The Motley Fool

2 ASX shares to watch for value investors this week

Last Friday, the All Ordinaries (INDEXASX: XAO) index bumped up 2% to end the week at 6831.8, finishing just 21.8 points shy of its all-time high. As we march toward a seemingly inevitable new peak, it’s a reminder that stocks aren’t exactly what you would call cheap at the moment.

Markets are awash with cash after last week’s interest rate cut. In June we got one for the money, but the Reserve Bank of Australia has just given us two for the show and the markets are running with it.

But, as always, there may just be some value out there if (as Peter Lynch would say) you turn over enough stones. Here are two ASX stocks that I believe may be worth a second look.

South32 Ltd (ASX: S32)

South32 is looking pretty cheap at the moment, with the share price closing at $3.16 last week – the stock is just off its 52-week low of $3.00 and a long way from its 52-week high of $4.28. I think South32 has fallen out of favour as iron ore and gold miners like BHP Group Ltd (ASX: BHP) and Newcrest Mining Ltd (ASX: NCM) have stolen the spotlight so far this year. However, South32 is now trading with a price-to-earnings multiple of just 8.7, and is yielding a 4.48% dividend on these prices. I think S32 shares might be a good place to park a resource allocation going forward, as the iron stocks look to be approaching (or passing) their peak.

Bellamy’s Australia Ltd (ASX: BAL)

The Bellamy’s share price is now trading at almost half of its 52-week high of $13.66 and opened today at $8.33. Considering the stock touched more than $22 in March last year, Bellamy’s has now fallen off the radar in a serious way. Although I think its highs were a bit too euphoric to be justified, I also think that its price is looking cheap at the moment, particularly if Bellamy’s gets the green light to enter the lucrative Chinese market (which is still pending). Investors have clearly got sick of waiting, but if this does happen, I see big upside in the Bellamy’s share price going forward.

Foolish takeaway

Both of these shares look undervalued at current prices (in my opinion). If I had to choose, I would go with South32. The stock is looking cheap but has a healthy dividend yield, a diversified earnings base and has proved to be a quality company.

For more some more potential bargains, don't miss our favourite value stocks here!

NEW. Five Cheap and Good Stocks to Buy in 2019…

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

Stock #1 is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Stock #2 is another high-growth business trading near a 52-week low all while offering a 4.7% grossed-up yield...

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Bellamy's Australia. 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.

One ASX Stock For An Estimated $US22 Billion Marijuana Market

A little-known ASX company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.

And make no mistake – it is coming. To the tune of an estimated $US22 billion.

Cannabis legalisation is sweeping over North America, and full legalisation arrived in Canada in October 2018.

Here’s the best part: we think there’s one ASX stock that’s uniquely positioned to profit immensely from this explosive new industry… taking savvy investors along for what could be one heck of a ride.

AND, this is the first time The Motley Fool Australia has EVER put a BUY recommendation on a marijuana stock.

Simply click below to learn more on how you can profit from the coming cannabis boom.

Click here to find out more