Are you just starting out on an investment path? Perhaps you've been sitting on the sidelines waiting for the perfect time to dive in and buy some ASX shares.
Meanwhile, you may have watched incredulously as the Aussie stock market soared 18% over the past year and cracked multiple all-time highs in the process.
Now what? Are you thinking perhaps you should hold off and wait to buy the dip? Is now really a good time to invest?
As Motley Fool's chief investment officer, Scott Phillips, wrote this week, no one knows what the market will do next, especially in the short term. And Scott's advice? "Just keep investing!"
Scott explained that over his almost 30 years of investing, he didn't "try to time the market". He just "saved regularly, invested steadily, and stayed the course". He further highlighted that the stock market "has never yet failed to regain, then surpass, a record high".
So, we asked our Foolish writers which ASX shares they think are great buys right now for beginner investors.
Here is what they came up with:
6 best ASX shares for newbie investors in October 2024 (smallest to largest)
- Nick Scali Limited (ASX: NCK), $1.35 billion
- Betashares Nasdaq 100 ETF (ASX: NDQ), $4.94 billion
- VanEck MSCI International Quality ETF (ASX: QUAL), $6.20 billion
- Argo Investments Limited (ASX: ARG), $6.76 billion
- Woolworths Group Ltd (ASX: WOW), $40.29 billion
- Resmed Inc (ASX: RMD), $50.93 billion
(Market capitalisations as of market close 4 October 2024).
Why our Foolish writers love these ASX stocks
Nick Scali Limited
What it does: When looking to style a living or dining room, Nick Scali is a brand that often comes to mind. Boasting 128 store locations across Australia and New Zealand, the high-end furniture retailer is well-established locally. But Nick Scali is no couch potato, expanding into the United Kingdom more recently.
By Mitchell Lawler: When I think about what makes a good ASX share for beginners, there are two key traits I'm looking for:
- An easy-to-understand business (preferably one you're a customer of)
- Simple and solid fundamentals for valuing the business.
I frequently hear of people who 'tried' investing and now swear off it altogether. Almost every time, it involved an extremely speculative company, often in a pre-profit stage, leaving would-be investors to assign a valuation based mostly on hopes and dreams.
Nick Scali is not that. This company has survived and thrived for 62 years, is highly profitable (~17% net margin), and can be easily assessed on real returns to shareholders today (not some arbitrary point in the future).
Plus, at a price-to-earnings (P/E) ratio of 17 times and a projected annualised earnings growth rate of 10%, I believe Nick Scali trades on an undemanding valuation.
Motley Fool contributor Mitchell Lawler does not own shares of Nick Scali Limited.
Betashares Nasdaq 100 ETF
What it does: This ASX exchange-traded fund (ETF) seeks to mirror the performance of the NASDAQ-100 Index (NASDAQ: NDX), before fees.
By Bronwyn Allen: We live in an increasingly technological age, so I think the NDQ ETF provides a great no-brainer investment for beginners.
The ETF tracks the NASDAQ-100 index, which represents the largest 100 companies on the NASDAQ exchange. The NASDAQ-100 is full of tech stocks, including big names like Alphabet, Nvidia, and Microsoft, as well as many leading global companies in other sectors.
Betashares investment strategist Tom Wickenden reckons the NASDAQ-100 is home to global innovators, who are more likely to deliver superior earnings growth in the future.
The companies comprising the NASDAQ-100 have a global revenue base, and the index has opposite sector weightings to the ASX 200. This makes NDQ a great complementary holding next to an ASX index-based ETF. The ASX NDQ also has a great track record, delivering an average total return of 20.23% per year since 2019.
Motley Fool contributor Bronwyn Allen does not own units of the Betashares Nasdaq 100 ETF.
VanEck MSCI International Quality ETF
What it does: This is a globally-focused ASX ETF that invests in a portfolio of businesses that rank highly on various quality factors.
By Tristan Harrison: I think beginner investors would be well-served by considering an ETF that provides instant diversification, owns high-quality shares and can deliver strong, long-term returns.
The QUAL ETF is invested in around 300 businesses from around the world. There are a number of countries represented in the portfolio, including the United States, Switzerland, the United Kingdom, Denmark, Japan, the Netherlands, France, Canada, Sweden, Italy, Ireland, and Germany.
To make it into the portfolio, companies must rank well on three factors: high return on equity (ROE), earnings stability, and low financial leverage. When you combine these elements, you'll find a very compelling business. Every single one of the holdings in this ETF is a high-quality company.
Past performance is not a reliable indicator of future returns, but the QUAL ETF returned an average of 16.5% in the five years to 31 August 2024. Some of its biggest positions currently include Nvidia, Meta Platforms, Apple, Microsoft, and Alphabet.
This is the sort of investment that could make solid returns for decades, in my opinion.
Motley Fool contributor Tristan Harrison does not own units of the VanEck MSCI International Quality ETF or any of the stocks mentioned.
Argo Investments Limited
What it does: Argo Investments is a listed investment company (LIC) that has been around for decades on the ASX. It invests in a portfolio of underlying shares on behalf of its shareholders, which it manages with trademark conservatism.
By Sebastian Bowen: When considering the right shares for a beginner on the ASX, I'm a big advocate for starting with broad-based investments that offer inherent diversification and minimal permanent capital loss potential.
In this vein, I think Argo is a great fit. This LIC has been around since the end of World War II. Over the subsequent decades, it has built up a reputation as being a solid, conservatively managed company that has delivered respectable growth and dividend income for its investors.
Argo holds a huge portfolio of investments dominated by blue-chip Aussie shares. These typically include everything from Commonwealth Bank of Australia and Telstra to Woolworths and Bunnings-owner Wesfarmers.
For one, this gives Argo shareholders a huge amount of safety, as their money isn't tied up to the fortunes of one single company. But it also means investors tend to enjoy an 'average' return, of sorts, of the whole stock market.
I think this is a perfect combination for a beginner investor who wants to start their investing journey with a toe dip.
Motley Fool contributor Sebastian Bowen owns shares of Telstra Group Ltd and Wesfarmers Ltd.
Woolworths Group Ltd
What it does: Founded in 1924 and listed on the ASX in 1993, Woolworths owns Australia's biggest supermarket chain. The company has more than 1,000 stores across the nation and more than 185 stores in New Zealand. Woolworths also owns Big W.
By Bernd Struben: When it comes to shares for beginners, I think Woolworths' lengthy track record makes it a good starter stock. And with inflation heading lower, customers may again boost spending even as Woolies' operating costs come down.
Now, Woolworths' stock has dropped 10% since 28 August as the government mulls over the alleged duopoly it shares with rival Coles. And the recent ACCC accusation of misleading sales price advertising hasn't helped improve investor sentiment.
But I believe both issues are temporary, and Woolworths should be able to weather the spate of unfavourable media coverage. This makes the recent share price retrace a potentially opportune entry point.
Atop the potential for a share price rebound, Woolworths is also a reliable dividend payer. At Friday's closing price of $32.98, Woolies shares trade on a fully franked trailing dividend yield of 4.37%.
Motley Fool contributor Bernd Struben does not own shares in Woolworths Group Ltd.
Resmed Inc
What it does: ResMed is a medical device company that focuses on developing, manufacturing, and distributing sleep disorder treatment solutions.
By James Mickleboro: If you are just starting your investment journey, then I believe it is important to focus on high-quality companies with the potential to grow materially over the long term.
ResMed ticks both of these boxes for me. Not only is it a global leader in sleep health, but it has one of the most positive growth outlooks on the Australian share market. For example, last week, the company released its five-year revenue and earnings guidance.
ResMed revealed it expects to help more than 500 million people worldwide achieve their full health potential in 2030. The company believes this will position it to grow revenue in the high single digits each year and earnings at an even quicker rate.
And while ResMed shares have already risen strongly over the past 12 months, analysts at Ord Minnett don't believe it is too late to invest. They recently put an accumulate rating and $39.00 price target on the stock.
Motley Fool contributor James Mickleboro owns shares of ResMed Inc.
