The past year has been a tumultuous one for investors. While the S&P/ASX 200 Index (ASX: XJO) is down by nearly 6%, many individual ASX shares have suffered an even grimmer fate.
While a deep laceration to a share price can be cause for concern, it can also present an opportunity for investors looking to pick up high-quality companies at a discounted price. From my perspective, Christmas has come early for those willing to scoop up some of the less loved corners of the market.
Right now, there are few companies that look rather tantalising at their current prices. With that being said, here are three ASX shares that have fallen by over 30% this year and why I'd consider buying them now.
I'm seeing value in these 3 ASX shares
Codan Limited (ASX: CDA)
The metal detector-making communications company has seen its share price get pummeled this year. Shockingly, shares in Codan have dropped 58% over the course of the year, after already falling sharply from a high of $19.33 in 2021.
With that level of destruction, you might assume this is an unprofitable business… or at best, experiencing a severe cratering in earnings. Instead, Codan posted record revenue and profits in FY22 despite a challenging environment.
Investors are mostly worried about the forward guidance, which projects a possible 45% fall in Minelab sales in FY23. However, I believe Codan could achieve around $390 million in revenue even with a big blow to its detecting division.
Maybe I'm missing something (@ me on Twitter if you think I am)… but the valuation on this ASX share looks too good to ignore — in my opinion — at a price-to-earnings (P/E) ratio of around 7 times.
ARB Corporation Limited (ASX: ARB)
The 4X4 accessories company might be susceptible to a weakening economic environment. As interest rates increase, car loans and mortgages are becoming more expensive, meaning less money spare to deck out the ute.
However, I can't get over the enviable track record that ARB has built over the years. Earnings have grown at a historical rate of ~23%, management has successfully established a booming export market, and not a cent of debt on the balance sheet.
There could be a touch more downside to play out as car sales potentially decline into 2023. Though, I wouldn't be foolish enough to try and time the market. This is one ASX share I'd happily nibble away at throughout the year.
The ARB share price is down 52% compared to where it was pre-2022.
Sonic Healthcare Limited (ASX: SHL)
Lastly, this medical diagnostic mastodon is possibly my favourite on the list for dividends. The Sonic Healthcare share price has suffered a 34% retreat during this year, which is significant considering it's a $14.6 billion company.
The market is wary of how much of Sonic's earnings are replicable in a post-COVID world. As such, the company now trades on a P/E ratio of around 10 times. I also suspect that Sonic's earnings might begin to normalise. Despite this, I believe its profits will still hold above pre-COVID levels, and with a much healthier balance sheet.
Currently, Sonic offers a dividend yield of 3.3% at a payout ratio of 33%. I suspect further dividend increases are probable in the future. Discounted valuation, plus decent dividends, and a dominant market position — consider me keenly interested!
