As the S&P/ASX 200 Index (ASX: JXO) keeps climbing (up another 0.42% on Friday), many investors will be celebrating. Rising ASX share prices normally equates to rising wealth for anyone already invested in ASX shares. But for those investors who might still be sitting on a cash position and looking for more opportunities to invest in, it’s also a bittersweet time to be alive. That’s because the higher ASX shares climb, the more unattractive adding new money to one’s share market portfolio becomes.
So that’s why I’ve found 2 ASX shares that I still think are dirt cheap today.
1) A diversified ASX conglomerate
Washington H. Soul Pattinson & Co Ltd (ASX: SOL) is one of the oldest companies on the ASX and is even older than our modern nation, having started life back in pre-Federation days. Back then, Soul Patts owned a small chain of chemists in Sydney. Today, Soul Patts is a diversified conglomerate that is often described as the ASX’s answer to Warren Buffett’s Berkshire Hathaway. That’s because this company primarily invests in other ASX companies these days (although it still retains a couple of pharmacies). Some of its largest stakes are in the newly-merged TPG Telecom Ltd (ASX: TPG), Brickworks Ltd (ASX: BKW) and New Hope Corporation Ltd (ASX: NHC).
The Soul Patts share price has recovered somewhat since the lows of March but is still trading far below the highs we saw back in February. At under $20 a share, I think this company is dirt cheap right now.
2) An ASX telco giant
Telstra Corporation Ltd (ASX: TLS) is our second dirt-cheap ASX share today. Telstra shares have had an exceptionally good week, rising from $3.12 on Monday to finish on Friday at $3.36 (up 7.7%). Despite this, I think this company is still undervalued. We were seeing prices above $4 last year, and I think Telstra can easily get back there when investors start appreciating its solid dividend yield. On current prices, this amounts to 4.76% (or 6.8% grossed-up with full franking) if you include the special nbn dividends.
Further, Telstra is also investing heavily in a new 5G network, which could end up paying off handsomely over the rest of the decade. The commercial impacts of a 5G rollout are not too certain just yet, but I’m optimistic Telstra will be able to work it’s new network into a profitable business venture. As such, I think this telco is a good deal at the current prices, with (in my view anyway) a lot of potential upside without too much downside
5 stocks under $5
We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, Telstra Limited, and Washington H. Soul Pattinson and Company Limited. 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.