Is it time to buy these 2 beaten-up ASX shares in 2025?

These stocks are compelling buys, in my view.

| More on:
A young woman makes an online travel booking as she sits on some steps with her suitcase next to her.

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

sdf

I love looking at ASX shares that have been beaten up because you can buy them at much cheaper valuations.

Sometimes, businesses can drop because of a short-term issue that resolves itself sooner than expected. Of course, sometimes, businesses undergo permanent changes that may be detrimental to the company. Identifying which one a business is going through can be the difference between great and mediocre returns.

I'm going to look at two ASX shares that have suffered, but where I also see potential for strong returns thanks to a recovery.

Premier Investments Ltd (ASX: PMV)

Premier Investments is a retail company that owns a number of brands, including Smiggle and Peter Alexander.

It's currently in the process of selling its apparel brands to Myer Holdings Ltd (ASX: MYR), which includes Just Jeans, Jay Jays, Portmans, Jacqui E, and Dotti.

On 13 January 2025, Premier Investments reported that its apparel business is expected to make $31 million to $35 million of operating profit (underlying EBIT), $16 million to $20 million less in the first half of FY25 compared to the first half of FY24. That's despite the gross profit margin for this business being "broadly flat" year over year.

The Premier Investments share price is down 13% from 10 January and around 22% from 5 December 2024. Considering the potential of the retained businesses (Smiggle and Peter Alexander), I think the ASX share looks much better value now.

The reason why I'm optimistic about the long-term future of this business is its global aspirations for both Smiggle and Peter Alexander. For example, Peter Alexander recently launched into the UK – it planned to open three stores before Christmas, and it sees opportunities for up to 10 new stores in the short term as part of the initial launch plans. The UK has a population of more than double that of Australia and New Zealand, so it's an exciting market for the company.

There are lots of opportunities for Premier Investments to add many more global stores to the Smiggle network. Adding global scale should help in numerous ways, including rising profit margins.

Hence, I think this is a great time to look at Premier Investments shares at this lower price.

Webjet Group Ltd (ASX: WJL)

Webjet is a leading online travel agency (OTA) business in Australia. It also has a vehicle rental business called GoSee and a tech offering called Trip Ninja which automates the highly manual process of selling complex multi-stop travel itineraries.

The Webjet share price is another example of a heavy decline in recent times – it's down 13% in 2025 to date and around 36% from September 2024.

In late November 2024, the business reported in its FY25 half-year result that its total transaction value (TTV) declined 8% to $752 million, following an 8% decrease in bookings.

Webjet blamed the challenging macroeconomic conditions impacting domestic flight bookings.

One of the most impressive things about the ASX share's result was that despite the decline in TTV, the business reported higher Webjet OTA revenue per booking, which was now higher than before the COVID pandemic, thanks to higher margin ancillary products now accounting for 35% of revenue and international flight bookings representing 20% of total flight bookings.

Due to that dynamic, HY25 revenue fell 1% to $72 million, and operating profit (EBITDA) rose 1%.

When economic conditions improve, I think Webjet's profitability and sentiment about the business could significantly increase. The business has invested in technology to help improve its margins, which has already helped its overall financials.

The Webjet group managing director Katrina Barry said:

Looking forward, the macro-economic environment continues to be challenging and given our brands are consumer facing, Webjet Group will not be immune. However, we remain optimistic on the broader medium-term outlook. As outlined in our demerger investor presentation, we have clear and robust strategic priorities to deliver growth and enhance our leadership positions in online travel marketplaces.

Our planned initiatives are progressing well with several showing exciting potential and we are accelerating investment in technology platforms and other key growth drivers. With the demerger now behind us, Webjet Group is solely focused on growth, and we look forwarded to sharing more about our plans to take the Company to the next horizon at our Strategy Day in March 2025.

I'm optimistic about how things could turn around for the company in the next year or two, assuming economic conditions do start improving for the ASX share.

Motley Fool contributor Tristan Harrison 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 Premier Investments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Opinions

ASX 200 retail shares a woman smiles over the top of multiple shopping bags she is holding in both hands up near her face.
Opinions

Up 90% in a year, is it too late to buy Zip shares?

Should investors buy this stock now or wait until later?

Read more »

A trio of ASX shares analysts huddle together in an office with computer screens all around them showing share price movements
Opinions

2 of the best ASX 200 shares to buy right now

I think these stocks are excellent buys for the long-term.

Read more »

Concept image of a businessman riding a bull on an upwards arrow.
Opinions

I'm very bullish on these 2 ASX stocks

I think these are two of the best ASX investments money can buy.

Read more »

Young businesswoman sitting in kitchen and working on laptop.
Opinions

Should I buy Berkshire Hathaway or Soul Patts shares?

Both have been stand out investments over the long term.

Read more »

A photo of a young couple who are purchasing fruits and vegetables at a market shop.
Opinions

Here are 2 of the ASX's most hated shares. Which should I consider buying?

Could today's dogs be tomorrow's stars?

Read more »

A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.
Opinions

Where I'd invest $5,000 into ASX shares today

I’m excited by what these stocks can achieve.

Read more »

An analyst wearing a dark blue shirt and glasses sits at his computer with his chin resting on his hands as he looks at the CBA share price movement today
Opinions

What are Soul Patts shares worth?

This company has delivered strong gains. But what is its intrinsic value?

Read more »

Two funeral workers with a laptop surrounded by cofins.
Opinions

2 exciting ASX 300 shares on sale right now

I’m bullish about these exciting businesses.

Read more »