive, isn't it, when an economic downturn is coming?

MH: Yeah, that's right, so better earnings streams … Like you say, quite defensive, given they operate in the healthcare space.

The post 3 small-cap ASX shares that drove fund up 35% while the market plunged appeared first on The Motley Fool Australia.

When an ASX All Ords share turns ex-dividend, investors buying these shares won't be eligible to receive the company's upcoming dividend payment.

Instead, the dividend payment will go to the seller on the other side of the transaction.

What's more, a company's shares typically fall on the day they turn ex-dividend, reflecting the absence of the dividend.

Ahead of the ASX closure on Thursday, here are three ASX All Ords shares turning ex-dividend tomorrow.

NRW Holdings Limited (ASX: NWH)

To kick things off, NRW shares will be trading tomorrow without a fully franked final dividend of 7 cents. 

Investors who own NRW shares by the time the market closes today can expect to see this payment land on 12 October.

According to management, FY22 saw the best results NRW has reported.

Revenue grew by 5% to $2.4 billion while earnings before interest, tax, and amortisation (EBITA) came in ahead of guidance at $157 million, up 30% from the prior year.

On the back of these results, NRW hiked its final dividend by 40%, with annual dividends growing by a similar amount to 12.5 cents.

Based on current prices, this puts NRW shares on a trailing dividend yield of 4.9%. Adding in franking credits boosts this yield to 7.0%.

In other news, NRW made headlines recently after it launched a $375 million play to acquire MACA Ltd (ASX: MLD). However, this wasn't enough to sway MACA's board from an offer already on the table from mining services giant Thiess.

Macmahon Holdings Limited (ASX: MAH)

Next up, fellow mining services company Macmahon will also see its shares turn ex-dividend tomorrow.

Macmahon is set to pay out an unfranked final dividend of 0.35 cents to eligible shareholders on 7 October.

While this dividend may appear small in absolute terms, the Macmahon share price is currently sitting at 15.5 cents.

So, after throwing in the company's interim dividend of 0.3 cents earlier in the year, Macmahon shares are sporting a trailing dividend yield of 4.2%.

FY22 was a year of growth for Macmahon, lifting revenue by 26% to $1.7 billion. This was primarily driven by the contribution from new project start-ups, inflation, and increased contract activity.

This revenue growth partially flowed through to earnings, with underlying net profit after tax (NPAT) increasing by 5% to $63 million.

The ASX All Ords share held its total dividends steady at 0.65 cents, in line with the prior year.

Capitol Health Ltd (ASX: CAJ)

Rounding out this trio of ASX All Ords shares going ex-dividend on Wednesday is diagnostic imaging business Capital Health.

As of tomorrow, Capitol Health shares will no longer be trading with a fully franked final dividend of 0.5 cents, which will be paid on 21 October.

Capitol Health delivered revenue of $184 million in FY22, up 3% from the prior year. This was driven by organic growth, the acquisition of Womens' Imaging, and three greenfield clinic openings. 

These growth drivers were partially offset by COVID lockdowns, suspensions in elective surgery, and impacts from the omicron variant.

On the bottom line, statutory NPAT decreased 9% to $11 million.

Nonetheless, Capitol Health held its final and total dividends steady. The ASX All Ords share has declared fully franked interim and final dividends of 0.5 cents since 2019.

As a result, Capitol Health shares are currently flashing a trailing dividend yield of 3.0%. Including franking credits, this yield dials up to 4.3%.

The post 3 ASX All Ords shares going ex-dividend on Wednesday appeared first on The Motley Fool Australia.

WAM runs a number of different listed investment companies (LICs) including WAM Capital Limited (ASX: WAM), WAM Active Limited (ASX: WAA), and WAM Research Limited (ASX: WAX).

The fund manager likes to look for compelling, undervalued growth opportunities on the ASX share market. The below companies are two investment ideas that WAM recently highlighted.

IPH Ltd (ASX: IPH)

WAM described IPH as Asia Pacific's leading intellectual property (IP) services group with a network of member firms and clients in more than 25 countries.

Last month, IPH announced that it was buying Canadian IP agency Smart & Biggar for a total of $387 million.

The fund manager noted the acquisition will extend IPH's international secondary markets network beyond the Asia Pacific region for the first time and lift IPH "towards being a global leading IP services group".

IPH expects that the transaction will result in adding to underlying earnings per share (EPS) of approximately 10% in the first year of ownership and deliver access to more growth opportunities.

August was also reporting season. Last month, the company announced its full-year result, revealing a 14% year-over-year increase of underlying net profit after tax (NPAT) to $86.7 million as well as an 11% rise in underlying earnings before interest, tax, depreciation and amortisation (EBITDA).

Here is what WAM had to say about the company:

We remain positive on IPH and believe the business has a strong runway for organic and acquisition-led growth over the medium term.

Capitol Health Ltd (ASX: CAJ)

Capitol Health is described by the fund manager as a diagnostic imaging provider to the Australian healthcare market.

Last month, the ASX share announced the full-year result for its 2022 financial year which was better than the market was expecting. It also included the acquisition of Future Medical Imaging Group, a diagnostic imaging services provider, for a total cost of $56.1 million.

WAM pointed out the acquisition is expected to add to EPS in the high single digits. The fund manager said:

With a strong balance sheet and continued investment in well-defined growth opportunities, we believe the outlook for Capitol Health remains strong as diagnostic imaging providers recover from the coronavirus pandemic.

The post 2 little-known ASX shares that this fund manager says have 'strong' outlooks appeared first on The Motley Fool Australia.

One such sector is health, where the logic is that Australians will still need to treat their illnesses and injuries even if the economy is depressed.

Medical imaging provider Capitol Health Ltd (ASX: CAJ) is one company that's seen its share price drop significantly, to the tune of 32% so far in 2022.

Quality business that's too cheap

For Shaw and Partners portfolio manager James Gerrish, this dip has opened up a nice buying opportunity.

"We continue to like Capitol Health on valuation grounds," he said in a Market Matters Q&A.

"We think it's simply too cheap for the quality of their business."

While it is not widely covered by fund managers, on CMC Markets, three of the four surveyed analysts rate Capitol Health shares as a buy.

Gerrish likes the revenue profile of the company, considering the economic downturn we're heading into.

"It's… important to note that in a recessionary environment, 80%+ of Capitol Health's spending is Medicare based, providing downside protection alongside a balance sheet that has very minimal debt."

The ASX share also pays out a decent income, currently handing out a 3.7% dividend yield.

Healthcare is the hot industry right now

Switzer Financial Group director Paul Rickard noted last week that the health sector was enjoying a nice comeback in July after plunging this year.

The S&P/ASX 200 Health Care (ASX: XHJ) index is indeed up a whopping 9% this month, after dropping 12 % from January to June.

Rickard attributed this to recent weakness in the dominant banking and mining sectors, as well as a weaker Australian dollar.

"Banks, there are question marks about whether high interest rates will really impact profits and bad debts in the long term," he said on Switzer TV Investing.

"In the resources sector, people are still worried about commodity prices and the 'R' word — recession — and what that might do."

Financial results season is another consideration, Rickard added.

"We're coming into reporting season, and healthcare companies have traditionally done really well in reporting season."

The post 'Simply too cheap' ASX share that could plough ahead in a recession: expert appeared first on The Motley Fool Australia.

This article is about two smaller businesses that could be opportunities for investors to consider.

Here are two buy-rated stocks:

Elmo Software Ltd (ASX: ELO)

Elmo Software is an ASX tech share that provides HR and payroll software to small and medium businesses in Australia and the UK.

The Elmo Software share price has fallen 32% since the start of the 2022 calendar year.

Broker Morgan Stanley currently rates the ASX share as a buy with a price target of $7.80. That implies a possible rise of around 150% over the next year.

The company's FY22 first half result included growth in a number of areas for the business. Annualised recurring revenue (ARR) rose by 35% to $98.3 million, while reported revenue rose 41% to $43.1 million.

In that result, Elmo was able to report a positive earnings before interest, tax, depreciation and amortisation (EBITDA) after it rose by $0.9 million to $0.3 million.

Due to "strong trading conditions" and increased adoption of cloud-software solutions by businesses to manage remote and hybrid workforces, Elmo upgraded its FY22 ARR guidance to $107 million to $113 million.

Elmo said that "operating leverage continues to improve with a reduction in key spend ratios across the business".

Capitol Health Ltd (ASX: CAJ)

Capitol Health describes itself as a leading provider of diagnostic imaging and related services to the Australian healthcare market. It has clinics across Victoria, Tasmania, South Australia, and Western Australia.

The Capitol Health share price has fallen by 17% since the start of 2022.

The ASX share is currently rated as a buy by Ord Minnett with a price target of $0.44. That implies a possible upside of more than 30%.

Ord Minnett thinks the business has demonstrated the defensive nature of its earnings and that the end of COVID-19 will help the business.

In the first six months of FY22, Capitol Health announced that revenue rose by 11.2% to $94.9 million. Operating EBITDA grew by 6.9% to $22.2 million. Statutory net profit after tax (NPAT) jumped 30.2% to $8.1 million.

The company is looking to expand its network through both bolt-on acquisitions and the opening of greenfield/brownfield locations. It's also developing various synergies from the acquisition and opening of clinics. The ASX share is working on becoming more efficient by standardising its processes across its clinics.

According to Ord Minnett's projections, the Capitol Health share price is valued at 24 times FY22's estimated earnings with a grossed-up dividend yield of 4.3%.

The post Brokers rate these 2 top ASX shares as buys in May 2022 appeared first on The Motley Fool Australia.

ASX small caps have followed suit and are only lagging by a small amount, also up by almost 6% during the last month of trade.

The S&P/ASX Small Ordinaries Index (ASX: XSO) spiked 2% in the past week, not enough to erase a 6% loss that investors have penalised the segment with so far in 2022.

Interestingly, with all the talk of inflation, investors can look to the smaller end of town in search of some juicy dividends at more than respectable yields. Take a look.

Small cap dividends? Please tell me more

ASX small caps have often lent investors an uncorrelated return to add into their portfolios. So hearing that some of these names also pay dividends is music to our ears.

One interesting name is Beacon Lighting Ltd (ASX: BLX). Two experts are also constructive on the stock and rate it as a buy right now. Beacon paid a fully franked 4.3 cents per share dividend in March.

Both Martin Hickson of 1851 Capital and portfolio manager at Hayborough Investment Partners, Ben Rundle, agree that Beacon is worth its weight at present.

"We think Beacon's a buy. We're going through a renovation boom at the moment that's supportive of their earnings," Hickson said during an episode of Buy Hold Sell on Livewire. Rundle agreed.

"We also think the market is underestimating the growth in their trade and international businesses. So, Beacon's a buy," he added.

Hickson also advocates to buy Capitol Health Ltd (ASX: CAJ), noting the new CEO's turnaround and a respectable valuation.

"They've [Capitol] got $100 million in firepower to deploy into acquisitions, trades on an EV/EBITDA multiple of 8x, versus private transactions being done at 12x. So, we think it's a buy," he remarked.

Meanwhile, Rundle is supportive of Money3 Corporation Ltd (ASX: MNY). He likes the company's recent earnings strength, plus its growth vision appears more visible from recent funding.

"I think it's a buy," he noted, agreeing with Hickson, who said the same thing about Money3.

"As he [Hickson] pointed out, they upgraded earnings the other day and they probably will upgrade again. They've just got more funding as well, which can support their growth plans. So, I think it's a buy," Rundle concluded.

Money3 has paid a 13 cents per share cumulative dividend since 8 April 2021.

The returns for each of these names is charted below. In that time, Beacon lighting has surged over 29%, beating the other recommendations.

The post 3 small-cap ASX shares that pay big dividends? Please tell me more appeared first on The Motley Fool Australia.