Investors in the S&P/ASX 200 Index (ASX: XJO) are being encouraged to consider two particular shares that have garnered strong endorsements from the fund manager L1. The ongoing volatility in the Australian share market presents opportunities for investors seeking to acquire positions in high-quality companies at favorable prices.
Viva Energy Group Ltd: A Rising Star
Viva Energy Group Ltd (ASX: VEA) is characterized as a leading convenience retailer and energy infrastructure provider in Australia. The company operates a network of around 900 retail convenience and fuel sites, supplying fuels and lubricants to nearly 1,500 service stations. Additionally, Viva Energy owns and operates the Geelong Refinery in Victoria, along with various businesses in bulk fuels, aviation, bitumen, marine, chemicals, polymers, and lubricants.
In November 2023, Viva Energy’s share price saw a significant increase of 16%, driven by rising global refining margins amid ongoing Russian trade sanctions and refinery closures. This sharp rise follows a period of relatively subdued margins over the past year. The L1 fund manager expressed optimism regarding the company’s refining business, suggesting that if current trends continue, the earnings upside could be substantial, potentially offsetting challenges related to acquisition integration and market performance in its convenience sector.
Despite the convenience business facing disappointing results, L1 anticipates improvements in the latter half of 2025, attributed to synergies from recent acquisitions and the introduction of new and converted stores. These factors are expected to contribute to further earnings growth in 2026.
Light & Wonder Inc: Strong Performance and Growth Potential
The second share highlighted by L1 is Light & Wonder Inc (ASX: LNW), an international gaming company with a strong presence in the North American market. The company specializes in cross-platform gaming and digital game content, positioning itself as a significant player in the gambling sector.
In November, Light & Wonder’s share price surged by 40% following the release of robust third-quarter results and a reaffirmation of its full-year earnings guidance. The company’s stock also benefited from its recent transition to a primary listing on the ASX after completing its NASDAQ delisting. This shift mitigated significant forced selling by US passive investors, further bolstering the share price.
L1 views Light & Wonder as well-positioned for solid earnings growth over the medium term, driven by strong performance in its land-based gaming operations.
Investors should critically evaluate their positions in these companies, particularly in light of L1’s insights. While the potential for growth exists, informed decision-making requires thorough analysis of both the market conditions and the companies’ operational strategies.
In conclusion, both Viva Energy and Light & Wonder present intriguing investment opportunities within the ASX 200, supported by their recent performance and growth potential. Investors are encouraged to conduct their due diligence before making any investment decisions.
