Oftentimes, market fluctuations are a source of frustration for many. Given the frequency of noisy headlines about cost of living pressures, impending global recession and counterintuitive rise of markets in the first half of 2023 (particularly the S&P 500), it is understandable that investors may slip into watching share prices more than underlying business operations and performance.
Recently, the respective CEOs of two holdings from within TAMIM portfolios delivered insightful presentations shedding light on their respective businesses and the opportunities that lie ahead in FY24. In an ever-evolving market, where unique competitive advantages and strategies for achieving earnings growth play a crucial role, conducting thorough investment research becomes all the more important. By delving deeper, investors can gain valuable insights into how these companies leverage their strengths, such as Viva Leisure's data-driven approach and Close The Loop Group's commitment to sustainability, to position themselves for success and drive future growth.
Viva Leisure Group (ASX: VVA)
First-order thinking would lead some investors to assume that companies like Viva Leisure Group (ASX: VVA) will struggle during tough economic periods. Recapping the previous discussion, some industries tend to experience relatively steady demand in both good times and bad. That makes them fairly recession-resistant. One of the areas that are becoming increasingly important to consumers is personal wellness, and Viva Leisure (ASX: VVA) is well-positioned to capitalise on this trend. Second-order thinking realises that sentiment for a sector, like discretionary spending, can impact a company’s share price even though the underlying business is performing well.
Recap: The Business
Viva Leisure (ASX: VVA) is a leading player in the personal wellness industry, capitalising on the increasing importance of holistic health and well-being among consumers. With a portfolio of renowned brands including Club Lime, Pinnacle Health Clubs, Fit n Fast, HIIT Republic, and Plus Fitness, Viva Leisure is well-positioned to thrive in this burgeoning market.
Expansion and Growth
Viva Leisure has been in expansion mode since fully reopening after the COVID-19 pandemic. Recent milestones include the opening of multiple locations across WA, NSW and QLD. The company continues to build new sites and expand its footprint, supported by a loyal customer base. Additionally, the Viva Leisure team has been recognised as the Fitness & Wellness Company of the Year 2023 at the FitSummit Awards held in Singapore.
Sticky Customer Loyalty
An independent survey conducted by Viva Leisure revealed that the majority of Club Lime members view their gym membership as a necessity rather than a luxury, an important factor in recognising how Viva Leisure can separate itself from others in the “Discretionary” sector. Moreover, a significant portion of respondents believed that their membership would contribute to saving on future costs associated with ageing and illness. The survey results also revealed that mental well-being was the primary motivator for Club Lime members to engage in health activities. This underscores the importance of Viva Leisure's offerings in promoting holistic health and wellness.
Data and Technology Advantage
Viva Leisure leverages data and technology, including artificial intelligence, to gain a competitive edge. By analysing data such as membership ratios and equipment usage patterns, the company optimises its offerings and enhances the customer experience. This technological prowess has allowed Viva Leisure to achieve high portfolio utilisation rates despite the rapid expansion.
The company's proven track record of execution positions it for further success. The company's expansion, loyal customer base, emphasis on holistic health, data-driven approach, and recent financial performance make it an attractive investment opportunity. Viva Leisure itself believes it is also opportune to take advantage of the current share price, initiating an on-market buy-back of up to a maximum of 10% of its issued shares. We’ll be watching for the release of full year FY23 results closely.
Close The Loop (ASX: CLG)
Not many ASX investors know of Close The Loop (ASX: CLG). As a key player in the circular economy, CLG is dedicated to creating innovative products and packaging, recycling resources, and promoting sustainability. With a strong foundation and strategic acquisitions, CLG is poised for remarkable growth in the coming years.
Expanding Horizons and Sustainable Solutions
CLG has rapidly become a leading provider of waste recycling and packaging since its ASX listing less than two years ago. Through a series of carefully planned acquisitions, the company has established a robust network of collection points worldwide, enabling the efficient recycling of various materials. This extensive reach, combined with years of research and development, has created a significant competitive advantage for CLG.
CLG is experiencing a surge in demand from diverse industries, including print, cosmetics, supermarkets, electronics, pet food, and batteries. As these sectors increasingly prioritise sustainability, CLG's reliable and cost-effective solutions are in high demand. For instance, CLG's Tonerplus road asphalt, derived from recycled plastic bags, offers superior longevity compared to traditional road surfaces. It is probable CLG will continue to benefit from favourable industry tailwinds driven not only by customer demand but also by institutional investors seeking sustainable solutions.
In March, CLG completed a game-changing acquisition of ISP Tek, a rapidly growing and highly profitable US-based business. ISP Tek specialises in electronic refurbishment, full lifecycle recovery, and sales of laptops, PCs, and printers for prominent OEMs like HP, Dell, and Microsoft.
As the world continues its journey toward a sustainable future, Close the Loop Group remains at the forefront of the circular economy movement. With its global presence, strategic acquisitions, and innovative solutions, CLG is well-positioned to thrive in an evolving market. The company's commitment to sustainability and customer-centric approach ensures a reliable and cost-effective offering for industries seeking to minimise their environmental footprint.
Video source: NWR Communications https://nwrcommunications.com/
Disclaimer: Viva Leisure Group (ASX: VVA) and Close The Loop (ASX: CLG) are currently held in TAMIM Portfolios a the date of publication of this article.
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TAMIM Asset Management provides general information to help you understand our investment approach. Any financial information we provide is not advice, has not considered your personal circumstances and may not be suitable for you.