In a recent update to its Australian Equity Core Portfolio, Bell Potter has identified three high-conviction ASX shares that it believes could offer substantial growth opportunities for investors. These picks come as the broker emphasizes the importance of investing in high-quality companies that promise long-term growth. The selections include packaging giant Amcor, media conglomerate News Corp, and logistics technology firm WiseTech Global.
Amcor: A Packaging Powerhouse
Bell Potter’s first recommendation is Amcor, a leading name in the packaging industry. The broker’s optimism stems from Amcor’s recent merger with Berry Global, which is expected to drive significant earnings per share (EPS) growth in the coming years. This merger is seen as transformative, enhancing the company’s resilience and reducing its cyclical nature by expanding its footprint in the defensive home & personal care and pharmaceutical sectors.
The overweight stance is based on the transformative merger with Berry Global, which not only drives a strong growth outlook with expected double-digit EPS growth from significant synergies but also improves the quality of the business.
Amcor’s current valuation is perceived as attractive, factoring in a discount due to macroeconomic uncertainties and execution risks, while potentially undervaluing the company’s growth prospects and quality improvements.
News Corp: Undervalued Media Giant
Next on Bell Potter’s list is News Corp, a media giant the broker believes is undervalued by the market. The company’s strategic shift towards high-margin enterprise income streams is seen as a positive move that enhances its business quality. Bell Potter highlights the value of News Corp’s 61% stake in REA Group, suggesting that the market price largely reflects this stake, leaving other high-quality assets, like the rapidly expanding Dow Jones business, available at a discount.
The overweight position is driven by a sum-of-the-parts valuation where the market price is seen as largely reflecting the value of its 61% stake in REA Group.
This strategic shift away from cyclical advertising revenue towards more stable income streams is expected to provide a more robust financial foundation for News Corp moving forward.
WiseTech Global: Leading Logistics Solutions
The third high-conviction pick is WiseTech Global, a company specializing in logistics solutions technology. WiseTech’s core product, CargoWise One, is a leading Software as a Service (SaaS) solution widely used by some of the largest logistics providers globally. The company’s vision to become the operating system for its customers and the broader logistics ecosystem is supported by its strategic acquisitions aimed at expanding its geographical reach and market presence.
WiseTech is a leading global provider of software solutions to the logistics services industry. CargoWise One, WiseTech’s core product, is a market leading SaaS solution.
Bell Potter sees a bright future for WiseTech, driven by its innovative offerings and strategic expansions into new markets and adjacencies.
Strategic Insights and Market Implications
Bell Potter’s recommendations come at a time when investors are increasingly seeking resilient and growth-oriented investment opportunities amid market volatility. The broker’s focus on companies with strong fundamentals and strategic positioning highlights the potential for long-term gains. By identifying undervalued assets and companies with transformative growth strategies, Bell Potter aims to guide investors towards opportunities that may not be immediately apparent in the broader market landscape.
As investors consider these high-conviction picks, the broader implications for the ASX market include a potential reevaluation of company valuations, particularly as businesses adapt to changing economic conditions and technological advancements. The move towards more stable and high-margin revenue streams, as seen with News Corp, and the strategic mergers and acquisitions exemplified by Amcor and WiseTech, reflect a broader trend of companies seeking to fortify their market positions and enhance shareholder value.
Looking ahead, investors will be closely monitoring these companies’ performance and strategic developments, as well as any shifts in market sentiment that could impact their valuations. Bell Potter’s insights provide a valuable perspective for those looking to navigate the complexities of the ASX market and capitalize on emerging opportunities.
