Leading fund manager Wilson Asset Management (WAM) has picked a few S&P/ASX 200 Index (ASX: XJO) shares as opportunities.
There has been a lot of volatility on the ASX share market in recent weeks and months amid the focus on inflation and interest rate rises. No one can truly know when conditions will die down. But experts think that the lower valuations represent good prices for many businesses.
WAM manages a selection of listed investment companies (LICs). These include WAM Capital Limited (ASX: WAM), WAM Research Limited (ASX: WAX) and WAM Active Limited (ASX: WAA).
Moreover, a key focus of the WAM LICs is to find "undervalued growth companies" where there is a catalyst that could send the share price higher.
These are two of the ASX 200 shares WAM identifies in its recent update.
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ARB Corporation Limited (ASX: ARB)
ARB designs, manufactures, distributes and sells motor vehicle accessories.
In May 2022, the company gave investors a market update citing "numerous" challenges to its business operations. These include an increase in commodity prices, a global shortage of new vehicles, and global logistics and pricing issues. Further to this is a labour and skills shortage and exchange rate volatility.
WAM notes that ARB pointed out it expects an increase in total capital expenditure to $57 million in FY22. That would be up from $33 million in FY21. The company attributes this to costs associated with its factories and upgrades to its retail stores and manufacturing equipment.
The fund manager is "upbeat" that the ASX 200 share will "likely" achieve its projected FY22 revenue of $700 million, supported by its 18% year-on-year increase in sales revenue over the nine months to 31 March 2022.
Wilson Asset Management is positive on the outlook for ARB as it delivers on growth opportunities in Australia and in export markets, development of new products, and fostering of partnerships with major customers.
Worley Ltd (ASX: WOR)
Another business named as an opportunity by WAM is Worley.
Worley provides engineering, procurement and construction expertise to the upstream, midstream, chemicals, power, energy and minerals sectors.
Last month, the ASX 200 share was given three new contracts. It also signed an agreement with Avantium Renewable Polymers to provide engineering, procurement and construction services.
WAM said that the services Worley will provide to these companies aims to support the growth of their assets and their sustainability targets.
With new contracts in the pipeline and FY22 costs expected to be less than half of FY21, the fund manager thinks the revenue and earnings target for the second half of FY22 is "well supported".
