Buy low, sell high.
It's easier said than done, right? The strategy is not even practical to execute, because no one knows whether a particular stock has topped or bottomed until well after the event.
The best any investor can hope for is to buy shares of quality businesses at a (temporarily) discounted price.
That's even more important for ASX dividend shares, in order to maximise yield and capital protection.
Here's a couple of contenders that currently tick those boxes:
'We remain comfortable holders'
Supermarket wholesaler and retailer Metcash Limited (ASX: MTS) has seen its share price plunge more than 15% over the past 12 months.
Just recently the stock has dived 8.1% in the space of just 18 days.
Shaw and Partners portfolio manager James Gerrish blamed this on shifting consumer tastes after 11 interest rate rises.
"Metcash Ltd… has been sold off on signs that consumers are becoming more 'price conscious' and prioritising value over convenience," he said in a Market Matters Q&A.
The current fortunes contrast dramatically with consumer habits over the COVID-19 years when Metcash's local IGA supermarkets attracted many new customers who didn't want to travel to big shopping centres.
The market has now turned against it.
"Research [is] suggesting that Metcash is losing some of the market share gains they captured during COVID, with Aldi being the net beneficiary."
However, Gerrish's team is backing the stock for its long-term ability to grow and pay out an income.
"On 12x [PE ratio] and a yield above 6%, with a looming dividend in July, we remain comfortable holders in our income portfolio," he said.
"If we didn't own, we would buy it here."
'Market is completely underestimating the value'
Office and self-storage real estate trust Abacus Property Group (ASX: ABP) has lost 11.6% off its share price over the past year.
That's not a massive surprise, considering how most real estate assets have struggled in the face of steep interest rate rises.
But Gerrish reckons enough damage has already been done.
"We like Abacus Property Group at the bottom of its trading range (here) believing that the market is completely underestimating the value of their self storage operations."
Abacus shares are currently paying out a chunky 7% dividend yield.
The near future might also see a considerable catalyst for the stock.
"A theme that the company has flagged recently as they float the concept of splitting [the self-storage assets] out into a separate entity," said Gerrish.
"We are bullish from current levels."
