The fund manager Wilson Asset Management (WAM) has told investors about two compelling ASX shares that it has in its portfolio.
WAM operates several listed investment companies (LICs). Some, like WAM Leaders Ltd (ASX: WLE), focus on larger companies.
WAM Capital Limited (ASX: WAM) targets "the most compelling undervalued growth opportunities in the Australian market".
The WAM Capital portfolio has delivered an investment return of 15.8% per annum since its inception in August 1999, before fees, expenses and taxes. This gross return outperformed the All Ordinaries Total Accumulation Index (ASX: XAO) return of 8.4% per annum over the same timeframe.
These are the two ASX shares that WAM Capital outlined in its most recent monthly update:
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Ardent Leisure Group Ltd (ASX: ALG)
Ardent Leisure owns and operates leisure and entertainment businesses in Australia and the US, including theme parks such as Dreamworld, WhiteWater World, and SkyPoint.
WAM pointed out that during February 2022, Ardent announced its FY22 half-year result beat expectations in its important US business, Main Event Entertainment. This business operates 45 bowling centres in 16 states in the US.
The fund manager noted that Main Event Entertainment continued to outperform constant centre revenue expectations by achieving levels of more than 20% growth in the financial year to date compared to pre-COVID levels in FY20.
Main Event Entertainment's growth pipeline remains "robust" with plans for three new centres to open in the second half of FY22. As domestic and international border restrictions continue to ease, the fund manager believes momentum will return to the entertainment sector and it sees a strong outlook for both Main Event Entertainment and Dreamworld.
Uniti Group Ltd (ASX: UWL)
This ASX share is described as a business focused on the construction of core telecommunications infrastructure and is the owner and operator of fibre cable networks across Australia.
In February 2022, Uniti Group announced its FY22 half-year result, which showed a 98.4% increase in revenue to $109.5 million and a 130.3% increase in operating cash flow to $65.4 million. The ASX share's earnings before interest, tax, depreciation and amortisation (EBITDA) for the half-year was $70.5 million, up 140.3%.
WAM noted that despite achieving a result that was in line with what the market was expecting, Uniti Group's half-year result disappointed the market, resulting in a fall of the Uniti Group share price after the announcement.
In February, Uniti Group commenced its on-market share buyback. WAM sees the potential for the company to make earnings accretive acquisitions thanks to its "strong" balance sheet.
