Wilson Asset Management thinks these 2 small cap ASX shares are a buy

WAM thinks that DGL Group and Ardent Leisure are opportunities.
The post Wilson Asset Management thinks these 2 small cap ASX shares are a buy appeared first on The Motley Fool Australia. –

Respected fund manager Wilson Asset Management (WAM) has recently identified two small cap ASX shares that it owns in its portfolio.

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 24.5% per annum since inception in June 2017, which is superior to the S&P/ASX Small Ordinaries Accumulation Index average return of 11.5%.

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

DGL Group Ltd (ASX: DGL)

DGL was created over 20 years ago and listed onto the ASX and NZX a month ago in May 2021.

WAM Microcap explains that DGL is a specialty chemicals and dangerous goods solutions provider servicing over 1,300 customers across Australia, New Zealand and internationally. It operates across 26 sites, with 140,000 tonnes of manufacturing capacity, 126,000 tonnes of chemical storage and 174,000 tonnes of waste processing capacity.

The small cap ASX share’s initial public offering (IPO) was oversubscribed. It issued $100 million at $1 per share. The share price has since risen to $1.21.

Wilson Asset Management said that the company has reported strong financial performance, with FY20 pro forma revenue of $180.1 million forecast to increase to $209.7 million in FY22.

The fund manager is still positive on the company’s industry position and outlook for organic growth and earnings-accretive acquisitions.

Ardent Leisure Group Ltd (ASX: ALG)

WAM Microcap described Ardent Leisure as a business that services more than 3 million customers annually as the owner and operator of theme parks, indoor entertainment centres and attractions in Australia, including Dreamworld, WhiteWater World and SkyPoint and a growing portfolio of family attractions in the US.

The fund manager pointed out that after a positive trading update in April, the small cap ASX share announced in May the continuation of strong revenue momentum in its US bowling alley operations, Main Event Entertainment, with revenue up 23% in March, 40% in April and 8% in the first week of May against the corresponding period in 2019.

WAM Microcap continues to see upside to earnings, as coronavirus related restrictions ease. It also sees strong optionality existing through portfolio optimisation and asset sales.

The post Wilson Asset Management thinks these 2 small cap ASX shares are a buy appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of May 24th 2021

More reading

DGL Group (ASX:DGL) share price falls despite positive announcement
DGL Group launches on the ASX today following successful IPO

Top brokers name 3 ASX shares to sell next week

Why the Ardent Leisure (ASX:ALG) share price is climbing 5%

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!