Earlier today I looked at a few shares which have shaken off pandemic concerns and surged to record highs this week.
Unfortunately, not all shares have been so fortunate. A number are still trading materially lower than their 52-week highs.
For example, the two shares below are down very heavily from their highs. Here’s why I think they could be bargain buys:
Aristocrat Leisure Limited (ASX: ALL)
The Aristocrat Leisure share price has risen strongly this month but is still trading 30% lower than its 52-week high. Investors have been selling the gaming technology company’s shares because of the closure of casinos globally during the pandemic.
While these closures have been a blow, it is worth noting that it has given its lucrative digital business a huge lift. The company has millions of daily active users playing its games and generating significant recurring revenues. And with casinos now reopening, I expect demand for its poker machines will start to rebound. Overall, I feel it is well-positioned for solid long term growth once the crisis passes.
Jumbo Interactive Ltd (ASX: JIN)
The Jumbo share price has lost 56% of its value since peaking at $27.92 in October. The catalyst for this disappointing pullback was a surprise slowdown in the online lottery ticket seller’s earnings growth in FY 2020. After years of explosive growth, this year’s earnings are only expected grow at a reasonably modest rate due to a step change in expenses to support the increase in scale of the business and planned future growth.
However, I believe investors should look beyond this and focus on the future. These investments are expected to play a key role in the company achieving its “billion-dollar vision.” This will see the company grow its business to the point that it is processing $1 billion of tickets on the Jumbo software platform by 2022. This will be a significant lift on FY 2020’s expected ticket sales and should drive strong earnings growth over the coming years.
And here are more top shares to consider. All five recommendations below look dirt cheap after the crash…
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More reading
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- 2 ASX shares to buy with $5000 today
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- 5 ASX 200 10-bagger shares of the decade
James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Jumbo Interactive Limited. The Motley Fool Australia has recommended Jumbo Interactive Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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