The ASX share market is throwing up a lot of volatility in August, giving us the opportunity to buy at a cheaper price.
When a company’s share price reduces, it means we can buy at a lower price/earnings ratio (p/e ratio) and get a better dividend yield, if it pays dividends.
Centuria Capital Group (ASX: CNI)
This business is a real estate manager, the Centuria share price down more than 50% from September 2021.
Interest rates have soared since 2021, making commercial real estate seem less attractive because of the higher cost of debt. However, as a manager, Centuria is still earning significant management fees.
The ASX share recently announced that it was going to expand into the world of data centres, with an investment in ResetData, which has the potential to reduce the carbon footprint and space required compared to other data centres.
With interest rates seemingly peaked, it could be a way to play the theme of lowering interest rates in the next few years, while receiving a sizeable distribution. It currently offers a yield of more than 6% for FY24.
Johns Lyng Group Ltd (ASX: JLG)
Johns Lyng is a business that specialises in rebuilding and restoring properties and contents after being damaged from events like fire, floods, storms and so on. It also has a division that focuses on assisting after catastrophes.
Its client base includes major insurance companies, businesses, local and state governments, body corporates and owners’ corporations, and retail customers.
The ASX share has grown its profit significantly over the last few years, with the HY24 result showing ongoing progress for its core business. ‘Normalised business as usual’ net profit after tax (NPAT) grew by 15.8% to $25 million – it has excluded catastrophe earnings here, which can be variable.
I like the company’s bolt-on acquisition strategy to grow its position in complementary services which can build defensive earnings and create synergies. John Lyng recently acquired another strata management business called SSKB Strata, and a heating, ventilation and air-conditioning services business in regional NSW called Chill-Rite HVAC. Those two acquisitions are expected to make more than $45 million of revenue and around $9 million of EBITDA in FY25.
If underlying profit can keep growing at more than 10% per year, I’d say the future is bright for this ASX share, particularly if it keeps expanding outside of Australia.
