Although the All Ordinaries index (ASX: XAO) has fallen heavily from its highs due to the coronavirus pandemic, some shares have fallen even harder.
Two shares that have been beaten down in 2020 are listed below. Is this a buying opportunity for investors?
Jumbo Interactive Ltd (ASX: JIN)
Jumbo is the online lottery ticket seller best known for its OzLotteries website. Although its shares have rebounded strongly over the last few weeks, they are still down by almost 60% from their 52-week high of $27.92.
Jumbo’s share price weakness has been caused largely by concerns over its its declining earnings due to its investment in growth opportunities. In FY 2020 the company expects to report a net profit after tax of $24.4 million to $25.3 million. This is down from $26.4 million a year earlier.
I think investors should overlook this and focus on the bigger picture. Management expects its margins to return to normal next year and for these investments to support its FY 2022 target. That target is for $1 billion of ticket sales through its Powered by Jumbo platform. This compares to $321 million in FY 2019.
Another positive in the short term is that the company looks set to benefit from a shift to online lottery ticket buying caused by store closures during the pandemic. If it can retain these players when the pandemic is over, it stands to benefit greatly.
Kogan.com Ltd (ASX: KGN)
Kogan is a growing ecommerce company and Australia’s answer to Amazon. I believe it has outstanding long-term growth potential thanks to the growing popularity of online shopping and its burgeoning customer base.
In the short term, I suspect that the coronavirus pandemic could also be a positive for the company. Especially with bricks and mortar shops closed and people spending more time at home.
Another positive has been the launch of Kogan Marketplace. This has proven to be very popular with consumers and small businesses. I expect this to be a key driver of growth in the coming years. So with the Kogan share price down 25% from its high, now could be an opportune time to invest.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive Limited and Kogan.com 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.