2 ASX 200 shares trading at a 'deep discount to their deserved valuation'

This fund manager spies a bargain with these two stocks.

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A number of S&P/ASX 200 Index (ASX: XJO) shares have soared in recent months. Despite that, the investment team at Wilson Asset Management has picked out two stocks that it thinks look cheap.

WAM Leaders Ltd (ASX: WLE) is the listed investment company (LIC) that invests in ASX large-cap shares, which are often called ASX blue-chip shares. The idea is that this zone of the market is full of the strongest and biggest Australian companies.

While they aren't the biggest businesses on the ASX, the below names are among the leaders across the globe at what they do.  

Orora Ltd (ASX: ORA)

WAM describes Orora as a business that provides glass and can beverage packing in Australia and New Zealand. It also provides packaging solutions including corrugated sheet packaging in North America and Central America. Orora acquired Saverglass last year, a high-end bottle manufacturer based in France.

The investment team suggested that the Orora share price has been impacted since the acquisition because the destocking cycle has been "more aggressive" than first anticipated.

However, results by key international customers of Saverglass – Diageo, LVMH and Remy Cointreau – show that there are "green shoots emerging with customer depletion rates ahead of shipping volumes."

WAM also pointed out that a surge in South Australian wine exports in late 2023 suggests "strong volumes" for the ASX 200 share's Australasian business.

The investment team revealed that Orora remains a key holding within the WAM Leaders portfolio and they believe it's "still trading at a deep discount to its deserved valuation".

Brambles Ltd (ASX: BXB)

Brambles is another very large ASX 200 share. According to WAM it owns and operates the world's largest pool of reusable pallets and containers, which are used to transport fast-moving consumer goods, fresh produce, beverage, retail and general manufacturing through its supply chains.

The investment team said that Brambles benefits from the same destocking trends as Orora, with key customers reporting "consistent volume improvements" in the three months to December 2023.

WAM said that the amount of pallets issued is generally an early-cycle indicator, and the rate of decline has slowed, while pallet returns are late cycle, and these are elevated.

In the investment team's opinion, this suggests excess pallets have "washed through the system".

Brambles is also a "key holding" in the investment portfolio and WAM expects "another solid result" when it reports later in February.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Diageo Plc. The Motley Fool Australia has recommended Orora. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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