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"Price is what you pay. Value is what you get."
— Warren Buffett
Published
ASX shares remain elevated this week after the US Midterm Election results reignited hopes for conflict resolution in the Middle East, potentially easing inflation pressure.
The sharemarket has shrugged off another cash rate hike in November, and a huge oil price decline late last week.
But even though sentiment is looking a little more positive, several ASX shares are still trading significantly lower than their latest peaks.
The problem is, if shares have lost 30%, or even 10% from their highs, it's easy to think they're a bargain buy and that a rebound is imminent.
But down doesn't mean cheap.
Sometimes a falling share price presents a great buying opportunity, and other times it reflects a necessary share price correction.
I've taken a closer look at three ASX shares which have come off their highs this year. And there's only one that I'd actually consider buying.
Strong tailwinds saw Aurizon shares spike to a multi-year high of $4.38 in June.
The rail freight operator, which hauls bulk commodities, including coal, iron ore, and agricultural products, has seen strong operational momentum this year, including some stronger-than-expected financial results, growth across its bulk and network segments, and upsized dividend payments.
The company also benefitted from higher oil prices this year, which have helped make rail freight a more competitive option compared to road transport.
But it hasn't all been good news for Aurizon.
In mid-August the shares crashed around 14%, after investors were unimpressed by the company's FY27 EBITDA guidance of $1.725 billion to $1.775 billion (Aurizon's EBITDA was $1,724 million for FY26) and concerns were raised about a structural slowdown in its core coal division.
The company said it is targeting higher earnings in the Network and Bulk divisions, but it said Coal is expected to moderate due to lower contracted volumes. Containerised Freight is forecast to reach break-even on an EBITDA basis.
The ASX shares have slowly trended higher since the crash to the time of writing. But the rail operator's shares are still down around 12% from that June-high.
Would I consider buying Aurizon shares today?
No.
I don't see an imminent rebound of the shares in the near-future.
I think that, at $3.85 apiece, the shares are well-priced and already reflect Aurizon's near-term earnings potential
At the time of writing, Aurizon trades at a forward price-to-earnings (P/E) ratio of roughly 18.2 times. For a freight business with projected near-stagnant FY27 EBITDA guidance, I think the current share price is about right.
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