2 exciting ASX shares that are on course for 'robust growth': expert

These little-known ASX shares could be leading contenders for growth.

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Key points

  • The fund manager WAM has named two little-known ASX shares that could keep growing
  • Austin Engineering has experienced a big bump for its order book
  • Healthia is expected to produce more profit than expected and can keep making acquisitions

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, such as WAM Leaders Ltd (ASX: WLE) and WAM Capital Limited (ASX: WAM), focus on larger companies.

There's also one called WAM Microcap Limited (ASX: WMI) which focuses on small-cap ASX shares with a market capitalisation of under $300 million at the time of 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 outlines in its recent monthly update.

Austin Engineering Ltd (ASX: ANG)

Created with Highcharts 11.4.3Austin Engineering PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

WAM described Austin Engineering as a designer and manufacturer of customised dump truck bodies, buckets, water tanks, tyre handlers and other ancillary products that are used in the mining industry.

The fund manager pointed out that in January, Austin Engineering reported a surge in global truck-tray orders from December 2022 to January 2023, increasing its order book and improving the revenue outlook for the second half of FY23.

WAM noted that the ASX share is now expecting its revenue for the second half of FY23 to be around $250 million as the pipeline is expected to "remain strong for at least the next 18 months."

The investment team like this because of the "robust outlook for growth and a strong balance sheet". WAM thinks that the Austin Engineering share price is still undervalued.

Healthia Ltd (ASX: HLA)

Healthia has more than 300 clinics, according to WAM, describing it as "one of the leading diversified allied healthcare providers across Australia and New Zealand."

The fund manager noted that at the end of January, Healthia provided guidance for the FY23 half-year result, revealing total sales are expected to be between $122.5 million to $127.5 million, which would be growth of 5.4% on the prior corresponding period.

Earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to be between $17.7 million to $18.3 million, which would be a growth of 4% and higher than analyst expectations.

WAM was positive about the fact that the company confirmed its guidance. The fund manager also suggested that the "strong balance sheet" will allow the ASX share to make acquisitions that can add to earnings in the future.

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Motley Fool contributor Tristan Harrison has positions in Wam Microcap. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Healthia. The Motley Fool Australia has recommended Healthia. 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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