True long-term investment means buying ASX shares of businesses that have excellent business prospects, regardless of recent stock price movements.
This philosophy is, as they say, simple but not easy.
It's especially difficult for amateur and professional investors alike when the stock price is haemorrhaging in the short term.
And that's fair enough. It's only human nature not to want to put money into losing assets.
But if you can act completely rationally, those could be the best buying opportunities ever.
The team at ECP Growth Companies Fund this week named two of its S&P/ASX 200 Index (ASX: XJO) holdings that are exactly in that position:
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Don't be distracted by the current troubles
Nothing personifies recent strugglers more than technology company Megaport Ltd (ASX: MP1).
As a cash-burning growth business, the share price has taken an absolute battering.
Over the past 12 months, the stock has more than halved its value. Going back to November 2021, Megaport shares have lost an agonising 72%.
The stock price for the network-as-a-service provider again struggled in January.
ECP analysts, in a memo to clients, attributed this to a "mixed" quarterly update.
"Underlying port growth, a leading indicator for services, grew 30% quarter on quarter, though net ports only grew 2%," read the memo.
"Customers have started consolidating ports to larger ports (10GB to 100GB), giving them the ability to add more services to less ports."
This trend is painful for the immediate balance sheet, admitted the ECP fund managers, but a "net positive" in the long term.
Ultimately the business is heading towards spending less cash than it earns.
"The company has maintained their EBITDA positive run rate and expects this to extend to the full year," read the memo.
"Price increases and reduced costs also [bring] forward free cash flow positivity in our estimation."
'One of the highest quality travel companies in the world'
Although the Corporate Travel Management Ltd (ASX: CTD) share price gained almost 25% in January, it is still down 25% over the past year.
The simple fact is that the ECP team is happy to have this one in the portfolio, regardless of what the stock price has done in recent times.
"Corporate Travel Management remains one of the highest quality travel companies in the world," read its memo.
"And [it] is well positioned to benefit from a continued recovery in underlying travel volumes and expansion into new markets and regions."
The analysts admitted there is some short-term risk, but the longer-term trajectory is heading in the right direction.
"While there is still uncertainty related to the outlook for US and European travel volumes, the market in Australia — and to a lesser [extent] Asia — is still growing strongly, with domestic travel volumes leading the way."
Other professionals generally agree.
According to CMC Markets, seven out of 11 analysts currently covering Corporate Travel recommend it as a strong buy.
