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Are these cheap ASX shares in the bargain bin?

Whilst a lot of the most popular shares on the local market such as Afterpay Touch Group Ltd (ASX: APT) and WiseTech Global Ltd (ASX: WTC) currently trade on sky-high multiples, not all shares trade at such a premium.

The two shares listed below trade on lower than average multiples at present, are they in the bargain bin?

Adairs Ltd (ASX: ADH)

Adairs is one of Australia’s largest homewares retailers with a network of 166 stores and a thriving online business. Despite concerns about the housing market downturn and the arrival of Amazon in Australia impacting its business, Adairs has continued to deliver solid earnings and dividend growth. In the first half of FY 2019 the company posted a 10.6% increase in half year sales to $164.4 million and a 9.1% lift in net profit after tax to $14.9 million.

This was driven by strong online sales growth and a 7.3% increase in like-for-like sales. Pleasingly, during the first seven weeks of the second half, like-for-like sales were up 7.1%. I think this makes its shares dirt cheap at just 10x trailing earnings. An added bonus is that they provide a trailing fully franked 7.9% dividend yield.


BWX is a developer, manufacturer, distributor, and marketer of branded skin and hair care products with a focus on the natural segment of the beauty and personal care market. Whilst it has a number of brands in its portfolio, its best-known and biggest seller is its Sukin brand.

At present the company’s shares are changing hands at ~15x underlying trailing earnings. Whilst this looks good value on paper, I’m holding out to see how the company performs in the second half of FY 2019 before making a move. After all, almost three-quarters of its full-year EBITDA guidance is expected to be generated in the half, which looks like a bit of stretch given its poor performance over the last couple of years.

In the meantime, I think these quality shares are trading at very attractive prices at present.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BWX Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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