Down 22%, this ASX 200 stock will return to form next year

LSN Emerging Companies has revealed two of its favourite shares at the moment.

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It can be confusing to retail investors whether a heavily fallen S&P/ASX 200 Index (ASX: XJO) stock is a bargain or a value trap.

So when you see a professionally operated fund keep the faith in certain discounted shares, you need to take note.

If people who invest for a living think those ASX 200 stocks are worth picking up, then it's only prudent you consider it too.

Here are two such examples that the team at LSN Emerging Companies Fund are backing right now:

'We remain attracted to the business'

Bapcor Ltd (ASX: BAP) may have made plenty of people wealthy in years gone by, but its recent performance has been nothing to write home about.

Since mid-September, the share price for the auto parts provider has dived a horrifying 21.6%. Over the past five years, Bapcor shares have lost 11.6% for its investors.

LSN analysts, in a memo to clients, pointed out that the latest figures coming out of the business did nothing to bolster its credibility. 

"Bapcor, at its AGM, provided an update that showed trading across both its 'Trade & Wholesale' and 'Retail' divisions had deteriorated with revenue slowing to low single percentage growth and costs rising, which resulted in profit expectations tracking below estimates."

The LSN team, though, is urging punters to look beyond the immediate gloom.

"Whilst the short-term headwinds are disappointing, we remain attracted to the business and believe the impact is more short term than structural, which combined with significant efficiency improvement they are targeting, will see a return to solid profit growth in 2H FY24."

'Well positioned to deliver strong earnings growth'

Financial services provider EQT Holdings Ltd (ASX: EQT) is also something of a bargain at the moment.

The price for the ASX 200 stock has cooled off almost 11% since the end of September.

Like Bapcor, EQT shares have also gone largely sideways over the longer term, only rising 11.5% over the past five years.

LSN analysts reckon the company's latest figures were encouraging.

"EQT Holdings delivered a first quarter update, which showed a strong start to FY24 with flows ahead of expectations and Australian Executor Trustee (AET) acquisition integration remaining on track."

The experts added that the positive momentum is set to continue with acquisition synergies and the exit from the unprofitable Ireland and UK market.

Again the LSN team prompted investors to look past the short term.

"Given this outlook, the company is well positioned to deliver strong earnings growth which should be rewarded by investors over time."

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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Bapcor. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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