I love finding ASX shares that are trading at appealing discounts to what they may be worth.
Being able to buy a business at a good price can give us a good margin of safety, which can give us a better chance of achieving a positive return.
A lot of businesses have seen their share prices rise in the last six months, so I'm going to talk about two other stocks that I normally don't highlight.
Abacus Storage King (ASX: ASK)
This business is a fully integrated owner and manager of a portfolio of self-storage properties located across Australia and New Zealand.
In the recent FY24 first-half result, the business said self-storage operating conditions remained "robust" despite global inflationary and cost of living pressures. In HY24, revenue per available metre increased by 4.8% to $324 and the occupancy rate was 90.4%.
The ASX share points to a number of helpful structural demand factors for its future such as population growth, the rise of e-commerce and increasing household awareness of self-storage as an option.
The business reported it has net tangible assets (NTA) of $1.52 per security as at December 2023, and the Abacus Storage King share price is at a 19% discount to this. It's expecting to pay a distribution of 6 cents per security, which is a distribution yield of 4.9%.
Collins Foods Ltd (ASX: CKF)
Collins Foods is the operator of a large number of KFC franchisees in Australia, as well as a growing number of KFCs in Europe. The company is also responsible for Taco Bells in Australia.
As we can see on the chart, the Collins Foods share price is down around 20% from 9 January 2024, making it much cheaper.
In the FY24 first-half result, it revealed its Australian KFC footprint had reached 275 nationally, with management expecting the company to open nine to 12 new restaurants in Australia in FY24. It had 72 outlets as at HY24, with plans for a further three net new locations in the Netherlands in the second half of FY24. The ASX share now has 27 Taco Bells across Australia.
HY24 saw a good improvement from the ASX share's KFCs and Taco Bells, with revenue up 14.3% to $696.5 million, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) increasing by 16.7% to $109.9 million and underlying net profit after tax (NPAT) up by 28.7% to $31.2 million.
That profit growth was impressive and shows the operating leverage in the business where profit can rise faster than revenue. It's the profit growth that usually drives the Collins Foods share price and dividend growth higher.
Based on the profit projections on Commsec, Collins Foods is valued at just 13 times FY26's estimated earnings with a possible grossed-up dividend yield of 5.8%. I may buy some myself when Fool's trading rules allow, if Collins Foods stays at this valuation.
