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Key points
- Brokers have identified some opportunities for 2022
- One well-liked ASX share is Universal Store, an apparel business focused on younger customers
- The other stock is IDP Education, a global education and English language testing business which is seeing recovering volumes.
Australia's leading Australian brokers and analysts are always on the lookout for ASX share investment opportunities.
Some companies are now rated as buys by these notable investors.
In recent weeks, both of the below ASX companies have fallen materially and that could make them more attractive.
Universal Store Holdings Ltd (ASX: UNI)
Over the last two months the Universal Store share price has dropped around 25%.
For readers that haven't heard of Universal Store before, it's a specialty retailer of youth casual apparel. It sells products both online and through its store network of more than 70 outlets across Australia.
Its strategy is to offer a frequently changing and curated selection of on-trend clothing products to 16 to 35 year olds. It wants to provide a high level of customer service and a welcome and engaging store environment.
UBS currently rates Universal Store as a buy, with a price target of $8. That suggests a potential upside of around 30% over the next year, if the broker is right. The broker thinks the ASX share can continue to rollout new stores and grow revenue.
In a FY22 trading update for the 20 weeks to 14 November 2021, it said that compared to FY20 sales were up 3.3% but down 14.1% compared to FY21 because of lockdowns in Victoria and NSW.
Online sales continue to soar higher. FY22 digital sales were up 67.8% year on year and up 275.2% compared to two years ago.
It's investing in relocating its distribution centre and office facilities (and building the team), which will help support growth.
UBS thinks the Universal Store share price is valued at 16x FY23's estimated earnings.
IDP Education Ltd (ASX: IEL)
The IDP Education share price has fallen by nearly 20% over the past two months.
This ASX share is involved in a number of different areas of the global education sector with student placements, education and English language testing.
Despite all of the impacts of the pandemic, at the company's AGM it said that it was seeing a continued recovery in volumes across the network. It had a "strong performance" in the first quarter of FY22 with English language testing volumes up 84% year on year.
Its growth is being helped by the expansion of its English language testing network. During FY21 it added another 100 new computer-delivered test centres.
Whilst Australian borders make it difficult for students to enroll in Australian institutions, the northern hemisphere is seeing a better performance, particularly the UK.
The company says that a strategic breakthrough was experienced last year with the British Council in India, which saw IDP take on sole distribution of English language testing in that market. India is the largest English language testing market globally by volume.
UBS also rates IDP Education as a buy, with a price target of $36.40. That's a potential upside of more than 10% if the broker turns out to be right on the direction of the company. It thinks that English language testing has returned to levels seen before COVID.
According to UBS, the IDP Education share price is valued at 50x FY23's estimated earnings.
