On Tuesday the S&P/ASX 200 Index (ASX: XJO) continued its poor run and dropped to a three-month low of 5,763.2 points.
While this is disappointing, I believe it has created a buying opportunity for patient investors.
Two beaten down ASX shares that I think are in the buy zone right now are listed below. Here's why I like them:
a2 Milk Company Ltd (ASX: A2M)
The a2 Milk share price is down a sizeable 18% from its 52-week high. Investors have been selling the infant formula and dairy company's shares since the release of its full year results in August. Although a2 Milk delivered strong growth in FY 2020, the market was expecting an even stronger result. In addition to this, this result appears to have been boosted by pantry stocking during the height of the pandemic. As a result, there are concerns that this could have brought forward sales and lead to subdued demand in the first quarter.
While this could prove to be the case, management remains confident that it will still deliver strong revenue growth in FY 2021. After which, I believe a2 Milk is well-positioned for long term growth thanks to the popularity of its products in China, its relatively small market share, and its growth through acquisition opportunities. This could make the recent a2 Milk share price weakness a real buying opportunity.
Commonwealth Bank of Australia (ASX: CBA)
This banking giant's shares have fallen heavily in 2020 because of the coronavirus crisis. Since peaking at a 52-week high of $91.05 in February, the CBA share price has lost a whopping 31% of its value. Investors appear concerned by a potential spike in bad debts because of the pandemic's impact on businesses and employment.
Although these concerns are certainly not unwarranted, I believe the selloff has been severely overdone and left CBA's shares trading at a very attractive level. Especially given its strong balance sheet and decent dividend yield.
