The start of 2024 looks like a great time to invest in ASX shares. Some share prices are below their all-time highs and interest rate cuts may be coming later this year.
I'm always on the lookout for good businesses at good prices. I think the below ten are well worth an investment for the long term.
Bailador Technology Investments Ltd (ASX: BTI)
This company invests in relatively small, but growing technology businesses that have international revenue generation, a large market opportunity and attractive unit economics.
Bailador is currently trading at a sizeable discount to its underlying value, the net tangible assets (NTA) per share. It also offers a dividend yield of 4% of the pre-tax NTA, so the yield is even bigger right now because of the valuation discount it's trading at.
I think Bailador's portfolio of businesses can outperform the S&P/ASX 200 Index (ASX: XJO) over the next three to five years, particularly as interest rates come down.
Close The Loop Ltd (ASX: CLG)
This ASX share is focused on the circular economy, meaning recycling and ensuring that zero waste goes to landfill.
Its core offering is collecting various products and then turning them into consumer goods.
Close The Loop can grow its business organically with its existing businesses as more households and businesses look to become more environmentally friendly. This ASX share can also make acquisitions to expand into other forms of recycling.
Centuria Office REIT (ASX: COF)
This is a real estate investment trust (REIT) that owns a portfolio of office buildings. It owns properties around the country but has less exposure to the Sydney and Melbourne markets than one might expect. Those smaller Australian markets have generally performed quite well and are avoiding the disaster other places in the world are seeing.
I think the market may have oversold this ASX share, particularly if interest rates start falling this year. One of the things that makes me think that is the size of the distribution yield, which is projected to be 9.4% in FY24, according to Commsec.
Frontier Digital Ventures Ltd (ASX: FDV)
This ASX tech share has fallen heavily since its peak in 2021, it's a lot cheaper. It has been working on its profitability during this period and it's now reporting a small (positive) earnings before interest, tax, depreciation and amortisation (EBITDA) and positive cash flow.
It has invested in a number of classifieds website businesses (like real estate and cars) in emerging markets like Latin America and Asia. I think digital adoption alone in those countries is a strong tailwind for the underlying businesses. Adding additional users can be a real boost for profit because of the operating leverage and network effects.
GQG Partners Inc (ASX: GQG)
GQG is a fund manager based in the US, which is looking to expand overseas in countries like Canada and Australia.
The fund managers' investment fund performance has done well, which organically grows funds under management (FUM). It also helps attract more FUM.
GQG isn't priced highly considering it's growing earnings at a decent rate and it pays a large dividend yield thanks to its dividend payout ratio of 90% of distributable earnings.
Johns Lyng Group Ltd (ASX: JLG)
Johns Lyng is an ASX share that specialises in offering repair and rebuild services after an insured event, like flooding, storms or a fire. It's rapidly growing its exposure to and revenue from catastrophe work, with clients like local and state governments.
The business is seeing impressive double-digit growth each year, and it's displaying operating leverage, enabling its profit to grow a bit quicker than revenue.
I'm also pleased to see the business is expanding into bolt-on areas that can extract synergies with the main business units. I'm talking about its acquisitions focused on body corp/strata services, as well as electrical, gas and fire safety and compliance. These areas offer defensive, recurring earnings and plenty of room to grow market share.
Lovisa Holdings Ltd (ASX: LOV)
Lovisa is a retailer that sells affordable jewellery. It makes good profit margins on its products, and it doesn't cost much to open new stores.
The company has been rapidly growing its store network around the world, entering markets like Canada, Mexico, China and Vietnam. Lovisa's sales and profit seem to be climbing at roughly the same rate as its store network up until FY23 – I think it can double its store count over the next five years and continue to pay a nice dividend yield.
Vaneck Morningstar Wide Moat ETF (ASX: MOAT)
This is an exchange-traded fund (ETF) that has produced very strong long-term returns, though that's no guarantee for the future. I like its investment style – it targets businesses that have competitive advantages which are expected by Morningstar analysts to almost certainly endure for the next decade and more likely than not endure for 20 years.
It only buys businesses when Morningstar thinks these competitively-advantaged businesses are trading materially below what Morningstar thinks they're worth.
Pinnacle Investment Management Group Ltd (ASX: PNI)
Pinnacle is a business that helps leading fund managers start their own businesses and also takes a stake. In addition, it offers a number of services like legal, compliance, distribution, seed funding and so on, allowing the fund manager to just focus on the investing.
I think this business is associated with a group of quality managers that will be able to deliver outperformance and attract more FUM.
With asset markets rebounding and seeming more confident, I think this is a strong tailwind for the company over the next financial year or two.
Xero Limited (ASX: XRO)
This ASX tech share is still down 25% from November 2021, but it has grown its revenue and profit considerably since then.
The cloud accounting software company is focusing a bit more on balancing growth and profit from now on.
I think this business can become one of the most profitable on the ASX (outside of the big miners and banks), with an incredibly high gross profit margin, which means extra revenue adds a lot of extra usable money for investing in growth or boosting the bottom line.
