While the market selloff this week has been disappointing, it could prove to be a great buying opportunity for investors.
But which ASX shares should investors pick up while the market is under pressure? Two that analysts think are quality options right now are listed below:
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CSL Ltd (ASX: CSL)
Arguably one of the best ways to build wealth in the market is to buy high-quality companies when they're on sale.
The team at Morgans thinks that this biotechnology giant is on sale right now. It highlights that its shares are trading on lower-than-average multiples despite the company having an increasingly positive outlook. The broker said:
While shares have struggled of late, we continue to view CSL as a key portfolio holding and sector pick, offering double-digit recovery in earnings growth as plasma collections increase, new products get approved and influenza vaccine uptake increases around ongoing concerns about respiratory viruses, with shares trading at 25x, a substantial discount (20%) to its long-term average.
Morgans has an add rating and a $315.40 price target on the company's shares. This implies a potential upside of 15% for investors over the next 12 months.
Woolworths Group Ltd (ASX: WOW)
Another high-quality ASX share to buy after the market selloff could be supermarket giant Woolworths.
It may be facing a supermarket inquiry at present, but analysts at Goldman Sachs believe any penalties imposed are sufficiently priced in (and more) by the market.
In light of this, it sees significant value in its shares at current levels. It said:
Post the conclusion of the [2008] ACCC Inquiry findings, WOW's valuation improved ~8% in the subsequent 2 weeks. We note in Exhibit 12 that WOW saw a reduction in PE premium to ASX200 (from ~70% at announcement of 2008 Inquiry to 30% at trough at ~T+120 days). This compares to the current inquiry where WOW valuation premium has shrunk from ~50% at T+0 to 29% now (below 2008 trough).
We are Buy rated on the stock as we believe the business has among the highest consumer stickiness and loyalty among peers, and hence has strong ability to drive market share gains via its omni-channel advantage, as well as its ability to pass through any cost inflation to protect its margins, beyond market expectations. The stock is trading below its historical average (since 2018), and we see this as a value entry level for a high-quality and defensive stock.
Goldman has a buy rating and a $40.40 price target on the ASX share. This implies a potential upside of 26% for investors over the next 12 months.
