Ask A Fund Manager
The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Eley Griffiths portfolio manager Nick Guidera takes a look at three heavily discounted small-cap ASX shares.
Cut or keep?
The Motley Fool: Let's examine three ASX shares that have been devastated in the past year, and see if you think each of these fallen stars are now a bargain to pick up or if you'd stay away.
The first one is Wisr Ltd (ASX: WZR), a fintech stock that's plunged 64% over the last 12 months.
Nick Guidera: At this point in time, we believe it is too early [to buy].
The team at Wisr have built a disruptive next-generation personal lender with a focus on building financial products, apps, and services that are designed to improve the wellness of Australians. A track record of growing new loans since inception, Wisr now has a sizable loan book of close to $900 million and is targeting profitability in 2023.
While the market opportunity is large, competition remains intense, and higher interest rates have meant the cost of funding has increased. As the economic outlook deteriorates in Australia, there is also likely to be further pressure on the consumer.
MF: Art marketplace Redbubble Ltd (ASX: RBL) has been slashed 76% in the past year. Would you pick it up as a bargain?
NG: At this stage, no. Redbubble has delivered a series of successive earnings downgrades, as the inflated revenue unwinds from the COVID bump. The CEO is embarking on a turnaround of sorts, however, the challenging trading conditions have meant there is a need to focus on cost out to conserve cash.
MF: How about online furniture retailer Temple & Webster Group Ltd (ASX: TPW)? It's dropped about 40% over the past 12 months.
NG: At this stage, yes we are likely to [buy].
While there are consumer headwinds in Australia, Temple & Webster is the clear leader in the online furniture and homewares category. It has demonstrated it can continue to grow its customer base at a time where penetration remains low for online spend in the category relative to other developed markets.
