With the market seemingly a sea of red this month, now could be a great time to start making investments.
That's because ASX shares are now trading at a sharp discount to what investors were willing to pay just a week ago.
If you have $500 to invest, here are three buy-rated ASX shares that could be worth considering when the dust settles:
Lovisa Holdings Ltd (ASX: LOV)
Bell Potter thinks that this fashion jewellery retailer could be a top ASX share to buy.
This is due to its strong long term growth potential, which is being underpinned by its global expansion. And while it shares trade at a premium, the broker believes this is justified. It commented:
We continue to view distinctive growth traits, strong gross margin outlook, store opportunity, ability to execute as a strong player in the fashion jewellery market and lower price point driven competitive advantage as able to justify LOV's premium to the peer group (~30x FY25e P/E, BPe). Retain BUY.
Bell Potter has a buy rating and $36.00 price target on its shares. Based on the current Lovisa share price of $31.48, this implies potential upside of 14% for investors.
Universal Store Holdings Ltd (ASX: UNI)
Another ASX share that could be a great option for investors after the selloff is Universal Store. It is a youth fashion retailer behind the Universal Store, Thrills, and Perfect Stranger store brands.
A recent note out of Morgans reveals that its analysts are feeling very positive about the company's outlook. So much so, it has named Universal Store as a key pick in the sector. It said:
UNI has provided a strong trading update for FY24 with EBIT expected to be $46-47m, which is ~7% above market consensus and up 15% on FY23. We see this as a solid result amid a challenging consumer and inflationary cost environment. Sales were broadly in line with expectations, but we believe disciplined pricing and promotions will see gross margins better than expected. Tighter cost management particularly around labour rostering and greater benefits from the new DC may have assisted margins. […] UNI remains a key pick in Consumer Discretionary.
Morgans has an add rating and $6.95 price target on its shares. This would mean a return of 20% before dividends and almost 25% including them.
Xero Ltd (ASX: XRO)
Goldman Sachs thinks that Xero is an ASX share to buy. It is a cloud accounting platform provider which has been growing at a rapid rate for a number of years.
The good news is that Goldman believes this strong form can continue long into the future thanks to its huge global total addressable market (TAM) and favourable trends. It commented:
Following our June UK trip, attending Xerocon and meeting with accountants/competitors/experts, we are encouraged with the positive feedback (vs. our 2022 trip), in particular around its refreshed strategy and increased focus. […] We see Xero as very well-placed to take advantage of the digitisation of SMBs globally, driven by compelling efficiency benefits and regulatory tailwinds, with >100mn SMBs worldwide representing a >NZ$100bn TAM.
Goldman has a conviction buy rating and $180.00 price target on its shares. This suggests that upside of 39% is possible over the next 12 months from current levels.
