Brokers: 2 beaten-up ASX shares to buy next month

City Chic is one ASX share opportunity, according to brokers.

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Key points

  • Brokers have named two ASX shares that look good value after heavy falls
  • City Chic is a global retailer of plus-size clothing
  • BWX is a leading natural beauty business

There have been some very painful sell-offs for some ASX shares in the last few months.

Sometimes a decline can mean that the company is now an opportunity and is in the ‘buy zone’.

However, just because a business has fallen heavily doesn’t mean it’s going to rebound rapidly.

With that in mind, these are two ASX shares that brokers think are opportunities.

City Chic Collective Ltd (ASX: CCX)

Since the start of 2022, City Chic shares have fallen by more than 50%.

The business sells plus-size clothes, footwear and accessories to women in multiple regions.

City Chic operates under a number of different brands in different countries. In the United States it has its Avenue business, in the United Kingdom is Evans, and in the European Union it has its Navabi brand. City Chic products are sold in its store network locally, and through partnerships and online in the northern hemisphere.

City Chic has been reporting revenue growth. In the first half of FY22, sales increased by 49.8% to $178.3 million. However, one-off COVID impacts meant that underlying net profit after tax (NPAT) was roughly flat at $14 million.

The company said that it has continued to grow sales in the first eight weeks of the second half of FY22. US growth continues, while the UK and EU are showing signs of a recovery. The ASX share is developing new ranges with existing partners and onboarding new partnerships in the second half and into FY23.

It’s currently rated as a buy by several brokers, including Citi, which has a price target of $3.70 on the business. That implies a possible upside of around 40% over the next year. It acknowledges short-term growth may be slowing, but it sees attractive long-term growth for the business.

At the current City Chic share price, it’s valued at 18x FY23’s estimated earnings, according to Citi. It could also start paying a dividend in FY23.


Since the start of 2022, the BWX share price has fallen by around 55%.

It has a number of natural beauty brands and businesses. Its beauty brands include Sukin, Mineral Fusion, Andalou Naturals, Nourished Life and Go-To Skincare. And it has two e-commerce platforms, Nourished Life and Flora & Fauna.

The business is growing. In the FY22 half-year result, it generated revenue growth of 26.5% to $106.9 million and underlying NPAT increased 22.1% to $4.7 million.

One of the ways that BWX is laying the foundation for growth is by increasing its global points of distribution. In HY22, this increased by 21% year on year to 1.6 million. It’s aiming to reach 2 million by the end of FY22.

It also wants to increase its direct-to-consumer sales – total online sales contributed 41% of total revenue for HY22.

BWX expects “strong” underlying revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) growth in FY22. The ASX share said this outlook was supported by sales momentum in the second quarter of FY22, which has continued into the third quarter of FY22.

Its new facility in Clayton will also be a “significant” enabler of greater efficiency across its operations and financial management. It said it will keep reinvesting this leverage back into its brands to support longer-term value creation.

The BWX share price is rated as a buy by Citi, with a price target of $4.90. That implies a potential increase of more than 150%.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BWX Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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