Some of the companies that were the most devastated by the COVID-19 pandemic were those in the services sector.
Social restrictions were especially rough for ASX shares of businesses that rely on a physical presence to deliver their services.
But as the Australian population moves towards a 90% full vaccination rate, these companies are set to make a roaring comeback.
Wilson Asset Management analysts recently named 2 such ASX shares in that position:
No shortage of mining clients for this ASX company
Laboratory testing, inspection and certification services provider ALS Ltd (ASX: ALQ) has seen its shares rally more than 40% over the year… until last week.
The stock has dropped almost 9% since 15 November, which could make it a bargain.
Wilson senior investment analyst Shaun Weick certainly rates it as a current “strong buy”, with many of its clients in the minerals sector.
“The backdrop for commodity exploration remains very strong. The company’s increasing capacity by 15%,” he told a WAM YouTube video.
“You’re seeing price increases go through and you’re also seeing mix evolve towards junior miners.”
Weick added that his team thinks ALS’ operating leverage is underappreciated.
“We also think the peers are providing a good read through on the life sciences side, which will also benefit from bolt-on [acquisitions].”
The WAM team is not the only one high on ALS. According to CMC Markets, 9 of 15 analysts rate the stock as a strong or moderate buy, with 5 recommending it as a “hold”.
Overseas pickup a great omen for Australian market
International student placement provider IDP Education Ltd (ASX: IEL) has seen its shares rally more than 84% this year so far.
But Weick is expecting even further growth, with the industry already seeing “a very strong bounce back” as border restrictions melt away in the UK and Canada.
“We think [that] presents a very strong lead indicator as we look into Australia, where hopefully into calendar year 2022, our borders will be reopened and you’ll see significant intakes of students.”
IDP also has a division that conducts International English Language Testing System (IELTS) testing.
To complement this, IDP earlier this year acquired a testing business in India, which was bought for cheap in Weick’s opinion.
“Going forward, we think there’s still significant consolidation to play out here in terms of the global distribution of testing. We think this one’s a buy.”
Morgan Stanley analysts agree with WAM, labelling IDP shares as “overweight” with a $40.20 price target. The stock was trading at $37.33 on Wednesday morning.