The Australian share market has rocketed above the 5,200 point mark today, supporting Deutsche Bank's belief that local shares have become significantly oversold.
According to The Age, Deutsche Bank believes the recent market crash has created a number of "exceptional buying opportunities". With the market still hovering more than 13 per cent below its April high, it believes the selloff has been overdone with opportunities opening up in the non-resources sectors.
Indeed, the crash has brought a number of Australian companies back down to earth with the 12-month forward price to earnings ratio of the market now hovering below the long-term average. At the same time, dividend yields have increased, creating an excellent environment for income and growth investors to start buying high-quality companies.
According to The Age, Deutsche Bank is particularly interested in the likes of AMP Limited (ASX: AMP), Perpetual Limited (ASX: PPT) and Iress Ltd (ASX: IRE).
I couldn't agree more with Deutsche in that there are some incredible buying opportunities right now. In fact, I've bought a number of companies in recent weeks (both Australian and US companies for the matter of disclosure) and am keen on a number of others as well.
One company I am certainly interested in right now is XERO FPO NZ (ASX: XRO). Although I already own shares in the New Zealand-based accounting software provider, I am considering topping up my stake to take advantage of its heavy fall.
The fall is likely attributed to the fact that Xero is not yet profitable. In reality however, the company could likely turn profitable very quickly, but only if it were to stop investing so heavily in development and marketing a decision that would significantly limit its long-term growth potential. With shares at just $13.10, down from a 52-week high of $25.60, now could be an exceptional time to buy.
Catapult Group International Ltd (ASX: CAT) is another company that has my attention. The sports analytics group, which provides the software and hardware to track the on-field performance of elite athletes around the world, recently lost its contract with the AFL.
Still, roughly 84% of its revenue is generated overseas with plenty of room left to grow over the coming years. Despite the market's strong gains over the last two days (it's up another 1.7% today), there's no way of knowing if, or for how long, the market's optimism will last. What I do know however, is that there are some attractive opportunities for long-term investors willing to take advantage.
