2 underappreciated ASX 200 shares to buy now

Investors may be undervaluing these ASX 200 shares heading into 2025, according to this expert.

| More on:
A male investor sits at his desk looking at his laptop screen holding his hand to his chin pondering whether to buy Macquarie shares

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Looking to add a few appealing S&P/ASX 200 Index (ASX: XJO) shares to your portfolio before 2025 rolls around?

Below, we look at two quality companies that may be trading at bargain valuations heading into the new year after slipping in 2024.

Consumer spending outlook makes this ASX 200 share a buy

First, we have Endeavour Group Ltd (ASX: EDV), which was spun off from Woolworths Group Ltd (ASX: WOW) back in 2021.

The ASX 200 share is down 18% in 2024, currently trading for $4.25.

But Bell Potter Securities' Christopher Watt envisions a better year ahead for Endeavour shareholders in 2025 (courtesy of The Bull).

"Endeavour operates liquor outlets, hotels and gaming facilities," said Watt, who has a buy rating on Endeavour. "This leading Australian liquor retailer includes brands, such as Dan Murphy's and BWS."

Explaining why he is bullish on the outlook for Endeavour shares in 2025, Watt said:

It stands to benefit from a forecasted rebound in retail spending in fiscal year 2025. Economic conditions, including an expanding workforce, higher wages and possible income tax cuts could all boost consumer confidence, lifting demand for EDV's broad retail offerings.

The market may not fully reflect a strengthening retail environment in EDV's valuation, making it an appealing entry point. As buying power increases, EDV's earnings growth and share price could follow suit.

Atop potential share price gains, Endeavour also offers some attractive passive income. The stock currently trades on a 5.1% fully franked trailing dividend yield.

A sustainable growth story

Which brings us to the second ASX 200 share which underperformed in 2024 that Bell Potter Securities' Watt believes is set to outperform in 2025, Amotiv Ltd (ASX: AOV).

The Amotiv share price is down 11% in 2024.

"Amotiv, formerly GUD Holdings, owns a portfolio of companies specialising in providing automotive products and solutions," said Watt, who also has a buy rating on Amotiv.

According to Watt:

Non-internal combustion engine (ICE) revenue streams now represent 75% of total sales, providing a stronger, more future-oriented portfolio. A diversified global footprint taps into growth markets in South Africa and Europe via Rindab.

AOV's recent forward price/earnings multiple looks undemanding given its financial strength, geographic expansion, better quality earnings and reduced risk.

We view AOV as a sustainable growth story in the medium to long term that's yet to be fully appreciated by the market. We believe it's an appealing buying opportunity.

Amotiv is also a reliable dividend payer.

The ASX 200 share trades on a fully franked trailing dividend yield of 3.9%.

Motley Fool contributor Bernd Struben 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Opinions

A woman with a mobile phone in her hand looks sceptical with a puzzled expression on her face with an eyebrow raised and pursed lips.
Opinions

Is it time to be bullish or cautious on buying ASX shares right now?

Should investors be greedy or fearful as FY26 approaches?

Read more »

A happy young woman in a red t-shirt hold up two delicious burritos.
Opinions

Bull vs. Bear: Guzman Y Gomez shares

Guzman Y Gomez shares peaked at $45.99 in February and closed at $28.04 yesterday. Where to now?

Read more »

A businessman hugs his computer and smiles.
Opinions

3 ASX 200 shares to buy and hold forever

I don't expect these stocks to go out of style anytime soon.

Read more »

A young woman with tattoos puts both thumbs down and scrunches her face.
Opinions

2 ASX shares I'm avoiding in today's uncertain market

I wouldn't touch these two stocks if you paid me right now.

Read more »

Smiling elderly couple looking at their superannuation account, symbolising retirement.
Opinions

Aiming for rock-solid retirement income? I'd buy these two ASX shares

These stocks have impressive dividend credentials.

Read more »

a smiling picture of legendary US investment guru Warren Buffett.
Opinions

Would Warren Buffett buy Soul Patts shares?

Soul Patts is an impressive business. But would it appeal to one of the world’s greatest investors?

Read more »

asx share price growth represented by hand holding hourglass surrounded by dollar signs
Opinions

'Patience isn't passive': Expert reveals 2 ASX shares his team won and lost on

They say patience is a virtue. This asset manager says it can also determine your investment success.

Read more »

A young couple sits at their kitchen table looking at documents with a laptop open in front of them.
Opinions

Why I'd buy these top ASX 200 shares next

Growing businesses are compelling. These two are growing significantly.

Read more »