I love looking at opportunities that have been sold off because they offer the potential to buy the dip. Some S&P/ASX 200 Index (ASX: XJO) shares could be a bargain amid recent volatility.
When businesses have long-term potential but suffer a short-term valuation decline, it could suggest it's an opportunistic time to buy.
Some industries, such as ASX retail shares and ASX mining shares, can behave quite cyclically, giving us a chance to buy at a temporarily lower price.
With that in mind, I think the two ASX shares below are worth scrutinising.
Image source: Getty Images
Super Retail Group Ltd (ASX: SUL)
Super Retail is one of the largest retailers in Australia with four key brands – Supercheap Auto, Rebel, BCF and Macpac.
The chart below shows that the Super Retail share price has fallen more than 20% since 20 February 2024.
Why the negativity? The company said in an update that sales have slowed, with total sales in the second half of FY24 showing a negative year-over-year change. According to Super Retail, in the second half of FY24, total like-for-like sales were down 1%, with Rebel sales down 2% and BCF sales down 5%.
However, the company revealed some positives – group sales across March and April were up approximately 1% year over year. Supercheap Auto benefited from "strong demand in auto maintenance categories", Rebel footwear sales improved after introducing new and expanded brand ranges, and Macpac sales growth was "driven by a strong performance in New Zealand."
The increase in wages and other costs is a headwind for the business' profitability, but I don't believe it will last forever. The company said in its May trading update that store foot traffic and transaction volumes "continue to grow", which is a positive.
It has opened 16 net new stores during FY24 to date, with expectations of opening another seven before the end of FY24. I think this bodes well for future revenue growth, once trading conditions improve on a per-store basis.
According to Commsec, the Super Retail share price is valued at just 12x FY24's estimated earnings.
Sandfire Resources Ltd (ASX: SFR)
Sandfire is one of the larger ASX copper shares, with a market capitalisation of approximately $4 billion. It's a global miner, with projects in Western Australia, Spain and Botswana.
Copper is an important decarbonisation resource that's useful because it conducts electricity well. For example, electric vehicles need more copper than traditional vehicles. Copper is also needed for the expansion of the electrical grid and the manufacture of renewable energy generation like wind.
McKinsey research suggests there could be a 6.5 million metric ton deficit between supply and demand by 2031, which translates into a 20% deficit in percentage terms. I think this could provide strong support for the copper price and Sandfire's earnings over the next decade.
As shown on the chart below, the Sandfire share price is down around 10% since 20 May 2024, following a decline in the copper price over the same time period.
I think this could be an opportunity to invest in the ASX 200 share at a lower price.
