Last year likely proved torturous for some ASX investors as shares on the index plummeted.

The S&P/ASX 200 Index (ASX: XJO) fell more than 5% in 2022 while major indices in the United States fell into bear territory.

But I believe there’s a silver lining to the downturn. It’s likely left many ASX shares trading at bargain prices, and they might well be ripe for the picking for long-term investors.

Making the most of a downturn

Like many investments, ASX shares experience volatility from time to time. When such volatility results in upwards movements, investors rejoice as their wealth compounds.

However, when the market moves lower, many investors are tempted to pull their money out.

But I think withstanding the discomfort – and even leaning into it – could ultimately help my financial position.   

As legendary investor Warren Buffett once wrote:

[B]e fearful when others are greedy and be greedy only when others are fearful.

The billionaire also noted he doesn’t track “fear and greed” (the pair assumably manifest as bull and bear markets). Instead, Buffett simply invests in companies he believes are high quality when they’re trading at a good price – a technique known as value investing.

And when he finds such a company, he buys to hold. As Buffett famously says, if you wouldn’t want to own a share for 10 years, you shouldn’t own it for 10 minutes.

Cheap ASX shares and where to find them

Fortunately, downturns tend to leave plenty of quality share trading at bargain prices. Interestingly, however, some ASX sectors were worse hit by 2022’s slump than others.

For instance, soaring oil, gas, and coal prices helped the S&P/ASX 200 Energy Index (ASX: XEJ) gain nearly 40% over the 12 months ended 31 December 2022.

Meanwhile, the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) and the S&P/ASX 200 Real Estate Index (ASX: XRE) each dumped 23%, while the S&P/ASX 200 Information Technology Index (ASX: XIJ) plummeted 34%.

Tumbles of such magnitude are typically few and far between. And while they’ve likely been devastating for some, I think they’ve provided a rare wealth-building opportunity.

Because the market has historically recovered from downturns to post future gains, such embattled sectors are where I’d start hunting for cheap ASX shares I believe could help me get rich.

The post Cheap ASX shares: A rare chance to get rich? appeared first on The Motley Fool Australia.

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More reading

• Can ASX 200 coal shares really deliver dividend yields of over 10% in FY24?
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Why I’ll be buying more ASX dividend shares for my portfolio in 2023

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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.

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Cheap ASX shares can be very effective ASX dividend shares. When businesses have low valuations, it bumps up the dividend yield on offer.

The elevated volatility last year has opened up a number of opportunities for investors to find some strong passive income.

It’s hard to say when share prices will get back to their former heights, but I believe that good businesses will be able to grow their earnings over the long term and this will encourage investors.

I don’t know how long investors will remain pessimistic – there are already signs that confidence is returning despite inflation remaining relatively high. I’d want to jump on these cheap ASX shares while they still offer great income potential.

Metcash Limited (ASX: MTS)

There are three segments to this business – food, liquor and hardware.

In food, it supplies IGAs around the country. The liquor division supplies independent liquor stores around the country, including IGA Liquor, Bottle-O, Cellarbrations, and Porters Liquor. The hardware division owns brands like Mitre 10, Home Timber & Hardware and Total Tools.

Using the numbers on Commsec, Metcash is priced at just 13 times FY23’s estimated earnings with a possible grossed-up dividend yield of 7.5%.

It grew its FY23 half-year dividend by 9.5% to 11.5 cents per share. The second half of FY23 has started strongly, with group sales up 6.2% “as consumers continue to be driven by robust underlying demand and inflation.”

The hardware division is now the division making the biggest profit. It’s expected to continue to see strong underlying demand in the second half of FY23.

This business trades on a lower price/earnings (P/E) ratio compared to Woolworths Group Ltd (ASX: WOW) and Wesfarmers Ltd (ASX: WES), which is one of the reasons why it seems like a cheap ASX share to me.

Nick Scali Limited (ASX: NCK)

Nick Scali is one of the largest furniture sellers in Australia – it owns both the Nick Scali and Plush businesses after an acquisition.

The Nick Scali share price has dropped by around 20% over the last year, pushing up the prospective dividend yield.

According to Commsec, it’s valued at just 10 times FY23’s estimated earnings with a potential grossed-up dividend yield of 9.8%. In FY24 it might pay a grossed-up dividend yield of 8.5%.

While there may be fewer sofas bought in 2023, the cheap ASX share could keep generating good profits in the coming years.

The cheap ASX share has a number of initiatives to grow profit over time, including a store rollout, increasing online sales and a range expansion.

Best & Less Group Holdings Ltd (ASX: BST)

Best & Less sells value apparel to families. The business has a focus on kids and women – it says it has better quality than cheap retailers and better value than specialty retailers. Baby products are the ‘entry point’ and it’s looking to grow its market share in baby, kids and womenswear. It also wants to achieve faster-than-the-market online sales growth and grow its store network.

Using the numbers on Commsec, the Best & Less share price is valued at under 7 times FY23’s estimated earnings with a possible grossed-up dividend yield of almost 15%.

This business is projected to grow its earnings and dividend in FY24 and FY25, which could make it seem like a very cheap ASX share at the current level.

The post 3 cheap ASX shares that can help me easily build a second income appeared first on The Motley Fool Australia.

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More reading

• 4 best ASX dividend shares to buy right now: expert
• Here are the top 10 ASX 200 shares today
• Are ASX 200 retail shares on sale in 2023?
• Why ASX dividend shares are so ‘critical’ right now: fundie
• When it comes to ASX 200 dividend shares, is boring better?

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 no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended Metcash. 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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Qantas Airways Limited (ASX: QAN) shares have started the year strongly and are smashing the ASX 200 index.

Since the start of the year, the airline operator’s shares have risen over 11%.

As you can see below, this means the Qantas share price is now up 32% over the last 12 months.

Are Qantas shares a top option on the ASX 200?

The good news is that one leading broker believes Qantas is still an ASX 200 share to buy despite its strong gains.

In fact, the team at Goldman Sachs believes that the airline’s shares can still ascend materially between now and the end of the year.

According to a note from this week, the broker has reiterated its buy rating and $8.20 price target on its shares. This implies potential upside of over 25% for investors over the next 12 months.

Capacity increasing

Goldman highlights that slot bookings indicate that Qantas’ domestic capacity will be 102% of pre-COVID levels in the second half. This is ahead of the broker’s estimates and the company’s guidance. It said:

Over the last fortnight, 2H23 scheduled capacity was largely unchanged with the market at 98% of pre-COVID levels and QAN at 102% (GSe 100%, QAN guidance: 101%).

It is a similar story for international capacity, Goldman notes:

1H23 international market capacity was 58% of pre-COVID levels with QAN (incl. JQ) at 62% (GSe and guidance at 61% of normal). 2H23 scheduled int’l market/QAN settings were ~76%/80% of normal. Note we forecast 77% of normal for QAN Group International in the 2H.

Another positive is the price of airfares. Although they have fallen from recent highs, they are still well ahead of pre-COVID levels. Goldman adds:

The cheapest available return fare for the golden triangle routes (Brisbane-Sydney, Melbourne-Sydney, Brisbane-Melbourne) for Jan-23 averaged A$213, declining by 38% mom, but up 40% vs. the pre-covid level.

All in all, the broker believes that this positions Qantas to deliver a bumper profit result in FY 2023 and FY 2024. In fact, the former is expected to be 58% ahead of pre-COVID levels.

However, despite this, Qantas’ enterprise value is still lower than 2019 levels. This is a key reason why the broker sees a lot of value in this ASX 200 share today. Goldman concludes:

With the market capitalization 10% above pre-COVID levels and EV (based on last reported net debt) 8% below pre-COVID, we believe the stock is not appropriately pricing QAN’s improved earnings capacity. Specifically, our FY23e EPS forecast is 58% above FY19a levels with group capacity still 21% below pro-COVID levels. Even as the yields moderate (with capacity restoration) our FY24e EPS (100% of FY19 capacity) is 46% above FY19 levels.

The post Should ASX 200 investors buy Qantas shares today? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Shareholders rejoice! Qantas share price hits post-market-crash high
• Could Qantas shares hit turbulence as competition ramps up?
• 4 ASX 200 shares celebrating Friday with new, 52-week highs
• How I’d invest my very first $500 in ASX shares in 2023

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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.

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It’s a good day to own S&P/ASX 200 Index (ASX: XJO) biotech share Telix Pharmaceuticals Ltd (ASX: TLX). The company just revealed it has surpassed a major milestone towards profitability – positive cash flow.

The Telix share price is roaring 8.60% higher at the time of writing to trade at $7.07.

Shares in the ASX 200’s Telix soar on maiden positive cash flow

Here are the key takeaways from the biotech company’s latest quarterly report, covering the three months ended 31 December:

• $1.6 million of free cash flow from operating activities– up from a $5.3 million outflow in the September quarter
• $72.2 million of cash receipts from customers – a 62% quarter-on-quarter improvement
• $78.2 million of revenue – a 41% jump
• $76.8 million of revenue from sales in the United States ­– a 43% improvement
• Ended the quarter with $116 million in cash

The company achieved a gross margin of 63% last quarter, representing a 2% quarter-on-quarter improvement.

Its operating, selling, general, and administrative costs dropped $4.7 million over the period, reflecting better-working capital management.

Finally, $19.2 million went towards the company’s research and development, manufacturing, and clinical development activities. That marked a $2.9 million increase.

What else happened last quarter?

Sales momentum for prostate cancer positron emission tomography (PET) imaging agent, Illuccix increased last quarter on the back of growth in hospital customers, independent imaging centres, and government customers.

The company’s distribution network now encapsulates 190 nuclear pharmacies in the United States.

Health Canada also approved Illuccix for use with certain patients last quarter. Telix is preparing to launch in the nation in the current half.

The company also recently entered into a collaboration with the University of Queensland and has been granted an updated radiation licence by the Belgian Federal Agency for Nuclear Control.

What did management say?

CEO of Telix Americas, Kevin Richardson, commented in the news driving the ASX 200 share today, saying:

We are pleased to see continued sales momentum nine months after launching in the United States and Puerto Rico. We are continuously adding new sites and growing existing accounts, resulting in a steady increase in demand for doses.

In 2023, we look forward to building on the foundations of a successful commercial launch to continue to drive sustainable growth and make a positive impact on more patients’ lives.

What’s next?

This year looks like it could be exciting for Telix.

The company is making progress on the European regulatory process. It plans to finalise an undated dossier to be resubmitted to the Danish Medicines Agency by the end of the March quarter. Telix is also progressing with marketing authorisation applications in Brazil and South Korea.

Finally, the company is progressing its core clinical pipeline, with a focus on prostate cancer, renal cancer, brain cancer, and rare diseases. It has more than 20 clinical trials underway.

Telix share price underperforms the ASX 200

Sadly, the Telix share price has struggled to keep up with the ASX 200 lately.

The stock has tumbled 18% over the last 12 months. Meanwhile, the ASX 200 has slipped just 0.4%.

The post Guess which ASX 200 biotech share saw revenue jump 41% last quarter appeared first on The Motley Fool Australia.

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More reading

• Can ASX 200 coal shares really deliver dividend yields of over 10% in FY24?
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Why I’ll be buying more ASX dividend shares for my portfolio in 2023

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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.

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The Allkem Ltd (ASX: AKE) share price is on the move on Wednesday morning.

At the time of writing, the ASX 200 lithium miner’s shares are up 1% to $12.45.

Why is the Allkem share price rising?

Investors have been bidding the Allkem share price higher today following the release of the company’s second quarter update.

According to the release, Allkem’s group revenue for the quarter was US$265 million and its group gross operating cash margin was approximately US$218 million. This reflects record sales revenue of US$151 million from the Olaroz operation despite softer sales units and revenue of US$83 million from the Mt Cattlin operation.

An additional US$32 million in revenue was generated from shipments of 53,715 dmt of low grade spodumene concentrate.

What drove the strong revenue?

Pleasingly, Allkem is still commanding strong prices for its lithium, which helped drive the solid top line result.

Allkem recorded an average of US$46,706 per tonne for its lithium carbonate during the quarter, which was up 16% from the first quarter.

It was a similar story for its spodumene concentrate, which came in 5% higher quarter on quarter at US$5,284 per tonne.

Another positive was the record performance of the Olaroz Lithium Facility, which reported production of 4,253 tonnes of lithium carbonate. This was up 17% on the previous corresponding period and took its half year production to a record of 7,542 tonnes. This was 13% higher than the prior record in 2019.

Outlook

The good news is that management appears positive on the company’s outlook despite some analysts predicting that times could get tough for the industry. It said:

EV sales growth is expected to remain robust in 2023 given strong order books and potential pent-up demand. Supportive government targets and policies announced globally (including subsidies or tax incentives) continue to ensure strong fundamentals for future growth

It also revealed that it expects the weighted average price for third party sales of lithium carbonate products in the current quarter to be in line with what was received in the second quarter.

The post Guess which ASX 200 lithium share just capped off a record quarter appeared first on The Motley Fool Australia.

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More reading

• Why are ASX 200 lithium shares struggling on Monday?
• 2 ASX 200 mining shares to buy as China reopens: analysts
• Own ASX lithium shares? Here’s the latest lithium price forecast
• Brokers name 3 ASX shares to buy today
• Broker says Allkem share price can rise 20% even if lithium prices fall

Motley Fool contributor James Mickleboro has positions in Allkem. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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.

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S&P/ASX 200 Index (ASX: XJO) coal shares were among the best performers last year. The dividend income is expected to flow this year. But, could shareholders keep getting big payments for years to come?

Coal prices jumped higher in 2022 after the Russian invasion of Ukraine as countries looked for alternative sources of energy.

Mining costs don’t typically change much month to month, so when the resource price climbs it adds a lot to revenue but it can make the net profit after tax (NPAT) jump much higher.

While it seems obvious that the next result will show large profits and dividends, how long can this continue? The world can’t just instantly conjure up another major energy source – it could take years.

Due to the current situation, ASX 200 coal shares could be cash machines until at least FY24.

New Hope Corporation Limited (ASX: NHC)

New Hope is expected to keep benefiting substantially from coal earnings in FY24 according to the profit estimate on Commsec.

It could generate earnings per share (EPS) of $1.83 in the 2024 financial year and then pay an annual dividend per share of $1.32. This could translate into a grossed-up dividend yield of around 30%.

In fact, the FY25 grossed-up dividend yield could be 14% based on the current estimates.

But, remember that these are just estimates and things could be quite different in the future. Coal prices may not be quite as strong as analysts are expecting and therefore the dividends could be smaller. But, if coal prices outperform then the dividend could turn out to be bigger.

Whitehaven Coal Ltd (ASX: WHC)

Whitehaven is another ASX 200 coal share that has done very well out of these conditions with higher coal prices.

It’s also expected to pay a very large dividend in FY23. But the good times could continue in FY24.

Commsec numbers suggest that Whitehaven may pay an annual dividend per share in FY24 of 91 cents. If that is paid, then Whitehaven’s projected grossed-up dividend yield could be around 15%.

After that, in FY25, the early estimation is that Whitehaven could pay a grossed-up dividend yield of 11.5%.

Coronado Global Resources Inc (ASX: CRN)

Coronado Global is another ASX 200 coal share that is expected to pay very large dividends.

In FY23 it could pay an annual dividend per share of 35.7 cents, which translates into a dividend yield of 17.3%.

Profitability could reduce in the coming years, with a possible dividend yield of 11.5% in FY24.

Foolish takeaway

Even if coal earnings do drop off, it could still be strong enough for them to pay dividend yields of more than 10% in FY24. However, investors need to consider how much the share prices may reduce if the earnings fall.

The post Can ASX 200 coal shares really deliver dividend yields of over 10% in FY24? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 to yield 4.4% in 2023. These 2 dividend shares pay more than twice that
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Why I’ll be buying more ASX dividend shares for my portfolio in 2023

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 no position in any of the stocks mentioned. 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.

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The Macquarie Group Ltd (ASX: MQG) share price has had a ripper decade.

If an investor were to have bought $1,000 of the investment bank’s stock 10 years ago today, they likely would have walked away with 27 securities and $29 change, having paid $35.95 per share.

Today, those 27 shares would be worth a total of $4,840.56. The Macquarie share price last traded at $179.28.

For comparison, the S&P/ASX 200 Index (ASX: XJO) has risen around 57% over the last 10 years.

But what kind of return have Macquarie shares provided when we factor in the company’s dividends as well? Let’s take a look.

How much have Macquarie shares paid in dividends in 10 years?

Here are all the dividends paid by those holding Macquarie shares over the last 10 years:

Macquarie dividends’ pay date	Type	Dividend amount
December 2022	Interim	$3
July 2022	Final	$3.50
December 2021	Interim	$2.72
July 2021	Final	$3.35
December 2020	Interim	$1.35
July 2020	Final	$1.80
December 2019	Interim	$2.50
July 2019	Final	$3.60
December 2018	Interim	$2.15
July 2018	Final	$3.20
December 2017	Interim	$2.05
July 2017	Final	$2.80
December 2016	Interim	$1.90
July 2016	Final	$2.40
December 2015	Interim	$1.60
July 2015	Final	$2
December 2014	Interim	$1.30
July 2014	Final	$1.60
December 2013	Interim	$1.25
July 2013	Final	75 cents
Total:		$44.82

As readers can see, each Macquarie share has paid out $44.82 in dividends since January 2013.

Meaning, our figurative parcel has likely produced $1,210.14 of passive income over its life. That’s more than the initial investment!

It also brings the return posted by Macquarie shares in that time – factoring in both dividends and share price gains – to a whopping 523% return on investment (ROI).

Just imagine the potential gains if one were to have reinvested their dividends in the company, thereby compounding their wins.

Not to mention, most of the dividends handed out by the company over the last 10 years have been at least partially franked.

Macquarie shares currently trade with a 3.6% dividend yield.

Sydney Airport divestment

Long-term shareholders also likely saw an additional return from their investment in 2014. That was the year the ASX 200 bank palmed off its 17% stake in the once-ASX-listed Sydney Airport.

The bank offered shareholders one Sydney Airport share for every Macquarie share they held.

Technically, the value of the airport was offloaded to shareholders in two accounting components – a $2.57 per share reduction of capital and a $1.16, 40% franked special dividend.

If our figurative investor were to have held their Sydney Airport stake over the coming years, they would have been paid $8.75 per share – a total of $236.25 – when the airport was taken over in 2022.

The post Did you buy $1,000 of Macquarie shares 10 years ago? If so, here’s how much dividend income you’ve earned appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy next week
• Buy this ASX 200 bank share with 21% upside: Morgan Stanley
• Why Integrated Research, Macquarie, Pilbara Minerals, and South32 shares are pushing higher
• How different is the Vanguard Australian Shares Index ETF (VAS) now compared to a year ago?
• ASX financial shares lifted the ASX 200 today

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group. 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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If you’re looking to boost your income portfolio, then you may want to look at the shares listed below.

Here’s why these ASX dividend shares could be worth considering right now:

Rural Funds Group (ASX: RFF)

The first ASX dividend share for income investors to look at is Rural Funds.

It is an agricultural focused real estate investment trust (REIT) that owns a high quality portfolio of assets across a range of agricultural industries. These include almond and macadamia orchards, premium vineyards, water entitlements, cropping and cattle farms.

These properties are leased to major players in the industry such as Australia’s largest meat processor, JBS Australia, and wine giant Treasury Wine Estates Ltd (ASX: TWE).

Bell Potter is a fan of the company and has a buy rating and $2.75 price target on its shares.

As for dividends, the broker is forecasting an 11.7 cents per share dividend in FY 2023 and then a 12.7 cents per share dividend in FY 2024. Based on the current Rural Funds share price of $2.43, this represents yields of 4.8% and 5.2%, respectively.

South32 Ltd (ASX: S32)

Another ASX dividend share that experts are tipping as a buy is diversified mining and metals company South32.

Morgans is a fan of the mining giant due to its attractive valuation, the de-risking of its growth portfolio, and its earnings-linked dividend policy. The broker expects the latter to lead to some very big dividends being paid in the coming years.

For example, the broker is forecasting fully franked dividends per share of 23 cents in FY 2023 and 22 cents in FY 2024. Based on the current South32 share price of $4.56, this will mean yields of 5% and 4.8%, respectively.

Morgans has an add rating and $5.30 price target on the miner’s shares.

The post Buy South32 and this ASX dividend share: experts appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Rural Funds Group. The Motley Fool Australia has recommended Treasury Wine Estates. 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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The ASX share market went through a lot of pain last year. So did my portfolio which dropped around 15%, though that doesn’t account for the dividends I received.

Some of my biggest investments are growth-focused, with two of my biggest holdings being listed investment companies (LICs) that target businesses with good growth prospects.

Hopefully, the difficulty seen last year last won’t be repeated this year. But whatever happens this year, I’m not going to let it affect my investment strategy in 2023.

Firstly, not every one of my ASX shares had a bad year. Fortescue Metals Group Limited (ASX: FMG) shares performed well for my portfolio; the company also paid another big dividend.

How I’m planning to invest in 2023

When share prices drop, I get excited.

I plan to keep investing whether the market is a bit higher or a bit lower.

While share prices are moving, I believe there will always be an opportunity somewhere, whether it’s share X or share Y.

Some individual names can become attractively valued compared to other options over a relatively short amount of time.

For example, BHP Group Ltd (ASX: BHP) shares are sitting at around $50 after a solid run over the past few months. But there are a number of other names that have been heavily punished since the start of 2022 such as Xero Limited (ASX: XRO), Megaport Ltd (ASX: MP1), and Siteminder Ltd (ASX: SDR).

A few months ago, I was suggesting that both ASX mining shares and ASX retail shares were cheap. But, both of those areas have gone on strong runs recently.

Where I’d look for ASX share bargains now

I think there are still some sectors that were heavily hit by interest rate rises but haven’t seen a recovery in investor sentiment.

The ASX tech share sector is one area that I believe is a big opportunity. I think names like Xero and Megaport are compelling because of their revenue growth and increasing focus on profitability.

Other tech names I like the look of include Bailador Technology Investments Ltd (ASX: BTI), Frontier Digital Ventures Ltd (ASX: FDV), and REA Group Limited (ASX: REA).

I also think that some property-based ASX shares could be at a good discount to their actual underlying value. Names like Brickworks Limited (ASX: BKW) and perhaps real estate investment trusts (REITs) Centuria Industrial REIT (ASX: CIP) and Rural Funds Group (ASX: RFF) could also be opportunities.

While there is some pessimism around, I think that it won’t always be the case. While the share market has recovered some of its lost ground over the last few months, I believe there are still plenty of opportunities and that’s where I’ll be looking.

The post My ASX shares fell 15% last year. Here’s what I’m doing now appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Bailador Technology Investments, Brickworks, Fortescue Metals Group, and Rural Funds Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bailador Technology Investments, Brickworks, Frontier Digital Ventures, Megaport, SiteMinder, and Xero. The Motley Fool Australia has positions in and has recommended Brickworks, Rural Funds Group, and Xero. The Motley Fool Australia has recommended Bailador Technology Investments, Frontier Digital Ventures, Megaport, and REA Group. 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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Although — or maybe because — small-cap ASX shares were absolutely hammered in 2022, some experts are tipping a roaring comeback in 2023.

IML portfolio managers Simon Conn and Marc Whittaker are certainly in this camp and specifically like the look of small-cap industrials.

The fund managers told clients on an IML blog post that the greatly reduced valuations for these stocks now factor in “a lot of negative news” already.

“Small industrials are trading at their biggest discount for over a decade,” read the blog.

“Small industrials and large industrials have tracked each other quite closely for much of the past 10 years. However, over the past year a significant value gap has opened between the two indexes.”

If you’re wondering which ASX shares would be the best to buy right now to take advantage of this small-cap revival, the IML team thankfully named three:

‘Astutely led’ with a bank of assets

The IML fundies reckon Bega Cheese Ltd (ASX: BGA) did not have a chance to show its full potential in the 2022 financial year because of a string of one-off hurdles.

“Shanghai shutdowns negatively impacted its June 2022 result by over $40 million. Then as operations were returning to normal Bega witnessed a rapid increase in costs, particularly the price it pays farmers for milk,” read the memo.

“However, at its recent AGM, Bega confirmed that it had finished implementing these price increases and its profit for the 2nd half of FY2023 should be back to the level it anticipated when it bought Lion Dairy and Drinks [in January 2021].”

Looking ahead to financial year 2024, Conn and Whittaker love the outlook for Bega because of three factors: competitive advantage, balance sheet, and management quality.

“Bega has a significant asset base on its balance sheet, including land & buildings worth circa $400 million,” read the blog.

“Bega has been astutely led by the current chairman for a significant time, who has overseen the company grow from a small dairy company with one operating site on the South Coast of NSW to today being one of Australia’s leading food and dairy companies.”

The Bega share price has declined more than 21% over the past year, but has spiked up 27.5% since early November.

‘Well-recognised brands’ at a cheap valuation

GUD Holdings Limited (ASX: GUD) is primarily a vehicle parts and accessories provider.

According to Conn and Whittaker, its oldest business is the automotive aftermarket, distributing products like Ryco filters and DBA brakes.

“This division is relatively defensive given the wear and tear nature of demand for its products, and generates significant cash — however it has limited growth potential,” they said.

“GUD has made a series of acquisitions over recent years in order to diversify its earnings. This makes it more resilient, while providing a potential growth driver for earnings.”

Similar to Bega, GUD has had its share of troubles with supply disruptions and cost inflation.

But its growth potential, pricing power, and cheap valuation have the IML fund managers licking their lips.

“At current levels, GUD is very attractively priced at under 10 times FY2023 earnings with earnings that should grow into FY2024 as supply chains normalise and recently won contracts with major Australian car companies are fulfilled,” read the blog post.

“GUD has had good success in the past in raising prices to mitigate cost increases, given its portfolio of well-recognised brands in the aftermarket and focus on wear and tear parts for the trade, where range and service are valued.”

COVID cash well invested

Pathology services provider Australian Clinical Labs Ltd (ASX: ACL) saw earnings grow strongly during the COVID-19 pandemic.

The company used that cash, according to Conn and Whittaker, to pay off its debts, leaving it in a strong financial position for post-pandemic growth.

Like Bega Cheese, the IML team reckons ACL displays excellent competitive advantage.

“ACL has invested significantly in its national laboratory footprint, which allows it to flex its costs up and down as volumes fluctuate,” read the blog post.

“This unified national laboratory system enables it to process samples in any laboratory around the country, so maximising the efficiency of its fixed-cost, laboratory network.”

The pair also love ACL’s growing earnings and management team.

“The recent acquisition of Medlab is a significant development for the company as this provides ACL with a presence in the Queensland market for the first time, meaning it is now able to offer a national footprint to customers and tender for national contracts,” said the IML experts.

“It is [now] one of only three national pathology providers.”

There is no doubt ACL shares are now heavily discounted. It has dropped more than 43.5% over the past 12 months.

The post ‘Very attractive valuations’: Experts name 3 small-cap ASX shares to buy appeared first on The Motley Fool Australia.

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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 no position in any of the stocks mentioned. 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.

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