'Dominant player': Expert urges buying ASX shares in 2 near-monopolies

These companies rule their market. Life doesn't get much better than that!

| More on:
Two people climb to the summit and raise their arms in success as the sun rises brightly over the mountains.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

sdf

With many experts predicting a bullish 2023, buying ASX shares now would be the prudent action to take if you don't want to miss the upswing.

But with the economy about to slow down from a series of interest rate hikes, stock selection is absolutely critical.

Fortunately, Shaw and Partners senior investment advisor Adam Dawes had a couple of ideas:

'Copper is one of those places you need to be'

Sandfire Resources Ltd (ASX: SFR) is a major copper producer.

Dawes told Switzer TV Investing that he's a big fan of the ASX share as the business supplies a resource for which the world will be hungry for years to come.

"Certainly with the thematic of copper potentially having a drawdown over the next coming two to three years with all of the battery technology that's going to happen, I certainly think copper is one of those places you need to be."

Created with Highcharts 11.4.3Sandfire Resources PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

Quite brilliantly for Sandfire, its major competitor is about to disappear.

Rival copper extractor OZ Minerals Limited (ASX: OZL) has been courted by BHP Group Ltd (ASX: BHP) for a takeover throughout this year.

And finally, last week, the big Australian got its way, with Oz Minerals agreeing to a 100% acquisition.

"If you take Oz Minerals out of the equation… the only real large copper player left on this market is Sandfire," said Dawes.

"So a lot of that institutional money that will flow out of Oz Minerals when it goes into BHP has to go somewhere. And the first port of call would be Sandfire."

Making hay while competitors are demoralised

Respiratory medical device maker Resmed CDI (ASX: RMD) is Dawes' other ASX share pick.

"We're very overweight in healthcare, and this does really offer defensive earnings in any kind of storm."

Resmed's advantage comes from rival Koninklijke Philips NV (AMS: PHIA) having to perform a safety recall for its devices.

While that episode started last year, it is still having lasting effects.

Created with Highcharts 11.4.3ResMed PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

"It's a dominant player in the CPAP marketplace, which we're really really comfortable with," said Dawes.

"Resmed is definitely on its way to continuing to keep up that market share and becoming dominant in that space, now that Philips had a couple of product recalls."

He added that the addressable market in sleep apnea treatment is huge, and that market is growing at a much faster rate than the general healthcare industry.

The Resmed share price is down 7% year to date.

Motley Fool contributor Tony Yoo has positions in ResMed Inc. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended ResMed Inc. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Investing Strategies

an older woman holds a handful of paper money in her hands and looks at them with a slightly crazy smile on her face wearing her spectacles on a string as a lot of older people do.
Dividend Investing

I rate these 2 high-yield ASX dividend stock as buys

These businesses could pay big passive income.

Read more »

Woman and man calculating a dividend yield.
Dividend Investing

With the 13% dividend yield, is the GQG share price a buy?

This stock has a huge dividend yield. Does it offer more than that?

Read more »

an older couple look happy as they sit at a laptop computer in their home.
Dividend Investing

Forget term deposits and buy these ASX dividend stocks

Analysts think these shares could be top alternatives to term deposits.

Read more »

A young boy points and smiles as he eats fried chicken.
Dividend Investing

1 ASX dividend stock down 41% I'd buy right now

This stock could produce some tasty returns.

Read more »

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Growth Shares

Where to invest $50,000 in ASX shares

Analysts think these shares could be great destinations for your hard-earned money.

Read more »

Excited couple celebrating success while looking at smartphone.
Dividend Investing

2 fantastic ASX dividend shares to buy while they are cheap

Let's see why brokers think these shares are buys for income investors.

Read more »

A mature woman holds a plate of cake and licks her thumb.
Dividend Investing

Want a 5% yield from US stocks like Amazon? Buy this ASX dividend share

It's possible to have your cake and eat it too.

Read more »

Man looking amazed holding $50 Australian notes, representing ASX dividends.
Dividend Investing

5 top ASX dividend shares to buy next week

Analysts have good things to say about these shares. Let's see what they offer.

Read more »