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August has seen significant volatility in the ASX share market, creating potential investment opportunities as share prices adjust to current economic conditions. A decrease in share price often leads to a lower price-to-earnings (P/E) ratio and improved dividend yields for companies, including ASX growth stocks, that pay dividends.
Centuria Capital Group (ASX:CNI)
Centuria Capital Group, a prominent real estate manager, has experienced a sharp decline in its share price, falling more than 50% since September 2021. This drop can be attributed to the rise in interest rates, which has made commercial real estate less appealing due to increased debt costs. Despite these challenges, Centuria continues to generate substantial management fees.
Recently, Centuria announced its entry into the data centre sector with an investment in ResetData. This move is aimed at reducing the carbon footprint and space requirements of data centres compared to traditional models. With interest rates potentially peaking, investing in Centuria could be an advantageous way to capitalize on future declines in interest rates while benefiting from a substantial distribution yield. The company currently offers a yield exceeding 6% for FY24.
Johns Lyng Group Ltd (ASX:JLG)
Johns Lyng Group specializes in property restoration and reconstruction following damage from events such as fires, floods, and storms. The company also assists with post-catastrophe recovery. Its diverse client base includes major insurance companies, government entities, and private customers.
The company has shown impressive profit growth in recent years. For the first half of FY24, Johns Lyng reported a 15.8% increase in normalised net profit after tax (NPAT) to $25 million, excluding variable catastrophe earnings.
Johns Lyng’s strategic acquisitions are a key part of its growth strategy. Recent additions include SSKB Strata, a strata management business, and Chill-Rite HVAC, a heating, ventilation, and air-conditioning service provider in regional NSW. These acquisitions are expected to generate over $45 million in revenue and approximately $9 million in EBITDA for FY25.
If the company maintains its current growth trajectory, with underlying profit increasing by more than 10% annually, the outlook for Johns Lyng remains positive. The expansion into additional markets outside Australia further supports this optimistic view.
The recent market downturn has created opportunities for investors to consider companies like Centuria Capital Group and Johns Lyng Group. While Centuria offers an attractive dividend yield amidst high interest rates, Johns Lyng continues to demonstrate strong profit growth and strategic expansion. As always, thorough research and consideration of individual investment goals are recommended.
