There has been much market volatility in 2022. However, this can lead to potential opportunities for investors on the ASX share market.
Businesses that are growing but have been sold off could now be much more attractive in the long term.
These two ASX shares could be good value ideas:
Elmo Software Ltd (ASX: ELO)
Elmo describes itself as a cloud-based software provider for small businesses and mid-market organisations to manage people, processes, pay, and expenses. It operates in Australia and the UK.
How much cheaper is the business if you were to buy is now? It has dropped 28% over the past month and 32% in the 2022 calendar year to date.
However, the company continues to grow at a fast rate. In the third quarter of FY22, it revealed it made $67.4 million of revenue, which was up 37% to $67.4 million. Its annualised recurring revenue (ARR) growth implies more reported revenue in the next 12 months. Its ARR rose 33% to close at a record of $101.2 million.
Despite the business’s heavy investment for growth, it is now generating a positive earnings before interest, tax, depreciation and amortisation (EBITDA). The third quarter EBITDA was $2 million, up $3.2 million year on year.
Management says the ASX share is focused on reaching its operating cash flow breakeven point and it’s well-funded to achieve this goal. Cash receipts are growing quickly, but cash expenses are largely flat. Cash flow breakeven is expected to occur in the second half of FY23.
The broker Morgan Stanley currently rates the business as a buy, with a price target of $6.70. That implies that the Elmo share price could more than double over the next year.
Corporate Travel Management Ltd (ASX: CTD)
Corporate Travel Management is a company that helps businesses with their travel needs. It says its service and up to the minute information is a premium asset for its clients. The ASX share also says that its technology platform is critical to success with a global strategy and system architecture.
Despite the company regularly referring to recovery, the Corporate Travel share price is down by 14% in the last month.
Earlier in May, it gave an update with a presentation.
Corporate Travel Management said that it expects to be at least 75% larger than it was in the 2019 calendar year at full recovery. The company said that it has made some transformational acquisitions through COVID-19. Monthly revenue is expected to surpass 2019 levels in the fourth quarter of FY22.
The ASX share is targeting $265 million of EBITDA when it has 100% recovered.
Corporate Travel notes that it is recovering faster than the wider corporate travel sector in its largest regions. It puts this down to “strong” market share gains in all regions, its value proposition, and global scale.
Management notes that the business has zero debt with sufficient cash to support a full recovery. It has been making underlying EBITDA since March 2021.
The company says that the FY22 fourth quarter will provide strong momentum into FY23.
Morgan Stanley also rates Corporate Travel as a buy, with a price target of $30. The broker thought the FY22 third quarter was good and points to a further potential recovery for the sector and the business.