Fund manager Wilson Asset Management (WAM) has identified two top small-cap ASX shares in one of the portfolios it manages that could be investment ideas.
WAM operates several listed investment companies (LICs). Some focus on larger companies like WAM Leaders Ltd (ASX: WLE) and WAM Capital Limited (ASX: WAM).
There's also one called WAM Microcap Limited (ASX: WMI) which focuses on small-cap ASX shares with a market capitalisation under $300 million at acquisition.
WAM says WAM Microcap targets "the most exciting undervalued growth opportunities in the Australian microcap market".
These are the two small-cap ASX shares the fund manager outlined in its most recent monthly update:
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Silk Laser Australia Ltd (ASX: SLA)
Silk Laser was described as one of Australia's largest specialist clinic networks, offering a range of non-surgical aesthetic products and services.
The Silk Laser share price recovered in July after being sold off at the end of FY22 because of concerns about a recession and how consumers might tighten their spending, according to WAM.
The fund manager noted that the small-cap ASX share "strategically" acquired Victoria-based Unique Laser clinics, expanding Silk Laser's presence on the east coast.
Why did WAM invest in the company? The investment team said:
Our investment thesis is based on growth in the overall non-surgical aesthetic market, supporting the consolidation and rollout of a greater number of clinics around Australia. We are positive on the outlook for the business as we see significant clinic rollout and consolidation opportunities for the company across Australia and New Zealand.
Dusk Group Ltd (ASX: DSK)
WAM described Dusk as an Australian specialty retailer of home fragrance products, offering a range of "premium quality products at competitive prices".
One of the main things that caught investor attention about the small-cap ASX share during the month was that Dusk revealed a trading update and guidance for FY22 that was "ahead of market expectations."
Dusk's vertical retail model and long-term supply partnerships have allowed it to maintain "well-balanced" inventory levels to meet consumer demand.
WAM said:
We believe that Dusk Group is an undervalued growth company with a niche offering and a large store rollout opportunity into new regions such as New Zealand and the United Kingdom.
