There can be no doubting that 2020 has been a tumultuous year for the ASX. At the height of the coronavirus panic-selling in March, millions were wiped off the market caps of many ASX growth companies.

Buy now, pay later fintech Afterpay Ltd (ASX: APT) saw its share price slump almost 80% to a multi-year low of $8.01. Cloud accounting software developer Xero Limited (ASX: XRO) and healthcare blue-chip Cochlear Limited (ASX: COH) also shed over 30% of their values.

While some companies have staged incredible recoveries – Afterpay shares are up 620% since 23 March – there is still plenty of value left in the market. But separating the diamonds from the rough can be difficult. Here are 3 companies I think may have been neglected in the recent market recovery and could still offer big potential.

Nearmap Ltd (ASX: NEA)

ASX aerial imaging company Nearmap is one of the most promising ASX growth companies on the market. Nearmap is a leader in a niche industry and has rapidly expanded its footprint across Australia and North America. Statutory revenue for H1 FY20 surged 31% over the prior comparative period to $46.3 million. And the company was positioning itself for even greater things during the second half.

But then coronavirus happened. Nearmap investors fled despite the assurance that Nearmap had seen no adverse financial impacts from COVID-19. Nearmap shares dropped over 50% in value to a 52-week low of just $0.83 by 25 March. The company has recovered much of its losses, currently sitting around $2. But it’s still well short of the 52-week high of $4.29 in June 2019.

Livetiles Ltd (ASX: LVT)

LiveTiles is a perennially undervalued ASX software company and should be surging higher in the current climate. Software developers like MNF Group Ltd (ASX: MNF) and Objective Corporate Limited (ASX: OCL) have found themselves the unlikely market darlings of this emerging economy. But despite a modest recovery, LiveTiles shares are languishing well below their pre-coronavirus highs. 

LiveTiles develops intranet portals and online working environments for corporate clients. Given many businesses are still working remotely, you would think the demand for software that enables online collaboration would be accelerating.

And according to LiveTiles, it is. Cash receipts for the Q3 FY20 quarter were up 109% over the prior comparative period to $10.9 million. Annualised recurring revenue also rose 5% for the quarter to $55.7 million. And yet, LiveTiles shares are still trading for just 25 cents, 60% short of the 52-week high of 60 cents they recorded last July.

Audinate Group Ltd (ASX: AD8)

Audinate shares took a real hammering during the coronavirus selloff. After opening the year trading at over $7, Audinate shares crashed to $2.51 by 23 March. Despite a strong rebound, they still haven’t recovered all those losses. Audinate is trading at just $6.03 at the time of writing. And to think, as recently as December they were valued at $9.30.

This stunning collapse is, in large part, pretty understandable. Audinate was a promising ASX growth company pre-coronavirus, but demand for its services has been severely dampened by lockdowns. Audinate specialises in the technology required for complex and large sound systems. Past projects have included a theatre in Buffalo, New York, a shopping mall in Mexico City, and even a zoo and aquarium in Ohio.

Audinate was forced to withdraw its FY20 guidance in April in response to the pandemic. It will be interesting to see how much financial damage the company will have sustained. However, as restrictions ease and event spaces re-open, the global leader in sound technology is well-positioned for a rebound.

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• ASX 200 down 1.3%: Big four banks tumble, Afterpay tipped to go higher
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Rhys Brock owns shares of AFTERPAY T FPO, AUDINATEGL FPO, Cochlear Ltd., LIVETILES FPO, and Nearmap Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AUDINATEGL FPO, Cochlear Ltd., LIVETILES FPO, Nearmap Ltd., Objective Limited, and Xero. The Motley Fool Australia owns shares of and has recommended MNF Group Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended AUDINATEGL FPO, Cochlear Ltd., LIVETILES FPO, and Nearmap Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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I think the mid cap side of the market is a great place to look for long term investment options.

But which mid caps should you buy? Three which I think would be top options are listed below. Here’s why I like them:

Bravura Solutions Ltd (ASX: BVS)

The first mid cap ASX share to consider is Bravura Solutions. It provides software and services to the wealth management and funds administration industries. It has a number of quality products in its portfolio which are being used by some of biggest financial institutions in the world. This includes the Sonata wealth management platform, Rufus transfer agency solution, the Garradin back office solution, and the recently acquired Midwinter financial planning software.

Collins Foods Ltd (ASX: CKF)

A second ASX mid cap share to look at is Collins Foods. Not only is it one of the region’s largest KFC restaurant operators, it also has a growing presence in Europe. The good thing about the latter is that the KFC brand has a long runway for growth in the European market due to its under penetration. I believe this gives Collins Foods the opportunity to expand its international network materially over the next decade and drive solid earnings growth.

Pushpay Holdings Ltd (ASX: PPH)

A final mid cap share to consider buying with a long term view is Pushpay. It provides a donor management system, including donor tools, finance tools, and a custom community app, to the faith sector. The company has been growing at a very strong rate over the last few years and expects more of the same in FY 2021. In fact, today Pushpay upgraded its guidance just six weeks after first giving it. It expects EBITDA of US$50 million to US$54 million this year, up from its previous guidance of US$48 million to US$53 million. This will be more double FY 2020’s earnings.

More reading

• Pushpay share price jumps nearly 10% on updated guidance
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• 2 fast-growing ASX tech shares to buy right now
• Here are 2 top ASX tech shares for your portfolio
• UBS picks the best ASX retail stocks for the post COVID-19 world

James Mickleboro owns shares of Collins Foods Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Bravura Solutions Ltd. The Motley Fool Australia owns shares of and has recommended PUSHPAY FPO NZX. The Motley Fool Australia has recommended Bravura Solutions Ltd and Collins Foods Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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This is the time when many will be mulling over the question of whether the dogs of FY20 on the S&P/ASX 200 Index (Index:^AXJO) will outperform in the new financial year.

This strategy is popularised by the “Dogs of Dow” theory, which states that last year’s underachievers on the Dow Jones Industrial Average will rebound the following year as businesses move in cycles.

The theory doesn’t quite translate into practice for ASX 200 as there are differences between the Dow and our top 200 benchmark. The most obvious one being the size of companies included in each of the indices.

Value back in vogue

But this doesn’t mean it’s unhelpful to look at FY20 underperformers this year. In fact, this year is probably the best time to be hunting for buys among the laggards compared to past years.

This is because value stocks may finally be pulling ahead of growth stocks for reasons highlighted in my previous article.

This financial year’s underperformers are firmly in the value camp as value stocks trade at a discount to the market and their historical measurements.

On the flipside, growth stocks are those that trade at a premium as investors are happy to bid up shares with better growth prospects in the post COVID-19 world.

Not easy finding the real ASX bargains

But blindly picking ASX stocks from the bargain bin is a recipe for disaster.  Some stragglers deserve to be cast aside as their recovery prospects in FY21 don’t look much better than FY20.

What might work as a better filter is to pick the worst performers that are currently rated a “buy” by most brokers covering the stock.

Using consensus data from Thomson Reuters, there are five ASX dogs that stand out.

Dirt cheap

The worst performer of the group is the South32 Ltd (ASX: S32) share price, which lost around 35% of its value of the past year.

But the majority of brokers think the stock is fundamentally cheap, as do I. I sold out of the base metal miner in August last year but bought back in April when the stock fell under $2 a share.

I think it will head back towards $3 in FY21 as the market thinks the prices for its key commodities are significantly lower than spot prices.

If prices hold around current levels, I suspect we will see a re-rating in the stock.

Zero to hero

Another dog that could find love in the new financial year is the Nine Entertainment Co Holdings Ltd (ASX: NEC) share price.

The media group has long been under pressure due to structural changes in the industry but the coronavirus disruption certainly didn’t help.

The stock slumped around 24% over the past 12 months, but the headwinds are starting to ease.

Outlook improving

The reopening of our economy is one obvious plus point, but that isn’t the only light at the end of its tunnel.

The government’s move to force tech giants like Alphabet Inc (aka Google) and Facebook, Inc. to pay local media outlets to reuse content could be a game changer.

Nine also stands to benefit from further easing on cross-media ownership laws and subscriptions for some of its mastheads, like the Australia Financial Review, are stabilising, if not growing.

The other three wooden spooners with a “buy” consensus rating are registry services company Link Administration Holdings Ltd (ASX: LNK), property group Centuria Office REIT (ASX: COF) and health insurer NIB Holdings Limited (ASX: NHF).

More reading

• How the ASX 200 can help first home buyers save for a deposit
• Millennials be warned! Signs of dangerous ASX share trading grow
• Top brokers name 3 ASX 200 shares to sell today
• Australian unemployment jumps to 7.1%
• ASX 200 down 1.3%: Big four banks tumble, Afterpay tipped to go higher

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors.

Brendon Lau owns shares of South32 Ltd. Follow me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (C shares) and Facebook. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Link Administration Holdings Ltd. The Motley Fool Australia has recommended Alphabet (C shares), Facebook, Link Administration Holdings Ltd, NIB Holdings Limited, and Nine Entertainment Co. Holdings Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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