As mentally and emotionally draining as a market crash can be, a falling sharemarket is great for investors looking to put more cash to work.
Where it seems most investors go wrong is that they forget that shares represent a tiny part of an underlying business. Just because Mr. Market has a mood swing doesn't mean the business itself is worth any less, nor does it mean the shares are doomed to remain low forever.
Therein lies the difference between price and value. Price is what you pay; value is what you get. With the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) down 17.5% since April, and 3.3% today alone, prices are falling while value seems to be increasing.
If you're looking to take advantage of this trend, you may want to take these five ASX-listed companies into consideration. Some of them I own already, while others are sitting firmly on my watchlist.
- Burson Group Ltd (ASX: BAP) is Australia's leading automotive aftermarket parts supplier. In other words, it supplies the parts to mechanics that are necessary to fix those second-hand cars driving around out there. Run by a top-notch management team and with growing margins, this represents a fine business and, in my opinion, a solid opportunity today.
Notably, the company should also benefit should a downturn in the economy eventuate as more and more individuals choose to stick with their older vehicles. - Cover-More Group Ltd (ASX: CVO) has been a volatile performer ever since it listed its shares on the ASX in late 2013. It appears the travel insurance business could be offside with investors due to the weak Australian dollar (which many believe could impact demand for outbound flights, and thus travel insurance), but this short-term fear seems like a good long-term opportunity. Shares are trading at $2.18, down almost 15% from their recent high.
- Senetas Corporation Limited (ASX: SEN) shares are down 7% today, and 41% since late July. Although this is a very speculative bet, it could also be a rewarding one in the long-run if the company continues down its impressive growth trajectory. Senetas is a small-cap technology business which provides high-speed data encryption hardware to businesses and governments.
- ResMed Inc. (CHESS) (ASX: RMD) is a US-based healthcare giant that develops and manufactures products for the treatment of sleep apnea. Regardless of whether or not the market crashes, sufferers of sleep apnea will still need to be treated for their condition, so sales shouldn't be impacted too heavily. With the shares now trading around the $7 mark – down from almost $10 in April – now could be an excellent time to stock up.
- Retail Food Group Ltd (ASX: RFG) has lost nearly half its market value over the last six months which I believe is a complete overreaction by the market. Although the company, which owns brands such as Gloria Jeans and Pizza Capers, could be impacted by a slowdown in the economy in the near-term, its current price seems extra enticing for long-term investors. Especially considering the shares offer a tasty 5.6% fully franked dividend yield.
Which should you buy first?
Of the companies mentioned above, I'd probably be most inclined to buy Burson Group, Retail Food Group and ResMed. Although I already own the first two, I'd be happy to top up on my existing stakes at their current price tags while I believe ResMed is a solid company well worth considering.
