ASX shares were relatively volatile throughout May, but a last minute uptick means the All Ordinaries Index (ASX: XAO) managed to close the month marginally higher.
Unfortunately not all stocks ended the month on a high, some oversold shares are now trading for rock-bottom prices, and they're too cheap to ignore this month.
Image source: Getty Images
Life360 Inc (ASX: 360)
Life360 shares tumbled just over 4% in May, closing the month at $19.33 a piece.
At the time of writing, the US-based software development company's shares are now around 65% below an all-time high recorded in October last year, and 40% lower for the year-to-date.
The tech stock has been caught up amid an ongoing tech-sector-wide sell-off.
Investors sold up their tech shares amid a growing fear that companies' core services could be replaced by AI. At the same time, there has been some concern that tech sector share prices, including Life360, had become overpriced.
The tech sector suffered its latest sector-wide selloff in mid-May, with tech shares down across the board.
But I think the oversold ASX shares show great potential for growth.
The company reported a 38% increase in its total revenue in its latest quarterly results in mid-May. This was primarily driven by a 32% increase in subscription revenue and 36% increase in core subscription revenue.
Life360 upgraded its FY26 revenue guidance to US$650 million to US$685 million, up from previous guidance of US$640 million to US$680 million. This implies year-on-year growth of 33% to 40%.
Life360 also raised its adjusted EBITDA guidance to a range of US$130 million to US$140 million, up from US$128 million to US$138 million previously. This implies an expected margin of around 20%.
It's clear the business is performing well and is profitable. I think that once sentiment catches up its share price could climb higher quickly.
At the time of writing, brokers rate the ASX shares as a strong buy. The also tip a potential upside of 75% to $33.73.
Xero Ltd (ASX: XRO)
Xero shares fell just over 6% throughout May. The oversold ASX shares are now down 33% for the year-to-date and 61% lower than an all-time high recorded in June last year.
The tech stock was also smashed by the latest tech-sector wide sell-off.
But I think the shares are now way oversold and trading well below fair value.
Xero shares are a great option for investors looking for an attractive long-term investment.
The company has a sticky subscription revenue, which means its customers are likely to keep paying for its services and products over a long time. This makes Xero's revenue predictable.
At the same time, the ASX tech stock still has a relatively small position in the market, which means there is potential to unlock a large amount of growth.
Global growth opportunities include expansion in the UK and US, as well as payroll and workflow automation offerings. Xero is also actively expanding its presence and its product suite.
The company's latest FY26 result was impressive too. In mid-May, Xero reported a 31% hike in operating revenue in mid-May, and its adjusted EBITDA is up 18%.
At the time of writing, brokers rate the ASX shares as a strong buy. They tip a potential 88% upside to $141.56 a piece.
