Backtest Jul 2022

Backtest Jul 2022

7 best ASX shares for August 2022 (smallest to largest)

Top best ASX stock to invest August 2022

  • Lindsay Australia Limited (ASX: LAU), $144.95 million – Best
  • Electro Optic Systems Holdings Ltd (ASX: EOS), $148.86 million – Fail
  • Ansarada Group Ltd (ASX: AND), $164.82 million – Fail
  • Temple & Webster Group Ltd (ASX: TPW), $637.52 million – Fail
  • Charter Hall Long WALE REIT (ASX: CLW), $3.29 billion – Fail
  • Treasury Wine Estates Ltd (ASX: TWE), $8.84 billion – Good
  • South32 Ltd (ASX: S32), $17.63 billion – OK

(Market capitalisations as of 31 July 2022)

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1. LAU Lindsay Australia Limited – Best

What it does: Lindsay Australia is an integrated transport, logistics, and rural supply company. It has a large and growing fleet of road and rail transport, along with more than 40 rural supply stores and transport depots.

Lindsay Australia transports fresh produce and provides farming equipment to rural growers.

Ord Minnett points out that it “operates predominately in the consumer staples category”. This is a market sector that has traditionally withstood rising inflation better than other ASX All Ords shares.

Founded in 1953, Lindsay listed on the ASX in 2001. The company says it is “a pioneer in the refrigerated fruit and vegetable transport industry”. It was one of the first to use refrigerated trailers in Australia.

According to Ord Minnett, Lindsay operates 19 logistics terminals, 18 rural stores, and an import/export hub at the Brisbane produce markets.

About 85% of the goods it transports are perishable foods, mostly fruit and vegetables. These products are delivered to more than 3,000 customers across Australia.

Lindsay Rural supplies and transports farming equipment, fertiliser, nutrients, and packaging materials to about 1,500 customers.

Headquartered in Brisbane, the company employs more than 1,500 staff. The founding Lindsay family holds an estimated 13% of issued shares.

By Bernd Struben: The Lindsay share price has gained around 17% so far in 2022, despite skyrocketing fuel costs. Even following that gain, the stock trades at a reasonable price-to-earnings (P/E) ratio of 20 times. And, I believe it has strong growth potential with the end-to-end solutions the company provides to Australia’s farmers by simplifying transport and logistics issues across the agricultural sector. That’s particularly relevant in light of a growing global food crunch.

In its FY22 first-half (H1) results, Lindsay reported a 20.2% year-on-year increase in underlying earnings before interest, tax, depreciation, and amortisation (EBITDA), which reached $31.4 million. The company also continues to expand its rail fleet, adding 50 refrigerated containers in H1, bringing the total to 350.

Lindsay is also a reliable dividend payer, with a current trailing dividend yield of 3.96%, unfranked.

2. EOS Electro Optic Systems Holdings – Fail

What it does: Electro Optic Systems (EOS) is an Australian-owned and operated defence, space and communications company.

By Aaron Teboneras: EOS designs, manufactures and exports advanced technology systems. Key applications include sensors and systems for space domain awareness, optical, microwave and on-the-move satellite products, and remote weapons systems.

With the EOS share price currently trading not far off multi-year lows at 91 cents, I believe this has created an attractive buying opportunity for long-term investors.

Defence capabilities among Australia and its allies have been growing in importance since Russia’s invasion of Ukraine and China’s assertiveness in the Indo-Pacific region. This has highlighted a need among many EOS customers, including NATO, to increase their defence expenditure.

In FY2021, EOS reported record revenue of $211.8 million. That was 17.5% higher than what it achieved in FY2020 ($180.2 million). The company expects FY22 revenue to be equal to or higher than FY21.

Furthermore, the defence contractor continues to heavily invest in the future, particularly in its SpaceLink division. The total addressable market for this is estimated to be around US$2 billion per annum from 2024.

3. AND Ansarada Group Ltd – Fail

What it does: Ansarada is a provider of specialised cloud-based software addressing the needs of companies and organisations requiring data management solutions for managing mergers and acquisitions, tender processes, and board meetings.

By Mitchell Lawler: The tech sector has been punished so far in 2022. However, while it is not uncommon to find small-cap ASX tech shares showing falls of more than 40% on a year-to-date basis, the Ansarada share price has been somewhat resilient, retracing 19% since the start of the year.

Notably, the reduction in the company’s share price has coincided with sustained growth across key metrics. Last week, Ansarada released its fourth-quarter results for FY22. Positively, revenue increased 43% year-on-year (YoY) to $12.9 million, accompanied by customer growth of 52% YoY.

With an impressive staple of clients, zero debt, and $22 million in cash, I believe Ansarada is currently a relatively well-positioned company.

Motley Fool contributor Mitchell Lawler owns shares of Ansarada Group Ltd.

4. TPW Temple & Webster Group Ltd – Fail

What it does: Temple & Webster is the largest, online-only retailer of furniture and homewares in Australia. A majority of the 200,000 products for sale on the company’s website are held and directly despatched to customers by external suppliers. Temple & Webster also has a growing private-label range.

By Tristan Harrison: The Temple & Webster share price has fallen heavily in 2022, which I think has created an opportunistic time to buy.

The company continues to grow strongly, with its latest trading update showing 23% revenue growth year-on-year.

The ASX retailer is adding new growth avenues, such as its ‘The Build’ website for home improvement. It’s also aiming to boost its productivity and customer experience by investing in areas such as data, personalisation, AI, augmented reality and logistics.  

I believe greater scale can benefit Temple & Webster’s unit economics and enable further re-investment. Plus, it’s considering “opportunistic inorganic activity”, meaning potential acquisitions.

5. CLW Charter Hall Long WALE REIT – Fail

What it does: Charter Hall Long WALE REIT is a real estate investment trust (REIT). It owns a portfolio of properties with long weighted average lease expiries (WALE).

By Sebastian Bowen: I believe Charter Hall Long WALE REIT is an investment worth considering as we head into the last month of winter. This property trust specialises in holding real estate assets with long WALEs, as its name implies. These include distribution centres, offices, and pubs, among others.

Many of these properties are held with lease agreements spanning more than a decade, with inflation-linked rental increases built into many. This arguably provides investors today with much-needed certainty in an uncertain investing environment.

Even better, on recent pricing, this REIT offers a trailing distribution yield of close to 7%. As such, it could well be worth a look this August.

6. TWE Treasury Wine Estates Ltd – Good

What it does: Treasury Wine is the maker, marketer, and supplier of iconic Australian wine brands including Penfolds, Wolf Blass, and 19 Crimes.

By Brooke Cooper: The Treasury Wine share price has had a rough trot over the last few years.

It’s been impacted by the pandemic, Chinese tariffs on Australian wine, and general market weakness.

In fact, the stock is around 24% lower than it was at the start of 2020, trading at $12.25. However, brokers are tipping a turnaround.

Morgans has slapped Treasury Wines shares with an ‘add’ rating and a $13.93 price target.

The broker believes the company is gearing up to post a few years of strong earnings growth, starting with the six months ended 30 June.

7. S32 South32 Ltd – OK

What it does: South32 is one of Australia’s largest miners. It has a portfolio of world-class assets across a range of locations and commodities, including aluminium, copper, and nickel.

By James Mickleboro: I think South32 shares could be a top option for investors in August. Last month, the miner released its fourth quarter and FY2022 production update and revealed it had another solid year despite battling weather, COVID, and labour headwinds.

In light of this, and the strong prices South32 is commanding for a number of the commodities it produces, the company appears well-placed to deliver bumper free cash flow when it releases its full-year results later this month. And thanks to its strong balance sheet, this could potentially mean big dividends for shareholders.

Looking ahead, I believe the future is bright for South32 due to its exposure to commodities that are integral to the decarbonisation megatrend. So with its shares changing hands for just 0.75x net asset value, compared to Fortescue Metals Group Limited (ASX: FMG) at ~1.4x, this could make South32 great value today.

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