Despite numerous ASX shares recently hitting 52-week highs, I think there are still compelling opportunities out there.
Great businesses have a habit of continuing to win, and they are priced highly. But what about companies that have been sold off? It's possible that some may be able to rebound, while others could be a trap for investors.
How can we identify which of the sell-offs are opportunities? I'd say the potential target is hopefully going through a short-term problem, or management has plans to turn the business around.
In my opinion, the two businesses below are compelling ASX shares.
Kelsian Group Ltd (ASX: KLS)
The company describes itself as Australia's largest land and marine transport service provider and tourism operator. It operates Australia's largest zero-emission bus fleet and electrified bus depot. The ASX share has established operations in Australia, the USA, the UK, Singapore, and the Channel Islands.
The Kelsian share price has fallen close to 25% since 19 August 2024. At the AGM, the management acknowledged its solid FY24 result was overshadowed by the announcement of capital expenditure for FY25.
The board said it approved these investments as "highly commercial and strategic initiatives to support continued growth in the medium and longer term". But, it acknowledged shareholder feedback regarding leverage, returns on invested capital, and communication with the market.
After the sell-off, I think this looks like a compelling ASX share. For starters, it's reviewing its capital management and allocation framework and potential opportunities to improve returns and optimise the portfolio. It's also looking to identify property assets that it views as less strategic that can be sold and leased back.
Kelsian said it was going to take action to address underperforming assets, act on divesting non-core assets, and ensure leverage is appropriate.
I think this review could restore investor confidence.
According to the forecasts on Commsec, the Kelsian share price is valued at 14x FY25's estimated earnings with a possible grossed-up (including franking credits) dividend yield of 7.25%.
Audinate Group Ltd (ASX: AD8)
The Audinate share price has declined close to 50% since June 2024, which means it's significantly cheaper now.
This company says it's the worldwide leader in professional AV networking technologies. The Dante platform helps send digital audio and video signals over a computer network.
It's currently facing a number of issues, such as shorter order lead times, increased inventory across the industry, slower clearance of raw material inventories by its manufacturing customers and softer-than-expected demand from end users.
But, the company believes these issues won't last long; it's expecting manufacturing customers to have worked through their inventory by the end of FY25 and return to growth in FY26 with more normal customer order patterns.
I like the potential of Audinate's software platform to grow alongside the Dante device growth.
Audinate also recently noted in its FY25 first quarter update that design wins grew by 22% year over year, which is an indicator of future revenue growth.
If the company can grow its revenue and profit margins in the coming financial years, the outlook for this compelling ASX share could be promising.
