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Sharply fallen ASX shares can be a buying opportunity due to their significantly better value.
It is logical that it is better to buy good companies at a lower price than to buy them at a higher price.
It usually takes company-specific or widespread bad economic news to send a stock price down significantly. Investors may need some courage to invest during these volatile times, but this may also be the best time to strike.
If I wanted to do some against-the-current trading, I would choose the following two ASX stocks.
Centuria Capital Group (ASX:CNI)
Centuria is one of the largest real estate fund managers in Australia and manages a variety of different funds and properties.
The company manages two of the larger real estate investment trusts (REITs) and also owns significant shares in Centuria Industrial REIT (ASX: CIP) and Centuria Office REIT (ASX:COF).
Centuria Capital Group’s share price has fallen by 12.7% since June 25, 2024 and by 56% since September 2021, as we can see from the chart below.
High interest rates have affected the valuation of companies operating in the commercial real estate sector, so I hope that lower interest rates – if they come next year – can provide a tailwind for Centuria and its funds.
Centuria recently announced it is entering the data center space with a 50 percent stake in ResetData. Resetdata has committed to a 10-year lease on a Centuria Office REIT property, which could increase the value of the property, net of expenses, by 10 to 15 percent.
Audinate Group Ltd (ASX: AD8)
Audinate is the company behind Dante, a networking solution the company describes as a world-leading solution that is used “extensively” in professional live sound, commercial installation, broadcast, sound reinforcement and recording studios.
The appeal of Dante is that it replaces traditional analog cables by transmitting “perfectly synchronized AV signals over long distances to multiple locations simultaneously” using only one Ethernet cable.
Audinate’s share price fell about 43% last month after the company issued an update for fiscal 2024 and 2025.
For the 2024 financial year, the company reported revenue of $60 million, up 28.4%, gross profit increased 33.2% to $44.5 million, and earnings before interest, taxes, depreciation and amortization (EBITDA) are expected to have increased by at least 77% to A$19.5 million.
These were strong growth numbers and the ASX share demonstrated its operating leverage, with earnings growing much faster than revenue.
However, the company cited a number of factors that are likely to result in fiscal 2025 not being as strong as supply chains return to normal following COVID-19-related disruptions and sales backlogs are cleared.
I think Audinate could be a contrarian opportunity. The company expects a return to growth and more predictable order patterns in fiscal 2026.
The ASX share expects its gross profit margin to rise towards 85% over the long term, which would be positive for the bottom line, and if it returns to growth in fiscal 2026, this sell-off could be a buying opportunity.
