The prices we're seeing now and in the coming weeks could be some of the best value ASX shares available to investors this year, or even the rest of the decade.
It's not often that share prices go through a decline of 10% or more. Widespread selling is painful as a shareholder but there are lower valuations (almost) across the board for brave prospective investors.
Sell-offs give us the chance to search across the S&P/ASX 300 Index (ASX: XKO) (or smaller) to find beaten-up opportunities which could then bounce back when market confidence returns.
Assuming the investment still has a positive long-term outlook, a large decline is a great opportunity to see big returns if/when there's a recovery.
For example, if a share price drops by 50%, then returning to the previous position would be a return of 100%! Of course, it's not as easy as that to find the right opportunities. I'd only go for investments I believe can deliver higher earnings in three years from now.
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Where I'm seeing exciting ASX share opportunities
In my view, there are multiple areas where the market is being too bearish on certain ASX shares.
The ASX tech share (and tech-related) space is awash with names that have been hit by AI worries, then hit again by the prospect of inflation and higher interest rates. I'm thinking of names like Siteminder Ltd (ASX: SDR), TechnologyOne Ltd (ASX: TNE), Xero Ltd (ASX: XRO), REA Group Ltd (ASX: REA) and Pro Medicus Ltd (ASX: PME).
Businesses in the funds management space are certainly feeling the pain of lower share markets, as well as a hit to market confidence. I think the businesses of Pinnacle Investment Management Group Ltd (ASX: PNI), L1 Group Ltd (ASX: L1G) and Australian Ethical Investment Ltd (ASX: AEF) are very compelling options right now.
The ASX retail share space is appealing as well because market confidence in them can be cyclical. I think growing retail businesses could be particularly good long-term investments during this period, such as Temple & Webster Group Ltd (ASX: TPW), Lovisa Holdings Ltd (ASX: LOV), Universal Store Holdings Ltd (ASX: UNI) and Nick Scali Ltd (ASX: NCK).
Finally, I want to highlight some other ASX growth shares that have been caught up in the sell-off but could be generate significantly higher profit in three to five years. I'm attracted to Breville Group Ltd (ASX: BRG), Sigma Healthcare Ltd (ASX: SIG), Tuas Ltd (ASX: TUA) and Guzman Y Gomez Ltd (ASX: GYG).
