With the markets looking wobbly today, value opportunities that may have been lying dormant are suddenly looking a bit more exciting. It's times like these when the value investing philosophy thrives. Value investors love to wait until there is irrational fear in the market – fear that can cause stock prices to drop below their intrinsic value. This is what Warren Buffett likes to call the chance to "buy stocks for 50 cents on the dollar".
So here are two ASX stocks that I think are showing some value today. I'm not saying they're going for a 50% discount, but feel free to do your own research!
Pact Group Holdings Ltd (ASX: PGH)
Pact Group is what some would call a boring company – it specialises in making rigid plastic products ranging from milk crates and packing containers to yogurt tubs and tomato sauce bottles. However, there is nothing boring about Pact's share price. In the space of one year, Pact has gone from $4.16 a share to $2.08.
This steep decline resulted from the company writing down its projected earnings and paying its shareholders half of the earnings per share that it did two years ago. But this is mainly due to a huge increase in energy costs and other overheads that have yet to be fully passed on to Pact's customers. In my view, this company still has a leading position in its industry, a sustainable competitive advantage and (I think) will end up just fine in a year or two.
Woodside Petroleum Ltd (ASX: WPL)
The Woodside share price fell out of bed this morning and remains down 4.16% at the time of writing – approaching its YTD low. Nothing was out of the ordinary with Woodside, so it's likely that WPL shares were cleaned up as a result of the latest round of Sino-US trade war – oil prices (and oil shares) don't tend to respond well to trade tensions.
However, these moves have got nothing to do with the quality of Woodside as a company – and it remains the highest-calibre ASX oil driller on the ASX (in my opinion). Despite a shaky half-year earnings report released this month, the company still boasts free cash flow of $869 million and has a strong pipeline of growth ahead of it.
Foolish Takeaway
Both of these stocks could represent value rocks to turn over if you're on the hunt for an ASX bargain. I'm not too keen on the long-term outlook for oil companies, so I'd be more inclined to consider Pact for a long-term portfolio.
