Retail sales were flat overall in the month of April, following very small increases in March and February.

The bottom line is that retail sales are slowing in 2023, as the impact of rising inflation and interest rates starts to flow through the economy.

ABS head of retail statistics Ben Dorber said:

Retail turnover has plateaued over the last six months as consumers spent less on discretionary goods in response to cost-of-living pressures and rising interest rates.

Spending was again soft in April but was boosted by increased spending on winter clothing in response to cooler and wetter than average weather across the country.

What does weaker spending mean for ASX retail shares?

Household consumption is worth about 50% of Australia's gross domestic product (GDP), so that's why retail sales are an important yardstick for our economic health.

The data also provides insight into the categories of retail that are receiving more of our dollars.

According to today's figures, only two categories recorded higher spending in April. They were clothing, footwear, and personal accessories (up 1.9%) and department stores (up 1.5%).

Household goods spending declined by 1% — its third consecutive monthly fall.

We also saw the first fall in food spending following 13 months of increases. Spending at cafes and takeaway outlets fell by 0.2%, and general food shopping declined by 0.1%.

On the market today, the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) is among six out of 11 market sectors on the rise, up 0.33%. Meantime the S&P/ASX 200 Index (ASX: XJO) is up 0.07%.

Here are the risers and fallers among ASX retail shares on Friday, and how they're trending year to date (YTD).

Rising retail shares on Friday

Some of the top risers among ASX retail shares today are:

• The Dusk Group Ltd (ASX: DSK) share price is up 3.3% to $1.10, but down 41% YTD
• The Domino's Pizza Enterprises Ltd (ASX: DMP) share price is up 3.2% to $47.16, but down 29% YTD
• The Lovisa Holdings Ltd (ASX: LOV) share price is up 1.4% to $21.37, but down 7% YTD
• The Adairs Ltd (ASX: ADH) share price is up 2.4% to $1.91, but down 16% YTD

Falling retail shares on Friday

Some of the fastest fallers among ASX retail shares today are:

• The Universal Store Holdings Ltd (ASX: UNI) share price is down 5.1% to $2.98, and down 43% YTD
• The City Chic Collective Ltd (ASX: CCX) share price is down 5% to 38 cents, and down 17% YTD
• The Mosaic Brands Ltd (ASX: MOZ) share price is down 5.3% to 18 cents, and down 36% YTD
• The Mighty Craft Ltd (ASX: MCL) share price is down 5% to 9.5 cents, and down 47% YTD

Hitting 52-week lows today

The ASX retail shares hitting 52-week lows today include Mighty Craft shares, which dipped to 9.3 cents in earlier trade, Redbubble Ltd (ASX: RBL) shares at 38 cents, and Elixinol Wellness Ltd (ASX: EXL) shares at 1.4 cents.

The post Soft spending: How ASX retail shares are responding to a weak month appeared first on The Motley Fool Australia.

The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Capital H Management portfolio manager Harley Grosser casts his eyes over three ASX shares that are now going for a huge discount.

Bargain buy or value trap?

The Motley Fool: Let's examine three ASX shares that have been devastated this year, and see if you think each of these fallen stars is now a bargain to pick up or if you'd stay away.

The first one is Mighty Craft Ltd (ASX: MCL), a small-cap ASX stock that's plunged about 40% since last Easter.

Harley Grosser: Mighty Craft's an incubator and investor in beverage brands. We have met with them and quite like the business. Their star brand is Better Beer, which was started by the social media group Inspired Unemployed, which has got a massive following online. They just actually announced a restructure there, but Mighty Craft [still] owns 33% of Better Beer. 

So we don't own Mighty Craft at the moment. But I think if you watch the performance of Better Beer, that's probably the key there. Because if they continue on this trajectory, which has been just phenomenal growth every month, then MCL's a relatively cheap way to gain exposure there.

I think there were a couple of options — [one] was to sell their stake and cash out, but it seems like Better Beer's decided to raise more money and go even harder. So we don't own it, but we'll keep watching how Better Beer performs.

MF: I'm not a beer drinker myself, so I don't fully understand how such a small brand can take off so fast.

HG: Yeah, me too. I don't drink it either, but I have a lot of mates that all of a sudden have stocked their fridges with Better Beer, so they're doing something right.

MF: Next one is Dusk Group Ltd (ASX: DSK), which is down about 40% since last Easter as well.

HG: Yeah, they're a candle retailer and they've got a good business in their own niche. 

We took a view that we would just be avoiding retailers completely, probably around April of 2022 when we started to get concerns around inventory positions. And to be fair to retailers, it must have been a very hard time to manage inventory from the switch from in-store to online, then back now to in-store. 

But on the other side of that, we're happy to start looking at opportunities, and I think Dusk is a good brand and it's a business that we would own at the right price. 

Their first half numbers were still a little bit messy as everything normalises, but it's on our radar as one we would buy if it got to the right price. But it's not there yet for us.

MF: The third one is Redbubble Ltd (ASX: RBL), which has really taken a hammering. It's down 93% since the start of last year. What do you think?

HG: Yeah, we never invested in Redbubble. Years ago we looked at it and we did talk to some of the artists that used the platform, and we didn't think it was going to be a long-term winner. 

And then COVID just proved us really, really wrong there. The stock just took off. Obviously, since then, it's all unwound. 

For us, I know it's probably not the perfect answer, but we like to invest in [a] business that we can understand and then have a reasonable chance of forecasting. So Redbubble's been smashed and it might be the bargain of century, but it's too hard for us to try to model out what it looks like in three, four, five years. 

So it might look cheap, but it's just one that we have to put in the "too hard" basket and say no to.

The post Here's one hot, one lukewarm and one cold ASX share: fundie appeared first on The Motley Fool Australia.

But with those small fish, one needs to be extra fussy about which stocks to buy into.

"There's a lot of variability in there," Cyan portfolio manager Graeme Carson said in a Reach Markets video.

"It's very much about stock picking. Very much about picking the eyes out of it. To do that you need to do grassroots research, because a lot of these companies are undiscovered."

With this in mind, Carson named two ASX shares that his fund is holding very tightly for the long run:

Get most of the assets for free

Carson's partner at Cyan, Dean Fergie, has previously told The Motley Fool multiple times how much he believes in craft beer maker Mighty Craft Ltd (ASX: MCL).

Carson is no different, holding it up as a shining example of Cyan's growth portfolio.

"They hold a portfolio of liquor assets in boutique beer, ready-to-drink alcohol, cider and Aussie spirits," he said.

"We think there's pretty comfortable upside, even up to 100% upside, on a pretty conservative basis, for this one."

The Mighty Craft share price has dropped 43% over the past 12 months. But this year it has headed 11% up on the back of hype behind its Better Beer brand, which is co-owned by prominent comic duo The Inspired Unemployed.

Carson pointed out that Mighty Craft also owns some licenced venues but it could potentially sell these off to fund the growing alcohol business.

And at the current market cap below the value of Better Beer label by itself, buying the stock means investors acquire all the other assets for free anyway.

"We think it's a very very interesting opportunity."

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A post shared by The Inspired Unemployed (@theinspiredunemployed)

'Incredibly cheap' with proven performance

Carson presented Silk Logistics Holdings Ltd (ASX: SLH) as a torch bearer for Cyan's cash-generative portfolio.

"It's at $2.30 but it listed July 2021 at $2. So it's performed pretty well in a difficult market," he said.

"We think it's [still] incredibly cheap."

The company provides port and contract logistics services in Australia for many big-name clients.

"It's founder-led and managed, and they own a large chunk of the equity — and are heavily incentivised to continue the growth there."

The stock is trading at a single-digit price-to-earnings ratio all while paying out a 5% dividend yield including franking.

The performance is there in black-and-white. 

In its listing prospectus, the 2022 financial year revenue forecast was $339.4 million. Just a year later, the actual revenue turned out to be $394.7 million.

"We value it at $4.20 on a two-year view, which is 85% upside."

The Silk Logistics share price is already up 8.9% so far this year.

The post '100% upside': 2 small-cap ASX shares Cyan is quietly riding to the moon appeared first on The Motley Fool Australia.

2. Elements of the equity markets will recover from their recent lows. In the US, I'd be looking at large-cap tech stocks like Microsoft Corp (NASDAQ: MSFT), Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL), and Meta Platforms Inc (NASDAQ: META). Australia is a little trickier, given commodity stocks have been strong, bank stocks relatively stable, and some tech stocks, even after their shellacking this year, still look expensive.

3. Many stocks will never again reach their 2021 all-time highs. Many former market darlings and COVID-19 beneficiaries would have to 10x from here to get back to where they traded at their peak. It just isn't going to happen. I'm looking at you Zip Co Ltd (ASX: ZIP), Sezzle Inc (ASX: SZL), and Redbubble Ltd (ASX: RBL), and they've got plenty of mates.

4. That said, some fallen heroes will stage remarkable recoveries, rising 300% or more from these depressed levels. I own a few that have taken big tumbles for which I hold out hope of recovery, and in more recent times, I've taken bites in a few beaten-down ASX small and microcap stocks that are still growing quickly.

Recovery hopefuls: Pinnacle Investment Management Group Ltd (ASX: PNI), Aussie Broadband Ltd (ASX: ABB)

Newer bites: Field Solutions Holdings Ltd (ASX: FSG), Alloggio Group Ltd (ASX: ALO), Mighty Craft Ltd (ASX: MCL)

5. The economy will slow as interest rate rises start to bite. This will put pressure on corporate earnings, particularly in consumer discretionary retailers like Harvey Norman Holdings Limited (ASX: HVN), Kogan.com Ltd (ASX: KGN), and Temple & Webster Group Ltd (ASX: TPW). Profit warnings will likely outpace profit upgrades.

6. Even though some companies are likely going to experience falling profits in FY23, in some cases this has already been priced into their cheap stock prices. I'm certainly no energy and commodity stock expert, and I'm always very conscious of their cyclicality, but Woodside Energy Group Ltd (ASX: WDS) and BHP Group Ltd (ASX: BHP) trading on 8 to 10% trailing fully franked dividend yields and on trailing single digit multiples have significant future falls in the iron ore and oil price already reflected in their share prices.  

7. On a trailing basis, some retailers look dirt cheap. At $2, the Dusk Group Ltd (ASX: DSK) share price trades at seven-times profit and on a fully franked dividend yield of 10%. The specialty retailer of home fragrance products didn't provide FY23 guidance given "ongoing uncertainty surrounding the macro-environment". Dusk is capitalised at $125 million, has $21 million cash, and no debt. 

8. If you believe the economy will recover (it always has done so in the past) and corporate profits will be higher three to five years from now (as they have been in the past), and that will translate to a higher stock market in the future (as it has done so in the past), one of the simplest investing strategies and processes is to dollar-cost average into a low-cost exchange-traded fund (ETF).

My favoured option is the Vanguard MSCI Index International Shares ETF (ASX: VGS). Since its inception in 2014, it has returned 11.4% per annum, something that would have turned an initial $10,000 investment into almost $23,000. The ETF holds stakes in large US companies, including Apple, Microsoft, Amazon, Tesla, Johnson & Johnson, and Exxon Mobil. 

If you want to throw in a local flavour, consider adding the Vanguard Australian Shares Index ETF (ASX: VAS). You'll get exposure to the big miners, the big banks, and the big supermarkets.

9. Interest rates will start turning lower around the third quarter of next year as the economy slows in response to standard variable mortgage rates of around 7.5 to 8%. Consumer confidence has already taken a big hit, dropping to its lowest level since April 2020 amid higher interest rates and surging inflation. 

To the points above, discretionary spend – retail, food and beverage, even travel – is about to take a hit.

10. The forward-looking stock market has already priced much of what's coming into the prices of individual stocks. It knows not how far spending will fall, nor how much some corporate profits will shrink. 

Just as the stock market is falling now, despite an economy with near-record-low unemployment, the forward-looking stock market will go higher in the face of a sharply weaker economy. Bad news is good news for the stock market.

In the meantime, volatility is likely to persist. There could even be another bear market from here, where the S&P/ASX 200 Index (ASX: XJO) falls a further 20%.

For stock pickers, use it to your advantage to add to your favourite existing stocks, and to throw a couple of new positions into your portfolio. 

For ETF investors, continue making regular (fortnightly or monthly) contributions, come hell or high water. With annualised returns potentially around the 8% level, an investment made today would double in nine years. 

It reminds me of the Bill Gates quote…

"Most people overestimate what they can do in one year and underestimate what they can do in ten years."

The post These 10 predictions could help you profit from the stock market regardless of inflation, interest rates or even another bear market appeared first on The Motley Fool Australia.

"All types of investing require nerve and courage. But perhaps none more so than small-cap stocks," said Ophir analysts in a memo to investors this month.

"When an economic downturn hits, small caps tend to fall first and farthest."

In volatile and uncertain times, the value of smaller companies sinks much more dramatically than larger companies for multiple reasons.

"Small caps also tend to be more sensitive to changes in the economy. They are less able to diversify their operations and are less likely to have the large cash reserves needed to withstand difficult trading conditions."

They can also get caught up in a liquidity spiral. In a falling market, institutional investors often sell out of smaller holdings first to avoid getting trapped in an illiquid position.

"They then also stop buying, pushing prices down further and faster on even lower levels of liquidity," read Ophir's investment strategy memo.

"And while small-cap managers might see even cheaper stocks, many are unwilling to enter the market so prices in small-cap stocks keep falling at a faster rate."

But the reward for hanging onto the small fish is that, on the other side, they rally much faster than large caps.

"Historically, in the 12 months after the US small-cap index has bottomed around a recession, they have returned an incredible 70% on average – that's 11% higher than large caps," read the Ophir memo. 

"The small-cap rebound is also quick. Most of the additional return benefit versus large caps has happened in the first three months."

So remembering this, here are three small-cap ASX shares that the Cyan C3G Fund is holding onto despite being absolutely hammered last month:

Rock solid investments for the inevitable small-cap recovery

The Mighty Craft Ltd (ASX: MCL) share price tumbled more than 21% in September, but the Cyan team is not worried.

"The alcohol industry globally is dominated by a handful of powerful players, but the domestic industry has been growing strongly in recent years," read Cyan's memo to clients.

"We think it's a sector worth being exposed to and Mighty Craft is our preferred business model, whereby they acquire and accelerate growing beer and spirits brands through provision of capital, distribution and retail and wholesale points of presence."

The nature of the industry means Mighty Craft could become an attractive takeover target.

"Inevitably the successful domestic businesses or alcohol brands are acquired as they obtain, or are on a clear path to obtaining, reasonable market share."

Melbourne video games developer Playside Studios Ltd (ASX: PLY) is another small-cap Cyan analysts are backing, despite a 14.3% drop in valuation last month.

"This gaming business continues to impress with the execution of its growth strategy through a business model based on work-for-hire, original IP development and new initiatives like a third party publishing division," read the memo from Cyan.

"In short, an exceptional team with a strong and growing business in a strong and growing industry."

The heavy discounting in its shares means it's another potential takeover subject.

"We believe Playside can deliver great returns to shareholders independently or as an M&A target in time (hopefully both)," said the Cyan portfolio managers. 

"We see this as a unique opportunity to get exposure to these dynamics in the ASX listed space."

The Cyan team has been a longtime fan of hospital software maker Alcidion Group Ltd (ASX: ALC).

And that hasn't changed despite a 12.1% drop in share price in September.

"Alcidion is building a strong position in the digitisation of hospital management systems, both administrative and clinical, in Australia and the much larger UK market."

The business raked in $34 million in revenue for the 2022 financial year. Its June quarter revenue was 46% up year on year.

"The company has worked hard to become one of the leading providers and the timing looks perfect to scale the business significantly over the next two years as governments drive the push towards technology in healthcare in a post-COVID environment."

The post 3 battered small-cap ASX shares we're still backing: expert appeared first on The Motley Fool Australia.

The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Cyan Investment Management portfolio manager Dean Fergie discusses two micro-cap ASX shares he currently loves.

Hottest ASX shares

The Motley Fool: What are the two best stock buys right now?

Dean Fergie: We own shares in a listed investment company (LIC) called Touch Ventures Ltd (ASX: TVL), [which] is an Afterpay-backed investment or venture capital vehicle. 

Obviously, a huge amount of heat has come out of the buy now, pay later sector. Valuations are being crunched, and I think this has hurt this as an investment vehicle. 

MF: Even though Touch Ventures itself doesn't have anything to do with buy now, pay later?

DF: They have a buy now, pay later operation in China, which is kind of a double whammy.

But that equates to about 5% of its value. And they have a newer buy now, pay later business in the UAE, which again maybe has some issues with respect to its ongoing valuation. They've got investments in a logistics business Sendle, open market data platform Basiq, and the like. 

But most importantly, this stock's gone from a listing price of 40 cents back to, it's currently trading at, 13 cents. They have, in net cash, 10 cents per share on their balance sheet. And it was trading at 10.5 only at the end of June. 

So you're literally getting all their investments, which they've paid more than $100 million for, for almost nothing. And so we think that, as a pure value play, it's extraordinarily cheap. It's trading at 50% of its NAV [net asset value]. 

There might be some risk of its NAV, but you're not going to mark down the value of cash on your balance sheet. So we think it's a great opportunity.

MF: Did you buy in during the initial public offering (IPO), did you?

DF: We did, yes, unfortunately.

We also owned shares pre-IPO, which was at 20 cents. So we did see reasonable uplift when it IPOed, but then there's been a lot of, I guess, value destruction on the way down.

MF: Fair enough. What's the other stock you like at the moment?

DF: The other one we quite like, and I think it's a bit topical, is a company called Mighty Craft Ltd (ASX: MCL). So they're a boutique brewer and spirits company. And they're also in a few venues. 

They bought a company called the Adelaide Hills Group just at the start of COVID, so early [2020]. And that sort of equates to its whole market cap at the moment. 

But probably most excitingly, they own 40% of a product called Better Beer, which is pretty much taking the market by storm in Australia. They just signed a distribution deal in New Zealand. They expect they'll do next financial year something like 12 to 14 million litres of beer in this one product alone. 

So it's just got a huge amount of growth and at a very, very tiny valuation. I think the total market cap of Mighty Craft now is about $50 million. So we think, again, it offers incredible value given their ongoing asset base and their products.

MF: The share price has about halved this year, hasn't it?

DF: That's about right. I think it's gone from about 30 to 15 odd [cents].

So it's capped out at about $50 million, which we think is tiny, given the amount of products that they've got under their banner.

The post 'Extraordinarily cheap': The ASX share where 77% of its value is cash appeared first on The Motley Fool Australia.

But it's not just everyday retail investors feeling the pinch. The professionals aren't faring much better in a rough market.

One of the most successful funds in recent years, the Cyan C3G Fund, revealed this week that it "suffered badly" in May to see a fall of 14%.

"Performance in May was incredibly frustrating," portfolio managers Dean Fergie and Graeme Carson told clients in a memo.

"All but one of our holdings fell over the month, resulting in the overall poor performance."

Cyan attributed the "severe selling pressure" to a perfect storm of supply constraints, central bank tightening and geopolitical issues.

"In the six weeks to early June, the S&P/ASX Emerging Companies (ASX: XEC) index has fallen 17%." 

Normal programming will return sooner or later

But in the long run, the pair said fortunes would turn around.

"Logistics is improving, supply chains are opening up, costs are still a challenge but will subside as other parts of the supply chain normalise."

A steep hike in interest rates will indeed temporarily result in depressed consumer spending. 

But the portfolio managers reminded clients that even a 150-basis point increase would result in a cash rate that's still historically low.

"In terms of valuing companies on future earnings (which is what the stock market does), it is far from terminal, or perhaps not even particularly material," read the document.

"We feel the market is being overly bearish on where long-term rates might land."

Considering this, the Cyan team named three ASX shares that plunged last month that still have excellent underlying businesses (and it's still holding onto):

Value of brands could exceed the company's current valuation

Brewer Mighty Craft Ltd (ASX: MCL) watched in horror as its share price lost a quarter of its value last month.

It has lost even more in this week's brutal sell-off, to be down 42% since the start of May.

For the Cyan team, this is purely a macroeconomic reaction — because the business is going gangbusters.

"It is currently being valued at $70 million by the market," read the memo. 

"[But] it is expected to deliver more than $70 million in sales during this COVID-impacted year and strong profitable growth in FY23."

The company has a 37% stake in fast-growing brand Better Beer, which is expected to sell 4 million litres this financial year and 10 million in the next.

"On those metrics — at $25 per litre of value (which is the general metric for valuing boutique beer brands that reach scale) — Mighty Craft's ownership of the brand alone could be worth $90 million+."

No debt, profitable, pays dividend

Cyan lost 15% on its Kip McGrath Education Centres Limited (ASX: KME) last month.

Kip McGrath runs an education and tutoring business in the English-speaking markets of Australia, New Zealand, the United States, the United Kingdom and South Africa.

The financials are healthy, according to Fergie and Carson, who noted it has no debt, is cash flow positive, profitable, and pays a dividend. 

The company is also forecast to grow revenue and earnings in excess of 20% next financial year. 

"It is potentially an M&A target and has recently successfully pushed into the US," read the Cyan memo.

"The stock is down 40% from its highs of a few months ago and has delivered no negative news."

'Extremely attractive' takeover target

Fergie and Carson have been fans of micro-investing platform RAIZ Invest Ltd (ASX: RZI) for a while, and a 15% loss in May hasn't changed this view.

This is another ASX share that has no debt and holds $18 million in cash.

"Over the past 12 months, it has grown active customers by 50% to around 650,000, who collectively invest more than $1 billion," read the Cyan memo.

"The company is profitable in its core operations in Australia and is pushing successfully into south-east Asia."

May was just the continuation of a shocking run in 2022. Raiz shares have plunged almost 64% since the start of the year.

Similar to Kip McGrath, Raiz could make an "extremely attractive" takeover target.

"As a comparative valuation, Raiz's US parent Acorns Grow is valued at ~$800 per customer," the memo read.

"Completely ignoring Raiz's 350,000 strong customer base Asia, its Australian business of 290,000 customers is presently being valued by the local market at just $170 per customer."

The post 'Frustrating': Fund backs 3 great ASX shares with plunging prices appeared first on The Motley Fool Australia.

While finance and mining, dominated by large caps, have made hay over the past few weeks, it's still a volatile and uncertain time for small-cap ASX shares.

So it's worth being selective about smaller businesses before buying into them.

Cyan Investment Management portfolio manager Dean Fergie recently presented three ASX shares he's holding that are going gangbusters right now:

Australians have higher expectations about deliveries now

Delivery services platform Zoom2u Technologies Ltd (ASX: Z2U) gained a tidy 24% over March, and Fergie expects more growth to come.

"The delivery marketplace is well overdue to be disrupted with the incumbent, Australia Post, not being able to offer competitive delivery times, nor services such as driver tracking (due to union rules)," he said in a memo to clients.

"Zoom2U is well established in this market with a proven commercial driver network and user deployed tracking software. And we expect the news-flow and positive financial results to continue for this exciting business."

Like most tech stocks, Zoom2u has suffered a correction in recent months, dipping more than 29% for the year so far.

For Fergie, the company can take advantage of a recent cultural shift in Australia.

"We believe there is a step-change in customer expectations of delivery times, with the likes of Amazon.com Inc (NASDAQ: AMZN) and the food delivery platforms offering next day, same day or one-hour delivery windows."

A massive contract with Jetstar

Quickstep Holdings Limited (ASX: QHL) is an unusual business that not many investors may have heard of.

But Fergie has held this ASX share for a long time and feels like its time has come after the share price rocketed up 17% last month.

"Quickstep manufacturers composite parts for the F35 fighter jet and C130 bomber, provides commercial aerospace maintenance services, and produces high-end composite products for drone manufacturers."

The Cyan team recently visited Quickstep's Melbourne facilities in person and was told of "significant tailwinds" in all three of its business units.

"Indeed, post the end of March, Quickstep has announced a milestone three-year $30 to $35 million maintenance contract with Jetstar," said Fergie.

"We view this as both financially and strategically significant as Quickstep has dislodged offshore incumbents to bring the maintenance work to Australia."

Cheers to this ASX small-cap

The Mighty Craft Ltd (ASX: MCL) share price remained flat during March, but Fergie feels like it made the "most significant" announcement out of all his holdings.

"On the 30th March, it upgraded its medium-term ambitions for beer production from 12 million to 25 million litres," he said.

"Mighty Craft is having some phenomenal success with its Better Beer brand which is expected to sell four million litres in FY22 despite only launching in November 2021."

As a brewing and distillation company, Mighty Craft is a natural beneficiary of the post-pandemic life as customers flood back into pubs and clubs.

But even considering that, Fergie reckons the business is outperforming.

"It is enjoying an outstanding recovery from the challenges of COVID," he said.

"We currently see a real disconnect between the current share price and true value of the Mighty Craft group of assets and brands, and expect [a] material re-rate when market conditions improve for emerging companies."

The post Beers and planes: 3 ASX shares killing it right now appeared first on The Motley Fool Australia.

And that's exactly the disappointment Cyan portfolio manager Dean fergie relayed to his clients in a memo this week.

"Market sentiment, in the short-term, is a powerful force and the recent inflation fears (and associated rate rises), exacerbated by the invasion of Ukraine and the uncertainty and concerns around energy prices and the potential economic impact, has created almost the perfect storm for many of the fund's holdings."

However, Fergie told his clients that short-term shocks like this still doesn't shake his longer-term faith in the stocks that he's backed.

"In times of turmoil, it is valuable to focus on the underlying operational performance of our investments, particularly when the disconnect between the share prices and business performances has been stark," he said.

"We remain particularly positive given the optimistic results recently released."

Fergie examined 3 ASX shares that plunged in February despite the company performance still remaining strong:

Drink away the world's woes

Shares for craft drink provider Mighty Craft Ltd (ASX: MCL) fell a hair-raising 18% over last month.

Fergie noted that this freefall happened at the same time as it reported spectacular numbers.

The first-half saw revenue of $30 million, which is up 132%, and a "wildly successful launch" of its Better Beer brand.

"With the economy reopening and increased scale of the business post its acquisition of The Adelaide Hills Group, the company moved into profitability in the last quarter of the calendar year — a milestone that looked a pipedream only a few months ago."

According to Fergie, that was not just a fluke half and the outlook remains strong.

"We continue to back management to deliver on their aggressive growth ambitions which include posting revenues in excess of $70 million for FY22," he said.

"Despite these important financial milestones being achieved, the share price did not, in the short-term, reflect the company's underlying achievements."

Mighty Craft shares closed Thursday at 30 cents, which is almost 30% down from the start of February.

Wealth managers in the firing line

Fergie has publicly backed micro-investment platform Raiz Invest Ltd (ASX: RZI) for a while now.

Similar to Mighty Craft, the company reported excellent numbers in February but the share price sunk like a stone.

"Investment platform business Raiz delivered strong growth metrics period-on-period, including active customer growth of 73% to 595,000, funds under management growth of 71% to $1 billion and group revenue growth of 77% to $9.3 million (the vast majority of which is recurring)," said Fergie.

"Again, this was not reflected in share price movement with the stock falling 17% in February."

He suspected general market sentiment went against listed fund managers, with huge selloffs seen in sector stalwarts Magellan Financial Group Ltd (ASX: MFG) and Pinnacle Investment Management Group Ltd (ASX: PNI).

Raiz shares closed Thursday at $1.14.

The software maker that set a new company record 

Healthcare software provider Alcidion Group Ltd (ASX: ALC) reported "solid" half-year results, according to Fergie.

But guess what, its share price plunged 17% in February.

Fergie noted the contracted revenue of more than $27 million was a company record, despite COVID-19 delaying purchasing decisions in UK hospitals.

"As such we expect some material short-term catalysts by way of new contracts out of the region," he said.

"Alcidion is building a very strong position in the healthcare industry which is expected to rapidly expand as the digitisation of the healthcare industry accelerates."

The Alcidion share price finished Thursday at 18 cents.

Deals galore in February, but share price didn't match the news

Fergie has also been a longtime fan of games developer Playside Studios Ltd (ASX: PLY), which saw its shares lose 9% in February.

Again, Fergie is consoled by an excellent half-year report.

"This Australian-based game developer delivered a great interim result which clearly illustrated its strong growth and a healthy outlook," he said.

"Revenue grew 61% half-on-half to $9.4 million." 

In the same month, Playside revealed it booked $8.4 million in revenue in just one week after it launched Beans NFT.

"Further good news was released when Playside signed a material work-for-hire contract with Activision Blizzard Inc (NASDAQ: ATVI), one of the world's most successful interactive entertainment companies and maker of iconic games such as Call of Duty, Overwatch, Guitar Hero and Candy Crush."

The share price movement in February confounded Fergie.

"Through the month the share price of PLY rallied from $1.02 to $1.40 before, disappointingly, ending the month at $0.93 — a head-scratching outcome given the materially good news."

Playside shares closed Thursday at 94 cents.

The post 4 fallen ASX shares that are still awesome businesses: expert appeared first on The Motley Fool Australia.

Cyan Investment Management portfolio manager Dean Fergie told clients in a memo that both Mighty Craft Ltd (ASX: MCL) and Vita Group Limited (ASX: VTG) had shockers in August.

Vaccinations will lift spirits

Shares for brewing company Mighty Craft lost 15% over the month.

"Mighty Craft has come under reasonable operational and sharemarket pressure due to the extensive lockdowns in VIC and NSW which have severely impacted its venue businesses," Fergie said.

The Melbourne business is a craft-brewer, a spirits distiller, and owns some venues.

"The company owns brands such as Jetty Road, Ballistic and Mismatch Brewers, Kangaroo Island Gin, 78 Whisky, and over a dozen associated venues in NSW, VIC, and SA."

Mighty Craft shares have shaved 35% off their value so far this year.

Fergie told The Motley Fool it's a victim of circumstances and believes fortunes are about to swing around for this ASX share.

"MCL is currently in the eye of the COVID storm with its closed venue businesses but the present tight restrictions are only likely to ease and a strong rebound is likely before Christmas and patrons flood back into venues," he said.

"The timing of the recent capital raise and purchase of Adelaide Hills group, just before the latest COVID outbreak on June 21, was unfortunate timing."

One positive the very contagious Delta variant has brought is a sense of urgency for Australians to receive a coronavirus vaccine.

The rising coverage will also help Mighty Craft, according to Fergie.

"As vaccination rates roll forward it would appear likely that a gradual reopening will occur in the coming months which should see a rebound in the company's operations and its share price."

Patience is a virtue for this ASX share

Vita Group is best known for owning a network of Telstra shops.

But in February, Telstra Corporation Ltd (ASX: TLS) announced it would shift all its franchised retail outlets in-house.

But that's now 6 months ago and Vita Group still has not struck a buyout agreement with the telco.

Vita shares lost 10% over August.

"Investors are getting somewhat impatient with Vita," Fergie told The Motley Fool.

"The market has been expecting a deal to be struck between the two companies to exit the franchise but COVID closures have likely lengthened this process." 

The company has turned to other ventures, one of which shone during the recent reporting season.

"Vita Group reported great numbers from its growing beauty clinic division (Artisan) which saw revenue and gross profit rise over 40%."

The other reason for patient investors to hold onto Vita stock is that it's bringing in a nice income.

"VTG is paying a 9% fully franked yield, so investors are certainly being rewarded for their patience."

The post 2 ASX shares just had a shocking month but could be bargains now appeared first on The Motley Fool Australia.