There's no need to wait for the Boxing Day sales to pick up some mega stocktake bargains. Plenty of quality ASX companies have already had their prices slashed over the past few months of share market volatility.
But while everyone loves a bargain, it's fair to say not all bargains are worthwhile buys. So we asked our Motley Fool contributors for their thoughts on which cheap ASX shares they think have the potential for rich rewards down the track.
Here is what the team came up with:
7 cheap ASX shares for November 2023 (smallest to largest)
- Objective Corporation Ltd (ASX: OCL), $1.04 billion
- Lovisa Holdings Ltd (ASX: LOV), $1.96 billion
- Telix Pharmaceuticals Ltd (ASX: TLX), $2.69 billion
- Resmed Inc (ASX: RMD), $11.73 billion
- South32 Ltd (ASX: S32), $15.28 billion
- Coles Group Ltd (ASX: COL) $20.25 billion
- CSL Limited (ASX: CSL) $112.60 billion
(Market capitalisations as of market close 20 October 2023).
Why our Foolish writers think these ASX stocks are bargain buys
Objective Corporation Ltd
What it does: Objective Corporation provides software under three main categories: content and process, regtech (regulation technology), and planning and building. Founded in 1987, the tech company now services more than 1,000 public and private customers across five countries.
By Mitchell Lawler: On 29 December 2022, I shared what I believed were 10 of the best ASX shares to buy for 2023. Objective Corp made the list, but I was hesitant about coughing up more than $13 per share.
Shares in the software provider are now down 22% year to date, falling 23.5% in the last three months alone. However, at its core, Objective Corp is still fundamentally the same great business it has always been – albeit slower growing in recent times. Though, I think that will come to pass.
At roughly 48 times earnings, I don't know if this is the cheapest Objective Corp will get. However, I would be comfortable to begin building a position at this price. Rarely do companies with sound management, strong balance sheets, and sticky products go on sale.
Motley Fool contributor Mitchell Lawler does not own shares of Objective Corporation Ltd.
Lovisa Holdings Ltd
What it does: Lovisa is a rapidly growing retailer that sells affordable jewellery, predominantly to younger shoppers. It has stores globally, with its biggest store networks in Australia and the United States. It also operates a successful online platform.
By Tristan Harrison: The Lovisa share price has fallen by more than 30% since April 2023, which I think is overdone because of the long-term growth potential of its store network.
It's able to make strong margins in each store because of how cheap the products are. The business is capital-light, so it is able to expand rapidly. Look at what happened in FY23: its global store network increased by 172 to 801, with 72 stores added in the United States. FY23 net profit rose 20.1% to $68.2 million.
There are so many countries with a very low number of stores compared to their population size, such as the US, Spain (one store), Canada (seven stores), Mexico (four stores), Italy (seven stores) and so on. I think there's huge potential for store and profit growth with this business over time.
Motley Fool contributor Tristan Harrison does not own shares of Lovisa Holdings Ltd.
Telix Pharmaceuticals Ltd
What it does: Telix is a pharmaceutical company developing diagnostic and therapeutic solutions for cancer.
By Tony Yoo: The Telix share price seems to be caught up in the general sell-off of healthcare stocks in the past couple of months. The stock is now trading more than 15% down from its July peak.
This is despite the business prospect remaining as great as what it was earlier this year. Telix Pharmaceuticals already has products selling commercially, plus several that are in the testing and approval stages. All seven analysts surveyed on CMC Markets currently rate the stock as a buy.
Motley Fool contributor Tony Yoo owns shares of Telix Pharmaceuticals Ltd.
Resmed Inc
What it does: ResMed is a medical device company with a focus on the sleep disorder treatment market.
By James Mickleboro: The ResMed share price has been hammered this year amid concerns over the emergence of type 2 diabetes treatment Ozempic as a wonder drug for weight loss. I think this has created a buying opportunity for investors.
As obstructive sleep apnoea (OSA) is an indication that is correlated with weight and cardiovascular comorbidities, investors are concerned that demand for ResMed's products and services could lessen because of Ozempic.
However, Goldman Sachs isn't concerned. It highlights that "OSA remains under-penetrated, with global estimates suggesting <20% and many countries well below this level." As a result, it believes that ResMed can continue growing at a strong rate long into the future, despite Ozempic.
It is for this reason that the broker has a buy rating and a $33 price target on ResMed's shares, which implies major upside potential from current levels.
Motley Fool contributor James Mickleboro owns shares of ResMed Inc.
South32 Ltd
What it does: South32 is an Australian mining company with local and international operations. It produces bauxite, alumina, aluminium, copper, silver, lead, zinc, nickel, metallurgical coal, and manganese.
By Bronwyn Allen: The South32 share price has been resetting its 52-week low in recent weeks, reaching a trough of $3.19.
Morgans thinks the stock has been oversold big-time. It has an add rating and a share price target of $5.20. Morgans points out that South32's assets in base metals and metallurgical coal, with no iron ore exposure, means it will cash in on the decarbonisation thematic.
Citi also has a buy rating on South32 with a target of $3.90. Citi forecasts rising dividends of 10 cents per share in FY24, 20 cents in FY25, and 27 cents in FY26, fully franked.
Motley Fool contributor Bronwyn Allen owns shares of South32 Ltd.
Coles Group Ltd
What it does: Coles is the second-largest supermarket and grocery chain in Australia, with a major presence in all Australian states and territories. The company also owns a
network of bottle shops.
By Sebastian Bowen: Coles shares have been through the wringer over the past few months, falling from a new 52-week high of $18.85 in June to a new 52-week low of $15.20 a share in October.
Yet, this could well be a compelling buying opportunity here. Coles has a highly defensive earnings base that is resistant to both inflation and economic downturns. As such, this pullback could be a blessing for those investors seeking a defensive, dividend-paying blue-chip investment.
Speaking of dividends, this share price collapse has also pushed up the Coles dividend yield to around 4.3% today, the highest it's been since 2020.
As such, I think the case for Coles shares being oversold today is open and shut.
Motley Fool contributor Sebastian Bowen does not own shares of Coles Group Ltd.
CSL Limited
What it does: CSL is a global biotechnology company that develops and delivers biotherapies and vaccines. CSL also operates one of the largest plasma collection networks in the world.
By Bernd Struben: The CSL share price has taken a beating in 2023, down 15.5% to close on Friday at $237.70 a share.
Following that drop, I think the ASX 200 biotech stock represents a good buy for November.
CSL recently offered some strong FY 2024 guidance. That included a forecast 9% to 11% increase in revenue from FY 2023. Management also expects to see net profit after tax and amortisation (NPATA) increase 13% to 17% year on year, to a range of US$2.9 billion to US$3 billion on a constant currency basis.
Goldman Sachs has a neutral rating on CSL. However, the broker maintains a $296 12-month price target. Citi's analysts have a buy rating on CSL and a $325.00 price target, some 37% above Friday's closing price.
CSL shares also pay dividends, trading on a trailing yield of 1.3%.
Motley Fool contributor Bernd Struben does not own shares of CSL Limited.
