With record low interest rates and the ALL ORDINARIES (Index: ^AXAO) (ASX: XAO) knocking on the ceiling of its all-time high, it's been a relatively bleak time for all you value investors out there.
The value-investing GOAT (greatest of all time) – Warren Buffett – has recently spoken of his frustration at the lack of value opportunities presenting themselves as his company Berkshire Hathaway Inc. sits on a pile of over US $110 billion in cash waiting to be deployed (talk about first-world problems).
Although Mr. Buffett is limited by Berkshire's scale in what he can invest in, for us (somewhat) smaller investors, there may still be opportunities out there.
Here are two ASX stocks that might be looking appealing from a value investing perspective.
AMP Limited (ASX: AMP)
Shares of the embattled wealth manager are currently trading at the lowest levels in the (listed) history of the company – currently swapping hands for $2.10. Although there is no doubt AMP deserved a belting after the revelations of the Royal Commission last year, AMP shares might be undervalued at current levels. New CEO Francesco de Ferrari (no relation to the car) has promised to clean the mud off AMP's brand and has already slashed fees on its investment platform as well as AMP's superannuation products for both new and existing customers.
Pact Group Holdings Ltd (ASX: PGH)
Shares of this rigid plastics manufacturer have been absolutely destroyed over the last few months. In February, Pact shares were commanding over $4 a pop but today, you can pick some up for around $2.27 (close to a 50% drop in four months). The reason behind this slump: Pact's half-year profit result released in February disclosed an estimated drop in operating profit of 5%, driven mainly by increased costs of materials (mostly plastic resin) and foreign exchange liabilities. This share price drop may have been an overreaction in my opinion – Pact is a company with very little competition and inelastic demand and should be able to pass on these costs relatively easily. Although the current dividend yield of 10.13% may be a little optimistic going forward (at least in the short term), I still think there is value and upside in the Pact share price.
Foolish Takeaway
By definition, being a value investor means you have to be a contrarian – being prepared to go against the crowd. The crowd is certainly fighting to get out the door of these two companies – it might be worth sneaking around the back and getting a bargain. But make sure you know what you're doing, as always.
