The rotation away from growth shares into value stocks the past 6 months has seen some ASX darlings unceremoniously kicked to the kerb.
Maybe some companies have been brought back down to their intrinsic worth. But there could now also be some gems that the market has oversold.
Two such bargains were suggested this week that could give investors some food for thought.
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'Get out of jail card' for A2 Milk resellers
Watermark Funds Management chief investment officer Justin Braitling singled out A2 Milk Company Ltd (ASX: A2M) as "a strong buy".
"I think it's the stock for 2022," he told a Livewire video.
"The 2023 estimates for a profit are a third of where they were 18 months ago. So we think as the business recovers, those profit expectations will really surprise on the upside, and the stock will recover its rating."
A2 Milk shares had touched the $20 barrier a year ago, but have since spiralled down to $6.73.
The dairy producer has had many misfortunes since COVID-19 struck the globe last year. One of the biggest losses was the sales channel of personal Chinese expat exporters, named daigou, who were stuck with surplus stock.
Braitling's logic is that the daigou would now come roaring back in the post-pandemic era.
"New management's come in, they've basically cleared the channel, have written off all that [old] stock," he said.
"The daigou now have got a 'get out of jail card' basically. The daigou now are reordering, prices are coming back up, and the brand is trading well, they're actually picking up a bit of share. So we think that we're all really good signs for the brand."
'A straight shooter' can lead Appen out of trouble
TMS Capital portfolio manager Ben Clark picked Appen Ltd (ASX: APX) as a growth share to watch.
He said the artificial intelligence data provider has 5 big clients that contribute about 93% of its revenue. And this made for a tough COVID year.
"Those customers are either delaying projects that they were planning on using Appen's data for or changing projects that are moving resources around, which has affected the demand for the data."
Appen shares have gone from a 53-week high of $43.66 back in August to close Monday at $12.92.
"The market's really concerned about competition," said Clark.
"It's concerned that there are some new competitors coming in who are actually using AI to create AI solutions."
But the fund manager has much confidence in Appen's leadership to turn it around.
"The CEO is adamant that there hasn't been a change in the competitive landscape," he said.
"We followed him for many years and we think he's a straight shooter and says it how he sees it."
If earnings recover, Appen stocks could be an absolute bargain right now, according to Clark.
"You're paying 22 times [price-to-earnings ratio] for a business, I think, [which] is still in a very long-term structural growth area."
