The Delta variant of COVID-19 is reminding all Australians that the pandemic has not passed yet.
With half the nation in lockdown, it sure feels like 2020 all over again.
But for investors, this is the time to pounce on some undervalued ASX shares, according to one expert.
"I generally like to buy and tip quality companies that the market is beating up on," finance commentator Peter Switzer said on his website.
"And because I'm a long-term investor, I wait for short-term sets against good companies and buy them when others are selling."
Go for the 'unpopular' ASX shares
Sure, there are the evergreen quality names like Wesfarmers Ltd (ASX: WES), Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd (ASX: BHP).
But they're not the ones Switzer would target right now.
"While I think they will go up in price over the next year, I want to now buy the companies that are unpopular because of the coronavirus and the lockdowns."
Here are half-a-dozen ASX shares that Switzer wants to snap up:
- Qantas Airways Limited (ASX: QAN)
- Webjet Limited (ASX: WEB)
- Appen Ltd (ASX: APX)
- Tyro Payments Ltd (ASX: TYR)
- Zip Co Ltd (ASX: Z1P)
- CSL Limited (ASX: CSL)
The appeal of Qantas to Switzer is obvious.
"It's badly affected by the virus, the slow vaccinations, the lockdowns and the uncertainty of when life gets back to normal," he said.
"It's now priced at $4.53 but the expert company analysts (who get paid to guess future profits and prices of businesses) think Qantas will be a $5.79 stock in the future, which is 27.9% higher!"
Webjet is in a similar position, with Switzer calculating a 16.4% upside among analysts.
"Webjet isn't one of my blue chip quality companies. It's a more speculative stock," he said.
"However, if it can survive these current headwinds, it could become a quality performer."
Appen is also a bit of a punt, but Switzer reckons there's money to be made even in the bottom-side scenario.
"The experts think there's 67% upside! Now these guys could be wrong about this speech data company, but even if they're only 33% right, that would suggest a 20% upside," he said.
"The company was a $26 stock before the coronavirus crash, so at $12.50, it could easily see an improved share price as normalcy comes to town."
Tyro's payment terminals are highly dependent on physical retail activity, and that can only go up from here.
"As hospitality gets back to normal, Tyro should benefit," said Switzer.
"Before the crash, Tyro was a $4.38 stock. It's now $3.40. The analysts see it heading towards $4.04, which suggests there's a potential 18.5% upside."
'Businesses of the future'
Switzer labelled Zip as a "potentially good performer", while acknowledging the increased competition from giants like the CBA, Paypal Holdings Inc (NASDAQ: PYPL) and Apple Inc (NASDAQ: AAPL).
"I think these are businesses of the future."
CSL is one of Australia's "best businesses", according to Switzer, but has been pummeled by the COVID-19 pandemic.
"Stock price is now at $290. Before the virus, [it] was a $336 stock! If CSL comes back next year, that would be a 16% gain.
"The company's biggest profit-maker is collecting plasma in the US, and the virus concerns scared off a lot of its donors who get paid to give blood. As normalcy comes back, demand for blood will rise, and that will be good for CSL's bottom line."
Switzer himself put his money where his mouth is, revealing that he has bought all 6 stocks.
"They're not without their risks but I suspect they'll be pretty good performers over the next 12 months."
