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Are Bellamy’s and these beaten down ASX shares great value?

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Except for Monday’s blip, the All Ordinaries index has been heading in one direction this year – up.

But not all shares have fared as well as the index. Some have pulled back materially in recent weeks and months. Is this a buying opportunity?

The Bellamy’s Australia Ltd (ASX: BAL) share price is down over 27% since peaking at a 52-week high of $12.57. The infant formula and baby food products company’s shares have come under pressure this year due to concerns over its SAMR application in China. Bellamy’s has been waiting over two years for approval so that it can sell its products in the lucrative Chinese market. The delay has led to significant weakness in its sales in FY 2019 and could result in a similar underperformance in FY 2020 if its approval isn’t received soon. In light of this, I would wait for its results and guidance this month before picking up shares.

The Dicker Data Ltd (ASX: DDR) share price had been one of the very best performers on the All Ordinaries index in 2019 until a recent profit-taking sell off sent its shares sinking lower. The shares of the wholesale distributor of computer software and hardware fell almost 14% on Monday to close at $5.46. This means they are now down by almost a third since peaking at $7.85 last month. But with the company reiterating that it is on track to achieve its pre-tax profit guidance of $51.4 million and 22 cents per share in FY 2019, I believe it could be worth considering taking advantage of this share price weakness when the dust settles. The latter will be an increase of 22.2% on FY 2018’s 18 cents earnings per share.

The Superloop Ltd (ASX: SLC) share price is down a massive 63% from its 52-week high of $2.58. The catalyst for this decline was a material downgrade by fibre optic internet infrastructure company last month. Due to delays in signing a major commercial agreement, Superloop expects full year EBITDA of $7 million to $8 million in FY 2019. This is notably lower than its previous guidance of between $13 million and $18 million. Pleasingly, next year the company expects its performance to improve and has revised its forecast to underlying earnings guidance of $14 million to $16 million. If it delivers on this guidance then I think its shares could re-rate notably higher. But of course, given its recent form, this could be a reasonably big if.

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Returns as of 6th October 2020

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of SUPERLOOP FPO. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited. 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.

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