2 ASX shares that could surprise you in a year's time

Here are a couple of stocks that have different spins on the word 'quality', both of which could serve you well in the long run.

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While share markets have turned dark in recent months, we know from past experience that it could all turn around pretty quickly.

However, to combat rising interest rates, experts are emphasising quality.

There is no universal definition of "quality", but some of the more popular interpretations include profitability and tailwinds that are resistant to economic cycles.

As such, here are 2 ASX shares that have been beaten up pretty badly this year but experts reckon could surprise in a year's time:

'We've been buying it'

It's fair to say Megaport Ltd (ASX: MP1) shareholders have been sweating bullets this year.

The stock price has fallen a painful 62% so far in 2022.

Megaport's far from the only technology company to suffer the wrath of a violent rotation away from growth shares though.

Burman Invest chief investment officer Julia Lee doesn't think it will get any easier for the tech sector in the immediate future.

However, she reckons Megaport is worth a go if you have patience.

"If you're a longer-term investor there's certainly opportunities in the type of market that we're in," she told Switzer TV Investing.

"If you can… ride out the cycle then there's no problem in accumulating high-quality businesses like Megaport."

Megaport provides virtualised networking pipes to corporate customers. In the internet age when customer demand for connectivity can vary wildly, its services can be dialled up or down according to need.

And the already formidable transition of computing to the cloud has only accelerated since the COVID-19 pandemic arrived.

"We're still seeing that shift to the cloud. They've had that first mover advantage."

Shaw and Partners senior investment adviser Adam Dawes also rates Megaport shares as a buy.

"We really like this one. We've been buying it and putting it in clients' portfolios," he said.

"It's even lower than $8 today — I think there's definitely some value there."

37%: has this education stock discounted enough?

Lee also favours international education placement provider IDP Education Ltd (ASX: IEL), despite its valuation dropping more than 37% since November.

"It made a very smart acquisition in India," she said.

"I like that they've actually managed to improve on the business. The margins coming through that India acquisition are much higher than a couple of years ago, which is nice to see."

With the world outside of China moving past coronavirus restrictions, international study placements will gather steam again.

Notwithstanding the share price drop over the past 6 months, Lee admits IDP is still expensive by many measures.

"It does have a very high multiple. It trades on a [price to earnings] multiple of over 40 times," she said.

"But I think that post-COVID, as things start to move… this is going to be one of those companies that's going to be bigger and better than it was before COVID hit."

Dawes likes the current discounted price for IDP shares, but feels like it was too expensive to start with.

"[During] COVID, it shouldn't have really traded where it was and it always trades at a real premium to the rest of that sector, and even the market," he said.

"I'd be waiting for this sell-off to potentially ease before you get back into this one. I think there's probably still some more selling to go."

Motley Fool contributor Tony Yoo has positions in MEGAPORT FPO. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Idp Education Pty Ltd and MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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