Fund managers are constantly thinking about which ASX shares would be the best to own.
These are some of the picks of fund managers in recent times:
Bapcor Ltd (ASX: BAP)
Bapcor is one of the top picks from WAM Capital Limited (ASX: WAM), which is a listed investment company (LIC) operated by Wilson Asset Management (WAM).
This ASX share provides vehicle parts, accessories, equipment service and solutions to the Asia Pacific region.
WAM likes Bapcor because it has benefited from an increase in domestic travel, reduced usage of public transport and increased second-hand car sales. The fund manager said that Bapcor has a strong balance sheet and believes it's well placed to make earnings accretive acquisitions.
Bapcor recently gave a trading update which said that it has continued to perform strongly since its October update. For the five months to the end of November, group revenue was up 26%, with net profit after tax (NPAT) achieving operating leverage.
For the first half of FY21, Bapcor anticipates it will achieve revenue growth of 25% and an increase of net profit after tax of at least 50%.
According to CMC, the Bapcor share price is valued at 20x FY23's estimated earnings.
City Chic Collective Ltd (ASX: CCX)
City Chic is one of the ASX shares that's liked by the investment team at Clime Capital Ltd (ASX: CAM).
Clime describes City Chic as an omni-channel retailer of extended-size ladies fashion and it has a strategy to acquire plus size customers online globally.
The fund manager said that the company is generating 70% of its sales online, up from 44% in FY19, with online exposure to much larger offshore markets including North America and the UK. The remaining 30% of sales comes from the Australian and New Zealand network of 92 stores.
City Chic has been growing both organically and through opportunistic acquisitions. Clime said that the COVID-19 environment has benefited players well-developed digital businesses, largely at the expense of those dependent on bricks and mortar networks.
In the COVID-hit countries of the US and UK, City Chic is looking for potential target acquisitions of quality digital assets of competitors that have been bankrupted by their under-performing physical store networks.
After being unsuccessful with the bid for the e-commerce assets of Catherines in the US, City Chic recently announced the acquisition of the e-commerce assets of UK plus-size brand Evans. The purchase price was $41 million, which was funded from existing cash (from a previous capital raising). This represented roughly 1x Evans' FY20 online revenue of $46 million.
The acquisition came after a trading update from the ASX share that was given in the annual general meeting (AGM).
For the first 20 weeks of FY21, City Chic reported comparable sales growth of 18.7% excluding Victorian store closures (or 7.9% including store closures) and a "significant" improvement in gross margins since the peak of COVID-19 disruption in April to June. Gross margins are now above 50%.
The fund manager said that City Chic commands superior margins due to its vertically integrated structure. With a pro forma cash balance of $73 million and no debt, Clime believes City Chic is well positioned to execute on its strategy and it still thinks the business is an opportunity.
According to CMC, the City Chic share price is valued at 25x FY23's estimated earnings.
