This month could be a smart time to hunt for ASX share opportunities. Experts have identified two stocks that have the potential to deliver good returns in 2022.
Share prices are always moving, but experts believe that some of the recent declines have opened up strong opportunities:
Temple & Webster Group Ltd (ASX: TPW)
The Temple & Webster share price has fallen more than 50% over the past six months. Since the start of the year it has declined by 37%.
This business sells over 200,000 homewares and furniture products from hundreds of suppliers. The company uses a drop-shopping model where products are sent directly to customers by suppliers, enabling faster delivery times and reduces the need to hold inventory, allowing for a larger product range. It also means Temple & Webster can operate with negative working capital.
Temple & Webster is building out its own private label range, which comes with higher gross profit margins. The business continues to offer more products. It recently announced that it was working on growing in the home improvement sector – that includes things like plumbing supplies, painting, tools, flooring, garden and landscaping, window furnishings and so on.
The ASX share is growing quickly, which is helping long-term operating leverage and helps it invest more into marketing, technology and the customer experience. A key focus is the AI interior design service, as well as augmented reality (AR) so that the customer can see the product in their space.
Management think that Aussies will continue to do more online shopping. In 2020, the US had online penetration in the furniture and homewares market of 25.3%. That compared to between 7% to 9% for Australia in 2020. The suggestion is that Australia's online penetration is headed that way.
UBS thought the Temple & Webster HY22 result was impressive, with revenue growth of 46%. It rates it as a buy, with a price target of $11.80.
Corporate Travel Management Ltd (ASX: CTD)
The Corporate Travel Management share price has fallen 10% over the last couple of weeks. But UBS is a fan of the business, with a buy rating and a price target of $28.20. It thought the business did well in the recent result despite the Omicron variant impacts and that the FY22 half-year result showed a number of positives.
The ASX share reported that it made an underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $18.2 million in the first half of FY22, compared to a loss of $15.2 million in the prior corresponding period.
There was positive underlying EBITDA in North America, Europe and ANZ regions. The Europe EBITDA was stronger than the FY20 first half, which was before COVID.
Corporate Travel Management said that its expert service and proprietary technology value proposition is more relevant in a complex recovery environment. It has seen record client wins thanks to "enhanced reputation".
HY22 revenue was up 120% to $163 million, which was only 27% below pre-COVID revenue despite Omicron impacts.
Management are expecting a significant ramp-up of activity in regions where travel restrictions are relaxed or removed. The UK and USA are experiencing a rapid rebound in February 2022 as restrictions have been lifted.
It's expecting underlying EBITDA to continue to build during February and March as organisations return to working in offices. The ASX share continues to assess acquisition opportunities.
UBS thinks the Corporate Travel Management share price is valued at 24x FY23's estimated earnings.
