2 underappreciated ASX 200 shares to buy now

MotleyFool
2024-12-16

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%.

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