I believe there are always ASX share opportunities to be found. Share prices are changing every month, and business conditions are changing too. 2023 could be the year to jump on the three investments I'm going to talk about in this article.
The three ASX shares I've chosen have attractive growth potential in my opinion. With the first two, I think the share price falls means it's a great time to invest.
Johns Lyng Group Ltd (ASX: JLG)
Johns Lyng describes itself as an integrated building services group delivering building and restoration services across Australia and the US. Its core business is based on its ability to "rebuild and restore a variety of properties and contents after damage by insured events including impact, weather and fire events."
The S&P/ASX 200 Index (ASX: XJO) share has various clients including major insurance companies, commercial enterprises, local and state governments, body corporates and owners' corporations, and regular households.
Why is it good value? The underlying earnings continue to grow, yet the Johns Lyng share price is down 32% in the past year. Normalised earnings before interest, tax, depreciation and amortisation (EBITDA) excluding commercial construction is expected to grow by 56% year over year to $133.2 million.
I think core earnings can continue to grow as the number of damaging and expensive storms seems to be increasing.
I'm also very positive about the company's expansion into areas like essential home services, as well as acquiring body corporate managers because of the synergies.
Adairs Ltd (ASX: ADH)
Adairs is an ASX retail share that sells furniture and homewares through Adairs, Mocka and Focus on Furniture.
Over the past year, it's down 33%, and it's down over 60% since June 2021. While it reflects the likely decline of profit from the profit peak during COVID-19, I think the ASX share has been oversold on a medium-term view – I don't believe that tough retail conditions will last forever, so today's price will seem cheap when confidence recovers.
High interest rates and inflation could hurt demand in FY24, but by FY25 it could see profit rebound according to the estimates on Commsec, with earnings per share (EPS) recovering to 23.4 cents in the 2025 financial year. If that's what profit the ASX share achieves, the Adairs share price is valued at just 7x FY25's estimated earnings.
One of the other reasons I like Adairs shares is that the low price/earnings (P/E) ratio usually translates into a large dividend yield. In FY25 it might end up paying a grossed-up dividend yield of 13%, according to Commsec. The dividend income alone could provide good returns.
Vaneck Morningstar Wide Moat ETF (ASX: MOAT)
This is an exchange-traded fund (ETF) that looks to invest in attractively priced (US) businesses that have strong competitive advantages compared to others in their sector.
Names in the portfolio currently include Domino's Pizza Inc, Alphabet, US Bancorp and Transunion.
The businesses aren't necessarily going to stay in the portfolio forever, as the MOAT ETF only invests when Morningstar analysts think the stocks are undervalued compared to what they think the underlying value actually is.
There are currently more than 50 holdings in the portfolio, and the ETF has an annual management fee of 0.49%.
Since inception in June 2015, it has achieved an average return per annum of 16.2%.