The August reporting season delivered a deluge of ASX share information for investors to process. In the two weeks since most ASX companies reported their half or full-year earnings for FY24, the dust has settled, and enough time has passed for clear judgements to be made.
Some company results were met with disappointment, while others drew praise and astonishment. For the humble stock picker, emotions are better left on the sideline. As Winston Churchill said, "Hasty work and premature decisions lead to penalties out of all proportion to the issues immediately involved."
Now, as the impulse to act immediately on new information fades, our team of Foolish writers have poured their thoughts into which companies are befitting of 'top ASX share' status after flipping through pages of financial reports.
Here is what the team came up with:
6 best ASX shares to buy after their top earnings results
- Appen Ltd (ASX: APX), $344.46 million
- Objective Corporation Ltd (ASX: OCL), $1.39 billion
- Lovisa Holdings Ltd (ASX: LOV), $3.44 billion
- Coles Group Ltd (ASX: COL), $25.34 billion
- Macquarie Group Ltd (ASX: MQG), $86.58 billion
- CSL Ltd (ASX: CSL), $145.39 billion
(Market capitalisations as of market close 13 September 2024).
Why our Foolish writers love these ASX stocks
Appen Ltd
What it does: Appen provides a range of data — including natural language, video, and alphanumeric data — to improve search and social media engines. The company has recently shifted its focus to providing data solutions and services for artificial intelligence (AI) applications.
By Bernd Struben: With Appen reporting half-year revenue of $113 million, down 18% from the first half of 2023, you may be wondering why the ASX tech stock earned a spot in this article.
My reasoning is simple.
Virtually all of the half-year revenue decline stems from the termination of Appen's Alphabet Inc Class A (NASDAQ: GOOGL) contract. And with the company's growing footprint in the booming generative AI market, I believe the future is bright — with or without Google's business.
Nobody knows exactly where AI is heading. We do know it's already a game changer and that its rapid development is highly unlikely to slow down. We also know that developing generative AI requires huge amounts of high-quality data.
And, as the Appen's CEO Ryan Kolln pointed out, the company's "expertise, platform, and global crowd workforce are becoming crucial sources of data for many leading [AI] model builders".
After a rough few years, the Appen share price has rebounded in 2024, up 146% year to date.
Motley Fool contributor Bernd Struben does not own shares in Appen Ltd.
Objective Corporation Ltd
What it does: You won't find Objective's products in your kitchen or living room. And yet, its customers are dispersed across more than 60 countries. Playing a pivotal role in private and public organisations, Objective's software streamlines processes across content management, planning policy, and regulatory requirements.
By Mitchell Lawler: I compared Objective Corp to TechnologyOne Ltd (ASX: TNE) almost two years ago, drawing attention to the similarities between the companies regarding quality and strategic approach. Since then, TechnologyOne shares have nearly doubled in value, while Objective's share price is unchanged.
Nevertheless, Objective's FY2024 results continued to show promise for its future prospects. Much like TechnologyOne, Objective's software-as-a-service revenues are sustaining strong growth, and the bottom-line earnings – which increased 49% from FY23 – suggest a high degree of operating leverage.
The result reinforces my confidence that the future is bright for this founder-led company. I believe Objective's cashed-up balance sheet and large reinvestment in research and development will propel the business to new heights over time.
Motley Fool contributor Mitchell Lawler does not own shares of Objective Corporation Ltd.
Lovisa Holdings Ltd
What it does: Lovisa sells affordable jewellery to younger shoppers. It has a growing global retail store network and is investing in its e-commerce offering. Some of the countries it has stores include Australia, New Zealand, the United States, the United Kingdom, France, Germany, Spain, Mexico and Canada.
By Tristan Harrison: I'm choosing Lovisa again because I'm still excited about its potential. The Lovisa share price dropped recently after the troubling update regarding CEO-to-be John Cheston who had been sacked with immediate effect from Smiggle for alleged misconduct.
At the time of writing, it's not clear what Lovisa is going to do.
I believe Lovisa can continue to deliver growth regardless of who is in charge. The company has a winning strategy that doesn't necessarily require any bold decisions. It just needs to keep opening profitable stores in existing markets and enter new markets that make sense.
In FY24 alone, it added 99 stores, reaching a global total of 900. It entered several promising markets, including China, Vietnam, and Ireland.
FY24 saw revenue growth of 17.1% and net profit growth of 20.9%, largely thanks to the new stores.
I think there is scope to significantly add to its store network over the next five to 10 years, which could help the business grow its profit margins thanks to scale benefits. Lovisa's growing dividend is a useful bonus to owning the ASX share.
Motley Fool contributor Tristan Harrison owns shares of Lovisa Holdings Ltd.
Coles Group Ltd
What it does: Coles is the second-largest grocer in the country. This company owns the eponymous Coles supermarket chain, as well as the Vintage Cellars, Liquorland and First Choice bottle shop chains.
By Sebastian Bowen: For me, Coles' earnings report was one of the highlights of the recent earnings season. Coles previously posted some quarterly updates that indicated the company was doing well at the expense of its major competitor, Woolworths Group Ltd (ASX: WOW). But the company's full-year earnings confirmed this trend.
Coles reported a 5.7% rise in revenues and a 4.1% increase in underlying net profits after tax, which enabled the company to announce a hiked final dividend.
In contrast, Woolworths delivered a 3.7% lift in revenues over the same period but a 3% fall in underlying net profits. As a result, Woolworths' ordinary final dividend was cut.
In my view, Woolies' numbers make Coles' even more impressive. It shows that Coles is clearly making headway in its sector and continuing to gain market share. As a result, I think Coles' 2024 full-year earnings are very impressive, and bode well for the company's (and shareholders') futures.
Motley Fool contributor Sebastian Bowen does not own shares of either of the stocks mentioned.
Macquarie Group Ltd
What it does: Macquarie is a diversified investment bank with a footprint in several markets, including capital markets, commercial and retail banking, infrastructure, and commodities.
By Zach Bristow: The breadth of Macquarie's operations means it has access to any number of prosperous investment themes. In 2022, the bank's commodities division outperformed as commodity markets roared while equity markets stayed silent. In 2023, it was the exposure to infrastructure and hard assets. Now, the bank has two new tailwinds behind it.
First is the growth in its lending book. After growing by 1.6% in July, it now has 5.5% of the residential and investment mortgage market.
This is more than five times faster than its banking major peers.
Second is the proceeds Macquarie locked in following the sale of its stake in AirTrunk. The data centre provider was sold to Blackstone for $24 billion, and Macquarie's combined interest – along with the Public Sector Pension Investment Board – was 88%. You do the math.
JP Morgan estimates Macquarie will have up to $1.3 billion to play with due to performance fees earned on the sale.
With this amount of extra dry powder, my eyes are drawn to three potential options: dividends, buybacks, or reinvesting back into the business to grow.
All scenarios are favourable in my view. The stock is rated a buy from consensus, according to CommSec.
Motley Fool contributor Zach Bristow does not own shares of Macquarie Group Ltd.
CSL Ltd
What it does: CSL is the global biotechnology company behind the CSL Behring, CSL Vifor, and CSL Seqirus businesses. These are leaders in their respective fields of plasma therapies, iron deficiency treatments, and influenza vaccines.
By James Mickleboro: I was impressed with CSL's performance in FY 2024. The ASX healthcare share reported an 11% increase in revenue to US$14.8 billion and a 15% jump in net profit after tax before amortisation (NPATA) to US$3.01 billion.
Although all divisions of the company contributed, the star of the show was the key CSL Behring business, which delivered a 14% increase in total revenue to US$10.61 billion. This was driven by strong demand for its Immunoglobulins (Ig).
And while CSL's guidance for FY 2025 may have underwhelmed, I suspect management may have been conservative with its NPATA growth guidance of 10% to 13%. Particularly given the increasing demand it is experiencing for Immunoglobulins and its improving plasma collection margins.
Analysts at Morgans remain very positive on CSL. They responded to the result by retaining their add rating with an improved price target of $330.75.
Motley Fool contributor James Mickleboro owns CSL Ltd shares.
