October 2021 could be a good month to pick up some ASX shares that may be good value.
This COVID-19 period of time has impacted certain industries and businesses. It may have opened up opportunities when thinking about share prices.
Some businesses are expecting higher profitability as the world (hopefully) leaves the impacts of COVID-19 behind.
These two ASX shares could be ones to consider:
Image source: Getty Images
Webjet Limited (ASX: WEB)
Webjet is one of the leading travel businesses on the ASX. It's currently rated as a buy by the broker UBS, with a price target of $6.85. That suggests that the Webjet share price could rise by close to 10% over the next 12 months, if the broker is right.
The travel industry has obviously been impacted a lot since early 2020. But Webjet management are starting to see light at the end of the tunnel.
Webjet says that its strategy is delivering results and that the company will generate positive operating cashflow in the first half of FY22.
The ASX travel share points to WebBeds as being a key part of its future, which is the business to business segment. WebBeds was profitable in July and August and was on track to be profitable in September. It is seeing strong demand as travel restrictions ease in North America and Europe, suggesting "significant upside" as more international markets reopen.
The ASX share is also confident that its consumer-facing businesses will return to profitability as soon as the domestic Australia and New Zealand markets reopen.
The Webjet managing director John Guscic was feeling bullish when he said at the end of August:
We see a world of opportunity for Webjet. All our businesses have significant potential to grow market share by expanding into new market segments and benefiting from consumers shifting to buy travel online. Transformation initiatives are underway and we are on track to reducing costs by at least 20% once the company gets back to scale. As a result, as conditions normalise, we believe Webjet businesses will have higher market share, lower costs and greater profitability.
According to UBS, the Webjet share price is valued at 20x FY23's estimated earnings.
Magellan Financial Group Ltd (ASX: MFG)
The Magellan share price has fallen 33% this year, despite the funds under management (FUM) increasing to $118 billion at the latest disclosure.
Morgans currently rates Magellan as a buy. The broker thinks that the fund manager can grow earnings over the coming years. However, Morgans thinks Magellan's funds' performance will need to improve for the market to like the ASX share again.
In FY21, its average funds under management (FUM) increased by 9% to $103.7 billion, whilst profit before tax and performance fees of the funds management business rose 10% to $526.6 million.
Adjusted net profit after tax and before associates increased by 4% to $454.5 million. Those associates refers to the external investments Magellan made into Barrenjoey, Finclear and Guzman y Gomez (GYG).
Barrenjoey has been spending heavily to hire a quality time to rapidly take on the market. Magellan said that Barrenjoey is developing ahead of expectations. Meanwhile, GYG had a "strong" year, exceeding its budgeted earnings by almost 50%, despite difficult trading conditions. GYG had 157 restaurants at the time of Magellan's report announcement.
The ASX share owns 12% of GYG, 15% of Finclear and a 40% economic stake in Barrenjoey.
According to Morgans, the Magellan share price is valued at 14x FY22's estimated earnings. The broker also expects Magellan to pay a partially franked dividend yield of 6.75%.
