Experts are always on the lookout for ASX shares that could be opportunities. June 2022 could be a good month to go looking for some of those potential ideas.
Businesses that are expected to achieve profit growth over the long-term could be good picks. Brokers often like to assign a price target to businesses – that’s where they think the share price could be. The bigger the price target, the more that potential business could rise, if the broker is right.
Companies aren’t necessarily going to do well just because a broker thinks it’s good value, but the long-term could be promising with the plans the companies have.
Let’s look at a couple of these beaten-up ASX shares that could be opportunities.
Accent Group Ltd (ASX: AX1)
This business is one of the largest footwear retailers in Australia. It owns some brands and acts as the distributor for others.
Some of the brands that the business sells include The Athlete’s Foot, CAT, Dr Martens, Glue Store, Hoka, Kappa, Merrell, Skechers, Stylerunner, Trybe, Timberland, and Vans.
The broker UBS is one of the brokers that rates the Accent share price as a buy with a price target of $2.50. That suggests a possible rise of more than 80% over the next year.
UBS thought the recent trading update was better than expected and the profit margin may be improving.
The ASX share noted in its business update that sales performance from late February 2022 had improved compared to the 10% fall of like for like sales in the first eight weeks of the second half of FY22.
Accent also said that it has continued to focus on a full price, full margin sales strategy, which has driven an improved gross profit margin, which was ahead of both expectations and last year.
The company is taking a number of actions to grow profit, including growing its store network and growing online sales.
According to UBS, the Accent share price is valued at 9 times FY23’s estimated earnings with a potential grossed-up dividend yield of 14% in FY23.
City Chic Collective Ltd (ASX: CCX)
City Chic is another ASX share that has seen a significant decline in recent months.
This business owns a variety of brands that are targeted at plus-size women. Australia, the UK and the US are three key target markets for the business with its City Chic, Evans and Avenue businesses.
One of the brokers that really rates City Chic is Macquarie, which has a price target of $6.70 on the business. That implies a possible rise of over 200%, though many other brokers have lower (but still positive) price targets.
Macquarie points out that City Chic’s sales growth remains strong, partly as a result of the company ensuring a good inventory position. The broker thinks the business can keep growing.
At the end of April 2022, the ASX share said that in the second half to date it had achieved total sales growth of 25%, with USA total sales growth of 47%. Global partner sales growth was 465%.
The ASX share pointed out that the plus-size market is forecast to grow by around 7% per annum.
According to Macquarie, the City Chic share price is valued at 12 times FY23’s estimated earnings and it could pay a grossed-up dividend yield of 9.1% in FY23.