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2 compelling blue chip ASX shares to buy: top fund manager

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The high-performing fund manager Wilson Asset Management (WAM) has recently identified some ASX blue-chip shares that it owns (or owned) in one of its leading portfolios.

WAM operates several listed investment companies (LICs). Two of those LICs are WAM Capital Limited (ASX: WAM) and WAM Research Limited (ASX: WAX).

There’s also one called WAM Leaders Ltd (ASX: WLE) which looks at the larger businesses on the ASX, which investors can call ASX blue-chip shares.

WAM says WAM Leaders actively invests in the highest quality Australian companies.

The WAM Leaders portfolio has delivered gross returns (that’s before fees, expenses, and taxes) of 15.5% per annum since its inception in May 2016. That is superior to the S&P/ASX 200 Accumulation Index average return of 9.1%.

These are the blue-chip ASX shares that WAM outlined in its most recent monthly update:

Endeavour Group is described as a leading hospitality and liquor business.

WAM said the company posted a very strong interim result, which showed a combination of “earnings resilience and disciplined management execution”.

It was noted that the half-year report revealed little impact from COVID-19-related interruptions on the retail business with momentum “continuing to build” in the hotels business as the Omicron COVID-19 variant impact subsides.

In the interim result, Endeavour reported group sales of $6.34 billion (down 0.3%), online sales of $603 million (up 24.8%) and net profit after tax (NPAT) of $311 million (up 15.6%).

The fund manager likes both the retail and hotel divisions of the ASX blue-chip share, which are benefiting from increased leisure and entertainment spending by households.

WAM believes there is a compelling capital expenditure investment profile and multiple growth avenues for Endeavour Group to pursue including its data strategy, the digital arm called ‘Endeavour X’, and private label brands.

Computershare is another business that is liked by the investment team at Wilson Asset Management.

This company operates share registries and provides software specialising in financial and share markets. WAM says that it’s one of the most interest-rate exposed companies on the ASX because it earns interest on cash balances.

It was noted that Computershare’s management quantified the exact exposure in its recent half-year result. A 100 basis point increase in average rates would lead to improved annualised earnings by 26 cents per share.

WAM clarified that Computershare generated $0.51 of earnings per share (EPS) in the 2021 financial year.

The fund manager pointed out that six rate rises are predicted for the US over the next 12 months.

It was only last month that Goldman Sachs raised its Federal Reserve forecast to be seven consecutive 25 basis point rate hikes in 2022.

For WAM, the Computershare earnings trajectory is “compelling”.

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