As we leave a volatile FY22 behind us, many investors will be hoping for a calmer trading environment in the new financial year. Will the ASX share market gain fresh momentum? For their thoughts, we asked our Foolish contributors to compile a list of the ASX shares they reckon could deliver wealth in the years ahead. Here is what the team came up with.
9 best ASX shares for July 2022 (smallest to largest)
- Airtasker Ltd (ASX: ART), $118.8 million
- Kogan.com Ltd (ASX: KGN), $309 million
- Adairs Ltd (ASX: ADH), $329.7 million
- BUBS Australia Ltd (ASX: BUB), $379 million
- Rural Funds Group (ASX: RFF), $994.5 million
- Deterra Royalties Ltd (ASX: DRR), $2.31 billion
- NIB Holdings Limited (ASX: NHF), $3.41 billion
- ResMed Inc. (ASX: RMD), $12.45 billion
- BHP Group Ltd (ASX: BHP), $216.5 billion
(Market capitalisations as of 30 June 2022)
Why our Foolish writers love these ASX shares
Airtasker Ltd
What it does: Airtasker owns an online local services platform that enables people who need a task completed to connect with people who want the work. Examples of task categories include furniture assembly, removalists, website design, handyman services and accounting.
By Tristan Harrison: Volatility in the Airtasker share price has seen it fall more than 60% in 2022. I think this makes the company an attractive investment opportunity when we consider its ongoing growth and potential.
In the FY22 third quarter, Airtasker saw revenue rise by 21.2% to $8.6 million, while also generating $1 million of positive operating cash flow.
It's rapidly growing internationally, opening up large potential markets. Third-quarter gross marketplace volume in the United Kingdom jumped 138% year-on-year, while posted task growth in the United States rose 90% quarter-on-quarter.
With a gross profit margin of more than 90%, I think this business can become very profitable as it realises scale benefits and doesn't need to heavily invest for growth.
Motley Fool contributor Tristan Harrison does not own shares of Airtasker Ltd.
Kogan.com Ltd
What it does: Kogan is an online retailer with operations across Australia and New Zealand including brands such as Dick Smith, Matt Blatt, and Mighty Ape. The company has grown to be a one-stop shop for the online consumer – offering electricity plans, mobile plans, consumer goods, etc.
By Mitchell Lawler: Anyone who has held shares in Kogan over the past 12 months knows the pain – I'm one of them. It has been a journey to a high of $25 apiece and back down again to the current sub-$3 level.
As with much of the market, the prior exuberance from 'decades of online adoption' being brought forward has worn off and the fears of an impending recession have driven investors away from the consumer discretionary sector.
However, since 2018, Kogan has come a long way. Now boasting more than 4 million active customers, the online brand has become somewhat of a staple among shoppers. At a price-to-sales multiple of 0.4 times, the selling might be overdone.
Motley Fool contributor Mitchell Lawler owns shares in Kogan.com Ltd.
Adairs Ltd
What it does: Adairs is a home furnishings retailer boasting more than 170 stores across Australia and New Zealand.
By Brooke Cooper: The Adairs share price has struggled through 2022 so far, tumbling nearly 50% year to date to trade around the $2.00 mark.
While the company suffered amid COVID-19 outbreaks earlier this year, its paid loyalty program continued to grow. Linen Lovers was closing in on a million members at the end of the first half, having increased 10% over the 12 months prior.
And the future for the retailer's stock looks bright. My Fool colleague James reported Morgans slapped the stock with a $3.50 price target in early June.
Additionally, following recent turbulence, Adairs shares offer an impressive dividend yield of around 9%.
Motley Fool contributor Brooke Cooper does not own shares of Adairs Ltd.
BUBS Australia Ltd
What it does: Founded in 2006, Bubs produces and sells infant formula, organic baby food and cereals in Australia and overseas markets.
By Aaron Teboneras: The Bubs share price has continued to defy the recent slump of the S&P/ASX 200 Index (ASX: XJO). For context, the company's shares are up almost 25% in the past month while the benchmark ASX 200 index is down around 6%.
The current supply shortage of infant formula across the United States is providing Bubs with a unique opportunity to boost revenue. Bubs recently signed a deal with the United States government to deliver at least 1.25 million tins of baby formula.
In addition, the company has been busy expanding its footprint in the country through new supply agreements with major retailers.
In light of this, broker Citi believes that Bubs is poised to grow significantly over the coming year.
According to ANZ Share Investing, the broker raised its price target by 29% to 76 cents for Bubs shares. This implies an upside of roughly 24% based on today's closing price of 61 cents.
Motley Fool contributor Aaron Teboneras does not own shares in BUBS Australia Ltd.
Rural Funds Group
What it does: Rural Funds is an agricultural real estate investment trust (REIT) that holds a portfolio of farmland assets.
By Sebastian Bowen: There aren't too many shares on the ASX that give an investor pure exposure to farmland and agricultural assets. But that's exactly what Rural Funds does. This REIT owns almond orchards, macadamia orchards, vineyards, as well as cattle and crop farmlands. Rural Funds has a policy of increasing its dividend distributions by roughly 4% per year.
This Rural Funds has managed to do very consistently in recent years, growing its annual payouts from 9.3 cents per share in 2016 to 11.5 cents per share last year. With a dividend yield of more than 4.5% on recent pricing, Rural Funds Group could be a great place to look for a portfolio-diversifying, dividend-paying share this July.
Motley Fool contributor Sebastian Bowen does not own shares of Rural Funds Group.
Deterra Royalties Ltd
What it does: Deterra is a mining share with a difference. It doesn't conduct any physical mining or the like. Instead, Deterra manages and grows its portfolio of royalty assets, and distributes the cash flow back to shareholders via dividends.
By Zach Bristow: A dividend play for investors to consider, Deterra operates as a royalty business model that oversees a portfolio of mining and commodity royalties. Its model claims to have a lower risk, and higher-margin exposure to the resources sector.
Deterra's strategy is to pay 100% of its net profit after tax (NPAT) back to shareholders by way of dividends.
In FY21, it printed $94 million of NPAT and has a trailing dividend per share (DPS) of 23 cents. It confirmed royalty receipts of $59 million last quarter.
The share is evenly rated with five brokers each saying it's a buy or a hold right now, according to Bloomberg data. From this list, the consensus price target is $4.70 per share.
Motley Fool contributor Zach Bristow does not own shares of Deterra Royalties Ltd.
NIB Holdings Ltd
What it does: NIB Holdings is a leading Australian insurance company, and the first private health fund to list on the ASX back in 2007.
By Bernd Struben: NIB currently provides more than 1.6 million Aussies and Kiwis with health and travel insurance. And its market share continues to slowly expand, growing from 9.0% of the Australian resident health insurance market in 2019 to 9.3% in 2022.
The insurance sector is also one of the few that can thrive in higher interest rate environments. Insurers are required to hold plenty of secure debt to cover their policies, and as bond yields rise, so too does their passive income.
NIB shares are up 16% over the past 12 months. The company is also a reliable dividend payer, currently paying a 3.4% trailing dividend yield, fully franked.
Motley Fool contributor Bernd Struben does not own shares in NIB Holdings.
ResMed Inc.
What it does: ResMed is a provider of medical devices and cloud-based software applications that diagnose, treat and manage respiratory disorders such as sleep apnoea and chronic obstructive pulmonary disease (COPD).
By James Mickleboro: ResMed had a positive month in June and materially outperformed the ASX 200 index. Despite this, I don't believe it is too late to make an investment, particularly given that its shares are still down meaningfully year to date despite last month's gains.
This is because I believe the company is well-placed to continue its strong sales and earnings growth long into the future, thanks to its leadership position in a massive (and growing) market.
ResMed estimates that globally, more than 900 million people suffer from sleep apnoea and more than 380 million people live with chronic obstructive pulmonary disease (COPD). However, the vast majority have yet to be diagnosed due to a lack of awareness among both the medical community and the general public. However, ResMed's serviceable addressable market grows each year as awareness gradually increases.
And while at 30x estimated FY 2023 earnings, its shares are not cheap, I believe the premium is justified due to its positive long-term growth outlook.
Motley Fool contributor James Mickleboro does not own shares of ResMed Inc.
BHP Group Ltd
What it does: BHP is one of the world's largest diversified miners. While it is a major supplier of iron ore, it also produces metals like copper and nickel that are essential for the global energy transition towards renewables, including the manufacture of batteries.
By Brendon Lau: The Big Australian has been battered by worries about a global recession and waning demand for commodities. But too much bad news is priced in the shares with broker Macquarie Group reiterating its 'outperform' recommendation on the shares.
Higher diesel and power costs have forced some miners to downgrade their production guidance, but the broker noted that these higher costs would accelerate the transition to green energy. BHP's minerals, such as copper, are essential ingredients in this transition.
Macquarie also pointed out that BHP was trading on an attractive FY23 free cash flow yield of 16% using its forecasts and ~15% at spot prices. The broker's 12-month price target on the BHP share price is $51 a share.
Brendon Lau owns shares of BHP Group.
