10 ASX stocks to watch: flying under investors’ radar

Finding hidden gems in the stockmarket starts with looking beyond the headlines of profit season. Here’s 10 to watch.

Baby Bunting shares could be good value. Picture: NCA NewsWire/Sarah Marshall

Cash is flowing from companies across Australia but the noise of this month’s profit reporting season is drowning out investment opportunities among stocks that are flying under the radar.

Investment analysts and advisers say good companies can remain hidden in plain sight.

Portfolio manager Chris Conway from investment newsletter Marcus Today said the profit season was the noisiest time of year for shares but also the time “when you get the most clarity”.

“The volume of information that the average investor needs to take in means there’s often things likely to be missed,” he said.

Midsec Financial Advisors managing director Nick Loxton said people who took a long term approach to investing could “afford to look at things in a different way”.

“On occasion the market seems to think there is nothing to see here, and it moves on, leaving behind a potential opportunity,” he said.

These 10 Aussie stocks are potentially flying under investors’ radar.

1 SCENTRE GROUP

The Westfield shopping centres owner’s shares could be bought for less than the value of its assets, Mr Loxton said.

“Everyone was worried people wouldn’t go shopping again because of Covid, but the footfall rebounds strongly every time a lockdown ends,” he said.

“They are a destination and there is pent-up demand to get out.”

Bell Direct’s Jessica Amir likes the outlook for Inghams shares. Picture: Jonathan Ng

2 ORIGIN ENERGY

Mr Loxton said he expected earnings to rebound in the coming years.

“Energy stocks have been hit fairly hard – I think wholesale energy prices will go up.”

3 INVOCARE

Covid-19 hasn’t been great for this funerals company, which has suffered a 33 per cent share price fall in the past two years.

“But there is something we do know for funeral homes: there is a never-ending line of customers,” Mr Loxton said.

4 INGHAMS

Bell Direct senior market analyst Jessica Amir said at least four major stockbroking firms rated chicken company Inghams as a “buy”.

“While hard commodities continue to fall, soft commodities like poultry are trading a record highs,” she said.

“Inghams recently renewed its Woolworths supply – so it’s likely continue to generate stronger cashflows.”

5 OROCOBRE

“The lithium sector is heating up amid the world’s push to be carbon neutral by 2050,” Ms Amir said.

“Orocobre recently merged with Galaxy, creating the fifth-biggest lithium producer on planet.”

Baby Bunting’s store rollout has slowed, but is expected to bounce back.

6 BABY BUNTING

Mr Conway said the baby goods retailer had performed well and beat market expectations but its shares price had dropped since its recent results.

“Covid has slowed the planned store rollout – it won’t last forever,” he said.

7 CODAN

This technology company is tied to the materials sector and had also experienced a weaker share price since announcing a strong profit rise, Mr Conway said.

“The sell-off seems overdone,” he said.

Ansell’s protective clothing is expected to be in demand long after lockdowns end.

8 ANSELL

Shares in the manufacturer of medical gloves and other protective equipment are down 13 per cent from 2020 and Baker Young managed portfolio analyst Toby Grimm said at this price they could be a buying opportunity.

“The need for protective equipment is going to continue long after borders reopen and, if anything, demand may increase,” he said.

9 CORPORATE TRAVEL

Mr Grimm said the travel agency’s operations were largely business-focused and increasingly offshore, where it recently bought assets in the US.

“We think the outlook is improving as we reopen, and particularly as the northern hemisphere does.”

10 JANISON EDUCATION

Better Future Trust portfolio manager Damian Cottier said Janison was a small-cap stock positively shaping the future.

“Janison continues to build on recent momentum in the company’s online exam and assessments platform business as schools and universities globally structurally shift towards online exams and assessments in preference to traditional pen and paper exams,” he said.

Originally published as 10 ASX stocks to watch: flying under investors’ radar