Doug Goodwille from Kayne Anderson speaks to Drew Meredith from The Inside Network on market thinkers.
While a surging gold price is on hold as the world adjusts to a Trump presidency, all the factors that saw its price rise more than 50 per during his first term in office – trade disputes, fiscal deficits and geopolitical tensions – are almost certainly guaranteed the second time around.
Top ASX picks for October
There are always some good quality ASX shares that could be worth looking at. October 2021 could be the month to jump on those ideas.
When you can find quality businesses at a nice price, then it gives investors a better chance of producing attractive returns over time.
Looking at the current opportunities, I think these ASX shares could be attractive ideas:
Volpara Health Technologies Ltd (ASX: VHT)
Volpara is a leading business in the US when it comes to breast screening software and practice management solutions.
The ASX healthcare share already has a market share of around 33% in the US after both organic growth and acquisitions like MRS and CRA Health.
For me, one of the most attractive elements of the business is its incredibly gross profit margin. It was 91% in FY21, up from 86% in FY20. This means a lot of the new revenue can fall to the next level of the profit. As it gets bigger, it will become much more profitable.
A key part of future growth of the business is increasing its average revenue per user (ARPU) by selling a platform, not just a product. A lot of new sales are for two or three products, representing significantly increased ARPU. The business plans to upsell existing clients – evidence suggests a 200% to 300% increase in recurring revenue for those that upgraded.
Lung cancer screening is a growing focus of the business as well, which is another option for growth.
Future Generation Investment Company Ltd (ASX: FGX)
Future Generation is one of the more attractive listed investment companies (LICs) in my opinion. This could be an option in October 2021.
It doesn’t invest in individual shares. Instead, it invests its money in the funds of fund managers that invest in ASX shares. It only picks the best fund managers to work with, such as Bennelong, Paradice, Regal, Eley Griffiths, Sandon Capital, L1 Capital and Wilson Asset Management.
Those fund managers work for free so that Future Generation can donate 1% of its net assets each year to youth-focused charities.
The portfolio of investments have done well. Since inception in September 2014, the Future Generation portfolio has returned an average of 11.6% per year, compared to the ASX share benchmark return of 9.1% per year.
Another attractive feature of Future Generation is the dividend yield. Based on an annualised dividend of 6 cents per share, that translates to a fully franked dividend yield of 4.2%.
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