There's nothing quite as good as quality going on sale. Whether it is books, socks, or stocks — finding something of a high calibre at a discounted price is a pleasure I happily indulge in. Fortunately for me, the S&P/ASX 200 Index (ASX: XJO) fell 1.4% last month, giving rise to many exceptional businesses at lower prices — prime hunting ground for new additions to my ASX watchlist.
In August, most listed companies provide their latest financial figures as part of the ASX reporting season. This can be a fertile time to find good companies that are temporarily discredited merely because their numbers didn't meet some arbitrary expectations set by people sitting on the sidelines.
Analysts and the broader market can often be quick to punish and slow to reward. But I'm not complaining. In my opinion, this is one of the edges available to "retailer investors". There's no pressure on us to think in terms of quarterly or annual targets.
Long story short, here are three ASX shares I'll be keeping tabs on following a brutal August.
The ASX companies added to my watchlist
WiseTech Global Ltd (ASX: WTC)
The cloud-based logistics software company has been a stellar investment over the years, rewarding long-term shareholders handsomely. Notably, the rising share price has coincided with solid growth in the fundamentals.
However, investors put all that aside when WiseTech released its full-year FY23 results on 23 August. Despite delivering a 29% increase in revenue and a 9% improvement in statutory net profits during plummeting freight costs, the market delivered a 20% blow to the WiseTech share price (shown in the chart below).
I think the market overlooked the positives in the results, including:
- High levels of organic growth
- Opportunities for reinvestment in the business at high returns on capital
- Proven execution of merger and acquisition strategy
Hence, WiseTech has snuck onto my ASX watchlist in light of the market's reaction.
Ramsay Health Care Ltd (ASX: RHC)
There is no disputing that Ramsay Health is operating in a tough environment. Between dealing with inflating costs spurred on by staff shortages and trying to negotiate better deals with stubborn private health insurers, the hospital operator is between a rock and a hard place.
Nevertheless, hospitals remain a critical piece of in-demand infrastructure. Ramsay operates 70 hospitals, clinics, and surgical centres in Australia alone. Keep in mind hospitals can take hundreds of millions of dollars to establish. It's hard to argue Ramsay isn't in possession of a meaningful moat on this basis.
Still, onlookers were not satisfied with Ramsay's FY23 results on 24 August, sending shares down almost 12% on the day, as depicted in the chart above.
While mindful of the headwinds, Ramsay is now on my ASX watchlist. I find the strategic assets held by the business and the probable growth in demand for its services attractive.
Nanosonics Ltd (ASX: NAN)
Lastly, Nanosonics has joined the ranks of my list of companies to keep tabs on following its performance in August. The medical disinfection technology company continues to expand its revenue, yet the share price would leave you thinking otherwise.
Nanosonics grew its revenue by 38% to $166 million in FY23. Around two-thirds of this revenue came from consumables and services (refills and maintenance for its devices). That lends itself well to improving gross margins.
Evidently, investors had higher hopes for Nanosonics' results. The company's share price sank 5% on the day of the release, followed by another ~9% fall during the following trading session. Yet, the general trend continues to be double-digit growth.
This is the company I came out of reporting season most excited about. While it was already on my ASX watchlist, it might soon find its way into my portfolio.
