I've utilised the ability of my superannuation fund which allows me to invest in S&P/ASX 300 Index (ASX: XKO) shares. One ASX share has more than doubled in value, and it has been my best performer in the relatively short period of time that I've been stock-picking in my superannuation fund.
I'm not suggesting that anyone should invest like that with their own fund – my focus here is to show that investing in particular businesses can work out well if we invest at the right time, no matter what the ownership structure is.
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Temple & Webster Group Ltd (ASX: TPW)
My investment return currently shows a gain of over 110% since the investment in late October 2023.
When I think about Temple & Webster's future, I think it has a compelling future. It can benefit from Aussies adopting online shopping. That has been a tailwind for a long time already for the company, but as the younger (digital-savvy) Aussies enter their bigger-spending years, it bodes well for the ASX share, in my opinion.
Shopping for homewares and furniture is seen as a discretionary category, meaning a downturn could be bad news for the company. I understand why the market was pessimistic about the high-growth business amid inflation and higher interest rates.
Why I decided to invest
I love looking at cyclical ASX shares when they're at a weak point of a cycle. Share prices usually don't fall for no reason, something has to worry investors. But, I think this is when we can see the best valuations to invest at.
Temple & Webster has continued to grow during this period, gaining market share. In the FY24 first-half result, it saw revenue growth of 23% thanks to growth of both repeat and first-time customers. It reached 1 million active customers for the first time in February 2024. Amazingly, in the period 1 January 2024 to 11 February 2024, revenue was up 35% year over year.
An e-commerce business has a number of advantages compared to bricks and mortar retailers. Once the digital infrastructure has been built it can materially benefit from increased scale, profit margins can increase thanks to a number of factors, the fixed costs can become a smaller percentage of revenue, it can get better terms with suppliers, and it can invest more in areas such as marketing.
I'm excited by what the business can become in five years, particularly if it reaches its goal of $1 billion in annual sales sooner rather than later.
Great businesses sometimes see volatility and go through heavy declines. I view those times as a chance to buy a compelling business at a much cheaper price.
I wouldn't despair if the Temple & Webster share price went through more pain because I'd view that as another chance to buy it at a great price.
I'm not looking to sell the ASX share in my superannuation fund, I think it can become much bigger in the long-term. But, I'd be happy to wait for some more volatility before buying for my portfolio seeing as it's already the largest position in the stock-picking part of my fund.
