It's certainly been a rollercoaster for ASX investors in 2022. But now, it's time to disembark and begin a whole new ride!
Will rising inflation and recession fears derail the carriage again in 2023? Or will China fully reopen and central banks turn dovish to prevent any major big dippers?
Stay tuned! But in the meantime, we asked our Foolish contributors for their thoughts on which are the best shares to bring joy to your ASX ride in 2023.
Here is what the team came up with:
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7 best ASX shares for January 2023 (smallest to largest)
- Mach7 Technologies Ltd (ASX: M7T), $164 million
- Elders Ltd (ASX: ELD), $1.58 billion
- Deterra Royalties Ltd (ASX: DRR), $2.43 billion
- Metcash Limited (ASX: MTS), $3.75 billion
- iShares Global Consumer Staples ETF (ASX: IXI), $4.06 billion
- Allkem Ltd (ASX: AKE), $7.18 billion
- Qantas Airways Limited (ASX: QAN), $10.99 billion
(Market capitalisations as of 4 January 2023)
Why our Foolish writers love these ASX shares
Mach7 Technologies Ltd
What it does: Mach7 Technologies provides and develops image management and viewing solutions in the healthcare sector. The core of these offerings is its Mach7 Enterprise Imaging Solution.
By Bernd Struben: Mach7 is on the smaller end of the investment spectrum with a market cap of some $165 million. Yet it has a global reach into the large and growing medical imaging markets.
In the first quarter of FY23, the company reported annual recurring revenue (ARR) of $17.9 million, up 3.2% from the prior quarter. While cash receipts were down from the prior quarter, Mach7's balance sheet was solid, with $21.5 million in cash and no debt.
The company kicked off 2023 announcing the largest customer contract in its history. The 10-year deal with NASDAQ-listed Akumin Inc has a total contract value of approximately $16.7 million. The Mach7 share price surged 18% on the day of the announcement. But I believe there could be more gains in the months ahead.
Motley Fool contributor Bernd Struben does not own shares in Mach7 Technologies.
Elders Ltd
What it does: Elders is an agribusiness company providing services for those in industries such as livestock, wool, and grain. It also offers real estate services, home loans, and insurance products, among other various avenues.
By Brooke Cooper: A new year has dawned, and it's likely brought plenty of new investing opportunities. Alas, I've got my eye on an old one.
Elders has been around for more than 180 years, but the last one has been particularly rough on its share price. It's fallen 16% over the last 12 months.
Recent selloffs in the company have been excessive, in the eyes of both myself and broker Goldman Sachs.
The broker believes Elders is "very well-positioned to grow through the cycle", slapping it with a buy rating and an $18.40 price target. This represents a potential 82% upside.
Motley Fool contributor Brooke Cooper does not own shares in Elders Ltd.
Deterra Royalties Ltd
What it does: Deterra Royalties collects a fee from royalty assets it holds in its portfolio. The main contributor to the company's financials is its royalty over the Mining Area C iron ore mining operation in the Pilbara region.
By Mitchell Lawler: Inflationary pressures have shone a light on businesses with low operational costs. Companies with minimal employee expenses, material costs, and debt could be well situated this year.
Deterra Royalties appears to be one such company thanks to its royalty business model. Due to the lack of capital-intensive operations, Deterra touted a 97% gross profit margin in FY22 and a net income margin of 67%.
The risk to this company's bottom line is iron ore demand. There is concern stemming from China's challenging exit from a zero-COVID policy. However, I'd expect China will find its feet eventually, much like the rest of the world.
Motley Fool contributor Mitchell Lawler does not own shares in Deterra Royalties Ltd.
Metcash Limited
What it does: Metcash operates three different divisions. It is a food supplier for independent supermarkets around Australia, namely IGA, and a liquor supplier for brands such as Cellarbrations, The Bottle-O, IGA Liquor and Thirsty Camel. The company also owns hardware brands, including Mitre 10, Homeware Timber & Hardware and Total Tools.
By Tristan Harrison: Investors looking for stability during this uncertain time could do well with Metcash, in my opinion. I think its food and liquor earnings can be resilient, as we saw during the COVID-19 period. The Australian population's continued growth could be a boost, particularly for the food division.
I'm excited by the potential of the hardware division as it expands its number of locations and grows profitability. The hardware division is now making the most profit and saw 8% sales growth in the first four weeks of the FY23 second half.
According to Commsec, Metcash could pay a grossed-up dividend yield of 7.7% in FY23, which would boost total returns.
Motley Fool contributor Tristan Harrison does not own shares in Metcash Limited.
iShares Global Consumer Staples ETF
What it does: This exchange-traded fund (ETF) represents a basket of global companies specialising in consumer staples products like food, drinks, vices and household essentials.
By Sebastian Bowen: Happy New Year! Like 2022 before it, 2023 is shaping up to be a year of unknowns and risks. Rising interest rates have led to predictions of another recession this year.
With all of this uncertainty, I think it's a good time to turn to companies that can thrive in all economic climates: consumer staples. No matter what the economy is doing, we all need to eat drink and keep our homes running.
As such, I believe that the iShares Consumer Staples ETF, housing top-notch names like McDonald's, Kellogg and Colgate-Palmolive, provides a solid foundation for an ASX share portfolio in the new year.
Motley Fool contributor Sebastian Bowen owns shares in McDonald's.
Allkem Ltd
What it does: Allkem is a speciality lithium products company with a global portfolio of diverse and high-quality lithium chemicals.
By James Mickleboro: My first pick this year is lithium miner Allkem. The lithium industry has been going through a tough period in recent weeks amid concerns that prices have peaked. And while a peak was inevitable eventually, this doesn't mean the end of the road for Allkem. Far from it!
Thanks to its plan to grow production four times over in the coming years, it remains well-placed to continue generating bumper profits even as prices ease.
In fact, even Goldman Sachs, which is extremely bearish on lithium prices, believes Allkem shares are a buy. It currently has a buy rating and $15.20 price target on them.
Motley Fool contributor James Mickleboro owns shares in Allkem.
Qantas Airways Limited
What it does: Qantas is Australia's leading operator of international and domestic air transportation services. It also provides freight services and has a lucrative frequent flyer loyalty program.
By James Mickleboro: Another ASX share that I would buy this month is Australia's flag carrier airline, Qantas. Despite its shares smashing the market in 2022, I still believe they are attractively priced. Especially given how the airline has come out the other side of the pandemic as a significantly stronger business.
For example, Goldman Sachs forecasts FY 2023 earnings per share almost 60% higher than FY 2019's pre-COVID levels. And that's despite the company operating with a group capacity 20% lower than 2019 levels. Yet despite this, Qantas shares have closed out the year notably lower than where they ended 2019.
Goldman currently has a conviction buy rating and an $8.20 price target on its shares.
Motley Fool contributor James Mickleboro does not own shares in Qantas.
