It's nearly April 2022. With the first quarter of 2022 almost out of the way, some opportunities may be opening up.
Plenty of ASX shares with growth potential have been sold off since the start of the year. Just look at two of the biggest and most globally focused S&P/ASX 200 Index (ASX: XJO) shares. In 2022, the Xero Limited (ASX: XRO) share price is down over 30% and the Aristocrat Leisure Limited (ASX: ALL) share price is down 20%.
But there are other ASX shares that may be compelling after recent declines:
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Australian Ethical Investment Limited (ASX: AEF)
Australian Ethical is a fund manager with a focus on businesses that display a higher level of ethics and don't come from specific industries, such as fossil fuel or gambling.
The company is experiencing a high level of fund inflows every reporting period.
In the recent FY22 half-year result, it reported that funds under management (FUM) had grown by 38% to $6.9 billion. This helped underlying net profit after tax (NPAT) increase by 12% to $5.4 million.
The company is seeing long-term growth for its managed fund and superannuation investment options. As readers are probably aware, employees receive regular contributions into their superannuation account, helping Australian Ethical's FUM flows. Australian Ethical boasts of industry-leading superannuation retention rates.
Commenting on the fund manager's outlook, the Australian Ethical CEO John McMurdo said:
As Australia's original and leading ethical investor, this puts us in an enviable position to capture our natural and achievable share of a rapidly growing addressable market.
In our [FY21] full year results, we outlined our ambitious high growth strategy which is already yielding meaningful results. We've successfully launched new products, won multiple awards and fast-tracked our strategic plans by acquiring a minority stake in Sentient Impact Group. We're making progress towards digitising the customer experience, supported by the transformation of back-office systems to scalable technologies. All while delivering strong financial returns for our growing customer base and advocating for a better world.
Baby Bunting Group Ltd (ASX: BBN)
This ASX share is a leading retailer of baby products such as prams, toys, clothes, furniture and so on.
The company has a national network of stores which continues to slowly but steadily grow in number. It had 64 when it released its FY22 half-year result, with a long-term plan for over 100 in Australia.
But the company continues to experience elevated demand for its online shopping offering as well. In the recent FY22 half-year report, it said that online sales grew by 32.6% to $56.8 million.
The company's margins continue to improve as well. Baby Bunting's gross profit margin improved by 192 basis points to 39.3%. Part of this improvement came from the increase of sales that were from exclusive or private brands – these sales accounted for 44.5% of total HY22 sales. It has a long-term goal of 50% of sales coming from private label and exclusive products.
The business has also started expanding into New Zealand. This represents a larger addressable market for the company.
According to Commsec, the Baby Bunting share price is valued at 21x FY22's estimated earnings.
