The sell-off has been significant on the ASX share market because of the oil price and possible AI impacts.
There are numerous ASX shares that have declined heavily compared to a month ago or a year ago, depending on which issue the business is facing against.
I think there are opportunities for investors willing to be contrarian and believe the problems aren’t as bad as the market is pricing it to be. That’s why I like the below ideas.
Xero Ltd (ASX: XRO)
At times like this, I think it’s a good idea to go for some of the leading names in the country/world.
Xero is one of the world’s leading cloud accounting software providers. There’s a reason why it has reached 4.6 million global subscribers (up 10% year on year) in the HY26 result – its tools are very effective, easy to use, help get more done and are a big time saver.
Subscribers seem to love Xero, with the subscriber retention rate at around 99% each year. This level of customer loyalty has enabled Xero to increase subscription prices, boosting its average revenue per user (ARPU) and the margins.
In HY26, while operating revenue increased 20% to $1.19 million, free cashflow increased 54% to $321 million and net profit rose 42% to $134.8 million.
I’m expecting the ASX share’s subscriber count and free cashflow to continue rising, particularly if the world continues to adopt digital accounting/taxation reporting tools like Xero.
AI could become greater competition in the coming years for Xero, but I think Xero can continue growing. Its market position, brand power and two decades of business experience give the company a significant economic moat against possible threats.
It looks much better value after falling 52% in the past six months.
Wesfarmers Ltd (ASX: WES)
Wesfarmers is arguably the leading retailer in Australia, with brands like Bunnings, Kmart and Officeworks.
If inflation does rise in Australia then Wesfarmers could be well-placed to help households with good value products through Bunnings and Kmart.
The company has delivered steady sales growth during this decade, which is a great driver of net profit growth and good dividends shareholders.
I like how the ASX share is expanding into other sectors such as healthcare and lithium mining because retail may not be able to drive profit growth as much as it has over the past decade.
In my view, Wesfarmers is one of the highest-quality businesses on the ASX and one of the most likely to be able to grow and adapt to changes in the economy in the coming years.
With the Wesfarmers share price down 20% in the last six months, I think this is a good time to consider investing for the long-term.
