Below we look at three ASX companies currently still on the smaller end of the market cap spectrum that could deliver shareholders some juicy returns in FY 2025 and beyond.

These stocks were each named as top picks by leading fund managers at the Pinnacle Investment Management Group Ltd (ASX: PNI) 2024 Investment Summit.

Riding the energy transition

The first ASX small-cap stock tipped to potentially outperform in FY 2025 is Gentrack Group Ltd (ASX: GTK).

Gentrack provides customer billing software to energy utility companies.

And Eleanor Swanson, portfolio manager at Firetrail Investments, said this is one stock investors should keep a close eye on.

Firetrail recently added Gentrack to its own portfolio.

"The reason we like Gentrack is it's going to benefit from the energy transition, not only in Australia but globally," Swanson said.

She added:

The distribution model for energy utility companies is becoming a lot more complicated now that we've got wind and solar, battery storage, and customers pushing energy back the grid.

A technology provider like Gentrack, with its modern, flexible architecture, is going to take enormous market share from SAP and Oracle and help those energy utility companies transition their businesses and service their customers better.

Swanson believes that this ASX small-cap stock could rival the biggest players in time.

"We think Gentrack's a stock that everybody should have a look at and hopefully it'll become a household name like a WiseTech Global Ltd (ASX: WTC) or an Altium," she said.

The Gentrack share price is up 132% in a year.

ASX small-cap stock growing annual revenues

The second ASX small-cap stock tipped for strong growth is RPM Global Holdings Ltd (ASX: RUL).

David Wanis, co-founder of Longwave Capital Partners, said RPM Global is one of Longwave's top investment ideas in the current market.

"RPM Global is a mining service company on 50 times earnings, and that combination is a reason why companies like this in small caps get overlooked," he said.

So what caught Longwave's interest?

According to Wanis:

RPM Global has been around for 20 years developing software for tier 1 mining companies like BHP Group Ltd (ASX: BHP), Rio Tinto Ltd (ASX: RIO) and Newmont Corp (ASX: NEM) to help them manage all parts of their line operations.

RPM Global have spent about $200 million on R&D over the past 20 years building the software out. And they're now starting to see real traction, and that's the annual recurring revenue growth from the software that they're giving to clients.

It's not just the growth up until today that we're interested in or excited about with this stock, but it's the growth for the next five years and well beyond that.

As for what underpins this strong growth outlook, Wanis said this ASX small-cap stock is still "really early in the penetration story".

Wanis said:

Only 25% of Tier 1 miners are current customers. So RPM Global have a lot of new customer opportunities and they have multiple modules to sell. The strategy for RPM Global will be 'land and expand'.

The RPM Global share price is up 58% in a year.

Which brings us to…

Exciting growth potential for this ASX small-cap stock

The third ASX small-cap stock tipped for strong potential outperformance at the 2024 Pinnacle Investment Summit is NZME Ltd (ASX: NZM), which operates three business segments.

Spheria Asset Management co-founder Matthew Booker is particularly bullish on the potential for the company's property portal.

"We are not there for the paper business, we're not there for the audio business, we're actually there for the property portal, and we think there's exciting growth for that," he said.

"NZME to New Zealand, is basically what Fairfax was to Australia 10 years ago, and Fairfax 10 years ago was seen as a dead business," he added.

According to Booker:

What came out of Fairfax 10 years ago was Domain. And within NZME is a division called One Roof, and like Domain in Australia, it's the second biggest property portal in New Zealand.

The New Zealand property market has been slow to shift to digital, and if you apply the same margin that Domain does here with 20%, we think One Roof is going to play out in a big way for NZME.

Currently NZME is trading around NZ$190 million. So, we think this is a great valuation story, we think there's a good growth story, and we think that that the One Roof business has got some huge growth ahead of it.

The NZME share price is down 1% in a year.

The post 3 ASX small-cap stocks tipped for outsized growth in FY 2025 appeared first on The Motley Fool Australia.

At the event, a number of CIOs and portfolio managers from within Pinnacle's network of affiliated asset managers provided insights. This includes portfolio managers from specialist small cap fund managers Spheria Asset Management and Longwave Capital.

Two small cap ASX shares that these portfolio managers rate highly right now are listed below. Here's what they are saying about them:

Imdex Limited (ASX: IMD)

David Wanis from Longwave Capital Partners picked out mining technology company Imdex at the event. Its technology allows drilling contractors and resource companies to safely find, mine, and define orebodies with precision and at speed.

The portfolio manager highlights that Imdex is a technology business generating earnings and cash flow as well as spending big on research and development activities. Yet despite this, the company is valued materially less than some tech companies that are built largely on hope. Brainchip Holdings Ltd (ASX: BRN) with its $1.7 billion market capitalisation springs to my mind here.

Wanis commented:

Imdex is a mining technology business. It's a real business – real revenues, real earnings, real cash flow – but it's also a business that's invested almost $100 million in R&D over the past five years in new products to grow their business into new markets. And if we think about how the market values a company like Imdex versus some of these 'tech hope stocks' in the market today, there's a massive disconnect. There's a big disconnect between the doers – the companies who are actually innovating and executing – versus those that are promising and are built off hype.

We think what we'll see in the very short term is an improvement in their mining technology as a percentage of their revenue that will lead to an expansion in their EBITDA margins. But strategically longer term it'll also potentially expand their market size by four times – doubling from existing into new exploration, and then from exploration into production."

NZME Ltd (ASX: NZM)

Spheria's Asset Management portfolio manager, Matthew Booker, picked out NZME (New Zealand Media and Entertainment) at the event. He highlights that NZME is going from old world to new with the growth in the digital side of their business.

Booker points out that the New Zealand market is behind Australia by a few years in respect to real estate listings. This bodes well for NZME's OneRoof platform.

He explained:

The big kicker, we believe, is the digital aspect to the business – so they've got a business called OneRoof and it's similar to Domain here. It's the number two player in the market. It's going from print, it's going to digital, it's probably 5 – 10 years behind the Aussie market. So, there is going to be a lot of money made in that space.

With OneRoof NZME have the number two platform, they've got the number two audience, they've got the number two inventory, they are going to be that number two player in that market and that's a valuable position going forward. "NZME is a structural growth story. We think there's lots of money to be made here. The balance sheet is gone from $100 million of debt to net cash. The risk is very low, there's a rerate opportunity with this business.

The post Portfolio managers name 2 small cap ASX shares to watch appeared first on The Motley Fool Australia.

These companies have managed to defy waning consumer sentiment triggered by the rising cost of living.

The higher-for-longer inflation, interest rate hikes, and falling asset prices are major risk factors for the sector.

Small-cap ASX retail shares outperforming the big end of town

This explains why some of our biggest ASX retail shares have slumped by 20% or more in the past year. This includes the JB Hi-Fi Limited (ASX: JBH) share price and Wesfarmers Ltd (ASX: WES) share price.

However, there have been a number of retail gems at the smaller end of the market that have delivered double-digit returns in the past financial year.

I am not talking about illiquid micro-caps, where a single trade can drive their share prices into the stratosphere. These are ASX consumer discretionary shares with a market cap of at least $100 million.

The top-performing ASX retail shares in FY22

What's more, you probably haven't heard of some of these names. And in another blow to our Aussie ego, a few of these are New Zealand businesses listed on the ASX!

The best performing ASX retail share in FY22 is Mydeal.Com Au Ltd (ASX: MYD). The online retailer surged just over 60% over the financial year.

What really helped was Woolworths Group Ltd (ASX: WOW) buying an 80% interest in the company as opposed to operational growth. But a win's a win!

The second top performer for the year is NZME Ltd (ASX: NZM). The Kiwi media and entertainment group managed to deliver a 41% increase in share value.

This will be enough to embarrass its Aussie peers like Nine Entertainment Co Holdings Ltd (ASX: NEC) and Seven West Media Ltd (ASX: SWM). Nine fell 29% while Seven is about flat over the period.

More Kiwis beating the Aussies

But NZME isn't the only New Zealand media share to be shooting the lights out. In third spot is the SKY Network Television Limited (ASX: SKT) share price with its gain of around 32% for the year.

Adding insult to Aussie injury is New Zealand-founded jeweller Michael Hill International Ltd (ASX: MHJ). The ASX retail share jumped around 27% in value thanks to strong sales across all of the company's markets and its ability to hold margins.

Meanwhile, the Supply Network Limited (ASX: SNL) share price isn't far behind with a gain of around 24%. This is no doubt helped by the Australian and New Zealand auto parts retailer issuing a pleasing FY22 sales and profit guidance.

The post Top 5 outperforming ASX retail shares in FY22 that you may not have heard of appeared first on The Motley Fool Australia.

At the time of writing, the NZME share price is rocketing 15.5% to $1.565 in early morning trade. This means that the company's shares are up more than 25% in the past month alone.

What did NZME announce?

In its statement, NZME advised that it has signed a letter of intent with Google for the supply of news content to News Showcase. The latter is Google's online news platform that allows participating publishers to share their expertise and thoughts.

Both parties will now enter a 90-day negotiation period to finalise the key terms set out in the proposal.

It is expected that the final contractual agreement will be based on a minimum term of five years.

NZME also noted that it is currently in commercial discussions with Meta, the parent company which owns Facebook and Instagram. The nature of the potential agreement is in regards to receiving support for a number of digital transformation projects over the next year.

If the Google deal materialises along with other anticipated commercial arrangements, NZME is forecasting an improved EBITDA for FY22. This would be in the range of $67 million to $72 million, given the current trading performance in hand.

NZME chief executive, Michael Boggs touched on the announcement, saying:

We are pleased to have reached a point with Google where we can partner with them to further enable digital growth across NZME's business, boosting digital revenue for NZME and increasing our audience reach.

We look forward to reaching final agreement with Google that will see NZME's news content supplied and shared through Google programmes, continuing to support the future of high quality, trusted journalism in Aotearoa.

About the NZME share price

After gaining 15% today, the NZME share price has more than doubled in value over the past 12 months.

Although, when looking at year to date, the company's shares are up around 16%.

NZME has a price-to-earnings (P/E) ratio of 9.45 and commands a market capitalisation of roughly $308.21 million.

The post Little-known ASX share pops 15% following Google deal appeared first on The Motley Fool Australia.

That's a mouthful, but the reality nonetheless. Markets across the board are seeing red and correlations are all turning positive, meaning most asset classes are heading one way – south.

But that's broadly speaking. At the extremes, there are plenty of shares that are outstripping their peers both here in Australian exchanges and on global terms.

Strong analysis and due diligence will generally trump those styles that involve simply jumping aboard the gravy train and betting on hope. Many experts argue that, over the past two years, there's been a dislocation in fundamentals and the 'hype' of certain themes or trends.

That's why, even as the S&P/ASX 200 Index (ASX: XJO) has slipped more than 4% this year to date, if we look a little deeper, we see there are still various pockets of green among ASX shares.

Don't overlook microcaps, this fundie says

Whilst Australian large caps have suffered losses this year, Marcus Burns, portfolio manager at Spheria Asset Management, is bullish on the smaller end of town.

Micro caps – those ASX shares with a market capitalisation of below $300 million and that sit outside of the S&P/ASX 300 Index (ASX: XKO) – tend to be more volatile and carry more risks than your average passive index fund.

In fact, many large Australian fund managers are mandated to invest in ASX 200 companies for that very reason, in order to preserve client capital during times of volatility.

But not all fundies are bound by the same mandate, however, and active managers such as Spheria are able to explore the more underexploited areas of the market, away from the crowded large-cap space.

Speaking to Livewire recently, Burns noted that small-cap and micro-cap stocks are often "simpler than large companies", and that one can often dig deeper and "get granular" when reading accounts.

As with all prudent investing, however, it's essential to keep a cool head, focus on the fundamentals, and try to avoid the short-term hysteria. Again, the market seems to have been rewarding unsavvy behaviour of late, Burns said.

In micro caps people seem to have lost their way. They're chasing stories and forgetting about valuation being important. We think valuation is important. Cash flow is central to valuation, and also works as a screening tool for us. All those things tie together to work as being central to our process.

Which ASX share is this expert bullish on?

Burns is constructive on NZME Ltd (ASX: NZM), the "old school media business in New Zealand". This ASX share has its foothold on the radio network in NZ and is also the owner of the New Zealand Herald.

Not only that, but it also owns an online property portal called OneRoof, Burns says, and that's sure to fold in more revenue at the top for the company in years to come.

Moreover, the fundie likes NZME's pivot and transformation into digital media, something which he says the company has executed well to date.

"They're going to get more out of digital advertising. That's coming through strongly in the numbers. Also, the radio is starting to digitise, with some of the digital streaming services you can get on the radio," he said.

The company is also in talks with media giants Google and Meta, nee Facebook, Burns says, and this might come through to earnings in a big way.

The graph above shows how the NMZE share price has been outperforming both the ASX 200 and the S&P/ASX Small Ordinaries Index (ASX: XSO).

NZME shares are currently down 2.59% for the day at $1.315 apiece. They are also slightly in the red this year to date. However, in the last 12 months, this ASX share has climbed more than 71% and is now up around 10% for the month.

The post Why this old-school ASX share is under-appreciated: fundie appeared first on The Motley Fool Australia.

Not to spoil the surprise, but the media stocks that outperformed their peers probably aren't the ones you are expecting…

The 5 top performing ASX media shares of October

A quick note; this list only includes shares with market capitalisations of more than $100 million.

Enero Group Ltd (ASX: EGG)

The Enero share price has outperformed those of all its ASX media and communications-focused peers.

Through the month of October, it gained 30.69% to finish at $3.96.

Last month, Enero announced the September quarter had seen it with 22.6% more revenue and 50% more earnings before interest, tax, depreciation, and amortisation (EBITDA) than the same quarter of financial year 2021.

The company operates a number of brands in the communications and marketing spheres.

HT&E Ltd (ASX: HT1)

Coming in second best is HT&E, also known as Here, There & Everywhere.

The radio, audio, and digital content business saw its share price grow by 17.68% over the course of October to finish the month's final session at $1.93.  

The big news from HT&E last month was the settlement of a longstanding taxation dispute with the Australian Taxation Office.

IVE Group Ltd (ASX: IGL)

The IVE Group share price had a great October on the ASX. It gained 16.23% to end the period at $1.79.

The print and marketing company's stock was boosted by news of 2 acquisitions, both expanding IVE's retail display operations.

Gtn Ltd (ASX: GTN)

The Gtn share price also outperformed many of its peers over October, gaining 14.13% to finish at 52.5 cents.

Gtn – Global Traffic Network – provides traffic reports to radio stations in Australia, the United Kingdom, Canada, and Brazil. As compensation for supplying such reports, Gtn is generally given advertising slots. It then bundles and sells the slots to other parties.

There was no word from the company to explain its stock's surge last month.

NZME Ltd (ASX: NZM)

Finally, the crown for the fifth best performing media share of the month of October goes to NZME – New Zealand Media and Entertainment.

The company operates more than 50 print, radio, and digital media brands.

The NZME share price gained 13.27% over October. It finished the month trading at $1.11.

There were a number of announcements from NZME over October.

First, it updated the market on the impacts it was facing as COVID-19-induced lockdowns continued in New Zealand. The company's advertising revenue was hit by the lockdown. However, it remained 7% higher than during the prior corresponding period. The company also provided EBITDA guidance for the 2021 calendar year.

It later completed the sale of its GrabOne business.

The post These were the 5 best performing ASX media shares in October appeared first on The Motley Fool Australia.

New Zealand is projected to be heading for a recession, in contrast to the broader ASX, which is a bull market at the moment as confidence rides high following an electric rebound after the COVID-19 pandemic.

While much remains uncertain regarding the economic output across the ditch, with so many interesting Kiwi companies listed on the ASX, it's worth taking stock of how three of New Zealand's biggest companies have been performing over the past few months.

3 ASX shares that call New Zealand home

New Zealand Media and Entertainment (ASX: NZM) 

NZME is New Zealand's leading integrated print, radio and digital media and entertainment business. The firm has a portfolio of publishing, radio, digital, newspapers, and e-commerce brands. This business model makes it particularly susceptible to economic downturns.

NZME carries a substantial amount of debt and its advertising revenues were slashed during the COVID-19 pandemic, with the business still unable to recoup those losses entirely. However, it was quick to cut its operational expenditure and has managed to make some of those cuts permanent.

While the NZME share price is down 6% this month, it's up over 287% in the last 12 months.

Tilt Renewables Ltd (ASX: TLT)

New Zealand energy supplier Tilt Renewables has recently been the subject of a takeover from Mercury NZ Ltd (ASX: MCY). Mercury is a 51% New Zealand government-owned, 100% renewable energy generator that more than doubled its share price between 2017 and January this year.

Tilt is the owner, operator and developer of a number of established wind farms and an extensive wind and solar development pipeline across the south-east of Australia and the north and south islands of New Zealand. 

Mercury has lost 15% YTD, but Tilt is up 141% in that time period, beating the utilities sector by a similar margin. At the time of writing, its price-to-earnings ratio is 6. Both Tilt and Mercury have benefited from a high-priced wholesale energy market in New Zealand.

Xero Limited (ASX: XRO) 

Xero is one of the giants of the S&P/ASX All Technology Index (ASX: XTX) and one of the highest performing companies from across the Tasman. It provides a platform for online accounting and business services to small businesses, specialising in cloud computing. 

The Xero share price is down 1.89% this month, down 17% YTD, and down 26.9% against its technology sector over the past 12 months. This is despite acquiring workforce management platform Planday at the beginning of this month.

Between March 2020 and December 2020, Xero shares share increased from $63 to $154, but are currently sitting around $123.

The post How are New Zealand-based ASX shares performing ahead of a likely recession? appeared first on The Motley Fool Australia.

What does NZME do? 

NZME, which stands for New Zealand Media and Entertainment, is an integrated media company with a portfolio of newspapers, radio stations, and digital platforms. With its content accessed by more than 3.2 million Kiwis, NZME offers advertisers the opportunity to access its audience via a fully integrated multi-platform presence. 

What did NZME report? 

NZME released its results for 1H 2020 this morning, reporting 5% growth in operating earnings before interest, taxes, depreciation and amortisation (EBITDA) which reached NZ$28.9 million.

Although NZME's operations are deemed an essential service, key revenue streams were significantly impacted by COVID-19. Advertising revenue fell 47% in April, 39% in May, and 23% in June. This led to a 17% decline in segment revenue for the half, which fell to $147.3 million. Operating revenue fell 13% to NZ$157.8 million, including an NZ$8.6 million government wage subsidy during the half. 

NZME took swift action to mitigate impacts of the downturn on profitability and cash flow, contributing to a NZ$24.6 million reduction in operating expenses. This flowed through to a 66% increase in operating net profit after tax (NPAT), which increased to NZ$6.8 million. Statutory NPAT increased by an impressive 217% to NZ$3 million, up from $0.9 million in 1H 2019. 

Although some actions taken in response to COVID-19 were temporary, NZME expects to achieve a permanent reduction in cost base. Costs were decreased by NZ$24.6 million in the first half, with approximately NZ$7 million relating to permanent cost reductions. The annualised permanent reduction in cost base is expected to be NZ$20 million per annum. NZME reduced net debt by NZ$19.5 million to NZ$55.2 million in 1H 2020. Debt reduction is expected to be lower in the second half, however, as net working capital is expected to grow. 

What's the outlook for NZME? 

NZME says it has seen a stronger than anticipated recovery from COVID-19, but remains cautious regarding the future economic environment. Advertising revenue is expected to be down 16% in 3Q 2020 so cost containment remains a focus.

NZME is currently forecasting FY20 operating EBITDA of NZ$60–$63 million. Based on improvement in economic conditions, COVID-19 recovery, and permanent cost reduction, NZME is expecting profit growth in 2021. Based on this outlook and the company's capital requirements, the company advised its board expects to be able to consider a dividend payment after 30 June 2021.  

The NZME share price is currently sitting at 39 cents per share, which is down 21% on this time last year.

The post ASX stock of the day: NZME share price rockets 41% higher as profits jump more than 200% appeared first on The Motley Fool Australia.