As interest rates head up yet again, there's no longer a question of whether an economic downturn will come, but it's now a matter of how severe it will be.
Some of the ASX shares that are most impacted by a slowdown in spending is anything related to advertising.
The logic is that marketing spend is one of the first to be trimmed when businesses try to tighten their belts through tougher times. Promotion of goods and services is less effective anyway when consumers have less money to spend.
Because of this perception, most ad-related ASX shares have plunged in recent weeks.
However, Forager Funds portfolio manager Alex Shevelev and analyst Gaston Amoros reckon there are a couple of stocks that will fare better than the market expects.
The stock that's cheap as a Russian telco
In their reporting season review, the pair argued that August updates showed advertising hasn't actually slowed down that much, at least for some.
So some ASX shares are just selling at absurdly cheap levels at the moment.
"Seven West Media Ltd (ASX: SWM) is trading at around 4x consensus earnings, the level you would normally associate with a Russian telecommunications company, not one of the near-duopolistic owners of broadcast TV stations in Australia."
The Forager experts noted that Seven West is so bullish about advertising activity in the coming period that it backed up the rhetoric with actual cash.
"The company is so confident in its outlook that they have just announced a 10% buyback," they said.
"And we tend to agree with them – buying its own stock at these levels seems like a very good deal."
Seven West shares have lost about a quarter of their value so far this year.
The rest of the professional community is divided on the media conglomerate. Out of the 12 analysts surveyed on CMC Markets, five rate it as a buy, four think it's a hold, and three recommend selling.
Bouncing back from COVID-19 but as cheap as 2020
Outdoor advertising provider oOh!Media Ltd (ASX: OML) is another example of a stock that's too cheap to ignore.
"Their business continues to bounce back strongly from the pandemic," said Shevelev and Amoros.
"While the core Street, Road and Retail segments have sustained the recovery thus far, Airports and Offices are still to make a comeback, providing more runway for growth into FY23."
Similar to Seven West, the oOh!Media share price has lost 22.4% year to date.
The Forage experts see this as a golden buying opportunity.
"Its share price… is back to the pre-vaccine days of 2020!"
Other fund managers share Shevelev and Amoros' enthusiasm for oOh!Media much more than Seven West.
According to CMC Markets, six out of nine analysts currently recommend the stock as a buy, with five of them rating it a strong buy.
