Buy these 2 ASX shares with more than 40% upside: expert

Straker Translations is one of the ASX shares that Ord Minnett says has significant upside.

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Key points

  • Two of Ord Minnett’s ASX share picks have an upside of more than 40%
  • Centuria is a property funds management business with a growing portfolio
  • Straker Translations is a language services business with a global client base

Experts are always trying to find buying opportunities amongst ASX shares.

Today we look at two ASX shares selected by Ord Minnett. The broker rates these shares as a buy with price targets more than 40% higher than where the shares are trading now.

A price target is an estimation of where the share price will be in 12 months.

Of course, Ord Minnett doesn't have a time machine. It's impossible to know where a share price will actually be in 12 months. However, brokers can certainly make predictions of where they think the share price will be (or should be) in a year based on their research and analysis.

With that in mind, here are the two ASX shares that Ord Minnett is recommending today.

Centuria Capital Group (ASX: CNI)

Centuria is an investment manager that has more than $20 billion worth of assets under management. This includes listed and unlisted funds as well as tax investment bonds.

Ord Minnett has a buy rating on this ASX share with a price target of $2.80. That's a possible rise of about 40%.

The broker thinks the real estate investment trust (REIT) sector is more attractive as bond yields stabilise. In recent times, bond yields rose as expectations that global central banks would raise rates increased.

The Centuria Capital Group share price has dropped 43% since the start of the year. So, the broker is simply predicting that the ASX share will regain some of that lost ground.

Centuria recently announced that it was growing its institutional-backed healthcare and retail portfolios with $223 million of acquisitions. This included the $163 million private hospital development in Alexandria, Sydney. The business said that 43% of the development is leased on a 15-year term.

In FY22, Centuria is expecting to generate 14.5 cents of operating earnings per share (EPS). This would represent growth of just over 20% year on year. The distribution is expected to be 11 cents per share, representing a dividend yield of 5.5% for ASX investors.

Straker Translations Ltd (ASX: STG)

Based in New Zealand, Straker describes itself as providing "next generation language services supported by a state-of-the-art technology stack and robust AI layers to clients around the world. By combining the latest available technologies with linguistic expertise, Straker's solutions are scalable, cost-effective and accurate."

Ord Minnett currently rates this business as a buy with a price target of $1.85. That implies a possible rise of about 60%. The broker thinks the ASX share can keep growing at a good pace.

The broker noted Straker's FY22 result, which showed revenue growth of 78.5% to $55.9 million thanks to "strong organic growth".

It generated positive adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) of $1.2 million in the second half of FY22 and $200,000 for the full year.

The company said that translation volumes from the IBM strategic partnership continue to grow in line with expectations and new partnership opportunities are developing.

Straker also said that customers looking for technology-led solutions for localisation are driving a strong enterprise pipeline.

The ASX share is expecting revenue growth of 20% in FY23, with a positive adjusted EBITDA.

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. 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 recommended Straker Translations. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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