Just two months ago the S&P/ASX 200 Index (ASX: XJO) was trading at a record high and cheap shares were virtually non-existent.
Today, things are very different due to the coronavirus pandemic and value can be found across most sectors following indiscriminate selling by investors.
Three top ASX shares that look ridiculously cheap right now are listed below. Here's why I would be a buyer of them:
Accent Group Ltd (ASX: AX1)
I think Accent could be a great option for investors after the significant pullback in its share price. Although the footwear-focused retailer's FY 2020 result is likely to be impacted greatly from coronavirus-related store closures, I expect it to bounce back strongly in FY 2021 when trading conditions return to normal. In the meantime, its rapidly growing online businesses look set to benefit from the shift to online shopping. At present Accent's shares are changing hands at an estimated 12x FY 2021 earnings.
Aristocrat Leisure Limited (ASX: ALL)
This gaming technology company's shares have recovered strongly over the last few weeks, but are still down over 38% from their February high. Investors have been selling its shares due to the closure of casinos and the expected fall in demand for its poker machines. However, Aristocrat Leisure is not a one-trick pony and has been busy growing its Digital business over the last few years to take advantage of the fast-growing mobile gaming market. In FY 2019, the Digital side of the business generated revenue of $1.23 billion from its 7.5 million daily active users. This represents 28% of its total revenue. I expect lockdowns, casino closures, and social distancing measures to be a major boost to the Digital business and offset some of the softness being experienced across the rest of the business. Aristocrat Leisure's shares are trading at 15x estimated FY 2021 earnings.
Jumbo Interactive (ASX: JIN)
Jumbo is an online lottery ticket seller and the operator of the ozlotteries.com website. Its shares are down 57% from their 52-week high and changing hands for 22x estimated FY 2021 earnings. I think this is great value for investors given its strong long term growth potential and bold ticket sale targets. Jumbo's investments in growth initiatives are expected to play a role in the company achieving $1 billion in ticket sales through the Jumbo platform by FY 2022. This will be triple what it recorded in FY 2019.
