2 ASX shares to watch while they're still dirt cheap

I'm bullish about these ASX shares.

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I like buying ASX shares at really attractive prices. Some stocks are trading at levels that are currently undervalued, in my opinion, so I'm seeing appealing opportunities.

There are several different ways to spot good value in a company. These include whether it's trading at a large discount to its underlying asset value, if it has a lower price/earnings (P/E) ratio, or if the market does not identify its growth potential.

One of the stocks below is valued at a big asset discount. The other ASX share has seen its share price decline, yet the earnings growth outlook is appealing to me.

Bailador Technology Investments Ltd (ASX: BTI)

This company invests in technology businesses seeking growth-stage investment. It usually invests in businesses run by the founders, with proven business models boasting attractive unit economics, international revenue generation, a huge market opportunity, and the ability to generate repeat revenue.

Every month, Bailador tells investors what the underlying value of its portfolio is, which includes a relatively conservative valuation of each investment and also the cash on the balance sheets.

The ASX share recently expanded its portfolio with two investments.

It invested $20 million in Venture Startups International, which owns Updoc, a digital healthcare platform that connects consumers who need medical services (advice, online prescriptions, referrals, etc.) with registered health practitioners through a telehealth offering.

The business also invested $20 million in financial advice and investment management platform DASH Technology Group.

At 31 May 2024 it had pre-tax net tangible assets (NTA) of $1.76, while the post-tax NTA was $1.61. The current Bailador share price is at a 26% discount to the post-tax NTA and a 32% discount to the pre-tax NTA. That's an appealing discount for exciting technology businesses, in my opinion.

Collins Foods Ltd (ASX: CKF)

Collins Foods is a large franchisee operator of KFC outlets in Australia and Europe (Germany and the Netherlands).

I think the Collins Foods share price looks good value after falling more than 20% over 2024 to date.

Inflation and a high cost of living are disrupting the ASX share, but I think the long-term prospects look very promising.

The company is growing the number of KFC locations across both continents, which can add scale benefits and boost revenue in the longer term.

During FY24, Collins Foods added seven new restaurants in Australia, taking its national footprint to 279 locations. KFC Europe saw its network reach 75 restaurants, with the Netherlands seeing an increase of 11 locations after eight acquisitions and three new builds.

The FY24 result showed exactly what I wanted to see – double-digit revenue growth of 10.4% to $1.49 billion, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 12% to $230 million and underlying net profit after tax (NPAT) growth of 15.6% to $60 million.

I love it when profit rises faster than revenue, demonstrating strengthening profit margins. FY25 may not show as much earnings growth amid difficult economic conditions, but I think FY26 could be very promising.

The ASX share also grew its full-year dividend by 3.7% to 28 cents. The FY24 grossed-up dividend yield is 4.4%.

According to the estimate on Commsec, the Collins Foods share price is valued at 14x FY26's estimated earnings.

Motley Fool contributor Tristan Harrison has positions in Bailador Technology Investments and Collins Foods. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Bailador Technology Investments. The Motley Fool Australia has recommended Bailador Technology Investments and Collins Foods. 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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