Up 150% in 3 months: It’s not too late to buy these 2 rebounding ASX stocks

When you see an ASX stock that’s lost 94% since its glory days, what are your thoughts?

You might think that something has gone horribly wrong, which is probably correct.

But if you think such a dramatic decline means it has no chance of making you money, then you would be wrong.

Shares don’t care about the past. Only the future performance of the business and the demand for stocks from investors matters.

Along these lines, a pair of much-maligned ASX shares have started 2024 with massive increases in their valuations.

And the analysts at QVG Capital reckon there’s more where that came from:

Beating earnings expectations

The fall of Zip Co Ltd (ASX: ZIP) has been breathtaking.

The share price has tumbled 94% from February 2021, as the market turned away from “buy now, pay later” providers, then growth stocks.

However, recent months have shown signs of life.

The Zip share price, believe it or not, has rocketed more than 148% since the start of November.

The latest boost, according to the QVG team, came in January.

“Zip reported their December quarter result which showed that earnings expectations of $6 million were too low as they produced $30 million of earnings in the first half alone,” read its memo to clients. 

“They now have a repaired balance sheet and improved margin profile, substantially de-risking the business.”

Brilliant ‘turnaround story’ for this ASX stock

Shares for payments technology provider EML Payments Ltd (ASX: EML) have suffered a similar journey to Zip.

They have fallen more than 85% since its April 2021 peak, as a series of regulatory and governance scandals hit the business.

But since 30 March the stock has returned a whopping 102%.

QVG analysts, who are fans of this “turnaround story”, noted EML also provided an upbeat update in January.

“We were attracted to EML early last year when we noticed significant board and management change,” read their memo.

“Sensible, reputable people tend to make equally sensible decisions and this month they announced the closure of a business division that was burning significant cash.”

The momentum is now positive for the ASX stock, the QVG team feels.

“We’re expecting further earnings and balance sheet improvements, potentially via a divestment.”

The post Up 150% in 3 months: It’s not too late to buy these 2 rebounding ASX stocks appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Zip share price surges 7% on quarterly cash flow report
• Why IDP Education, Karoon Energy, Liontown, and Zip shares are falling today
• The Zip share price has soared 147% in 3 months, can it keep going?
• Why 4DMedical, A2 Milk, QBE, and Zip shares are charging higher today
• Zip shares rocket 17% on ‘outstanding’ quarter

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 EML Payments and Zip Co. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/01w8BpS