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Market volatility has cetainly thrown up some interesting opportunities.
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ASX share market volatility may seem scary in the moment, but I think that it’s offering investors the ability to invest in some very compelling ideas.
Not every business is worth owning just because it has fallen in value. But I’ve got my eyes on some leading ideas that now seem really good value amid the sell-off that we’ve seen.
I think that ASX shares that are growing well could be really attractive ideas to consider, particularly if they’ve been sold down. In my opinion, the below two contenders could do well over the coming years:
This exchange traded fund (ETF) looks to give investors exposure to the global video gaming and e-sports sector.
Looking at the holdings, there are a total of 25 businesses in the portfolio. The top ten holdings make up more than 60% of the total allocation. Readers may have heard of some of these names: Tencent, Activision Blizzard, Nvidia, Nintendo, Advanced Micro Devices, Netease, Roblox, Electronics Arts, Bandai Namco, and Aristocrat Leisure Limited (ASX: ALL).
VanEck said that this ETF can benefit from “the increasing popularity of video games and e-sports”. It’s invested in businesses that make a significant portion of their revenue from the video gaming industry.
E-sports revenue is certainly growing quickly. VanEck said it has grown by an average of 28% per annum since 2015.
It notes that e-sports has created new potential revenue streams from game publisher fees, media rights, merchandise, ticket sales, and advertising.
City Chic is one of the leading ASX retail shares in my opinion. It sells plus-size women’s apparel, footwear, and accessories. City Chic owns a number of brands including City Chic, Avenue, Evans, CCX, Hips & Curves, and Fox & Royal.
One of the things that attracts me to this business is the fact that it’s going global. It has a presence in the UK, US, and Europe, with the intention of growing in each region and launching more ranges. Canada is another place where it could also grow over time.
Increasing scale can help a number of areas of the business, leading to operating leverage.
The ASX share has outlined several positives for its business in the coming years.
City Chic said that the plus-size market is expected to grow by around 7% per year. The company noted that the average annual spend on plus-size apparel is currently materially less than the rest of the women’s market. But City Chic also said that there are “increasing rates of plus-size women globally”.
In late April 2022, the company said that it had delivered strong sales growth in the FY22 second half to date, underpinned by the company’s in-stock inventory position. Trading margins have remained consistent with last year. The northern hemisphere has grown to be around 55% of group sales and continued its growth at a rate of 52% in the second half of FY22.
City Chic continues to add new partners. It’s thinking about increasing prices and it expects to make more earnings before interest, tax, depreciation and amortisation (EBITDA) in the second half of FY22 compared to the first half. I think the company can provide solid compound growth in the coming years as it wins over more customers in more countries.
Since the start of 2022, the City Chic share price has fallen around 60%. This is much more attractive to me.
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 positions in and has recommended Activision Blizzard, Advanced Micro Devices, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Electronic Arts. The Motley Fool Australia has recommended Activision Blizzard, Nvidia, and VanEck Vectors ETF Trust – VanEck Vectors Video Gaming and eSports ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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