I think that this year’s volatility is a great to buy time to buy some quality ASX shares.
‘Buy low, sell high’ is a bit of a cliche, but I think it’s a good way to invest – the buy low part at least. Another one, said by Warren Buffett is: “Be fearful when others are greedy, and greedy when others are fearful.” There seems to be growing fear in the market with worries about inflation and interest rates.
It’s impossible to know what’s going to happen next. But I do think that choosing good investments at low prices should turn out well over the long-term.
That’s why I think these two ASX shares could be opportunities:
Volpara Health Technologies Ltd (ASX: VHT)
The Volpara share price has fallen by 16% since the start of the year.
It’s a leading business in the healthcare sector, providing technology related to breast screening and administration tools for the clinics.
The company has claimed a market share of around 35% of women who have screenings in the US.
It’s growing revenue at a good rate, which is helping the company’s scale. Subscription based cash receipts in the three months to 31 March 2022 rose 39% to more than NZ$7.5 million. Its annual recurring revenue (ARR) keeps growing, while the retention rate remains high and the average revenue per user (ARPU) is slowly but steadily rising.
Volpara also has a gross profit margin of more than 90%.
The ASX share is investing for growth and it’s starting to win international deals in other countries. It has signed a distribution deal with IMS Giotto to sell Volpara Scorecard software in Italy. Multiple orders are in place, with the possibility of up to 100.
It has also signed a Fuji distribution deal with Cleveland Clinic Abu Dhabi.
In the fourth quarter of FY22, the net operating and investing cash outflow was NZ$2.9 million, an improvement of 20% on the third quarter. If cashflow keeps improving by double digits, it can compound nicely over the longer-term.
WCM Global Growth Ltd (ASX: WQG)
This is a leading listed investment company (LIC). That means its purpose is to invest in other shares or assets on behalf of shareholders. As the name suggests, it’s investing in businesses globally.
Some of the names in the portfolio are Thermo Fisher Scientific, West Pharmaceutical Services, Sherwin-Williams, Old Dominion Freight Line, Amphenol, Visa, Stryker, ServiceNow, First Republic Bank and Costco.
The WCM investment team are looking for businesses with growing competitive advantages/economic moats and a corporate culture that supports the growth of the economic moat. It’s a pretty unique investment style.
However, the names in the ASX share’s portfolio have dropped in 2022. In the three months to 31 March 2022, the WCM Global Growth portfolio dropped almost 20%. With rising interest rates, a bit of a decline for most assets is probably justified, but I think this presents an opportunity to buy the LIC (and its underlying assets) at a much cheaper price than a few months ago.
Using the most recent weekly update, the WCM Global share price is at an 11% discount to the 15 April 2022 net tangible assets (NTA) before tax, which is the underlying value.
