Despite the All Ordinaries Index (INDEXASX: XAO) sitting close to its all-time high, I still believe you can find value on the ASX. In fact, thanks to sector volatility and the emotional behaviour of investors I believe the 2 ASX shares below offer long-term investors a great risk/reward profile. I would be happy to split my $4,000 investment between them during this reporting season.
Nearmap Ltd (ASX: NEA)
Nearmap shares have given investors a very volatile ride lately. After a huge rise to an all-time high of $4.29 mid-last year, the shares subsequently dropped to around $2.60. However, a recent market update saw them fall even further to a 12 month low of just $1.60, with the shares rallying back to close trade at $1.93 on Friday last week.
In its market update, Nearmap revised its guidance to roughly 10% below prior expectations, also noting an increase in churn for its North American segment. Here, Nearmap quoted a large partner contract cancellation and downgrades to 2 other contracts as the reasons. However, these figures still represented growth of 41% in annualised contract value (ACV) for North America and 14% for Australia and New Zealand.
I like Nearmap for its scalable business model, revenue growth and global outlook as it looks to expand into new markets. Additionally, thanks to its recent market update I doubt there will be many surprises when it releases its half year report on 19 February. I view the recent share price weakness as an opportunity and would be happy to allocate $2,000 to Nearmap shares today.
Corporate Travel Management Ltd (ASX: CTD)
Shares in Corporate Travel recently hit a 12-month low of $17.05, owing largely to market fears surrounding the coronavirus outbreak. With Chinese cities putting travel restrictions in place and countries recommending to avoid travel to China, these fears may be well founded. However, Corporate Travel announced that it is still too early to asses the full impact on the business. It also stated that travel to and from Greater China (including Hong Kong) is a small percentage of total transactions generated by its 3 largest profit regions.
Corporate Travel has been seeing growth in all four of its operating regions. Namely Australia and New Zealand, North America, Asia and Europe. With a combined average growth in total transaction value (TTV) of 30% during 2019. Corporate Travel’s shares currently trade on a trailing underlying price-to-earnings ratio of just under 20 times, which is a price I think could offer great value for those who can look past recent events.
I would be happy to make an investment in the shares now but will also be keeping an eye on its 2020 first half results. If there is any further share price weakness that I believe to be unjustified, it may present an even better buying opportunity. These results are expected to be released on Wednesday 19 February.
These 3 stocks could be the next big movers in 2020
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Motley Fool contributor Michael Tonon owns shares of Corporate Travel Management Limited and Nearmap Ltd. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Nearmap Ltd. 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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