Buy low and sell high: that's the oldest investment axiom, right?
So if you want to do that successfully, you need to have eyes like a hawk to find S&P/ASX 200 Index (ASX: XJO) shares that are not just cheap but also have the business conditions in place to turn their fortunes around.
Here are two such suggestions that experts have rated as buys this week:
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'We are more optimistic than the market'
Harvey Norman Holdings Limited (ASX: HVN) shares have sunk 17.6% since Australia Day.
It is no surprise, with the consumer discretionary sector hit hard by 12 interest rate rises at the same time as coping with supply cost inflation.
Ord Minnett senior investment advisor Tony Paterno admitted his team has had to adjust its expectations of the department store chain.
"We have reduced our fiscal year 2023 underlying pre-tax profit forecast by 10% to $676 million," Paterno told The Bull.
"We have lowered our fiscal year 2024 underlying pre-tax profit forecast by 6% to $655 million."
But this doesn't mean Paterno has given up on Harvey Norman.
Quite the opposite, actually.
"Despite revisions to our near term forecasts, we are more optimistic than the market on the medium term earnings outlook and expect fiscal year 2024 will be the trough for margins and earnings," he said.
"From fiscal year 2025, we estimate low single digit earnings growth per year."
'The shares offer better value' after June plunge
Similar to Harvey Norman, TPG Telecom Ltd (ASX: TPG) has had its troubles this year.
"The Australian Competition Tribunal has recently declined to authorise a regional mobile network sharing arrangement between TPG and Telstra Group Ltd (ASX: TLS)."
The TPG share price has thus plunged a horrifying 12% since that decision last month.
Fortunately, Paterno's team did not count its chickens before they hatched.
"Our current forecasts didn't incorporate any benefits from the proposed arrangement."
Paterno's advice is to buy TPG shares while looking past the short-term adversity because the telco's long-term prospects haven't changed.
In fact, if anything, the June freefall has presented an attractive buying opportunity.
"TPG retained earnings guidance despite cost impacts. TPG is forecasting EBITDA of between $1.85 billion and $1.95 billion for the financial year ending December 31, 2023," said Paterno.
"The shares offer better value following the TPG announcement on June 21."
