This period looks like one of the best times to invest over the last 12 months, with widespread selling across different sectors and geographies. With all of that going on, it's easier to find undervalued ASX shares to buy.
It's not common for companies to fall more than 20% from a recent high. Something must be seriously causing investors to worry. Right now, it seems to be actions taken by the new US administration to simultaneously put tariffs on various products coming into the US and reduce spending across various parts of the US economy (including sacking tens of thousands of federal employees).
The tariffs could increase inflation, and both inflation and reduced spending could increase the chance of a US recession.
With share prices now looking better, I think the below ASX shares may be undervalued.
Mineral Resources Ltd (ASX: MIN)
This ASX mining share has suffered from a trifecta of problems – a weaker iron ore price, a weaker lithium price, and various governance issues.
The fund manager L1 Capital recently pointed out that it thinks the business has an underlying value (enterprise value) of $9.2 billion, whereas the current market capitalisation is currently under $5 billion, according to the ASX.
L1 suggested that the mining services segment of the undervalued ASX share could be worth as much as the entire business' market capitalisation. This segment is on track to generate operating profit (EBITDA) of around $1 billion in FY27.
L1 also said the lithium business could be worth around $3 billion compared to similar lithium businesses. The iron ore business has a compelling future because, according to the fund manager, the new Onslow project could make $750 million of EBITDA in FY27.
If you put those different factors together, I think the business could be very undervalued. UBS recently agreed with the viewpoint.
The Mineral Resources share price is currently down more than 60% in the last 12 months, as the chart below shows.
Siteminder Ltd (ASX: SDR)
Siteminder is a hotel software provider that generates more than 125 million reservations worth of A$80 billion in revenue for hotel customers each year. It also has an offering called Little Hotelier, which is an all-in-one hotel management software that aims to "make the lives of small accommodation providers easier."
The Siteminder share price has dropped more than 20% in the year to date, making it seem much cheaper to me. I recently decided to invest and take advantage of the lower valuation.
The undervalued ASX share is making the right steps to grow, including targeting larger hotels to join as subscribers. It has also been working on its 'smart platform', which aims to build on its market position with "deeper partnerships, innovative engineering and improved accessibility for all hotels".
I think those two initiatives could help the business deliver 30% organic annual revenue growth in the medium term as it swings to profitability on an underlying profit (EBITDA) and underlying free cash flow basis in FY25.
According to UBS, the business is projected to achieve $54 million of net profit after tax (NPAT) in FY29. This would mean the undervalued ASX share is priced at 24x FY29's estimated earnings, with plenty of further growth potential in subsequent years.
