2 beaten-up ASX shares that could be buys in August 2021

Kogan is one of two beaten-up ASX shares that might be opportunities.

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Sometimes there are ASX shares that have been heavily sold off.

That may be completely justified. It may be an opportunity.

There is a saying about trying to catch 'falling knives'. Sometimes falling shares can keep falling.

With that in mind these two ASX shares, which have been beaten-up in recent months, could be good ideas to think about:

Kogan.com Ltd (ASX: KGN)

The Kogan share price has dropped by around 37% over the last six months.

It's an e-commerce business that sells a wide variety of products and other services online. Some of those services includes insurance, superannuation and mobile.

The ASX share has been suffering from excess inventory costs. That includes demurrage costs and warehousing. To bring down the level of inventory it has been lowering item prices and spending on advertising.

Despite those problems, Kogan saw more volume in FY21 than FY20 – gross sales grew 52% and gross profit rose by 60%.

The month of June 2021 saw am acceleration of gross sales, gross profit and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA), suggesting a recovery could be underway.

Kogan may be able to get back to delivering operating leverage improvements in FY22, where profit could rise faster than revenue, thanks to its growing size and number of customers.

ELMO Software Ltd (ASX: ELO)

Over the last six months the ELMO share price has fallen by 25.6%.

ELMO is a business that provides cloud-based HR and payroll software for small businesses and mid-market organisations to management people, process and pay. It provides services in the UK, New Zealand and Australia.

The business is steadily launching more modules so that it can provide a better service, ensure it's more integrated with a business' operations and potentially make more money from each client.

Despite the decline of the share price, its annualised recurring revenue (ARR) continues to grow. In the first half of FY21, the ARR grew by 42.8% to $74.2 million and cash receipts rose 25.5% to $34.4 million in the half-year.

In a guidance update a couple of months ago, the ASX share said that its momentum had continued, with growth across the business. ELMO pointed out that an increasingly remote-based workforce has highlighted the mission critical nature of having cloud-based business solutions, like ELMO's.

The ELMO CEO and co-founder Danny Lessem said:

There is positive sentiment in the market, and it is pleasing to see procurement starting to return to pre-COVID levels.

Our growth strategy remains on track…Our value-proposition is stronger than ever, and ELMO remains well placed to benefit from tailwinds in the adoption of cloud-based technology.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Elmo Software and Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended Elmo Software and Kogan.com ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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