The S&P/ASX Small Ordinaries Index (ASX: XSO) has fallen 5% in 7 trading days in August, erasing all its gains year-to-date.
If you're looking for ASX small-cap ideas, now may be a good time to bargain-hunt good companies.
For those wanting to have exposure to the small-cap sector without taking too much risk, companies at cheap valuations might be a good option.
It's even better if they are consistent dividend payers, as dividend-paying companies tend to have solid cash flow and balance sheets.
Here are two such ASX small caps that might be worth consideration today.
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GR Engineering Services Ltd (ASX: GNG)
Founded in 2006, GR Engineering provides engineering consulting and contracting services in the mining and mineral processing sectors. Its services encompass the project life cycle, from the initial study phase to design, construction, commissioning, and operational support.
As a mining services company, GR Engineering wasn't immune to the adverse impact of global commodity price weakness, which hit the ASX mining sector. Its share price took a hit when its client, BHP Group Ltd (ASX: BHP), announced a temporary suspension of its West Musgrave Project in July 2024.
Unfortunately, this was one of the large projects GR Engineering was engaged in. Management forecasts that the project suspension will affect its projected FY25 revenue by up to $80 million.
This is nearly 20% of the company's revenue in the last 12 months, and there's no denying this is substantial. However, it is largely a one-off event that happens in a cyclical industry. Surely, upcycle will return, lifting many mining and mining services shares.
GR Engineering has a strong balance sheet with an ample cash balance of $58.4 million, equivalent to 18% of the company's current market capitalisation.
GR Engineering shares are valued at 11x its trailing 12 months' earnings-per-share (EPS), offering a dividend yield of 10%.
The GR Engineering share price closed at $1.90 on Friday.
Aspen Group Limited (ASX: APZ)
Aspen Group is a diversified property group specialising in providing affordable accommodation solutions across Australia. The company owns and operates a portfolio of residential and retirement communities, as well as holiday parks.
Unlike the mining sector discussed above, the affordable housing sector has shown resilience even during economic downturns. Aspen Group's strategic focus on affordable accommodation positions it well to benefit from the country's ongoing housing supply shortage.
Its business model focuses on generating recurring rental income from its property assets, which provides a steady income stream. In addition, Aspen Group continues to explore growth opportunities through property developments and enhancements. This proactive approach enhances the company's growth prospects.
Although the Aspen Group share price has risen 9% since the end of May 2024, the company is still valued at 0.9x its book value.
Aspen Group offers an attractive dividend yield of 4.34% today.
The Aspen Group share price closed at $1.96 on Friday.
