Bargain buys? 3 ASX All Ords shares trading at 52-week lows right now

A woman peers through a bunch of recycled clothes on hangers and looks amazed.

A woman peers through a bunch of recycled clothes on hangers and looks amazed.

The volatility impacting the All Ordinaries Index (ASX: XAO) since the end of 2021 has been painful for some companies.

For investors, there can be a danger in trying to ‘catch a falling knife’. That’s the concept of investing in a business where the share price is falling, the investor buys in, and the share price keeps falling. A share price that falls from $100 to $20 can still halve again to $10.

However, finding businesses that are down heavily but are still expected to grow over the long term could be a good opportunistic strategy.

Here’s why the ASX All Ords shares in this article could be bargain buys after hitting 52-week lows.

Adore Beauty Group Ltd (ASX: ABY)

Adore Beauty claims to be the leading online retailer of beauty products in Australia.

But, the Adore Beauty share price hasn’t seen a beautiful performance over the last 12 months. It’s down by around 60%.

It’s understandable that the ASX All Ords share has gone backwards a bit, considering interest rates have shot higher. That logic applies to most All Ords ASX shares that don’t actually benefit from higher interest rates, because higher interest rates act like gravity on valuations, pulling down asset prices.

But, the company is also suffering from the impact of reduced online shopping now that lockdowns are in the past and COVID impacts are fading.

For example, in the FY23 half-year result, the company reported that revenue dropped 17% to $93.6 million and active customers declined 9% to 801,000. The earnings before interest, tax, depreciation and amortisation (EBITDA) margin was just 0.4%, reflecting “lower operating leverage, inflationary pressures and phased investments in key initiatives”.

But, February 2023 sales were up 3.7%. I think the future is positive, with cost optimisation and margin improvement which could help profit in future years. The EBITDA margin is expected to improve, and I think more shoppers will buy online in the coming years.

FINEOS Corporation Holdings PLC (ASX: FCL)

FINEOS describes itself as a leading provider of core systems for life, accident and health insurance carriers globally. It works with seven of the 10 largest group life and health carriers in the United States as well as six of the 10 largest life and health carriers in Australia.

Over the past year, the FINEOS share price has dropped around 50%.

The ASX All Ord share’s FY23 half-year results also saw some financial numbers go backwards.

While subscription revenue went up 18.4% to €29.9 million, total revenue dropped 6% to €61.5 million, with North America representing 78.3% of total revenue. It made an EBITDA loss of €2.6 million, down from a profit of €6.5 million in the FY22 first half.

The statutory net loss was €14.6 million.

While the company advised that sales deal closing had been “slower” than it would like, it did say the pipeline is “very strong”. The business is investing in automation to achieve further efficiencies across the business.

Management believes that customers will invest in extending their use of the FINEOS platform to enhance their business operations by replacing legacy core systems. It expects to achieve positive free cash flow in the second half of FY24.

Bubs Australia Ltd (ASX: BUB)

The Bubs share price has dropped by more than 50% in the past six months, despite the infant formula business making progress on its global growth plans.

In the first half of FY23, gross revenue dropped 1%, though infant formula revenue jumped 44%.

Bubs said that its inventory provision balance was driven by “volatile trading conditions and slower-than-expected consumer offtake in key markets.”

The ASX All Ords share recorded an EBITDA statutory loss of $44.4 million.

Bubs claims to be the number one goat formula brand in both Australia and the US.

US and ‘other international’ sales increased 63% year over year, with the US contributing 31% of first-half group revenue.

China sales were reflected by lockdowns and channel disruption.

Bubs expects the growth rate in China to improve thanks to the easing of restrictions and borders reopening, with “momentum building in the fourth quarter.” It also sees the US as a key export market for the long term.

Management is confident it has sufficient capital to realise its growth ambitions. It had cash of $51.4 million on its balance sheet as at 31 December 2022.

The post Bargain buys? 3 ASX All Ords shares trading at 52-week lows right now 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 recommended Adore Beauty Group. The Motley Fool Australia has recommended Adore Beauty Group, Bubs Australia, and FINEOS Corporation. 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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