As I look across the ASX share market, I see numerous businesses whose share prices have soared. But not every company has shot higher in the last 13 months. Hence, I'm going to look at Telstra Group Ltd (ASX: TLS) shares and GQG Partner Inc (ASX: GQG) shares as possible opportunities.
When I look at names like Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Wesfarmers Ltd (ASX: WES), JB Hi-Fi Ltd (ASX: JBH), Aristocrat Leisure Ltd (ASX: ALL), WiseTech Global Ltd (ASX: WTC), and Xero Ltd (ASX: XRO), I see big gains in recent times.
But that's not the case for fund manager GQG and telco Telstra. In the last 12 months, the Telstra share price is virtually flat, while the GQG share price has fallen 28% in the last six months.
Thus, I believe both could be buying opportunities for a few different reasons. Not least, because they are currently trading at cheap valuations.
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Telstra Group Ltd (ASX: TLS)
I like how Telstra has the leading market share in Australia, which allows the business to increase subscriber prices with seemingly little loss to subscriber numbers or new subscribers. In FY24, it added hundreds of thousands of new subscribers.
The business has demonstrated operating leverage, where profit rises faster than revenue. Telstra has to pay its network costs, whether it has a few thousand more subscribers or a few thousand fewer subscribers. So, spreading the costs over more users helps increase profit margins.
Most households and businesses seem to view having an internet connection as essential, so I view Telstra's underlying mobile profit as resilient. That profit can rise as Telstra adds more subscribers and potentially grows its wireless home broadband offering if it can capture market share from the NBN.
With the world becoming increasingly technological, I believe Telstra's offering will grow in importance.
I think Telstra's underlying profit is likely to rise more than that of Commonwealth Bank of Australia (ASX: CBA) in the next few years, and I also believe it can pay a larger dividend than many other ASX blue-chip shares.
I'm calling Telstra shares a buy at the current value.
GQG Partners Inc (ASX: GQG)
Fund manager GQG seems like a compelling option to me because it has delivered strong funds under management (FUM) both as an ASX-listed business and as a private company.
Its main investment funds have outperformed their benchmarks since inception. FUM growth has been delayed for now due to the fallout with its Adani investments. But, I believe the fund manager can deliver pleasing returns for clients in the longer term, which can help it retain and grow FUM.
GQG shares are now trading at a lower price-earnings (P/E) ratio, so I think the ASX share is compelling, assuming the fund performance recovers and achieves FUM growth.
If the ASX share's clients are more willing to invest money under a new US administration, then that could be a positive tailwind for the business.
I also like how GQG is committed to a dividend payout ratio of 90% of its distributable earnings, which means investors are getting a large annual payment.
According to the forecasts on Commsec, the GQG share price is valued at around 9x FY25's estimated earnings with a possible dividend yield of close to 10%.
