The February reporting season is set to wrap up this week and I think investors have been presented with some attractive buying opportunities thanks to better-than-expected results and/or unexpected market reactions.
In fact, I have taken the opportunity over the past couple of weeks to add new positions to my portfolio including these two shares:
Blue Sky Alternative Investments Ltd (ASX: BLA)
The Blue Sky Alternative Investments share price has performed strongly since it released its first-half results, and this is a little bitter-sweet for me since I was hoping to buy more shares at a lower price.
Nonetheless, I was very impressed with the company's first half result that delivered a 92% increase in earnings per share (EPS). This was largely driven by a 59% increase in fee-earning assets under management (AUM).
As the slide below highlights, Blue Sky has an impressive record when it comes to growing AUM, and since alternative asset classes are becoming increasingly popular, I think its FY19 target is quite realistic.
If the company can match its first-half result over the back-end of the year, the shares are currently trading at around 26x earnings. While this is not particularly cheap, I think this can be justified when you take into account the company's current earnings momentum.
Freedom Insurance Group Ltd (ASX: FIG)
Freedom Insurance Group is a small-cap financial services company that specialises in the design, distribution and administration of life insurance products in Australia.
The company has only been ASX-listed for around three months, but in that time has already managed to upgrade its FY17 guidance twice.
Its first-half results revealed exceptionally strong growth with net revenue and pro-forma net profit after tax (NPAT) growing 116% and 573%, respectively. This impressive growth was driven largely by new business sales and a reduction in operating costs as a result of economies of scale.
Pleasingly, the strong result has allowed the company to upgrade its FY17 EBITDA guidance from $16.9 million to between $18 million to $21 million.
One point investors should note is that the shares can be quite illiquid with around 38% of shares currently in escrow. However, this risk is partially mitigated when you consider the shares currently trade on a relatively undemanding price-to-earnings ratio of around 11.5.
