2 ASX shares you never heard of ready to make hay

It’s a tough time for stock picking at the moment.

There is much volatility in the markets. Every day we seem to see a sudden jerk upwards or downwards as investors try to reconcile their feelings about the latest economic news.

According to many experts, this has caused many otherwise healthy businesses to see their valuations plummet.

“Given the next leg of this bear market is likely to be a focus on earnings not multiples, we have been positioning the portfolio towards companies we believe have greater earnings certainty,” stated QVG Capital in a memo to clients.

“This ought to mitigate the impact on the portfolio of a recessionary or slowing growth environment, should it occur.”

The QVG team named two such ASX shares in its portfolio that it still has high hopes for:

Great time to put people in jobs

Recent labour shortages in Australia have been well-documented. Perhaps this is what makes staffing provider PeopleIn Ltd (ASX: PPE) an attractive proposition.

With international borders now opened up for the post-COVID era, the QVG team feels like a major deal last month was perfectly timed.

“Labour staffing business PeopleIn made a [sizable] acquisition of a business called Food Industry People, which helps provide workers from the Pacific Islands and Timor to Australian employers,” read the memo.

“The acquisition was 15% earnings accretive and PeopleIn reaffirmed earnings guidance for FY22 which puts it on 10x FY22 PE and 8x FY23 PE.”

The wider professional community is apparently in agreement with QVG Capital.

According to CMC Markets, all four analysts covering the stock recommend it as a strong buy.

Extreme weather events lead to work for this business

Insurance builder Johns Lyng Group Ltd (ASX: JLG) saw its share price lose more than 29% so far this year.

But with record-breaking rains causing havoc on the east coast of Australia once again, it might find itself with a hefty pipeline of work.

QVG analysts liked the latest trading update, which was an upgrade on its previous guidance.

“Johns Lyng now expect[s] to make $83 million EBITDA in FY22 – 5% ahead of their prior expectations.”

The outlook for the current financial year looks very positive too, the memo stated.

“Looking forward into FY23, Johns Lyng Group will benefit from a full year contribution of their US acquisition Reconstruction Experts and a full pipeline of ‘cat’ [catastrophe] work given the sequence of extreme weather events experienced over this financial year.”

It seems many investors are catching onto Johns Lyng’s potential. The share price has risen 10% just over the past week.

On CMC Markets, an astounding seven out of eight analysts currently rate the stock as a strong buy.

The post 2 ASX shares you never heard of ready to make hay appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has positions in Johns Lyng Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Johns Lyng Group Limited and Peoplein. The Motley Fool Australia has recommended Johns Lyng Group Limited and Peoplein. 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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