A number of ASX shares are now trading with low price-to-earnings (P/E) ratios, or they've suffered a heavy sell-off. They could be counted as cheap ASX shares.
I think they could be opportunities to make strong returns in the long run.
Not every company has dropped during this period of higher interest rates and strong inflation. Just look at the Commonwealth Bank of Australia (ASX: CBA) share price and how that has held up over 2022.
But, CBA is a huge business. How much more growth can the bank achieve?
According to the Moneysmart compound interest calculator, investing $1,500 per month and earning the long-term historical market average return of 10% per annum can grow into just over $1 million in 20 years.
I think smaller ASX shares, which seem cheap, could be an effective way to invest in the current environment and potentially enable better returns, making a possible million come quicker, though it would still take time.
However, nothing is certain in the share market, and returns can be more volatile with smaller names.
Here are 10 cheap ASX shares I believe could be opportunities:
Adairs Ltd (ASX: ADH)
This furniture and homewares retailer has seen a big sell-off, with the Adairs share price down by 45% in 2022 to $2.21.
It's planning to grow profit by opening more stores, relocating existing store locations to shops with bigger floor spaces, growing its membership base, selling Mocka furniture in stores and increasing its online sales.
Commsec numbers imply the cheap ASX share is valued at just 8x FY23's estimated earnings with a grossed-up dividend yield of 11.7%.
Accent Group Ltd (ASX: AX1)
Accent is one of the largest shoe retailers in Australia. It owns shoe store brands like The Athlete's Foot and Glue Store, while acting as the distributor for other brands like Skechers and Vans.
The retail business is planning to grow its store network, improve margins and potentially add more brands.
After a 27% fall of the Accent share price in 2022 to $1.79, it's now valued at 14x FY23's estimated earnings with a grossed-up dividend yield of 8%, according to Commsec.
Corporate Travel Management Ltd (ASX: CTD)
This company is one of the largest ASX travel shares. It's also one of the world's biggest corporate travel operators.
With COVID effects fading away, there is a strong rebound in demand for travel. Corporate Travel Management worked during COVID to become more profitable when the normal travel conditions could return. When the cheap ASX share is back to a full recovery, the business expects to demonstrate at least a 30% improvement in earnings per share (EPS) compared to FY19.
According to Commsec, the Corporate Travel Management share price of $14.28 is valued at just 13x FY24's estimated earnings with a potential grossed-up dividend yield of 5.3%.
Evolution Mining Ltd (ASX: EVN)
Evolution Mining is one of the largest gold miners on the ASX, though the Evolution Mining share price is 26% lower than it was a year ago. It closed on Thursday at $2.90.
Amid a collapse of cryptocurrency prices and uncertainty with the companies involved in the industry, the gold price has jumped over the last month. This could help the miner's earnings in the medium term.
It's priced at 12x FY24's estimated earnings with a potential FY24 grossed-up dividend yield of 4%.
Betashares Global Cybersecurity ETF (ASX: HACK)
This exchange-traded fund (ETF) gives investors exposure to a portfolio of companies involved in cybersecurity.
There is an increasing amount of data, information and retailing online, so it's integral for organisations to stay protected, and this could be a strong tailwind for the underlying businesses. Each successful cyber attack could encourage every company in that industry to tighten up its defences. For example, Optus was recently the target of an attack.
The global cybersecurity market is expected to grow from $223.7 billion in 2022 to $478.7 billion in 2030, according to Statista and Strategic Market Research.
The Betashares Global Cybersecurity ETF unit price of $8.04 is 25% cheaper than it was at the start of the year.
Mineral Resources Limited (ASX: MIN)
Mineral Resources has sometimes been called the cheapest ASX lithium share. It has mining services, iron ore, and lithium operations.
It's working on increasing its production capacity for both iron ore and lithium, which could improve its profitability. The business is also looking at becoming involved with more of the lithium value chain.
According to Commsec, it's valued at 7x FY24's estimated earnings with a projected grossed-up dividend yield of 7%. The Mineral Resources share price closed on Thursday at $87.78.
Shaver Shop Group Ltd (ASX: SSG)
This company sells premium products in DIY grooming, personal care, and hair and beauty appliances for men and women. Exclusive products make up more than half of sales and 60% of gross profit.
According to Shaver Shop, the Australia-New Zealand beauty and personal care market is expected to grow from approximately $10 billion to around $12 billion by 2026. It's hoping to grow its number of stores and increase online sales over time.
Commsec numbers suggest the Shaver Shop share price of $1.12 is valued at under 9x FY23's estimated earnings with a projected grossed-up dividend yield of 13%.
Temple & Webster Group Ltd (ASX: TPW)
This company is a leader in retailing furniture and homewares. Both third-party suppliers and private brand products are sold through the website. A drop ship model by the suppliers means quicker delivery, and the cheap ASX share doesn't need to hold as much inventory.
It's investing in technology and efficiencies so that it can provide a better online shopping service for customers. For example, an augmented reality service allows shoppers to 'see' the product in their room. Management thinks the company will return to double-digit revenue growth during FY23.
In my opinion, it looks a lot cheaper after a 58% fall in the Temple & Webster share price in 2022. It closed on Thursday at $4.56.
Universal Store Holdings Ltd (ASX: UNI)
This company operates the Universal Store and THRILLS brands that are focused on younger shoppers.
The first 21 weeks of FY23 have seen total Universal Store sales climb by 40.2%. It's planning to continue to open new stores, while also benefiting from a gross profit margin improvement. The cheap ASX share will continue to invest in the productivity and technology of its business too.
According to Commsec, the Universal Store share price of $4.73 is valued at under 12x FY23's estimated earnings with a projected grossed-up dividend yield of almost 8%.
Webjet Limited (ASX: WEB)
Webjet is a leading ASX travel share. Not only does it have its online travel agency business, but it also has its business-to-business segment called WebBeds.
As travel rebounds, the company is hoping to reach a much higher earnings before interest, tax, depreciation and amortisation (EBITDA) margin compared to pre-COVID times. It has invested in technology to become more efficient.
The Webjet share price — $6.27 — is now valued at 20x FY24's estimated earnings, according to Commsec.
