I think these 2 ASX shares are steals

Here are some beaten-up ASX shares that could be too good to miss.

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Key points

  • Both of these ASX shares have seen share price sell-offs, but are expecting longer-term growth
  • The VanEck Video Gaming and Esports ETF is invested in an industry with a growing fanbase, with names like Nintendo and Nvidia in the portfolio
  • Bubs is a globally growing infant formula business

There has been plenty of volatility over the last year, which has opened up a number of opportunities to buy ASX shares at much cheaper prices.

Share prices are meant to go up and down, but there can be the occasional year when there's a big drop for most businesses on the share market. Prices don't usually stay low forever, which means this could be an opportunistic time to invest.

Some of the biggest opportunities may be found with the ones that have fallen quite significantly.

Here are two ASX share ideas to consider that could deliver growth over the next few years and beyond.

VanEck Video Gaming and Esports ETF (ASX: ESPO)

I think this is one of the most exciting exchange-traded funds (ETFs) on the ASX. It gives investors access to a portfolio of businesses involved with video gaming and e-sports.

Some of the businesses involved may be known to readers as creators of past and current leading games such as Activision Blizzard, Nintendo, Electronic Arts, Take-Two Interactive, and Bandai Namco. There are also other businesses involved in the gaming world, including ASX shares such as Tencent, Nvidia, and Advanced Micro Devices.

While the US has the biggest weighting at just over 40% of the portfolio, it's a smaller allocation than other global ETFs may have. Other countries that have a sizeable weighting include Japan (21.4%), China (19%), Australia (4.2%), and Singapore (4.1%).

VanEck research shows there are more than 2.7 billion active gamers worldwide. The top e-sport tournaments are seeing crowds that reportedly rival the World Cup and the Olympic Games. Video gaming has achieved 12% average annual revenue growth since 2015. This is a good driver for earnings. Meanwhile, e-sports has created new potential revenue streams from game publisher fees, media rights, merchandise, ticket sales, and advertising.

After a 32% drop for the ETF since November 2021, I think this industry is now very attractively priced.

Bubs Australia Ltd (ASX: BUB)

Bubs is an ASX share that is seeing its revenue rapidly grow. The latest example of this was in the FY23 first quarter where its gross revenue increased 28% and infant formula revenue went up 109% year over year.

Impressively, the company is growing its market share in Australia, the USA, and China. In its Australian retail channel, it achieved a market share of 56% of the total goat formula category while in the USA, its market share was 0.4%, but 9% of the organic and health formula category in its first 13 weeks in the country.

With its Chinese revenue, the company saw daigou (private trader) infant formula gross revenue rise 20% in the first quarter.

I think the ASX share is taking the right steps to become a much bigger business in the coming years if it can keep gaining market share in its most profitable segment – infant formula. If it can achieve even half the success of A2 Milk Company Ltd (ASX: A2M), then it would do very well.

With the Bubs share price down 45% since mid-August 2022, I think it looks better value.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Activision Blizzard, Advanced Micro Devices, Nvidia, Take-Two Interactive Software, and Tencent. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Electronic Arts and Nintendo and has recommended the following options: long January 2023 $115 calls on Take-Two Interactive Software. The Motley Fool Australia has recommended VanEck Vectors Video Gaming And eSports ETF, A2 Milk, Activision Blizzard, Bubs Australia, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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