Long-term investing is all about ignoring short-term fluctuations in share price and focusing on the prospects for the underlying business.
This means that investors who truly stick to the philosophy don't get anxious about ASX shares that might have one bad month.
In fact, such short-term dips could present a mouth-watering buying window, if the business is still strong.
The team at ECP Growth Companies Fund, in a memo to clients, names two such ASX shares that it's backing, despite having absolute shockers in March:
Earnings are positive, so what's everyone freaking out about?
Shareholders watched in horror as virtual networking provider Megaport Ltd (ASX: MP1) plummeted 27.2% last month.
ECP analysts admitted there was a lot going on.
"The company announced the departure of its CEO. However, Bevan Slattery, the founder and executive chairman, stepped in as an interim CEO and announced the outgoing CEO's successor."
The team has no qualms about Megaport's position in its portfolio.
"Operationally, underlying port growth, a leading indicator for services, grew 30% QoQ, though net port adds only grew 2% as some customers consolidated port usage and migrated to larger ports," read the memo.
"Positively, the company has maintained their EBITDA positive run rate and expects to maintain this for the full year."
Megaport has been one of the poorest-performing tech shares on the ASX 200 in recent times, losing 64% over the past 12 months.
Other professionals are somewhat divided on Megaport's outlook. According to CMC Markets, six out of 14 analysts are rating it a strong buy while seven recommend holding.
This stock was punished despite 'strong business momentum'
Investors of asset manager GQG Partners Inc (ASX: GQG) didn't fare much better in March, watching their holding shrink by 12.1%.
The ECP team reported that the market turned on GQG despite "strong business momentum".
Again, the analysts had full faith in the investment firm's longer-term future.
"It reported material one-off cost growth in 2022 as it stepped up its global distribution and infrastructure investment to capture the significant interest in its funds," read the memo.
"Given the solid fund track records, greater distribution footprint and large funds capacity, we expect meaningful revenue growth in future years."
There is more agreement about GQG Partners in the broader investment community. Seven out of eight analysts currently surveyed on CMC Markets rate the stock as a buy.
