Wilson Asset Management (WAM) thinks these 2 ASX shares are a buy

Wilson Asset Management LIC WAM Capital (ASX:WAM) has outlined the investment case for 2 ASX shares including Viva Energy Group (ASX:VEA).

| More on:
A graphic showing share price movement, ASX market watch

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Respected fund manager Wilson Asset Management (WAM) has recently identified two 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 Research Limited (ASX: WAX).

There's also one called WAM Capital Limited (ASX: WAM) which targets "the most compelling undervalued growth opportunities in the Australian market."

The WAM Capital portfolio has delivered an investment return of 16.5% per annum since inception in August 1999, before fees, expenses and taxes. This gross return outperformed the S&P/ASX All Ordinaries Accumulation Index return of 8.6% per annum over the same timeframe.

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

Viva Energy Group Ltd (ASX: VEA)

Viva Energy is a business that refines, imports and delivers energy across Australia and is the exclusive licensee of almost 1,300 Shell and Liberty service stations. The Geelong Refinery employs more than 700 people and supplies more than 50% of Victoria's fuel requirements.

Viva Energy recently revealed its first quarter operational update to investors. In that, it revealed a strong performance in its retail service stations division, with volumes of petrol consumed in the quarter ending 31 March 2021 now only 17% below the prior corresponding quarter.

The CEO and managing director of Viva Energy, Scott Wyatt, said:

Viva Energy is making strong progress on our business recovery program with encouraging results in all parts of our business during the first quarter.

WAM Capital pointed out that the Australian Government announced a support package providing a production payment to support domestic refiners which should help with the profitability of the ASX share's struggling refining business which has been impacted by lower demand for refined fuel through this COVID-19 pandemic period.

Downer EDI Limited (ASX: DOW)

The LIC outlined what the Downer business is about – it designs, builds and sustains assets, infrastructure and facilities. It has a large workforce, with approximately 50,000 staff across more than 300 sites, largely in Australia and New Zealand.

During April, Downer announced that it was going to divest its tyre management business to Bridgestone Corporation for $79 million.

WAM Capital said this sale by the ASX share represented a strategic step in Downer's divestment of its portfolio of mining businesses. Downer's sale of mining and laundries assets so far will deliver total proceeds of $605 million to the business.

After the announcement of the sale of Otraco, the company revealed its intention to do an on-market share-buyback of up to 70.1 million shares, which is around 10% of its issued share capital. This will return the divestment program proceeds to investors.

Motley Fool contributor Tristan Harrison 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.

More on Value Investing

A woman looks questioning as she puts a coin into a piggy bank.
Bank Shares

Do ANZ shares present better value than other Big Four options?

Here's my take on whether ANZ is a good value investment right now.

Read more »

A couple makes silly chip moustache faces and take a selfie on their phone.
Value Investing

2 ASX value shares that are must-buys for Australians in November

Price is what you pay. Value is what you get.

Read more »

A young man goes over his finances and investment portfolio at home.
Growth Shares

Why earning 4% to 5% in a term deposit 'isn't that attractive'

The upside is capped on the most risk-less investments.

Read more »

Smiling couple looking at a phone at a bargain opportunity.
Value Investing

2 cheap ASX 200 shares down over 30% this fundie just bought

There's still value opportunities in this frothy market.

Read more »

Two excited woman pointing out a bargain opportunity on a laptop.
Value Investing

How to find cheap ASX value shares in the current market

Where is the value in such a hot market?

Read more »

A boy leaps and flaps his arms as he tries to fly with some birds on the shoreline of the beach.
Value Investing

The ASX is soaring to new heights, but Aussie investors can still seize profits

There are still ways to invest prudently when the markets are at record highs...

Read more »

Woman with spyglass looking toward ocean at sunset.
Value Investing

How to find ASX value shares when the market's at an all-time high

Finding value in a frothy market can be a challenge.

Read more »

A young male builder with his arms crossed leans against a brick wall and smiles at the camera as the Brickworks share price climbs today
Value Investing

Looking for value shares? This ASX 200 gem looks like a no-brainer buy to me!

Is this dividend favourite shaping up as an ASX value gem?

Read more »