3 beaten-up ASX shares fundies love right now

Experts think these three offer value at current valuations.

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Are you looking for some promising ASX shares that have taken a hit recently? The S&P/ASX 200 Index (ASX: XJO) has whipsawed sideways in the last three months, opening up the window for some potential bargains.

Investors might find it useful to know that fund managers are eyeing three beaten-up stocks: Telstra Corporation Ltd (ASX: TLS), Worley Ltd (ASX: WOR), and Cettire Ltd (ASX: CTT).

Let's dive into why these shares are catching the attention of savvy investors.

Telstra might be an undervalued ASX share

Telstra shares have dropped 18% in the past year, swapping hands at $3.55 apiece at the close of trading on Thursday. The telco giant recently announced plans to cut 2800 jobs, causing shares to dip further in late May.

Some fund managers believe this presents a buying opportunity. Allan Gray chief investment officer Simon Mawhinney noted the fund liked Telstra at its current valuations.

"I think this is one of the first times in 10 or 15 years that you've been able to buy Telstra at a not unreasonable price", he told The Australian Financial Review. The reporting notes Allan Gray has owned the ASX share since Q1 this year.

Goldman Sachs also has a buy rating on Telstra, with a price target of $4.25 per share, according to my colleague James. The broker forecasts dividends of 18 cents per share in FY 2024 and 18.5 cents per share in FY 2025.

Is Worley a diamond in the rough?

Worley shares have seen a bumpy ride in 2024. They are currently trading at $14.53 apiece, down 17% since January 1. In April, the company's largest shareholder, Sidara, offloaded its 19% stake in the firm, causing shares to drop sharply.

Despite this, fund managers see plenty of upside in this engineering giant. Hamish Tadgell from SG Hiscock believes that Worley is well-positioned to benefit from the projected increase in global energy investment, given its "global scale and competitive advantages".

"We continue to believe the business remains very well leveraged to benefit from the projected four-fold increase in global energy investment and decarbonisation projects…," he said. As quoted by the AFR:

In a lower-growth environment, and where increased spending on transitioning to lower-emissions energy technologies seems an undeniable trend in an uncertain world, we believe Worley has a strong earnings outlook…"

As my colleague Tristan reported recently, Sequoia Wealth Management also rates Worley a buy. It says the company plans to grow profit margins through automation and AI as a potential tailwind.

Why fundies are betting on this ASX share

Online luxury fashion retailer Cettire has slipped nearly 22% into the red this year to date and is currently trading at $2.29 per share. On 20 March this year, it closed at $4.33. Investors have punished this stock in 2024.

Despite recent concerns surrounding its selling practices last month, fund managers like Phil King's Regal Partners have been increasing their stakes in the company.

Regal bought an additional 4 million shares since March. Meanwhile, fellow fundie Cat Rock Capital also purchased nearly 5 million shares throughout April-May, the AFR reported.

Foolish takeaway

All three ASX shares — Telstra, Worley, and Cettire — have faced challenges but are catching the eyes of fund managers because of their potential upsides.

Whether it's Telstra's dividend growth, Worley's positioning in the energy transition, or Cettire's growth prospects, analysts see some compelling reasons to consider these beaten-up stocks for your portfolio.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Cettire. 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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