Company results season is about to start in a few days and that could see prices for certain ASX shares spike up or down.
Therefore it is wise to see if there are any stocks that might have big news coming up.
Medallion Financial managing director Michael Wayne this week picked out for his clients a trio of ASX shares to watch.
He told The Motley Fool these businesses are worth picking up for investors willing to put up with “a little pre-report risk”.
“We feel these 3 are a good chance of delivering and continuing the good momentum they’ve been displaying in recent months.”
Don’t let the decline in revenue fool you
Wayne is intrigued by debt buyer Credit Corp Group Limited (ASX: CCP) this reporting season.
“Management have shown themselves to be very adept at purchasing wisely, building solid debt ledgers over an extended period of time,” he said in a report to clients.
“We are optimistic that this careful approach, which served them well through the GFC, can drive growth into the future and we are supportive of a strong board which has worked closely with management to restore value for shareholders after the initial COVID-19 falls.”
Credit Corp shares closed Wednesday at $27.74, which is down almost 10% for the year.
The company revealed its half-year revenues declined. But Wayne suggested not overplaying this.
“While revenues fell by 2% to $188 million, the key for a business like Credit Corp is their profitability as it indicates how well they’re selecting and how efficiently they’re recovering the debt they purchase,” he said.
“In this instance, net profit after tax grew at a strong 10% to… $42.3 million against the prior corresponding half.”
The share price has dipped almost 6% in the past month and, according to Wayne, this presents an entry opportunity.
“With no alarming issues raised in the business update, a growing US presence and strong management track record, we see this week’s approximate $1.30 pull-back as an opportune time to consider Credit Corp.”
Small-cap ASX share with solid financials
Wayne reckons while scientific laboratory equipment provider XRF Scientific Limited (ASX: XRF) doesn’t have a huge market cap, it has a reliable history.
“We believe this to be a great business which exhibits solid financials over an extended period,” he said.
“XRF has delivered consistent growth in key metrics and after confirming a 47% increase in net profit to $2.4 million for the first half of FY21 in February and an impressive March quarter more recently, we are confident of continued growth being delivered in their upcoming full year results to be delivered in August.”
XRF is due to report its financials to the market on 24 August.
Its share price is up almost 47% for the year, to close Wednesday at 44 cents. It has cooled off in the past month though, dropping more than 6%.
Wayne said there’s a little icing on top for those willing to back the business.
“XRF also pays an approximate 2.9% fully franked dividend.”
‘Unregulated monopoly’ for this Aussie business
Audinate Group Ltd (ASX: AD8)’s flagship product Dante allows audio equipment to communicate with each other via computer networking cables.
It’s a business that Wayne has vouched for previously.
“They’re growing very, very quickly. The adoption rate… is about 17 times the nearest competitor,” he told The Motley Fool back in May.
“I think about 75% of new audio equipment and digital equipment incorporates the Audinate Dante protocol. And that should mean that they’re embedded into that industry for some time to come.”
The stock advisor still has the same conviction ahead of the August reporting season.
“At this stage the business is still building scale — but at this rapid rate of progression, it is conceivable in our view that the Dante product will emerge as an unregulated monopoly,” he said this week.
“This is particularly positive news with market data forecasting the networked audio space is expected to triple from 2020 to 2024.”
Audinate shares are up more than 14% for the year, closing Wednesday at $9.42. Its preliminary report is due 19 August.