We already know this year's modus operandi for the market seems to be to punish certain ASX shares regardless of business performance.
With so many macroeconomic headwinds, investors are irrationally fleeing some companies just because of their style or sector.
Glenmore Asset Management saw some of its ASX shares hammered in May for this exact reason.
"With interest rates globally continuing to rise from very low levels, we continue to see valuations of a wide range of stocks compress, in particular growth stocks," said portfolio manager Robert Gregory in a memo to clients.
But when the stock price starts diverging from business performance, the gap has to eventually close back sooner or later.
With this in mind, Gregory named two fallen stocks that are not widely discussed, but he's securely keeping locked away in his portfolio:
'Demand for new vehicles continues to exceed supply'
Car dealership network Eagers Automotive Ltd (ASX: APE) saw its share price fall 18.5% last month.
Gregory admitted the company put out a May update that forecast a pre-tax profit for the June half would be 12% to 15% below the prior comparable period.
But the trading conditions remain positive, he noted.
"Eagers said demand for new vehicles continues to exceed supply, with the new car order book having increased by more than 25% since 31 December 2021," said Gregory.
"New car margins remain elevated, and assuming supply constraints can improve somewhat over the next 6 months, APE should be able to deliver [a] full year 2022 NPAT of ~$300m, which we would view as a strong result in a challenging environment."
Many other fund managers agree with Gregory.
According to CMC Markets, eight out of 14 analysts rate Eagers shares as a strong buy, while three of the remaining six recommend it as a moderate buy.
The Eagers stock price has lost more than a third of its value since the start of the year, but it does pay out a 6.8% dividend yield.
Has this stock fallen so much that it can double from here?
Investment houses on the ASX have all suffered from painful drops in their valuation in 2022.
Pinnacle Investment Management Group Ltd (ASX: PNI) is no exception, losing a whopping 58% off its share price year-to-date.
In May alone it lost 13.2%.
According to Gregory, early in the month Pinnacle disclosed at an investment conference that funds under management (FUM) for the March quarter was down 2.4% from the December quarter.
But he remains optimistic as there is still net money coming in.
"Net inflows were $1.3 billion in the March 2022 quarter, which was a solid effort in volatile equity markets," said Gregory.
"The update was broadly in line with our expectations, with the main driver of the stock price fall in our view being the declines in equity markets and general sell-off in growth stocks."
The Motley Fool reported this month that UBS also thinks Pinnacle is undervalued.
Its analysts have slapped a share price target of $12.65, which is almost double the current level.
"The broker thinks that despite the challenges facing the investment industry, the business looks attractive over the long term," reported The Motley Fool's Tristan Harrison.
"The ASX [company] is looking to add new asset classes and investment strategies to its portfolio, diversifying sources of revenue and helping further growth."
Pinnacle shares give out a handy dividend yield of 5.1%.
