Yes, the S&P/ASX 200 Index (ASX: XJO) is looking wobbly this month, having dropped 3.6% to Tuesday afternoon.
But whether a full-on correction does or doesn’t arrive, it pays to buy ASX shares in quality businesses that mostly have their fate in their own hands.
If the market drops, those stocks will be more resilient against price falls.
If the market rises, those shares will have more potential for growth than their rivals.
In a recent client-only webinar, 2 fund managers from Eley Griffiths Group (EGG) picked out 3 such ASX shares that excite them after the August reporting season.
Only just above the IPO price
“Despite exceeding every major metric in its prospectus forecast at its maiden results, the stock is only just above IPO price at $1.10.”
Indeed, on Tuesday afternoon, DDH1 shares were trading at $1.23.
The company provides drilling services to the mining industry.
“It’s a high-quality contractor with sector-leading return on capital, one of the highest margins amongst the mining services sector, and one of the strongest balance sheets,” Guidera said.
“This stock has all things going for it at the moment — rig numbers improving, utilisation improving… We think there’s significant upside.”
Can you reject this ASX share?
Discount variety store Reject Shop Ltd (ASX: TRS) has burned more than a few investors the past few years.
As of Tuesday afternoon, the stock was trading at $6.30 which is more than 39% down over the past 5 years, as well as 14.5% lower over the past 12 months.
But Guidera reckons there’s only one way it can go from here.
“There’s a possibility the low may be in for that one.”
After its results announcement last month, brokers at Morgan Stanley agreed with Guidera.
They have rated Reject Shop as a ‘buy’ with a target of $10, which would be a tidy 59% gain from the current price.
Retail and hospitality will be roaring back after lockdown
With Australia’s 2 largest states hurtling towards 70% and 80% vaccination coverage, the end of lockdowns is looming.
And with that, Australians (or at least the vaccinated ones) are forecast to spend big on retail and hospitality.
EGG portfolio manager David Allingham reckons Tyro Payments Ltd (ASX: TYR) is poised to take full advantage.
“This business is, we think, absolutely at the forefront of the reopening trade that we’re going to see coming into Christmas across NSW and Victoria.”
Tyro provides card payment terminals to customer-facing businesses.
“Its 2 key payment verticals, physical, are retail and hospitality. It’s about 80% of its transaction value,” he said.
“This business has clearly been hampered by what has happened with the lockdowns. This is going to have an enormous reopening benefit.”
Tyro shares are up 19.5% for the year, trading at $4.05 on Tuesday afternoon.
“We’re bullish on Tyro. It’s trading at $4 today — we think it can trade comfortably with a $5 handle as we move into next year.”