To determine the best ASX shares to buy at present, there are four factors every investor should take into consideration. The first factor is price. If you pay too much for a company (even if it is a good one) you blow up your returns. After all, your returns/profits are only judged by your entry and exit point. You want to 'buy low and sell high'. Unfortunately, there is no one metric or threshold to use to tell when a stock is overvalued, although investors can look at ratios such as the P/E ratio and compare this to technical tools.
The Second is the Company's Customers
Who are they? Do they exist in large quantities? Do they need the company’s products? Are they loyal to the company, would they remain so in the event of price rises or tough economic times, and if so why? It is important to invest in stocks that have a large current or potential market as this will guarantee sales and revenue over the long run.
The Third is the Company's Management
Do they make decisions in the long-term interests of the company? Do they have a proven track record, whether at one company or another? Again, you need to be able to answer yes to all questions. It is also good if they have 'skin in the game' - that is to say equity ownership in the business because this aligns their interest with yours as an investor.
Fourth is the Competition in the Market
Is there competition or is the company in a monopoly situation? Preferably the latter, although it is a rare situation. And so how does the company stand out from its competitors? What is its competitive advantage? How is its product superior? What is the risk that the company could be overtaken by competitors? Investors should also consider the economic climate and how it may impact their investment. But ideally, investors should own stocks that will be unaffected by economic conditions. Nonetheless, there's nothing wrong with owning a stock that will benefit from certain economic conditions, as long as these eventually become true.
Here are four stocks that perform well based on these metrics even as this article does not detail each indicator for these stocks. They nonetheless have large consumer bases, good management, and good prospects over the medium term.
- Breville (ASX: BRG)
Breville is a premium kitchen appliances business with a presence in Australia, Europe, and the Americas. It was founded in 1932 – founded from capital obtained from a successful 4-to-1 bet at the 1932 Melbourne Cup. Breville sells nearly $1.5bn in goods each year in over 100 countries globally and caters to middle to higher-income earners. It is headquartered in Sydney and has manufacturing facilities in China and regional offices in key markets. It is a stock to watch.
- Reliance Worldwide (ASX: RWC)
Reliance is the leading producer of PTC (push-to-connect) behind-the-wall plumbing fittings in Australia. The push-to-connect fittings made of brass are the main offering from Reliance Worldwide and plumbers can save time by using these devices instead of traditional soldering techniques to join parts.
- Xero (ASX: XRO)
One of ASX's top-performing tech stocks in the past ten years is Xero (ASX: XRO), which provides accounting software to SMEs to help them run their businesses. Despite being severely damaged by the Tech meltdown of 2022–2023 and losing half of its value in that year, its share price has recovered strongly in the last several months and we anticipate further growth in FY25.
- Universal Store (ASX: UNI)
Universal Store is a chain of casual fashion stores aimed at Millennial and Gen Z customers (think 18-35 year olds). Universal Store has 79 stores across Australia, which tend to be in major shopping centers, as well as a further 20 or so stores exclusive for particular brands like Perfect Stranger, and the group makes 14% of its sales online.
- CSL (ASX: CSL)
As ASX's largest healthcare company, it is one of the few that have a market capitalisation that is above $100bn. It is renowned for its flu vaccines and blood plasma businesses and continues to undertake R&D work. CSL was once a government entity that was established in 1916. It was privatised in 1994 at $2.30 but continues to perform well in comparison with stocks in similar sectors.
In our list, we have illustrated that these stocks can outperform as they have a loyal base and have performed well in the last year. While past returns are no guarantee of future returns, these stocks have good potential to outperform over the long run and could present a good buy opportunity for women. The best way to hedge against future volatility is to pick stocks that have a substantial number of customers as this will support demand, and revenues and protect a dividend in the future. This list is not exhaustive but provides a guide to help you get started on your investment journey.
