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Why this $7 billion ASX-listed company is a ‘hidden gem’: expert

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A little-known ASX stock that represents a supplier for the ubiquitous Chemist Warehouse chain is set to zoom ahead this year.

That’s the opinion of Prime Value portfolio manager Shih Thin Wong, who said that in turbulent times such as now, businesses with resilient demand would win.

“I want to be comfortable owning companies which I think will give me earnings growth profile regardless of the macro environment,” he told Switzer TV Investing

“And can control a number of elements that will drive growth internally… And I want to be owning companies that are less reliant on what’s happening in the global financial markets.”

One ASX share that fits all those criteria is New Zealand’s EBOS Group Ltd (ASX: EBO), according to Wong.

“It’s not a company which is really followed by Australian fund managers that closely. But it’s a hidden gem in the mid-cap space.”

Wong notes that one of EBOS’ clients is a huge retailer that all Australians will have shopped at one time or another. 

“It really is a key supplier to Chemist Warehouse, which we know is growing very strongly. So there’s growth in that pipeline.”

In times of rising interest rates and wars, pharmacy and medical supplies industries are known to be robust.

“We’re comfortable that it’s got 8% to 12% earnings growth in the next 2 to 3 years,” said Wong.

“We will continue to buy pharmacy products whether the economy is good or bad.”

There is also an acquisition that EBOS will settle in the coming 24 months, which will bring it earnings growth, according to Wong.

“The management of this company is really strong.”

EBOS, which is dual-listed on the NZX and ASX, has a market capitalisation of $6.9 billion. 

Its ASX shares have lost about 7% for the year so far, closing Friday at $36.05.

According to CMC Markets, 6 out of 10 analysts currently rate the stock as a “buy”. Five of them consider it as a “strong buy”.

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