What a whirlwind year 2023 has been. The Reserve Bank of Australia lifted interest rates to 4.35%, new conflicts erupted while existing ones continued, and investment banks crumbled. Yet, here we are, basking in a green year for ASX shares as the S&P/ASX 200 Index (ASX: XJO) clocks a final 8.1% return before dividends.
It goes to show the value of staying invested through thick and thin. The reality is there's no telling what the share market will do week by week, month by month — heck, even year by year is anyone's guess. Nonetheless, the general trend for society over centuries is one of up and to the right. With enough time, companies tend to come up with more life-improving gadgets, and our collective wealth grows.
I don't know what 2024 will bring, but I do know I'd rather be invested in ASX shares than not. Much like last year, I've put together a list of 10 locally listed companies I believe could offer the finest selection among the ASX for the year ahead (and beyond).
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Skyscrapers in the making
Unlike 2022, the fast-paced growth shares have been back in vogue this year as investors anticipate rate cuts. The potential of looser monetary policy and cheaper funding has arguably propelled the information technology sector up 28% this year — beating out all other ASX sectors.
Some might then assume it's time to be contrarian and exit 'growth' now… I'm not so foolish to think I have a chance of making such bold predictions. Rather, I simply choose to stay skewed towards 'growth' due to my time horizon and risk appetite.
In this area of the market, I'm fond of the opportunities within Block Inc (ASX: SQ2), Netwealth Group Ltd (ASX: NWL), Nanosonics Ltd (ASX: NAN), and Jumbo Interactive Ltd (ASX: JIN). Each of these companies houses considerable innovation. Additionally, all bar Nanosonics have some degree of founder involvement, which is a big plus in my books.
I think these four ASX shares are trading at relatively attractive valuations for their upside potential.
Solid foundations to build on
Whispers of a possible recession in 2024 remain in circulation. Again, this is merely another prediction that may or may not manifest next year. My approach is to construct a portfolio that thrives under all economic conditions. As such, I like to include companies that I'd describe as 'defensive growth'.
On a side note, I consider growth a redundant term in investing. If a company isn't 'growth' to some extent, then it's a shrinking stock. Is anyone out here intentionally investing in shrinking stocks? I digress.
In the defensive corner, my top ASX shares for 2024 are Propel Funeral Partners Ltd (ASX: PFP), Resmed CDI (ASX: RMD), Supply Network Ltd (ASX: SNL), and Sonic Healthcare Ltd (ASX: SHL).
In my view, each of the businesses operates in recession-resistant industries and possesses a durable moat.
For example, Sonic Healthcare provides diagnostic services, a necessity in all environments. Furthermore, Sonic is at such an enormous scale, allowing it to acquire the most advanced equipment and offer the fastest turnaround over many of its peers.
Collecting rent with my top ASX income shares for 2024
If I wanted to boost my income next year, there are two companies at the top of my list — Harvey Norman Holdings Limited (ASX: HVN) and National Storage REIT (ASX: NSR).
The Harvey Norman share price has ebbed and flowed throughout 2023, settling at a flat return for the 12 months. It appears the market is rattled by the 34% decline in net profit after tax (NPAT) in FY23, giving rise to a 6.1% dividend yield. However, I believe this retailer is simply experiencing the effects of reduced consumer spending, not structural decline.
Secondly, National Storage is brandishing a 4.8% dividend yield. The predictability of this 'boring business' and its reasonable forward price-to-earnings (P/E) ratio of 20 times puts this storage operator on my top ASX shares list for 2024.
