Why I think these 2 bargain ASX 300 shares are buys

2025 could be a good year for these stocks, here's why…

| More on:
Cheerful girl deciding between tops in a stylish boutique.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

There are several S&P/ASX 300 Index (ASX: XKO) shares that could be excellent investments right now.

Some businesses have suffered from high interest rates, but the Reserve Bank of Australia (RBA) may cut rates this year.

In its December statement, the Australian central bank said:

The November SMP forecasts suggest that it will be some time yet before inflation is sustainably in the target range and approaching the midpoint. Recent data on inflation and economic conditions are still consistent with these forecasts, and the Board is gaining some confidence that inflation is moving sustainably towards target.

That's promising, in my view, for the companies that are suffering from higher interest costs.

The two stocks below are so cheap that I think they don't require rate cuts to do well, but they would be an added bonus.

Dexus Industria REIT (ASX: DXI)

This real estate investment trust (REIT) is operated by fund manager Dexus (ASX: DXS).

The business recently had all 93 of its assets externally valued, leading to a 2.4% increase in their values. Dexus is primarily invested in quality industrial warehouses located across Australia's major cities. It aims to provide a mixture of sustainable income and capital growth over the long term.

The income it provides is backed by an occupancy rate of more than 99% and a weighted average lease expiry (WALE) of more than five years.

Its portfolio includes rental increases, a combination of fixed rental increases (currently 3.2% per year growth) and CPI-linked increases. This can help drive rental profit and distribution higher in the coming years.

The ASX 300 share expects to pay a distribution of 16.4 cents per security in FY25, which translates into a distribution yield of 6.25%. It's trading at less than 15x its expected FY25 rental profit.

The Dexus Industria REIT share price has dropped close to 30% since September 2021, so it's a lot cheaper now despite the rental income growth. I believe any future interest rate cuts could be a sizeable catalyst for this business.

Brickworks Ltd (ASX: BKW)

The Brickworks share price has fallen 18% since March 2024, with the building products businesses suffering from lower demand in Australia.

The ASX 300 share has an impressive market presence in areas like bricks and pavers, stone and masonry, and roofing. Australia's population has grown significantly in the last few years, so I'm expecting building product demand to resurface once the interest rate headwinds reduce.

Any rate cuts could also benefit Brickworks' 50% stake in an industrial property trust. Its partner is the industrial property giant Goodman Group (ASX: GMG).

Brickworks occasionally sells land that exceeds its building product manufacturing requirements into the trust. Goodman then builds large industrial properties on that land, which are leased out to major tenants, such as AmazonColes Group Ltd (ASX: COL), and Woolworths Group Ltd (ASX: WOW).

Building these warehouses increases the value of the land and unlocks rental profits, allowing Brickworks to pay an increasing dividend to shareholders.

The outlook for industrial properties is good, thanks to tailwinds such as e-commerce adoption, population growth, and data centre demand.

Over the long-term, I believe its ownership of approximately a quarter of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares is also a big plus. Soul Patts' diversified and growing portfolio can help Brickworks with long-term capital growth and dividend growth.

Brickworks is one of the stocks I recently boosted my holding of.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tristan Harrison has positions in Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon, Brickworks, Goodman Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks, Coles Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Amazon and Goodman Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Opinions

A female miner wearing a high vis vest and hard hard smiles and holds a clipboard while inspecting a mine site with a colleague.
Resources Shares

3 reasons why the Rio Tinto share price could be a buy

Let’s dig into why I like this ASX mining share.

Read more »

A green shoot protrudes between two pavers on the ground with the fading sun in the background
Opinions

Why I think these 2 underrated ASX shares are steals

These businesses are trading too cheaply, in my view.

Read more »

Retired couple hugging and laughing.
Opinions

Why I think these ASX 200 stocks are great for Aussies in their 60s

These stocks could provide what retiring Aussies are looking for…

Read more »

A head shot of legendary investor Warren Buffett speaking into a microphone at an event.
Opinions

Would Warren Buffett invest in this impressive $10 billion ASX 200 share?

Would the Sage from Omaha want to buy this business?

Read more »

Middle age caucasian man smiling confident drinking coffee at home.
Opinions

Why I made this ASX share the biggest position in my portfolio

This stock offers virtually everything that I want from an investment.

Read more »

A boy stands in front of two similar but slightly different doors, scratching his head as to which one to choose.
Opinions

Should I buy Brickworks or Soul Patts shares?

Both of these stocks offer a two-for-one deal.

Read more »

Doctor checking patient's spine x-ray image.
Opinions

Pro Medicus shares drop 7%: falling knife or buying opportunity?

The healthcare tech company has had a painful March.

Read more »

Broker working with share prices on computers.
Opinions

2 high-quality ASX 200 stocks to buy for the long-term

Experts have revealed two ASX 200 stocks worth owning in a quality portfolio.

Read more »