Beating the market is a challenging proposition, so it pays to turn to the experts if you're looking for shares which might be undervalued.
I've had a look at the research coming out of Macquarie over the past week and selected three ASX shares which the analyst team thinks will do well, and which they believe can deliver about 50% upside, and 77% in one case.
Let's see who they're tipping to perform.
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James Hardie Industries Plc (ASX: JHX)
The building products maker reported its full year results this week, and the shares initially fell after it was revealed net profit attributable to shareholders was down 75% to US$104 million.
But the analysts have looked through the results, and picked up on the fact that underlying EBITDA was above the guidance range, and the synergies from the company's takeover of US company AZEK were being realised.
The Macquarie team said:
Cost and operational execution was solid, with productivity benefits from operational improvements and plant optimisation (including a coming ~$25m from closures) helping offset volume pressure.
Macquarie said there were some soft elements in the business, and the US market looked challenging.
They reduced their price target on the company to $39.60, but this remains well above the $28.87 the shares were changing hands for on Friday.
Jumbo Interactive Ltd (ASX: JIN)
Macquarie has also cut its price target for this ASX share, but again, the price target is still much higher than where the shares are trading right now.
Jumbo is a lotteries technology and management company, and Macquarie said trackable Australian lotteries volumes were down 2% year on year.
Macquarie said the majority of Jumbo's revenue comes from a reseller agreement with Lottery Corp, which is up for renewal in August 2030.
The analyst team said Jumbo shares were trading on a valuation which suggested the renewal did not take place, "providing a free option on the outcome''.
Macquarie values Jumbo shares at $10.50 compared with $7.08 currently.
Web Travel Group Ltd (ASX: WEB)
Once again, Macquarie has downgraded its price target for this ASX share, but their target is particularly bullish on this travel operator.
Macquarie said Web Travel Group is exposed to the Middle Eastern market which presented risk at the moment, "as traveller caution remains high, and the region is having difficulties restimulating demand''.
The Macquarie team also said the company was exposed to foreign exchange headwinds from the strong Australian dollar and also mentioned the uncertainty around a recently-revealed audit of the company's Spanish operations.
They said:
Whilst near-term visibility is low due to travel market disruption and Spanish audit uncertainty, we remain constructive on WEB's ability to improve margins when the travel market recovers, as it scales over the medium term.
Macquarie has a price target of $4.34 on Web Travel Group shares compared with $2.37 currently.
