Global equity markets have been plunging this week as Covid19 infections are rising globally. Following the underperformance of the US markets yesterday, the ASX started off in a similar fashion with Tech, Energy, Real Estate, Financials, and Materials sectors driving the plunge. In addition to the risk-off mood, there have been a couple of announcements by ASX listed firms that have downgraded their full-year guidance such as Nuix and Challenger.
Of course, equity market corrections lead to investment opportunities. The sell-off has some of the best and top quality companies on the ASX now trading at desirable levels.
Kogan shares began the year very well. After reaching a high of $21.67 a share, it has been downhill as selling pressure mounted. The average volume of trades in Kogan shares has nearly doubled since then – leading to massive corrections in recent weeks. The ecommerce giant operates under several brands in various segments. Their portfolio/business verticals consist of Retail – where the Kogan operates 20 exclusive brands, Marketplace – partners with sellers and proves an eCommerce platform, Mobile in Australia & NZ, nbn Internet, Energy, Insurance, Health, Life, Credit Cards, Home Loans, Super, Cars, Travel, Pet Insurance, Dick Smith, Matt Blatt, and the most recent acquisition of Mighty Ape.
So far, the performance has been extremely positive! Kogan’s half year earnings report is so strong that most companies will be looking on enviously. However, it looks to be a case of the bears adding pressure on the stock price. The correction presents a chance to pick up Kogan shares on the cheap. Currently, Kogan shares are trading at $12.47 a share.
The furniture and homewares online retailer is down over 10% this year. Homeware and furniture spending has been soaring since Australia was put on a lockdown. Temple & Webster recently stated that trading has been very positive and exceeding expectations. In order to take advantage of this shift in consumer behaviour, TPW has been increasing their investment in products, technology, marketing, and staff. While EBITDA margins are expected to fall back to pre pandemic levels given this increased cost, it is clear that the company is investing for growth. These investments will deliver long-term returns as ecommerce is set to explode over the coming years. Temple & Webster shares are trading at $9.75 a share after a 10.6% drop today.
Westpac shares have returned 29% just this year. Government stimulus checks and favourable operating conditions have seen the banks Down Under perform remarkably despite a very low interest rate environment. Westpac shares came to life once the firm announced their Q1 results for FY2021. Westpac is known to be reviewing its New Zealand business and considering separating the NZ business from its operations in Australia.
This morning, the news of a class action lawsuit coming the way of Westpac and CommBank has its share prices slipping. Despite the intervention of the royal commission, the news that has broken out is that the banks including Westpac are continuing to sell CCI to customers. This Westpac share price slip up may turn into an opportunity given that the company has been performing exceptionally well.
Growth stocks are potentially one of the hardest to pick as there are a lot of factors that need to be considered – from industry tailwinds to the financial health of the individual stocks and a lot of little things in between them. Shares in the Value research team have picked their top 5 ASX stocks to buy in 2021. Click here to download the report for free.