A number of S&P/ASX 300 Index (ASX: XKO) shares are facing weakening share prices again. Especially as inflation and rising interest rates throw up some more volatility.
When compelling businesses hit 52-week lows, that could be a good signal for investors to take advantage of lower prices.
This year could lead to a difficult economic situation for some businesses, but that doesn't mean it's going to last forever.
There could be an opportunity with these ASX 300 shares that could have been oversold by the market.
Dicker Data Ltd (ASX: DDR)
Earlier today, the Dicker Data share price hit a 52-week low. Over the past year, it has fallen around 40%.
For readers that haven't heard of this business, it acts as a distributor of a wide range of products including Cisco Systems, Dell, HP, Microsoft and many more. It's also expanding in other areas such as cybersecurity.
The ASX 300 share recently reported its result for the 12 months to December 2022. It said that revenue was up 25% to $3.1 billion, earnings before interest, tax, depreciation and amortisation (EBITDA) went up 9.3%, operating profit before tax increased 0.8% to $106.9 million and net profit after tax (NPAT) declined 0.3% to $73.4 million.
Management said that the company suffered from higher costs, particularly higher wages and finance costs. Higher costs were incurred as the acquired businesses Exceed and Hills were integrated. It's yet to achieve significant cost synergies with these acquisitions.
Earnings are expected to rise noticeably to FY24. Commsec numbers suggest that earnings per share (EPS) could be 52.4 cents, putting the Dicker Data share price at 17 times FY24's estimated earnings. In that year it could pay an annual dividend per share of around 50 cents per share, translating into a grossed-up dividend yield of 8%.
Sonic Healthcare Ltd (ASX: SHL)
Sonic Healthcare is a leading global pathology business with a presence in a number of countries including Australia, the UK, the USA, Germany and so on.
It played an important part during COVID-19 by carrying out millions of tests. In October 2022 it generated $57.7 million of COVID-19-related revenue, so FY23 will also include earnings from testing.
While the ASX 200 share's profit is likely to be lower than in FY22 because of the significantly reduced COVID-19 testing in FY23, there are still positive signs. In the four months to October 2022, base (non-COVID) revenue had increased from $2.29 billion to $2.45 billion, up 6.7%.
EBITDA in the four months to October 2022 was $621 million, up 32.7% compared to the four months to October 2019 – pre-COVID times.
I think that healthcare treatments delayed because of the pandemic will now flow through Sonic Healthcare's financials. Despite that, the Sonic Healthcare share price is down almost 40% since the start of 2022.
According to estimates on Commsec, the Sonic Healthcare share price is valued at under 19 times FY23's estimated earnings. It has a trailing grossed-up dividend yield of around 5%.
