There are some excellent opportunities to invest for the long-term right now, in my opinion. ASX shares that are undervalued could be attractive buys in July.
Despite the ongoing strong levels of inflation and higher interest rates, some ASX shares have risen. But not every business has gone through a large recovery, which is where I see very good value.
I'm going to talk about one very beaten-up idea, which I'd love to buy with $800.
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Frontier Digital Ventures Ltd (ASX: FDV)
The chart below shows that the Frontier Digital Ventures share price is down around 50% since 31 January 2023 and around 75% from 29 October 2021. It's now a lot cheaper.
If you're wondering what this business does, it's an owner and operator of online marketplace businesses in fast-growing emerging markets. It has a portfolio of 15 leading companies operating across 20 markets in Latin America, Asia and MENA (Middle East and North Africa).
Those businesses operate in areas like property, automotive and 'general' classifieds.
The ASX share generated its first quarter of positive operating cash flow in the first quarter of 2023, the three months to March 2023. The figure was only $0.6 million for the whole group, but being operating cash flow positive is a very good step.
The three individual segments – Latin America, Asia and MENA have been cash flow positive for three consecutive quarters.
Cost 'optimisation initiatives' in 2022 boosted the earnings before interest, tax, depreciation and amortisation (EBITDA) margin from 3% in the first quarter of 2022, to 11% in the first quarter of 2023. The portfolio's EBITDA rose 190% to $2 million, with 12 of 25 operating companies showing an improvement.
Why I think the ASX share is a buy
My point in talking about all these highlights is that the ASX share is in the strongest profitability position it has ever been, yet the Frontier Digital Ventures share price is almost as low as it has been since it was listed in 2016.
It's certainly possible that the current economic conditions of inflation and higher interest rates may hurt demand in the short term, but I think any slowdown will only be temporary, however long that is.
The business has reached positive operating cash flow, so if it can keep growing the cash flow then this could impress investors. Rising EBITDA is also a good positive.
With the Frontier Digital Ventures share price so much lower, I think it's a great time to invest in the business which has a very promising future if revenue grows in the long-term. A combination of rising revenue and an improving profit margin is usually a winning formula.
