Down 20%+ in a year, are these ASX 200 shares great buys for opportunistic investors?

Forget the past. Examine the business' future potential to decide whether you have a bargain or a value trap.

| More on:
A male investor sits at his desk looking at his laptop screen holding his hand to his chin pondering whether to buy Macquarie shares

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

Many investors are scared off S&P/ASX 200 Index (ASX: XJO) shares that have recently plummeted.

As much as this is human nature, this is irrational behaviour. 

Stocks have no memory of what's happened in the past. The only thing that matters is their future potential.

Quite a few ASX 200 shares have fallen more than 20% over the past 12 months. Here are some examples:

  • Domino's Pizza Enterprises Ltd (ASX: DMP): down 24%
  • Endeavour Group Ltd (ASX: EDV): down 25%
  • ASX Ltd (ASX: ASX): down 29%
  • Ramsay Health Care Ltd (ASX: RHC): down 24.5%
  • Lendlease Group (ASX: LLC): down 25%

Are these bargain buys at the moment or are they value traps?

Let's break down two of them:

Bad results, shares up

Domino's is a topical example with the company reporting its 2023 financial results just on Wednesday.

The share price for the pizza maker had been on a shocking run, falling more than 70% since September 2021.

Then on Wednesday morning, Domino's Pizza revealed a disaster of a financial year, with net profit plunging 74.4%, earnings per share (EPS) down 26.9%, and the dividend diving 29.7%.

And guess what — the stock soared 11.8% that day!

It seems wise investors were looking at the restructure and cost-cutting that Domino's is undertaking and decided it was a bargain.

Domino's chief Don Meij conceded there would be job losses, and he himself would take on additional duties.

"Wherever a global function sits within a market, the majority of our leaders will now 'double hat' so there is one decision maker, and my role is no exception – effective immediately I will be acting as both the group and ANZ CEO for Domino's," he said.

"These decisions, while challenging, will ensure we have a stronger foundation for future growth, both for our company and our franchisee partners."

Good results, shares down

Endeavour Group went the other way this reporting season.

Last week, the alcohol retailer and hotels operator revealed that it had boosted earnings before interest and tax (EBIT) to the tune of 10.7% while net profit after tax (NPAT) was also up 6.9%.

Then, would you believe it, the market sent the Endeavour share price 4% down that morning.

Perhaps a lack of 2024 guidance spooked investors, or they were expecting more out of the 2023 results.

The Motley Fool's Sebastian Bowen has taken advantage of the dip to buy.

"The recent pricing on this company is a compelling buying opportunity for a long-term investor. We have a company that houses two of the strongest brands in alcohol retailing in BWS and Dan Murphy's," he said.

"Its resilient earning base and consumer staples nature should protect Endeavour from both inflation and recessions going forward."

Moreover, the stock is paying out a fully franked dividend yield of around 4%.

"I was happy to pile into this company while other investors were running away," said Bowen.

"Only time will tell if it was the right move, but I'm confident in my decision and expect to at least have a shot at a market-beating investment here."

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Domino's Pizza Enterprises. The Motley Fool Australia has recommended Domino's Pizza Enterprises. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Opinions

An ASX investor relaxes on her couch as the Harvey Norman share price drops due to the shares trading ex-dividend from today.
Opinions

This ASX 300 stock soared 15% after reporting. Time to buy?

This business is a great operator. Is it time to buy?

Read more »

Boys making faces and flexing.
Opinions

3 ASX shares for Australian investors worried about Trump tariffs

These stocks could offer defensive characteristics.

Read more »

A man leans forward over his phone in his hands with a satisfied smirk on his face although he has just learned something pleasing or received some satisfying news.
Technology Shares

Life360 shares: A generational opportunity to get rich?

I think the Life360 share price could more than double again in the year ahead.

Read more »

A woman makes the task of vacuuming fun, leaping while she pretends it is an air guitar.
Opinions

Opinion: This is one of the best ASX growth shares to own for the next 5 years

This stock is rapidly growing, and I’m excited about it.

Read more »

Male and female workers at a steel factory.
Opinions

2 ASX 200 shares that could soar while Donald Trump is US President

These stocks may have a positive future.

Read more »

Smiling couple looking at a phone at a bargain opportunity.
Opinions

Prediction: These ASX 200 shares could be among 2025's big winners

These businesses have compelling tailwinds in 2025 and beyond.

Read more »

An older woman high fives an older man with big smiles after seeing good news on their laptop regarding their ASX tech shares
Opinions

If I were in my 50s I'd buy these compelling ASX stocks

I believe these options are appealing for people planning for retirement.

Read more »

A smiling woman at a hardware shop selects paint colours from a wall display.
Opinions

Where will Wesfarmers shares be in 3 years?

Can this business keep impressing the market?

Read more »