The uncertainty over the economy and asset prices means it could be worth listening to the professionals to see which ASX shares they are investing in.
Let's take a look at three stocks that the fund managers at LSN Emerging Companies Fund are bullish on:
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ASX tech company going in the right direction
Artificial intelligence has been the topic du jour in public discourse this year.
The mainstream release of generative AI engine ChatGPT has opened the world's eyes to the astounding possibilities of this technology.
And, perhaps unsurprisingly, many investment experts have named it as the theme to follow in the coming years.
The LSN team is putting its money into Megaport Ltd (ASX: MP1) to ride this megatrend.
"The recent organisational restructure and investor demand for all things AI pushed Megaport Ltd +21% higher during [last] month," it said in a memo to clients.
"The company provides the connectivity between customers and the top seven cloud providers across three hundred data centres."
Megaport was one of those businesses that burnt through capital in return for growth but is now endeavouring to achieve positive cash flow to satisfy the new world of high interest rates.
The business also lost its chief executive earlier this year.
"The restructure included the appointment of ex-Cisco Systems Inc (NASDAQ: CSCO) executive Michael Reid as CEO, who laid out the pathway to a significant improvement in profitability," read the LSN note.
"A renewed focus on the direct sales channel is a key driver of growth as they position themselves 'to be selling the picks and shovels for the 'AI gold rush"."
'Highly profitable' business on 'confident growth trajectory'
Shares for online currency exchange platform OFX Group Ltd (ASX: OFX) also went gangbusters in May, rocketing a whopping 28%.
According to LSN analysts, the outlook announced during the full-year report last month absolutely exceeded expectations.
"The unwind from COVID tailwinds caused concern in the market about their ability to generate earnings growth, however, benefits from both volume and price, in addition to synergies from their most recent acquisition, has the company confident they can continue their growth trajectory."
The LSN memo noted the company is already "highly profitable".
"[It's] earning operating EBITDA margins of 25% to 30% and has consistently generated free cash flow, which will allow them to pursue further bolt-on acquisitions."
The OFX share price is still 20.2% below where it started 2023.
Property business ready for turnaround
Lifestyle Communities Ltd (ASX: LIC) shares had a miserable May, losing 11%.
"Victoria's leading housing estate operator Lifestyle Communities Ltd advised that settlements for the current financial year would be slightly below previous expectations," read the memo.
"The shortfall stems from two projects — Wollert and Deanside — with residents taking longer to start selling houses, although the company did maintain their long-term settlement targets."
Despite this hiccup, the LSN analysts like what the future holds for the retirement property operator.
"Looking ahead we see the tailwinds for the sector remaining strong with Lifestyle Communities standing to benefit as an experienced player with a solid pipeline, track record and management team."
The Lifestyle Communities share price is down 23.6% year to date.
