There can be no doubting that 2020 has been a tumultuous year for the ASX. At the height of the coronavirus panic-selling in March, millions were wiped off the market caps of many ASX growth companies.
Buy now, pay later fintech Afterpay Ltd (ASX: APT) saw its share price slump almost 80% to a multi-year low of $8.01. Cloud accounting software developer Xero Limited (ASX: XRO) and healthcare blue-chip Cochlear Limited (ASX: COH) also shed over 30% of their values.
While some companies have staged incredible recoveries – Afterpay shares are up 620% since 23 March – there is still plenty of value left in the market. But separating the diamonds from the rough can be difficult. Here are 3 companies I think may have been neglected in the recent market recovery and could still offer big potential.
Nearmap Ltd (ASX: NEA)
ASX aerial imaging company Nearmap is one of the most promising ASX growth companies on the market. Nearmap is a leader in a niche industry and has rapidly expanded its footprint across Australia and North America. Statutory revenue for H1 FY20 surged 31% over the prior comparative period to $46.3 million. And the company was positioning itself for even greater things during the second half.
But then coronavirus happened. Nearmap investors fled despite the assurance that Nearmap had seen no adverse financial impacts from COVID-19. Nearmap shares dropped over 50% in value to a 52-week low of just $0.83 by 25 March. The company has recovered much of its losses, currently sitting around $2. But it’s still well short of the 52-week high of $4.29 in June 2019.
Livetiles Ltd (ASX: LVT)
LiveTiles is a perennially undervalued ASX software company and should be surging higher in the current climate. Software developers like MNF Group Ltd (ASX: MNF) and Objective Corporate Limited (ASX: OCL) have found themselves the unlikely market darlings of this emerging economy. But despite a modest recovery, LiveTiles shares are languishing well below their pre-coronavirus highs.
LiveTiles develops intranet portals and online working environments for corporate clients. Given many businesses are still working remotely, you would think the demand for software that enables online collaboration would be accelerating.
And according to LiveTiles, it is. Cash receipts for the Q3 FY20 quarter were up 109% over the prior comparative period to $10.9 million. Annualised recurring revenue also rose 5% for the quarter to $55.7 million. And yet, LiveTiles shares are still trading for just 25 cents, 60% short of the 52-week high of 60 cents they recorded last July.
Audinate Group Ltd (ASX: AD8)
Audinate shares took a real hammering during the coronavirus selloff. After opening the year trading at over $7, Audinate shares crashed to $2.51 by 23 March. Despite a strong rebound, they still haven’t recovered all those losses. Audinate is trading at just $6.03 at the time of writing. And to think, as recently as December they were valued at $9.30.
This stunning collapse is, in large part, pretty understandable. Audinate was a promising ASX growth company pre-coronavirus, but demand for its services has been severely dampened by lockdowns. Audinate specialises in the technology required for complex and large sound systems. Past projects have included a theatre in Buffalo, New York, a shopping mall in Mexico City, and even a zoo and aquarium in Ohio.
Audinate was forced to withdraw its FY20 guidance in April in response to the pandemic. It will be interesting to see how much financial damage the company will have sustained. However, as restrictions ease and event spaces re-open, the global leader in sound technology is well-positioned for a rebound.
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Rhys Brock owns shares of AFTERPAY T FPO, AUDINATEGL FPO, Cochlear Ltd., LIVETILES FPO, and Nearmap Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AUDINATEGL FPO, Cochlear Ltd., LIVETILES FPO, Nearmap Ltd., Objective Limited, and Xero. The Motley Fool Australia owns shares of and has recommended MNF Group Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended AUDINATEGL FPO, Cochlear Ltd., LIVETILES FPO, 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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