2 'undervalued' ASX 200 shares to 'beat market' before everyone else wakes up

Here are two businesses with excellent long-term potential that you could buy for cheap right now.

| More on:
a smiling woman holds up two fingers and winks.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The last 18 months has demonstrated that it's now more important than ever to ignore short-term volatility and instead focus on the long-term prospects of a business.

There are no better examples of that thinking than these two S&P/ASX 200 Index (ASX: XJO) examples, which Seneca Financial Solutions investment advisor Arthur Garipoli rates as buys:

'Positive view' on health devices giant

Healthcare is one of those industries that don't fare too badly even through times of economic stress.

That's because people will, understandably, prioritise their physical and mental wellbeing over other goods and services.

As such, a leader in its field like Resmed CDI (ASX: RMD) makes a sensible buy.

"This manufacturer of medical devices for respiratory disorders recently reported results that beat market expectations," Garipoli told The Bull.

"Revenue of US$1.0337 billion for the three months ending on December 31, 2022 was up 16% on the prior corresponding period."

The hardware company did encounter some roadblocks to growth last year as a global computer chip shortage hampered its own production.

But that short-term issue, Garipoli feels, is now past it.

"We retain a positive view on RedMed, given an improving supply chain," he said.

"It will enable ResMed to meet additional demand for respiratory units, leading to revenue growth."

The ResMed share price is 8.9% up over the past year.

Excellent dividend yield plus cheap share price

Deterra Royalties Ltd (ASX: DRR) is a mining royalty company, meaning it's almost like a landlord collecting rent from sites where resource companies are operating.

This model has some advantages over directly owning mining shares, according to Garipoli.

"Deterra holds a 1.232% royalty in BHP Group Ltd (ASX: BHP)'s Mining Area C (MAC) involving iron ore operations in the Pilbara region of Western Australia," he said.

"It gives Deterra price and volume exposure to a world class asset without taking on mining risk."

Garipoli noted that the first half update showed BHP increasing production at the MAC site.

"We believe the stock is undervalued due to the quality of the asset, its discount to peers and providing investors with a forecast fully franked dividend yield of 6.6%."

The Deterra share price has remained flat over the past year and so far in 2023.

Motley Fool contributor Tony Yoo has positions in ResMed. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Broker Notes

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

Broker looking at the share price.
Broker Notes

Top brokers name 3 ASX shares to buy today

Here's what brokers are recommending as buys this week.

Read more »

A young man talks tech on his phone while looking at a laptop. A financial graph is superimposed across the image.
Broker Notes

Guess which ASX 200 share offers 12% upside and a 4% dividend yield

Bell Potter just slapped a buy rating on this stock.

Read more »

A man leaps from a stack of gold coins to the next, each one higher than the last.
Broker Notes

Qantas or Telstra share price: Which will climb higher in 2024?

Let's see what top broker Goldman Sachs has to say about these ASX blue-chip stocks.

Read more »

A woman smiles as she sits on the bus using her phone and listening to music through headphones.
Small Cap Shares

3 small-cap ASX shares with 'long runways for growth'

DNR's Sam Twidale reckons investors could do worse than buy these guys for the long run.

Read more »

Woman using laptop for job search
Investing Strategies

2 ASX 200 shares to buy for 'strong growth' at decent prices right now

Searching for a bargain? Here's a pair that Catapult's Dylan Evans has his eyes on at the moment.

Read more »

A Paladin Energy miner wearing a hard hat and protective gear stands in front of a large mining truck and smiles to the camera.
Energy Shares

Uranium is set to boom, and this is the 'premium' ASX stock to buy

Shaw and Partners' Jed Richards reckons these are the shares to buy for the nuclear energy theme.

Read more »

female in hard hat crosses fingers
Investing Strategies

The ASX 200 stock that could get second time lucky

These shares have failed to impress in 2024, but many experts believe it's a bargain buy.

Read more »