Cyber Monday: could these ASX 200 shares be on sale?

The S&P/ASX 200 Index (ASX: XJO) is full of a broad range of businesses. And some of these ASX 200 shares may be opportunities during the discount season for shopping.

Many businesses that were COVID-19 winners have turned into post-COVID losers. But I think some of the declines may have been overdone. Yes, there are likely to be earnings declines compared to strong COVID earnings. But the share prices are already down heavily.

In my view, long-term global growth could make them opportunities. Let’s check a couple out:

ARB Corporation Limited (ASX: ARB)

ARB provides four-wheel drive accessories. It boasts that its accessories were built for the harsh conditions of the Australian outback, meaning that its products are designed to be tough and withstand the extremes four-wheel drive enthusiasts may put them through.

But investors are not so enthusiastic about the ASX 200 share at the moment. Since the start of the year, the ARB Corporation share price has dropped almost 50%.

FY22 was a solid year, with 8.1% growth of net profit after tax (NPAT) to $122 million and the total dividend rising by 4.4%.

The company’s non-Australian revenue has been growing, including as a percentage of total sales. FY22 export sales grew by 17.4%.

ARB also continues to grow its store network. New car models have been released to the market. A Texas distribution centre will be opened in Dallas in January 2023 which will give ARB USA two-day shipping to the majority of the USA, while also supporting growth in Mexico and Central America.

The business said that sales in Southeast Asia, Europe, Africa and the Middle East are all “trending positively”. The collaboration with Ford has also been “well received” by customers.

However, the company is facing lower short-term sales and higher costs because of inflation. But, the order book remains healthy and it’s expecting stronger sales in the FY23 second half and into FY24.

Commsec numbers imply the ARB share price is valued at 22 times FY23’s estimated earnings.

Reece Ltd (ASX: REH)

Bathroom supplier Reece is another ASX 200 share that has suffered heavily this year. The Reece share price is down around 45% year to date. It hasn’t seen a large recovery like some other ASX shares have in the last few weeks.

But, Reece isn’t just an Australian bathroom and plumbing product business anymore. It also has a network of 204 branches in the middle and south of the US. As well, it’s involved in irrigation and pools, commercial heating, ventilation, air conditioning and refrigeration, and civil construction (including water mains, sewerage, drainage, fire services, gas mains, and telecommunications).

I think that the business is more defensive than some investors are giving it credit for (given how heavily the share price is down).

With the US business, it has a long-term strategy. It’s refurbishing stores, opening new stores, and planning to make acquisitions.

FY23 started strongly, with the first quarter showing 28.8% revenue growth to $2.28 billion. Australia-New Zealand sales were up 13.9%, while US sales grew 33.1% on a constant currency basis. While this may not be reflective over the rest of the year, it has given FY23 a strong start. The company continues to focus on controlling costs and investing for the future, though demand is expected to soften in the second half.

It’s valued at 24 times FY23’s estimated earnings according to Commsec.

The post Cyber Monday: could these ASX 200 shares be on sale? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ARB Corporation Limited. 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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