Despite the strong bull run of the ASX share market over the last couple of years, there are a few ASX shares that have been beaten up in recent months. They could be opportunities.
While some businesses have gotten into difficulty and not recovered (yet?), like AMP Limited (ASX: AMP), there are others hoping for a turnaround sooner rather than later. If they are able to turn the business around, it’s possible they might be worth considering.
Kogan.com Ltd (ASX: KGN)
Over the last month, the Kogan share price has fallen around 7% and in 2021 to date, it has dropped almost 50%.
The e-commerce retailer and services provider has been telling investors of slowing growth for its products and profit impacts during FY21
However, Kogan recently announced how it performed in the first quarter of FY22.
It said gross sales grew by 21.1% year on year and 23.2% quarter on quarter to $330.5 million.
The gross profit performance was a bit mixed. It generated $52.5 million of gross profit, which was down 1.7% year on year, but up 31.6% quarter on quarter.
The ASX share made $10.8 million of adjusted earnings before interest, tax, depreciation and, amortisation (EBITDA), which included a $2.3 million contribution from Mighty Ape.
Active customers and Kogan First members continue to climb alongside the gross sales improvement. The active customers increased by 30.7% to 3.35 million, whilst Mighty Ape had almost 750,000 active customers at 30 September 2021. Kogan First members increased 171.1% year on year and rose 64.4% quarter on quarter to 197,000.
The business said it had resolved previous inventory pressures and closed a number of inefficient overflow warehouses. This reduction in inventory has led to the company significantly reducing its warehousing costs, delivering an average variable cost saving of $0.8 million per month compared to the last quarter of FY21.
Kogan continues to invest in its long-term strategy, improving its technology, logistics, platform, Kogan First membership benefits, and so on.
According to Commsec, the Kogan share price is valued at 23x FY23’s estimated earnings.
Magellan Financial Group Ltd (ASX: MFG)
Over the last six months, the Magellan share price has fallen by 28.5%. In the last year, it has dropped by 38%.
The fund manager has seen its leading investment strategy, the global equity strategy, underperform the global share market in recent times. On top of that, the ASX share saw $1.5 billion of net outflows during the three months to 30 September 2021. That outflow represented 1.3% of the average funds under management (FUM) for the quarter.
However, the broker Macquarie Group Ltd (ASX: MQG) thinks the decline of Magellan shares could mean it’s an opportunity.
The broker has a price target on Magellan of $38. It is trading cheaper compared to its historical forward earnings multiple. Macquarie also notes the fund manager’s high dividend yield, which could help attract and retain investor attention.
On Macquarie’s numbers, Magellan has a partially franked dividend yield of 6.5%.
Magellan recently held its annual general meeting (AGM).
While the company is confident about the long-term profitability of its core management business, management thinks its external investments are very compelling, which includes a 40% economic interest in Barrenjoey, a 12% shareholding of Guzman y Gomez, and a 15% interest in FinClear.
Magellan said Barrenjoey was profitable in the first three months of FY22.
Regarding those investments, Magellan said:
All of these initiatives are investments for the future that we believe can add meaningful additional earnings streams, create a more robust and diverse business and ultimately create meaningful shareholder value over time.
According to Macquarie, the Magellan share price is valued at 15x FY22’s estimated earnings.