Long-term buy-and-hold investing is straightforward in theory but in practice, it can be testing for even the most disciplined investors.
That’s especially so in turbulent times for the market, such as the past 18 months.
After all, it’s only human nature to feel disappointed when they see one of their ASX shares fall off a cliff in any given month.
QVG analysts recently saw this happen to two stocks in their Long Short Fund, but explained why investors need to look past the calamity:
Recent troubles don’t change ‘long-term outlook’
The Imdex Limited (ASX: IMD) share price has plunged almost 10% since 30 March. It’s a 20% fall if you go back to 23 January.
The QVG team attributed this to the fortunes of Imdex’s clientele.
“It appears their clients (miners & drillers) have had a slow start to the year.”
But with revenue, operating income, and cash holdings consistently growing, the analysts are backing Imdex shares to rise in the long run.
“We don’t see [the current slowdown] as changing the long-term outlook for the business.”
QVG is not the only one who thinks this.
According to CMC Markets, seven out of eight analysts currently rate Imdex shares as a buy.
The Motley Fool’s Mitchell Lawler last month rated the stock as his top pick, on the back of recent acquisitions.
“I believe the addition of Devico sweetens the investment case for Imdex, adding a higher earnings before interest, taxes, depreciation and amortisation (EBITDA) margin business and cementing the company’s global position in the sensor and directional drilling tech markets.”
Production hiccup is just temporary
It’s been an ugly 2023 for Mineral Resources Ltd (ASX: MIN), with its share price sinking 28% since 24 January.
April was especially distressing for the mining service provider.
“Mineral Resources⦠saw their share price decline 9% for the month as their lithium production expansion delivered less tonnes than expected and at a higher cost.”
The recent drop in lithium prices isn’t helping either.
And of course, the prospects of recession or an economic slowdown always hits the resources industry hard.
QVG analysts are keeping the faith with a long-term horizon.
“We believe the mining services volume dip and production ramp at Mt Marion are temporary in nature.”
The team at Morgans is also a fan of Mineral Resources’ long-term prospects.
Based on the Thursday trading price of $69.05, Morgans’ $103 price target implies an amazing upside of 49%.
“But it gets better!” reported The Motley Fool’s James Mickleboro.
“The broker is also forecasting a $5.79 per share fully franked dividend in FY 2024. This represents a [sizable] 8% forward dividend yield for investors that buy shares at today’s price.”
The post Keep the faith: 2 ASX shares to buy now at a temporary dip appeared first on The Motley Fool Australia.
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More reading
- 2 ASX 200 lithium shares to buy for $100 monthly passive income each
- Guess who has just downgraded Mineral Resources shares to a sell rating
- ASX lithium shares: Short-term pain for long-term gain?
- Top brokers name 3 ASX shares to buy next week
- Making it rain: Could this signal a boom for ASX 200 lithium stocks?
Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Imdex. The Motley Fool Australia has positions in and has recommended Imdex. 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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