There are some great ASX shares that look like they could be good to hunt for this Easter.
Volatility seems to be picking up and this can create a chance to buy a growing business at a cheaper price. It’s impossible to know what share prices are going to do in the short term, so the best thing to do is to go for an investment that looks good for the long term and that looks good value now.
That’s why I’m looking at these two ASX shares:
Kogan.com Ltd (ASX: KGN)
Kogan.com has been hit pretty hard over the last few weeks. It’s actually down around 45% since 25 January 2021.
There are a couple of possible reasons why investors may have decided to sell.
The Kogan.com share price may be suffering due to the worries about higher interest rates – which in theory hurts those businesses which have high growth expectations. Kogan.com is generating a lot of growth – in the FY21 half-year result it saw net profit after tax (NPAT) growth of 164.2%.
Kogan.com’s growth may be slowing, which is another reason why investors may be cooling about the business. In January 2021, adjusted EBITDA (EBITDA explained) went up 90% year on year – a much lower growth rate than the first half rate of 184.4%.
However, I think the Kogan.com valuation is now very attractive considering it’s still growing at a fast double digit rate and Kogan Marketplace is still seeing growth at more than 100%. It’s seeing growing profit margins and more customers.
Kogan.com is trading at just 22 times the estimated earnings for the 2021 financial year, with further growth expected in the coming years.
Magellan Financial Group Ltd (ASX: MFG)
Magellan is one of the best ASX-listed fund managers in my opinion. It doesn’t try to chase the latest high-growth stock, it goes for profitable businesses with strong competitive positions and a long term growth runway. Businesses like Microsoft, Alphabet, Apple, Mastercard, Visa, Yum! Brands and Starbucks are some the names that Magellan has focused on in recent years.
Whilst I’m expecting decent growth of the active funds management profit over time – particularly from higher retail investor funds under management (FUM) – it’s other areas of the business that look particularly attractive to me.
Magellan has been making some very interesting investments in its own business. New investment bank Barrenjoey is building a great team to win and serve clients in FY22. Guzman y Gomez has a very attractive global growth story which could eventually become a very large business. The prospect of a retirement product could also be very good if it can win over retirees – the superannuation pool of assets is huge and only getting bigger.
A bonus for shareholders is the high dividend payout ratio – it’s good to get high levels of a cash return to lock in that profit.