There are a handful of very promising S&P/ASX 300 Index (ASX: XKO) shares to consider investing in, according to the fund manager L1 Capital.

In its recent monthly update for the listed investment company (LIC) L1 Long Short Fund Ltd (ASX: LSF), the fund manager said it's relatively cautious about the outlook because of the "lagged impact of the significant interest rate hikes, weakness in leading economic indicators, gradually increasing pressure on corporate earnings and tail-risk from geopolitical tensions".

L1 Capital suggested that ongoing market volatility remains likely as investors reassess their outlook for the economy, interest rates, and corporate profits. However, the fund manager believes there are "numerous mispriced stocks" that can deliver "attractive long-term returns".

Below are three of the names that were picked out.

James Hardie Industries plc (ASX: JHX)

The James Hardie share price had a strong performance in January 2023, rising by 19% as housing sentiment improved for US homebuilders. The US market has noted a "sharp increase" in new housing demand in January while the US 30-year fixed mortgage rates fell back to 6% after peaking above 7% in November 2022.

For investors who don't know what James Hardie does, it's described as the market leader in fibre cement siding and has been increasing its market share in the US for the last two decades.

Around two-thirds of its revenue comes from repair and remodelling exposure, while the rest is from new housing.

The fund manager believes James Hardie is well-placed to manage a period of "softer" new housing demand. After this period, it could "grow at an above-market rate for many years to come".

BlueScope Steel Limited (ASX: BSL)

BlueScope steel is a sizeable steel business with operations in Australia and the US. The BlueScope share price went up 16% in January amid a recovery for US steel spreads, providing a "tailwind for the company's second-half earnings expectations".

The fund manager pointed out that the ASX 300 share is focused on growing its US operations with 850kt per annum capacity expansion at the North Star facility in Ohio. This follows the acquisition of the US's second-largest metal coating/painting company.

BlueScope is also focused on the establishment of BlueScope Recycling from its acquisition of the MetalX recycling business.

Even though the BlueScope Steel share price has risen, L1 Capital thinks the market "significantly undervalues BlueScope's unique and strategic asset base".

Imdex Limited (ASX: IMD)

The Imdex share price went up 16% last month after the company announced a first-half result that beat market expectations.

The ASX 300 share also announced the acquisition of Devico, a leading global mining technology company based in Norway.

The fund manager believes the acquisition is "strategic and value accretive and will accelerate the company's global growth strategy".

L1 Capital pointed out that Imdex raised $224 million to fund the acquisition, which was "well-supported" by the market. The fund manager concluded with the following thoughts on the business:

We believe Imdex is well-positioned for long-term growth as it is in the early stages of launching the industry's best suite of new and improved products.

The post These 3 ASX 300 shares are 'significantly undervalued': fund manager appeared first on The Motley Fool Australia.

The hype around artificial intelligence (AI) has never been more palpable. But with most AI companies located outside Australia and even fewer publicly listed, where can investors get a slice of AI stocks on the ASX?

We may not have the likes of Microsoft Corp (NASDAQ: MSFT) or Alphabet Inc (NASDAQ: GOOG) at our fingertips. However, Australia offers some high-quality businesses that may provide some exposure to the red-hot sector.

Find out what is catching my eye below.

The next frontier for productivity

Unless you have been living under a rock, you've probably heard of ChatGPT. The AI-powered chatbot owned by OpenAI became the fastest-growing consumer internet app in history in the past week — dethroning TikTok by reaching 100 million users in only two months.

Now, Microsoft, Google, and China search engine Baidu are all squabbling over which can implement the technology the quickest.

Critics may consider AI to be an overhyped fad, but the biggest tech companies in the world appear to be taking it seriously. In fact, Microsoft wasted no time integrating several new AI features into its browser yesterday, giving people the ability to leverage what it calls a 'co-pilot' directly in Microsoft Edge.

Which ASX stocks look ripe for the AI boom

In my opinion, the efficiency benefits of AI in the future will lend themselves to countless applications. As Microsoft CEO Satya Nadella states, "I think that this technology is going to reshape pretty much every software category."

That's why I'm personally keeping an eye on ASX stocks with their toes already in the AI industry.

TechnologyOne Ltd (ASX: TNE) is one such company that already makes use of the technology in its enterprise software solutions. If more enterprises see the value in AI, TechnologyOne could be well-placed to offer off-the-shelf solutions to its customers.

Another ASX stock offering AI-powered solutions is Imdex Limited (ASX: IMD). The company is a software provider to the mining industry, helping it make more informed decisions. One such product is their cloud-based AI spectral interpretation system named aiSIRIS.

Furthermore, Imdex currently trades at a price-to-earnings (P/E) ratio of 24. The valuation and its growth trajectory make it one company I'm seriously considering adding to my portfolio.

The final ASX stock with AI exposure that I think is appealing is circuit board design software company Altium Limited (ASX: ALU).

AI software ultimately needs hardware to run on. The company noted AI as a macro trend for driving increased demand for electronics in its 2022 full-year results.

Altium brings together a long tailwind, a history of executing on growth, and a commendable balance sheet. These ingredients combined make this ASX stock one I'd strongly consider for exposure to AI.

The post 3 unmissable ASX AI stocks on my radar right now appeared first on The Motley Fool Australia.

After a brutal 2022, it's no surprise investors are still anxiously obsessed with inflation, interest rates and geopolitics.

But the team at QVG Capital is urging investors to forget all that, because there is only one thing that matters this year.

"2023 will be all about earnings," stated a QVG memo to clients this week.

"We think future returns will be dictated by earnings. Worrying about rates and valuation, risks fighting the last war."

The secret sauce for buying stocks right now

To demonstrate how critical earnings are, the QVG analysts took the example of OFX Group Ltd (ASX: OFX).

The share price for the currency exchange tanked 18% in just one week in January after its latest financial results.

"The update showed softness in the consumer portion of OFX's revenues," read the memo.

"Even minor misses, such as OFX Group [last] month, will be punished."

The QVG team's secret sauce in buying ASX shares this year is to seek out businesses that have a very specific set of attributes.

"We believe the job to be done then is to own the relatively small number of companies run by motivated insiders that produce growing free cash flows," read the memo.

"If we are right on our earnings forecasts on the durable growers and pay a low enough price for the through-the-cycle cyclical growers, then 2023 ought to look a lot different to 2022."

Two ASX shares set to grow earnings

Two examples of such ASX companies expanding their cash flows and earnings are Imdex Limited (ASX: IMD) and Hub24 Ltd (ASX: HUB).

Imdex, in fact, has the opposite month to OFX, enjoying a 13.1% boost in its share price after a well-received quarterly update.

The mining technology provider also has an acquisition in progress.

"Imdex announced a large capital raise to fund the acquisition of a complementary Norwegian business called Devico. 

"Devico is a higher margin, higher growth business than Imdex and increases the skew of earnings to higher intellectual property drilling tools from more commoditised drilling fluids."

The QVG team admitted Imdex was not usually its cup of tea, but the current tailwinds were too hard to resist.

"We typically have little interest in commodity-exposed businesses, given their low through-cycle returns," the memo read.

"However, Imdex is atypical in this regard. Its products have significant intellectual property, can sustain above-industry growth rates and also sustain above-industry returns on capital."

As for Hub24, its share price remains flat for the year, but QVG absolutely loved the inward flows update released last month.

"We were — quietly — bracing ourselves for a soft flows number, given investor sentiment was awful in the December quarter and seemed to deteriorate as the quarter went on," read the memo.

"As it turned out, Hub24 added $2.8 billion of net inflows – a great effort and one that looked even better when Netwealth Group Ltd (ASX: NWL) and Praemium Ltd (ASX: PPS) subsequently released their flows."

This market positioning will serve them well in the coming years, according to QVG analysts.

"Part of our thesis on HUB is that they'll grow earnings faster than revenues in the future as they benefit from scale."

The post Fund reveals the type of ASX shares to buy for 2023, with 2 examples appeared first on The Motley Fool Australia.

How did your stock picking go this year?

It was a tough question to answer over family Christmas lunch this year. Unfortunately for my portfolio, I hold few ASX shares in the resource or utility areas of the market — the two best-performing sectors of the year.

As you can imagine, my 2022 returns have been abysmal, to put it lightly. The majority of my holdings are more tech-centric — which happens to be the worst-performing sector of the year. For context, the S&P/ASX 200 Info Tech Index (ASX: XIJ) is down 37% year to date.

However, it's important not to shift our goalposts. The ultimate success of investing is measured in five- or 10-year time periods. That's why I'm already planning to make the most of next year by buying high-quality ASX shares.

Running attack next year

After a punishing stint for 'growth-oriented' investments, some investors might be tempted to shy away from fast-growing ASX-listed companies. However, I would argue that the next six to 12 months could be extremely opportunistic to add these more forward-looking businesses.

In my opinion, the enticing investments with high-growth potential are Jumbo Interactive Ltd (ASX: JIN), Pro Medicus Limited (ASX: PME), and Imdex Limited (ASX: IMD).

Another one to consider on my list is Objective Corporation Limited (ASX: OCL), with a track record of annual earnings growth in excess of 20%. However, I'd need to see the share price below $8.50 before I felt confident adding this one to the portfolio.

My best defensive ASX shares for 2023

Many are worried about an impending recession next year as interest rates climb to their peak.

I believe the addition of some sturdy companies less susceptible to feeling an economic pinch can help reduce the overall volatility of the portfolio. In other words, these ASX shares are my favourites for 2023 to help me sleep better at night.

The most defensive two, in my opinion, are Sonic Healthcare Limited (ASX: SHL) and AUB Group Ltd (ASX: AUB). Despite any potential economic headwinds, I'd say there's a good chance people will continue to get blood tests and insure their valuables.

In addition to these, I think Lynas Rare Earths Ltd (ASX: LYC) and Codan Limited (ASX: CDA) are more antifragile than some might assume. Rare earths are commonplace in modern technology and are critical in the energy transition — any destabilisation of relationships with China could further exacerbate the problem. Meanwhile, Codan's communications division provides mission-critical products to both frontline workers and the military — areas of the economy that don't stop during a recession.

Income support

Lastly, in the event of a recession, we could all appreciate some extra money flowing in. That's why my final two best ASX shares to buy for 2023 are dividend payers.

Currently yielding 7.6% and 8.8%, JB Hi-Fi Limited (ASX: JBH) and Shaver Shop Group Ltd (ASX: SSG) are two well-capitalised and well-run retailers.

While retail tends to be hit hardest by weak economic environments, I trust these two companies have the balance sheets and the management to navigate the storm. Furthermore, both appear priced as though a tumultuous future is already factored in, trading on price-to-earnings (P/E) ratios of 9 times earnings.

The post I think these are the 10 best ASX shares to buy for 2023 appeared first on The Motley Fool Australia.

Let's say you have $1,000 to invest in ASX shares. If you were to buy S&P/ASX 200 Index (ASX: XJO) biotech giant CSL Limited (ASX: CSL), your $1,000 would buy you the grand total of precisely three shares, along with around $120 in change.

That's because CSL shares currently trade a little shy of $300 a pop — the highest individual share price of any company on the ASX.

If the thought of being the proud owner of just three shares doesn't exactly rock your world, perhaps you'd prefer to invest in some 'cheaper' options. Obviously, a smaller share price doesn't necessarily mean 'cheap', since a company's overall valuation is based on market cap. But companies trading at the lower end of the individual-share-price spectrum can certainly be more accessible (and indeed appealing) for many investors.

Furthermore, there are lots of high-quality companies trading on the ASX with share prices going for under a fiver. With that in mind, we asked our Foolish contributors to pop their thrifty thinking caps on and let us know which ASX shares they reckon are the best buys under $5 right now.

Here is what the team came up with:

8 best ASX shares under five bucks (smallest to largest)

• Volpara Health Technologies Ltd (ASX: VHT), $166.36 million
• Adairs Ltd (ASX: ADH), $385.46 million
• Imdex Limited (ASX: IMD), $875.67 million
• Core Lithium Ltd (ASX: CXO), $2.57 billion
• HomeCo Daily Needs REIT (ASX: HDN), $2.64 billion
• Harvey Norman Holdings Limited (ASX: HVN), $5.12 billion
• South32 Ltd (ASX: S32), $17.94 billion
• Telstra Group Ltd (ASX: TLS), $45.52 billion

(Market capitalisations as of 18 November 2022)

Why our Foolish writers love these ASX $5 finds

Volpara Health Technologies Ltd

What it does: Volpara "makes software to save families from cancer". Healthcare providers use Volpara's product to better understand a patient's cancer risk and guide recommendations on additional imaging, genetic testing and other interventions. The software can help radiologists perform their duties faster and more effectively.

By Tristan Harrison: Volpara continues to grow at an impressive pace. In the first quarter of FY23, cash receipts were up 23% to NZ$8.8 million. The healthcare company's annual recurring revenue (ARR) also continues to rise and is now above US$19 million.

Client retention rate remains high, and Volpara is hoping to grow its average revenue per user (ARPU) by selling more software modules to customers.

The gross profit margin is currently around 90% (which is high), so any extra revenue is highly beneficial to the bottom line. Volpara has the opportunity to reinvest extra gross profit into driving more growth by spending on further product development and marketing. The company is now focused on profitable growth.

Motley Fool contributor Tristan Harrison does not own shares in Volpara Health Technologies Ltd.

Adairs Ltd

What it does: Adairs is home furniture and decor retailer. It has an established network of more than 170 stores across Australia and New Zealand as well as an established and growing online channel.

By Matthew Farley: After plunging by around 44% year to date, I believe Adairs shares are now selling at an attractive discount. And at $2.25 as of Friday's close, the Adairs share price is also sitting substantially below its 52-week median price of $2.88 for its 52-week range, which makes it even more attractive to me right now.

One thing I like about the company is its revenue growth over the past couple of years. Adairs' group sales have grown from $388.9 million in FY2020 to $564.5 million in FY2022. The company expects sales revenue to grow further this fiscal year to between $625 million and $665 million.

Due to the market sell-off over the past year, Motley Fool's chief investment officer Scott Phillps recently highlighted the fact that some ASX retail shares are now trading at low valuation ratios. With a current price-to-earnings (P/E) ratio standing at just 8.7, arguably, Adairs is one of them.

Motley Fool contributor Matthew Farley does not own shares in Adairs Ltd.

Imdex Limited

What it does: Founded 42 years ago, Imdex has grown into a truly global tech company with sales in more than 100 countries. The business provides software solutions to the mining industry for optimising drilling and providing ore insights and actionable analytics.

By Mitchell Lawler: Imdex shares were perched at $2.20 apiece at the close of trade on Friday, amounting to a market capitalisation of around $875 million. The profitable tech company is a minnow relative to the broader Australian share market.

However, I believe the financial history of Imdex should speak volumes. Since the end of 2015, the company has evolved from a barely profitable biz raking in $145 million in revenue, to a profit printer with $341.8 million in revenue in FY22.

Despite its historical success, Imdex is still tinkering with new technology. Recently, Fortescue Metals Group Limited (ASX: FMG) entered a joint venture to implement the first commercial use of Imdex's Blast Dog tech.

Motley Fool contributor Mitchell Lawler does not own shares in Imdex Limited or Fortescue Metals Group Limited.

Core Lithium Ltd

What it does: Core Lithium is the Australian lithium developer behind the Finniss Project in the Northern Territory. Management claims it to be the most capital-efficient lithium project with arguably the best logistics chain to markets of any Australian lithium project.

By James Mickleboro: Core Lithium shares closed of Friday at $1.40 apiece, which is meaningfully lower than the 52-week high of $1.88 it reached just a few days ago. This weakness has been driven by concerns that the Finniss Project could run behind schedule and fears that lithium demand is softening in China.

However, the online lithium auction results from rival Pilbara Minerals Ltd (ASX: PLS) this week appear to demonstrate that demand is as strong as ever. In light of this and the expectation that lithium prices will remain high for some time, I think this is a buying opportunity for investors. Especially given that Core Lithium shares are trading at a reasonably modest 8x FY2024 earnings based on Macquarie's forecasts.

Motley Fool contributor James Mickleboro does not own shares in Core Lithium Ltd or Pilbara Minerals Ltd.

HomeCo Daily Needs REIT

What it does: HomeCo Daily Needs REIT is an Aussie real estate investment trust (REIT) focused on convenience-based assets. It boasts 53 properties, $4.6 billion of assets under management, and a 99% occupancy rate.

By Brooke Cooper: The HomeCo Daily Needs REIT has had a good run lately. Its funds from operations lifted 30% year on year in the 2022 financial year, while its net tangible assets rose 12%.

The trust has also announced more than $75 million worth of new development projects to be commenced this financial year.

Despite such tailwinds, the ASX 200-listed REIT's share price has tumbled 20% year to date to now trade at $1.27. Such a fall might have presented a buying opportunity, if Goldman Sachs is to be believed. The broker has a buy rating and a $1.57 price target on the share.

Motley Fool contributor Brooke Cooper does not own shares in HomeCo Daily Needs REIT.

Harvey Norman Holdings Limited

What it does: Harvey Norman Holdings Limited is the franchisor of Harvey Norman, a leading Australia-based retailer that sells home furniture and household goods.

By Bronwyn Allen: Personally, I like investing in the permanent cultural tailwind of Australia's property mania. We love upgrading our homes when our finances allow. We're very house-proud and increasingly partial to luxury furnishings, interior design, and the latest electronics.

We love watching The Block and spend millions on home renos annually. These are long-term trends. A strong, short-term trend also underway is that thousands of us are relocating from the expensive capital cities to cheaper regional areas since COVID ushered in the era of permanently working from home.

And when people change homes, they buy new stuff. I believe all of this bodes well for the iconic furniture and household goods retailer, Harvey Norman.

For the hard numbers analysis, let's look to broker Goldman Sachs. It's positive on the company with a price target of $4.80 and very healthy forecast dividend yields of 9% in FY23 and a bit below 8% in FY24.

Motley Fool contributor Bronwyn Allen owns shares in Harvey Norman Holdings Limited.

South32 Ltd

What it does: South32 is an ASX 200-listed miner with a focus on uncovering and digging up aluminium, manganese, silver, lead, zinc, and metallurgical coal across three continents. It has a market cap of just under $20 billion.

By Bernd Struben: With its focus on metals critical to a low-carbon future, I believe the outlook for South32 is promising. And I think the price for its met coal (used for steel making) is undervalued today compared to the rocketing price of thermal coal (used to generate electricity).

Katana Asset Management's Romano Sala Tenna says the miner "has tier-one assets in tier-two commodities".

South32 shares do run the risk of "some downgrades in the coming months" with cooling commodity prices, he said. However, "They've been one of the best companies in terms of capital management."

Down 2.5% year-to-date, the South32 share price has still outperformed the benchmark in 2022. At current prices, the stock pays a 9.4% trailing dividend yield, fully franked.

Motley Fool contributor Bernd Struben does not own shares in South 32 Ltd.

Telstra Group Ltd

What it does: Telstra is the leading provider of telecommunications, mobile and internet services in Australia

By Sebastian Bowen: Despite being a relatively large ASX 200 company, Telstra asks well under $5 per share. The telco has been going flat out with its restructuring and cost-cutting programs in recent years. After the success of its T22 plan, Telstra is now undertaking its T25 strategy and has just completed its corporate restructuring.

I believe this has the potential to rewrite the valuation Telstra commands. We've already seen Telstra secure some generous valuations for some of its underlying assets, such as its mobile towers. I feel there is plenty of potential for the market to place a premium valuation on some of the telco's other assets too.

As such, I think this is a great company to hold onto going forward, with a nice dividend to keep you company as well.

Motley Fool contributor Sebastian Bowen owns shares in Telstra Group Ltd.

The post Ballin' on a budget: The best ASX shares to buy for under $5 appeared first on The Motley Fool Australia.

The uncertain investing environment continues to make stock-picking a hazardous task.

However, buying ASX shares that represent prudent business models increases the chances of making money in the long run, after riding out shorter-term bumps.

This is especially true of small-cap companies, which have been heavily discounted over the past 12 months. They are often high beta, meaning that while they lose heavily in dark times, they can also gain spectacularly as conditions recover.

The team at QVG Capital this week named three small-cap ASX shares that it holds and explained why they have such faith in them:

The resiliency of this business is still under the radar

Imdex Limited (ASX: IMD) is a stock not often mentioned, but the business has been quietly plugging away serving clients in a very profitable sector in Australia.

The company provides technology, equipment and services to the mining industry.

It seems investors are starting to notice, with the Imdex share price climbing 4.9% in October after a 14.3% climb in September.

"Imdex reported September quarter revenue 22% ahead of the same quarter last year and 12% ahead of the June quarter," read QVG Capital's memo to clients.

"This was greater than our and consensus expectations."

The cyclical nature of mining makes investors anxious about buying into companies like Imdex, but the analysts insisted this was not a concern. 

"Fears around… cyclicality cause investors to under-appreciate the operational changes that have gone on within Imdex to make it a more resilient business," read the memo.

"This and significant investment in R&D make us very bullish on the long term outlook for the company."

A fundies' favourite at the moment

Investment software provider Hub24 Ltd (ASX: HUB) similarly gave a positive performance report, according to the QVG team.

"HUB24 had a very strong September quarter trading update, which showed resilient inflows on to the platform," read the memo.

"Given the nature of financial markets, we were impressed with the strength of HUB's flows. Commentary around revenue margins and operating cost growth were also encouraging."

The Hub24 share price has fallen 15.2% since the start of the year, although it has returned more than 180% over the past five years.

Stocks for the investment platform seem to be a bit of a darling among professional investors at the moment.

According to CMC Markets, nine out of 13 analysts currently rate Hub24 shares as a strong buy.

Not love at first sight

The QVG Capital team admitted it was not a fan of US family safety app Life360 Inc (ASX: 360) when it first floated three years ago.

"Due to the company being loss-making and high churn in the user-base we were initially slow to warm to the 360 story and did not participate in its IPO."

But now the analysts like what they see.

"In the three or so years since the company listed it has made good progress in improving the product, reducing churn and moving towards profitability," read the QVG memo.

"The announcement of significant price increases for the monthly subscription saw a strong re-rating in October as the market came to understand the [company's] latent pricing power and implications of this for an accelerated path to profitability."

The team also noted Life360 already boasts a significant user population and a paying customer base.

"The app is particularly popular in the US with over 40 million free users and over 1.3 million paid users."

After losing as much as three-quarters of its valuation this year, the Life360 stock price has now recovered to be 35% down in 2022.

The post 'Very bullish': 3 small-cap ASX shares QVG is loving right now appeared first on The Motley Fool Australia.

At the event, a number of CIOs and portfolio managers from within Pinnacle's network of affiliated asset managers provided insights. This includes portfolio managers from specialist small cap fund managers Spheria Asset Management and Longwave Capital.

Two small cap ASX shares that these portfolio managers rate highly right now are listed below. Here's what they are saying about them:

Imdex Limited (ASX: IMD)

David Wanis from Longwave Capital Partners picked out mining technology company Imdex at the event. Its technology allows drilling contractors and resource companies to safely find, mine, and define orebodies with precision and at speed.

The portfolio manager highlights that Imdex is a technology business generating earnings and cash flow as well as spending big on research and development activities. Yet despite this, the company is valued materially less than some tech companies that are built largely on hope. Brainchip Holdings Ltd (ASX: BRN) with its $1.7 billion market capitalisation springs to my mind here.

Wanis commented:

Imdex is a mining technology business. It's a real business – real revenues, real earnings, real cash flow – but it's also a business that's invested almost $100 million in R&D over the past five years in new products to grow their business into new markets. And if we think about how the market values a company like Imdex versus some of these 'tech hope stocks' in the market today, there's a massive disconnect. There's a big disconnect between the doers – the companies who are actually innovating and executing – versus those that are promising and are built off hype.

We think what we'll see in the very short term is an improvement in their mining technology as a percentage of their revenue that will lead to an expansion in their EBITDA margins. But strategically longer term it'll also potentially expand their market size by four times – doubling from existing into new exploration, and then from exploration into production."

NZME Ltd (ASX: NZM)

Spheria's Asset Management portfolio manager, Matthew Booker, picked out NZME (New Zealand Media and Entertainment) at the event. He highlights that NZME is going from old world to new with the growth in the digital side of their business.

Booker points out that the New Zealand market is behind Australia by a few years in respect to real estate listings. This bodes well for NZME's OneRoof platform.

He explained:

The big kicker, we believe, is the digital aspect to the business – so they've got a business called OneRoof and it's similar to Domain here. It's the number two player in the market. It's going from print, it's going to digital, it's probably 5 – 10 years behind the Aussie market. So, there is going to be a lot of money made in that space.

With OneRoof NZME have the number two platform, they've got the number two audience, they've got the number two inventory, they are going to be that number two player in that market and that's a valuable position going forward. "NZME is a structural growth story. We think there's lots of money to be made here. The balance sheet is gone from $100 million of debt to net cash. The risk is very low, there's a rerate opportunity with this business.

The post Portfolio managers name 2 small cap ASX shares to watch appeared first on The Motley Fool Australia.

A brand new deal with S&P/ASX 200 Index (ASX: XJO) giant Fortescue Metals Group Limited (ASX: FMG) hasn't been enough to save one All Ordinaries Index (ASX: XAO) share from the red on Monday.

Mining services and technology provider Imdex Limited (ASX: IMD) released its full-year results alongside news of an agreement with the iron ore goliath this morning.

At the time of writing, the ASX All Ords share is trading for $1.935, 4.68% lower than its previous close.

Let's take a closer look at the latest from Imdex.

ASX All Ords share teams up with Fortescue Metals

ASX All Ords share Imdex has signed a three-year agreement with Fortescue Metals' joint venture Iron Bridge.

The agreement will see Imdex's mining-support technology Blast Dog used at the Iron Bridge Operations in the Pilbara region.

Imdex expects the tech to generate $13 million over its initial term.

Blast Dog is a blast hole sensing and physicals measurement technology. It can be semi-autonomously deployed to log material properties and blast hole characteristics.

Imdex CEO Paul House commented on the news potentially weighing on the ASX All Ords share today:

The commercial success of BLAST DOG reflected in today's announcement is a credit to Imdex's research and development team and their drive to make a difference in the mining industry.

We are not aware of any other technology that has the capacity to produce the same quantity and quality of pre-blast rock data and provide as large an impact on downstream processes.

Imdex share price drops following full-year results

The ASX All Ords share is trading in the red today. That's despite posting record revenue and earnings before interest, tax, depreciation, and amortisation (EBITDA). Here are the highlights of its full-year earnings:

• $341.8 million of revenue – up 29.3% on that of the prior corresponding period (pcp)
• $104.9 million of EBITDA – a 38.9% improvement
• Net profit after tax (NPAT) of $44.7 million – up 41%
• Earnings per share (EPS) came to 11.3 cents – a 41.3% lift on that of the pcp
• Announced a 1.9 cent fully-franked final dividend – a 42% improvement

House also commented on the company's earnings, saying:

[Financial year 2022] was defined by a combination of positive market demand, offset by challenging labour and supply chain considerations. Our [full year] results demonstrate the strength of our business model, our objective to outperform industry market growth and the responsiveness of our global teams in all conditions.

The ASX All Ords share also noted demand for its products remains strong, as do long-term drivers for industry activity and development.

Though, it noted absenteeism and supply chain issues may continue to impact its customers in the near term.

The post Guess which ASX All Ords share just inked a new deal with Fortescue appeared first on The Motley Fool Australia.

ASX mining shares were the star performers last quarter, with the basket coming clearly out on top.

The S&P/ASX 300 Metal & Mining Index (ASX: XMM) gained 14.7% between December 31 and March 31. The S&P/ASX 200 Materials Index (ASX: XMJ) also rose by 11.9% during the period. In contrast, the broader S&P/ASX 200 Index (ASX: XJO) edged just 0.74% higher.

While some names flourished and kept the sector easily afloat, it wasn't bonanza shareholder returns for everyone involved.

Here are the laggards of the mining sector for the three months of trade to 31 March 2022.

Underperforming ASX mining shares last quarter

We'll talk in terms of percentage change for the quarter, as the list differs when talking in terms of points and dollars.

Taking out the top spot for ASX mining laggards is Australian Strategic Materials (ASX: ASM), which slid 28.8% for the three months. This was followed closely by Chalice Mining Ltd (ASX: CHN) with a 26.3% loss.

Perenti Global Ltd claimed third spot, falling 19.35%.

Perhaps surprisingly, nickel player Nickel Mines Ltd (ASX: NIC) saw an 11.9% down-step too. Even as nickel prices surged to record heights in the quarter, the company's relationship with a large nickel supplier and trader had the market nervous about the stock.

Not all the laggards were in the red, however. Further down the list are shares such as Alumina Limited (ASX: AWC) with a 7.5% gain. That's not bad, but not great compared to the other winners.

One of the larger ASX mining shares, Pilbara Minerals Ltd (ASX: PLS), finished flat for the quarter.

Below are the top 10 underperforming ASX mining shares for the March quarter in table form.

The post All that glitters isn't gold: Here are the worst performing ASX mining shares of the quarter appeared first on The Motley Fool Australia.

The share price of mining technology provider Imdex Limited (ASX: IMD) suffered today following the release of the company's results for the first half of financial year 2022.

As of Monday's close, the Imdex share price is $2.89, 2.36% lower than it was at the end of last week.

However, earlier in the day the company's stock reached $3.15, representing a 6.4% gain.

Imdex share price slips despite record revenue and profits

• $167.8 million of revenue – 34.9% more than in the first half of financial year 2021
• Record earnings before interest, tax, depreciation, and amortisation (EBITDA) of $51.5 million ­– up 55.1%
• $24.4 millon of net profit after tax, an 80.8% increase
• $30 million of cash at the end of the half, 31% more than at the end of the prior comparable period
• Fully franked 1.5 cent interim dividend

Over the course of the 6 months ended 31 December, the company saw its activity increase in all regions, particularly Australia and the Americas.  

Further, 35% more of the company's sensors were on hire during the half compared to the prior comparable period.

However, its pace of growth was hampered by labour restrictions and wider industry pressures.

Due to said pressures, the company increased its manufacturing capabilities and inventory levels to ensure it can continue supporting its clients.

Finally, IMDEX HUB-IQ's connected revenue increased by 46% last half.

The fully franked 1.5 cent interim dividend declared today represents a 24% payout ratio. It's also 50% more than the company handed out through its previous interim dividend.

What else happened during the first half?

Over the half just gone, Imdex acquired the MinePortal software from DataCloud International for around $20 million. It expects the acquisition will boost its growth within the mining production market.

It also acquired a 30% interest in Datarock Holdings for $5.5 million. The purchase will allow Imdex to offer image analysis software, artificial intelligence (AI) capabilities, and additional answer products.

The number of client sites trialling IMDEX BLAST DOG including integration with both IMDEX HUB-IQ and MinePortal software was expanded last half.

Imdex also released an IMDEX HUB-IQ software-as-a-service (SaaS) module for quality assurance survey data and next generation aiSIRIS software.

The company also released its first sustainability report.

What did management say?

Imdex CEO Paul House commented on the company's results for the first half, saying:

The combination of 35% revenue growth, 55% EBITDA growth, and 81% NPAT growth, is the strongest possible statement of the underlying quality of the Imdex business and the Imdex business model.

Our significant uplift in earnings reflected strong demand across all regions, particularly for our higher margin sensors and software.

What's next?

Those interested in the Imdex share price might be excited to learn the company's plan to grow in the future.

To achieve sustainable earnings growth, it will be growing its core business in resources-focussed exploration and development and expanding its technologies within the adjacent mining production market.

It will also be investing further into research and development and leveraging its capabilities in the mining production market.

Finally, it will be looking for more acquisition or collaboration opportunities to build on its geoscience analytics, AI, and computer visualisation capabilities.

It expects drivers of growth will include new innovations, discoveries, decarbonisation, and strong commodity prices.

Looking to the remainder of financial year 2022, Imdex expects additional expenses to come from the inflationary environment.

It also anticipates that COVID-19-induced challenges will remain in some form for another year or two. Though, it states it's in "its strongest position" to face the risks front on.

Imdex share price snapshot

The Imdex share price has slipped 0.6% year to date.

However, over the 6 months ended 31 December, it has gained 44%.

It is also currently 56% higher than it was this time last year.

The post Rock and roll: Why the Imdex (ASX:IMD) share price slid downhill today appeared first on The Motley Fool Australia.

ASX software-as-a-service (SaaS) shares proved their worth last year. The business model focused on sticky recurring revenues that brought home the cheese for some Aussie-listed companies in 2021.

Interestingly, often SaaS shares slot into the information technology sector. This is a sector that severely underperformed the S&P/ASX 200 Index (ASX: XJO) in 2021, with tech sliding 2.8% while the broader market rallied 13%. Yet, a number of SaaS companies racked up market-beating returns for their shareholders.

Let's take a look.

ASX SaaS shares giving investors the juiciest rewards last year

Imdex Limited (ASX: IMD)

Shares in ASX-listed Imdex hit a home run last year, with the share price rallying 71% during the year.

The mining equipment and technology company attracted the market's attention with a solid FY21 result. Impressively, the $1.12 billion company increased its revenue by 11.2% to $264.4 million year on year. Additionally, net profits surged 45% to $31.67 million.

While a substantial portion of the company's revenue is comprised of once-off sales and equipment rentals, there is a growing portion of SaaS-based revenue. Between FY17 to FY21, rental and SaaS revenue has increased from 44% to 57% of total revenue.

Readytech Holdings Ltd (ASX: RDY)

Entering the arena of the five best ASX SaaS shares of 2021 is ReadyTech Holdings. This company provides cloud-based software to the education, employment, and government sectors. For shareholders, ReadyTech also provided sizeable returns last year — rising 87% in the 12-month timeframe.

According to its FY21 full year presentation, the education software provider achieved respectable growth during the financial year. For instance, revenue increased 27.4% to $50 million compared to the previous year.

Although, earnings decreased to $2.16 million from $3.94 million. However, it's worth noting ReadyTech acquired Open Office for an upfront price of $54 million during this time.

WiseTech Global Ltd (ASX: WTC)

Making the podium finish is cloud-based logistics software provider, WiseTech Global. In 2021, the company dished out a 90% gain to investors.

WiseTech continued to grow its top line during 2021, a year plagued by supply chain and logistics issues. Perhaps this enabled a more robust trading period for the ASX SaaS share. In FY21, revenue increased 18% to $507 million compared to the prior corresponding period.

Additionally, the sticky nature of the company's software was reflected in its percentage of recurring revenue, at nearly 96%.

Janison Education Group Ltd (ASX: JAN)

Breaking into the 100%-plus return club last year and finding itself as the second best-performing ASX SaaS share is Janison Education. The online school assessments provider experienced a 130% rise in its share price in 2021 — a 10 times better return than the benchmark index.

For those unaware, Janison offers assessment platforms to a wide array of customers including the New South Wales government, NAPLAN, Chartered Accountants, and the University of London — to name a few. It appears shareholders weren't too concerned about the widening losses in FY21. Notably, the company grew revenue by 38% to $30.2 million.

Janison has $80 million to $100 million in revenue on its radar through growing its customer contracts and consolidating the digital assessments industry with its acquisition strategy.

Life360 Inc (ASX: 360)

Taking the top spot as the best ASX SaaS share of 2021 is the high-flying family safety service, Life360. Shares in the company gained an impressive 156% in a busy year.

Investors took a closer look at Life360 after Randi Zuckerberg joined the board of the company. At the time, this was considered a vote of confidence to Wilson Asset Management portfolio manager Tobias Yao.

Since then, the company has gone on to make two acquisitions — Jiobit and Tile. These acquisitions totalled more than $200 million worth of investments in 2021.

The post Sticky revenue winners. Here are the 5 best ASX SaaS shares of 2021 appeared first on The Motley Fool Australia.

The Imdex Limited (ASX: IMD) share price has started the day off in the green and is climbing 2% higher at $2.68.

Imdex shares have rallied 13% this past week, and another 13% this month as well.

That's well ahead of the S&P/ASX 200 index (ASX: XJO) which has posted a loss of 3% in that time.

Why is the Imdex share price gaining ground lately?

Imdex shares had been trading sideways since the company released its FY21 earnings report.

At that time, the provider of technology and equipment to the mining industry's share price popped 11% on the day, but returns had been fairly uninteresting from that point.

That is however until we finished the walk through September, where investors began to show love for Imdex in the markets again.

Despite no price-sensitive news, bullish investors began driving the price action from $2.32 to $2.45 per share in the first week of October.

Then, yesterday, the company announced some positive updates from its annual general meeting (AGM), noting it had made a positive start to FY22.

It stated that Q1 FY22 revenue was already up 41% from the same time last year, and 13% higher than the previous quarter.

This is the highest Q1 top-line earnings result the company has achieved since 2018 by at least $18 million, per the AGM presentation.

Can Imdex keep up the momentum? One leading broker seems to think so. Let's take a look at what investment firm Jeffries is saying about the Imdex share price.

Can Imdex keep growing its earnings?

Jeffries certainly believes it can, especially given the company's record quarterly revenue result. The broker has updated its modelling and raised its earnings outlook for Imdex from the company's updates.

As such, it reiterated its buy recommendation on Imdex shares, which implies analysts see further growth potential as a possibility.

The broker feels there are upcoming catalysts investors might want to consider as well too, as "the pace of recovery continues to surprise to the upside", referring to broad ASX earnings growth and the recovery of the real economy.

With this in mind, it "expect(s) the next catalyst to be earnings and the inherent operating leverage that would drive further upgrades", which it says could be bolstered by product development after the pandemic.

With FY22 revenue coming in so strong this early in the year, the broker lifted its FY22-24 estimates on Imdex's EBITDA by 13-15% and its net profit after tax (NPAT) forecasts by 18-20%.

As The Motley Fool reported in August, some fund managers are seeing this upside in Imdex shares too, with Fairmont Equities managing director providing an optimistic look on the company's shares in a note to clients.

Imdex share price snapshot

The Imdex share price has climbed 55% this year to date and has posted a return of 98% in the last 12 months.

These outsized gains have outpaced the broad index's 12 month return of around 25%.

The post What this broker is saying about the Imdex (ASX:IMD) share price appeared first on The Motley Fool Australia.

The Imdex Limited (ASX: IMD) share price has finished the day 7.35% higher. It closed the session at $2.63 having earlier hit an intraday high of $2.80.

Imdex shares were on the move after the mining technology company released the presentation of today's 2021 annual general meeting (AGM), which contained several key updates.

Here are the details.

Promising outlook for FY22

In its AGM, the company detailed several investment highlights that covered its FY21 performance. It also voted on standard resolutions regarding executive renumeration and election of board members.

The company had already covered its performance for the year in its FY21 earnings report released in August, where it also gave some colour on FY22 guidance.

In that report the company noted it had a positive start to FY22, with "strong demand for the company's IMDEXHUB-IQ technologies".

It stated that as of 13 August, sensors in use were up 13% from the year ended 30 June 2021. The Imdex share price gained 11% the day of the company's earnings release.

Today the company provided additional colour on its current progress and FY22 earnings outlook.

The presentation notes Q1 FY22 revenue is up 41% year-on-year from 2021, and revenues have also increased 13% from the prior quarter.

This represents the company's highest first-quarter result since at least 2018, per the presentation.

Aside from this, the company also covered the impacts of COVID-19 on its end-markets, and concluded there has been a net positive effect from the pandemic on the "demand for IMDEXHUB-IQ cloud-based technologies and software".

Today's gains means the Imdex share price has climbed 11% in the past week and 13% over the past month.

Imdex share price snapshot

The Imdex share price has soared 52% this year to date, and 95% in the past 12 months.

At the time of writing, Imdex has a market capitalisation of $971 million.

Its share price return over the past year has also outpaced the S&P/ASX 200 Index (ASX: XJO)'s gain of around 25%.

The post The Imdex (ASX:IMD) share price leaps 7% following AGM appeared first on The Motley Fool Australia.

With the S&P/ASX 200 Index (ASX: XJO) still hovering at record highs this results season, investors may have to turn to lesser-known businesses for a bargain on the way up.

Fairmont Equities managing director Michael Gable told his clients that he has an optimistic outlook for Australian shares.

"In the last few days, we have once again seen the US markets come back to the 50-day moving average and bounce off it, which means that the uptrend remains in place for now," he said.

But Fairmont reported 2 specific smaller-cap ASX shares that it is especially positive on:

Can Genworth deal with a potential break-up of a 50-year relationship?

Genworth Mortgage Insurance Australia Ltd (ASX: GMA) is in the business of providing lenders' mortgage insurance for home loans.

This ASX share holds a field-leading 31% share of the market, according to Fairmont's The Dynamic Investor report.

Its results this month exceeded expectations.

"Underlying net profit after tax (NPAT) for the six months to 30 June 2021 (1H21) was ahead of market expectations and underpinned by better-than-expected underwriting profit, which was driven by lower net claims incurred (-51%)."

One current risk spooking potential investors is that its contract with Commonwealth Bank of Australia (ASX: CBA) is up for renewal. 

While Genworth has enjoyed a 50-year relationship with the banking giant, there is no absolute guarantee that would continue.

The stock dropped from around $2.80 in mid-June to $2.26 on Tuesday afternoon.

Gable's team reckons the current price is worth it even if the CBA deal is lost.

"At current levels, the market appears to be heavily discounting the shares relative to its adjusted NTA [net tangible assets] should the CBA contract be lost, with the price/NTA ratio well below the usual range," the Fairmont report read.

"On an 'as is' basis, the fundamentals are improving. In particular, GMA's improving profitability, strong reserving (which was increased in 1H21) and strong capital position leaves it well-positioned to deliver strong shareholder returns."

Genworth shares typically trade between 20% to 40% discount to NTA, according to Fairmont.

"Short interest in GMA has been declining materially since January 2020 and now sits at [approximately] 1%."

Can Imdex join the big boys?

Imdex Limited (ASX: IMD) is a technology and equipment provider for the mining industry.

"The company has a strong market presence on 70% of mineral drilling projects globally and generated sales in over 100 countries," reported Fairmont. 

"Imdex directly supports 18 of the top 50 mining companies globally and has long-standing relationships with most of the top drilling clients."

The company's financial results this month showed earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin shot up to 28.5%.

Imdex declined to provide future guidance. However, Gable's team suspects financial year 2022 "appears likely to be another year of strong growth".

Imdex shares are up more than 34% for the year. However, they have dipped from $2.49 earlier this month to $2.30 as of Tuesday afternoon.

"The shares are currently trading on a 1-year forward P/E multiple of [approximately] 23x, which we do not consider to be demanding in the context of earnings per share growth of 15% over FY21-24 on a CAGR [compound annual growth rate] basis."

But for those buying in now, the biggest uplift could come from a trigger that is completely unrelated to anything Imdex itself does.

"Inclusion in the S&P/ASX 200 Index is a potential catalyst for the shares."

The business has a market capitalisation of around $900 million. The smallest company in the ASX 200 is Perseus Mining Limited (ASX: PRU), with a market cap of $1.89 billion.

The post 2 cheap ASX shares now ready to take off appeared first on The Motley Fool Australia.

The S&P/ASX 200 Index (Index:^AXJO) is clinging to its record high with a top broker upgrading these ASX shares to "buy" ahead of the August reporting season.

This shows that there's still value to be found if you cared to look even as investors are sitting on their hands.

They want to see the profit reports before deciding if our market is worthy of being pushed further into record territory.

ASX shares upgraded to buy ahead of reporting season

But UBS isn't waiting. It believes traditional ASX media shares represent good value and upgraded the Nine Entertainment Co Holdings Ltd (ASX: NEC) share price and News Corporation Class B Voting CDI (ASX: NWS) share price to "buy".

The key thing about these shares is their low probability of delivering an unpleasant earnings surprise next month.

Further, the broker reckons there is upside potential to the sector's earnings. This assumes economic growth remains favourable, notwithstanding the nearer-term headwinds from COVID-19 lockdowns.

Upside for these ASX media shares

"COVID-19's impact in the pcp will drive material y/y ad revenue growth for traditional media names in the June half," said UBS.

"Other themes include the impact of recent deals with Facebook/Google; cost control (with selected investment in growth areas); and with balance sheets broadly repaired, we see dividends returning or increasing in FY22 and the potential for corporate activity."

The broker's 12-month price target on the Nine Entertainment share price is $3.10 and the News Corporation share price is $39.50 a share.

Upgraded to "buy" on earnings cycle

Another that got upgraded by UBS is the Imdex Limited (ASX: IMD) share price. The broker lifted its rating on the drilling services small cap to "buy" from "neutral" with a price target of $2.40 a share.

"Imdex is well positioned to leverage the strong multi-year exploration cycle that is potentially emerging, supported by strength in gold and copper prices and improved access to capital," said the broker.

"IMD's Reflex units on hire are at record levels, driven by North America and Australia, where drill rig utilisation is approaching the peak."

Still cheap after 50% rally

Imdex's South American operations are lagging but at least conditions are returning to pre-COVID levels.

And don't be put off by the Imdex share price's circa 50% rally over the past year. That's broadly consistent with its global peers and the rise in gold and copper prices.

The Imdex share price is still trading at around an 11% discount to the ASX small industrials. Further, it's probably facing an upgrade cycle thanks to increasing exploration activity.

The post Why UBS just upgraded these 3 ASX shares to "buy" appeared first on The Motley Fool Australia.

Respected fund manager Wilson Asset Management (WAM) has recently identified two ASX shares that it thinks are buys.

WAM operates several listed investment companies (LICs). Some focus on larger companies like WAM Leaders Ltd (ASX: WLE), whilst others go for smaller companies like WAM Research Limited (ASX: WAX) and WAM Microcap Limited (ASX: WMI).

WAM Microcap targets small cap ASX shares with a market capitalisation under $300 million at the time of acquisition.

WAM says WAM Microcap targets the most exciting undervalued growth opportunities in the Australian microcap market.

The WAM Microcap portfolio has delivered gross returns (that's before fees, expenses and taxes) of 25% per annum since inception in June 2017, which is superior to the S&P/ASX Small Ordinaries Accumulation Index average return of 11.6%.

These are two ASX shares that WAM outlined in its most recent monthly updates:

Dusk Group Ltd (ASX: DSK)

This is a pick by WAM Microcap.

Dusk is the leading Australian omni-channel specialty retailer that is focused on home fragrance products.

The ASX share recently gave a trading update for the third quarter of FY21 with sales of $27.7 million, up from $18.4 million in the prior year. Financial year to date sales were $118.7 million, up from $77 million in the prior corresponding period.

Wilson Asset Management also pointed out that full year sales guidance is for a range of between $147 million to $151 million. It's delivering a lot of growth.

Dusk had a strong inventory position for Mother's Day in May according to WAM. New stores will further add to growth, it has added 10 new stores over the last year.

The fund manager is positive on Dusk because the disciplined cost management provides the business with operating leverage as it rolls out new stores across the country.

Imdex Limited (ASX: IMD)

This is a pick by WAM Research.

What's Imdex? The LIC explains that it's a global provider of end to end technology solutions for mining exploration and development, developing drilling optimisation products and sensors to provide real-time data.

Imdex is truly a global business with operations in the mining regions in Asia Pacific, Europe, Africa and the Americas. It has a presence on 70% of minerals drilling projects globally and sales in more than 100 countries.

The ASX share has benefited from strong copper prices, which reached almost US$10,000 per tonne in April, which is the highest in 10 years.

WAM Research explained where it's seeing opportunities. Clean energy and the battery mineral space continue to see significant investments. This help gives copper, nickel and lithium a strong outlook because of all of the demand.

Wilson Asset Management also thinks that the company will benefit from higher global exploration budgets after years of under-investment.

The post 2 top ASX shares that WAM thinks are buys appeared first on The Motley Fool Australia.

Imdex Limited (ASX: IMD) shares are leaping higher in early morning trade after the mining technology company released its results for the first half of the 2021 financial year (H1 FY21). At the time of writing, the Imdex share price has jumped 8.7% to $1.87.

What did Imdex report?

The Imdex share price is on the move after the company revealed this morning it will maintain its dividend despite a drop in revenue from the previous corresponding period.

Imdex reported revenue of $124.3 million for H1 FY21. That was 3% lower than the $127.7 million revenue figure for H1 FY20.

Earnings per share (EPS) of 3.42 cents also slid, down 28%. Net profit after taxes (NPAT) was $13.5 million, down 26% from the $18.2 million reported in the first half of 2020's financial year.

Earnings before income, tax, depreciation and amortisation (EBITDA) was up 6% from H1 FY20, to $33.1 million.

The company also reported a 33% lift in cash from operations and an 84% increase in its net cash position, to $47 million.

Imdex declared a fully franked interim dividend of 1.0 cent per share (CPS).

Commenting on the results, Imdex CEO Paul House said:

Activity increased in the majority of our regions, underpinned by strong industry fundamentals. While COVID continued to disrupt operations it heightened demand for our cloud-connected technologies.

The uplift in earnings reflects three key factors: an increasing percentage of revenue from our higher margin rentals and software business; leveraging the benefits of our digital transformation; and our ongoing focus on streamlining operations.

The strength of our balance sheet enables us to accelerate targeted R&D in line with demand and leverage opportunities for acquisitive growth.

Looking ahead, House added:

While the short-term risks associated with COVID remain, we have a resilient business and a strategy focused on delivering sustainable earnings growth for shareholders.

The company pointed to strong commodity prices supporting its clients, and said resource companies and drilling contractors are turning to new technologies to increase productivity and safety.

Imdex share price snapshot

Incorporating this morning's intraday gains, the Imdex share price is up 10% so far in 2021.

That compares to a 2.8% gain on the All Ordinaries Index (ASX: XAO).

Over the past 12 months, Imdex shares have gained 36.5% and more than 140% since the lows from 25 March last year.

The post Why the Imdex (ASX:IMD) share price is leaping 9% today appeared first on The Motley Fool Australia.

Respected fund manager Wilson Asset Management (WAM) has recently identified two ASX shares that it owns in its portfolio.

WAM operates several listed investment companies (LICs). Two of those LICs are WAM Capital Limited (ASX: WAM) and WAM Leaders Ltd (ASX: WLE).

There's also one called WAM Research Limited (ASX: WAX) which looks at smaller businesses on the ASX.

WAM says WAM Research invests in the most compelling undervalued growth opportunities in the Australian market.

The WAM Research portfolio has delivered gross returns (that's before fees, expenses and taxes) of 15.8% per annum since the strategy changed in July 2010, which is superior to the S&P/ASX All Ordinaries Accumulation Index return of 8.9% per annum.

These are the two ASX shares that WAM outlined in its most recent monthly update:

Imdex Limited (ASX: IMD)

WAM described Imdex as a mining services and technology company that develops drilling optimisation products and sensor for mining companies to conduct minerals exploration. According to the ASX, Imdex has a market capitalisation of $664 million. 

The fund manager said that the company is set to benefit from increasing commodity prices in gold, copper, and iron ore, which form 82% of its commodity exposure and should contribute to increased levels of exploration expenditure in 2021.

Imdex has a net cash balance sheet and WAM thinks the company has the potential to make earnings accretive acquisitions.

In FY20 the ASX share saw its net profit decline by 17% to $21.8 million, however operating cash flow improved by 31% to $52.4 million.

In July 2020, Imdex acquired AusSpec International, which the company said was the world's leading provider of spectral mineralogy through its platform. The co-founder of AusSpec is described as the world's leading spectral mineralogy expert who has built an extensive spectral library over the past five years.

Imdex said that AusSpec has a four-year consistent and profitable growth profile and generates revenue through a software as a service (SaaS) model. The acquisition was immediately cashflow positive.

Australian Finance Group Ltd (ASX: AFG)

The fund manager said that this ASX share operates the largest aggregation platform of mortgage brokers in Australia, with around 3,000 brokers offering business finance, insurance and securitised products. According to the ASX, Australian Finance Group has a market capitalisation of $730 million.

With the company leveraged to new loan originations and refinancing for homeowners, the fund manager sees a positive outlook for the company going forward, driven by a combination of record low interest rates, government stimulus measures and improving consumer confidence.

Australian Finance Group recently gave an update at its annual general meeting (AGM). The quarter ending 30 September 2020 was a record quarter of lodgement activity in the residential broking division. October volumes continued with that momentum.

Significant government incentives at both a federal and state level have targeted the first home buyer market. Due to that, according to the company, the first home buyer market share activity has increased to 23% in October, up from 15% in the same period last year.

Looking at October trading showed increases in lodgements across the country. Lodgement volumes for October exceeded $6.7 billion for the ASX share. That was the highest the company has ever achieved and represented a 16% increase from October last year. WA saw the largest percentage increase in volume with lodgements increasing 41% from the same period last year. Queensland growth was 30%, South Australian growth was 25%, NSW growth was 7% and Victoria growth was 11%.

The post Top fundie names these 2 ASX shares as buys appeared first on The Motley Fool Australia.

Buyers might soon be flooding back into the market and these ASX small cap stocks could be major beneficiaries as they are the latest "buy" calls from brokers.

The highly anticipated market sell-off from the US presidential election didn't materialise despite the worst-case scenario playing out.

Market watchers warned that unless we got a clear winner, Wall Street could tank and take the S&P/ASX 200 Index (Index:^AXJO) down with it.

Why ASX small caps look like good "buys" now

It's 48 hours since the election and we won't know who's the next US president for at least another day. Adding to the uncertainty, Trump also launched legal proceedings to challenge the results.

But investors are taking all of this in their stride with equity markets rallying despite the less than predictable outcome.

Small caps could benefit more from this tailwind as high-risk investments outperform when fear gives way to greed.

In the overtaking lane

Following this train of thought, the Eagers Automotive Ltd (ASX: APE) share price is one to watch. The auto dealer announced two new property deals and UBS took the opportunity to repeat its "buy" recommendation on the stock.

Eagers bought three sites in Western Australia for $30.3 million and a 43,000m² strategic site in New South Wales from Charter Hall Group (ASX: CHC).

"The deals provide an immediate ~$8m PBT benefit (+4% vs FY21E) on lower occupancy costs, strengthen APE's tangible asset base and provide significant optionality for APE to reconfigure existing franchises," said UBS.

"APE remains highly leveraged to current robust trading conditions and we see further opportunities for upside across its business."

The broker's 12-month price target on the stock is $13 a share.

Key ASX small cap buy recommendation

Meanwhile, Morgans reiterated its "add" recommendation on the Nanosonics Ltd. (ASX: NAN) share price today following its trading update.

Management reported that consumables volumes and sales growth for its disinfection devices were returning to pre-COVID‐19 levels.

"This is an upgrade on previous commentary provided by management at the release of its FY20 results last August," said Morgans.

"The key catalyst is the commercial launch of the new product which management are expecting in FY22.

"We recommend clients buy this quality growth stock."

The broker's 12-month price target on the NAN share price is $6.86 a share.

Attractive valuation drives upgrade

Finally, the Imdex Limited (ASX: IMD) share price jumped 3.7% to $1.26 ahead of the market close today after Bell Potter upgraded the stock to "buy" from "hold".

The upgrade comes as the mining services company's share price declined around 17% over the past three weeks despite an improving outlook.

The broker noted that capital raisings by junior explorers was strong, which should drive demand for Imdex's drilling services.

Investors may have been disappointed by the delay in Imdex commercialising four new technologies, but this is more than reflected in the depressed stock.

"The steady recovery since Apr'20 and the strength of the tools business demonstrates the quality of IMD's business, which should benefit from cyclical tailwinds," said Bell Potter.

"Strength in capital raisings, as well as gold and copper prices indicate a very strong FY22e outlook."

The broker's 12-month price target is $1.45 a share.

The post Latest ASX small cap buy calls from top brokers appeared first on The Motley Fool Australia.

Mining technology provider Imdex Limited's (ASX: IMD) share price gained an impressive 19.8% in July. That far outpaced the 0.9% gain from the All Ordinaries (INDEXASX: XAO).

After more than four years of strong performance, Imdex's share price got hammered during COVID-19 panic selling in February and March. After hitting a record high share price of $1.71 on 26 February, Imdex's share price cratered 53% by March 25.

From there, the company's share price ran higher — with plenty of ups and downs along the way — to gain 66% by 31 July.

Year to date, the mining tech's share price is down 6.8%. At the current price of $1.37 per share, Imdex has a market cap of $531 million.

What does Imdex Limited do?

Imdex develops cloud-connected devices and drilling optimisation products to improve the process of identifying and extracting mineral resources for mining companies across the world. Its technologies include drilling fluid products, data solutions and geo-analytics services to improve exploration results by helping companies obtain accurate subsurface data and receive critical information in real-time.

Imdex operates in the Asia Pacific, Europe, Africa, the Middle East and the Americas.

Why did Imdex's share price leap 20% in July?

There was no single cause to drive Imdex's share price up 20% in July.

The Imdex share price likely benefitted from the rapid resurgence of most of the mining companies it supplies following the shock downturn in February and March.

On 7 July, Imdex also released a promising announcement to the ASX, stating it had acquired AusSpec International Limited for $8.5 million. $3 million of that was in cash with the remaining $5.5 million in Imdex shares. AusSpec is a leading provider of spectral mineralogy through its Artificial Intelligence (AI) Spectral InfraRed Interpretation System. Imdex reported its acquisition was immediately cashflow positive and would provide a recurring revenue stream.

On 20 July, Imdex also reported that, "interest in its cloud-connected technologies has spiked during the COVID-19 pandemic, the positive effect of which will flow through for the next 10 years".

Chief Executive, Paul House, noted that the impacts of the coronavirus on the way people in the mining industry were working had moved up the adoption of some of Imdex's products and services by as much as 12 months.

The post Why did the Imdex share price leap 20% higher in July? appeared first on The Motley Fool Australia.