Happy new financial year!
If, like many investors, you took the end of FY24 as an opportunity to shake up your ASX share portfolio, you may now be looking to fill some holes in it.
Whether you cashed in some gains, offloaded a loser or two, or are simply looking to further diversify, right now could be the perfect time to usher in a few new investments.
We asked our Foolish writers which ASX shares they think deserve pride of place in your portfolio in FY25 and beyond.
Here is what they came up with:
- Betashares Global Uranium ETF (ASX: URNM), $130.96 million
- Step One Clothing Ltd (ASX: STP), $253.92 million
- PWR Holdings Ltd (ASX: PWH), $1.10 billion
- Corporate Travel Management Ltd (ASX: CTD), $1.94 billion
- Betashares Nasdaq 100 ETF (ASX: NDQ), $4.95 billion
- Transurban Group (ASX: TCL), $38.34 billion
- ResMed Inc (ASX: RMD), $42.75 billion
(Market capitalisationsas of market close 28 June 2024).
Why our Foolish writers love these ASX stocks
What it does:URNM is intended to track the performance of a basket of Australian and international uranium miners. The ETF provides instant diversification with exposure to 38 leading uranium producers across the globe.
By Bernd Struben: I believe the nuclear renaissance sweeping across the world is still in its early days. If that proves true, then this uranium-focused ASX ETF is well-placed for long-term outperformance.
Aussie investors will recognise two of URNM's top 10 holdings: Paladin Energy Ltd (ASX: PDN) and Boss Energy Ltd (ASX: BOE).
Over the past 12 months, the Betashares Global Uranium ETF has gained more than 54%. With shares having slipped 15% since late May, this could be an opportune entry point. The ETF paid out 40 cents per share in unfranked dividends in 2023.
Furthermore, it was only in December that 22 nations – including the United States, Japan, and France – pledged to triple their nuclear power capacity by 2050. And the US Government recently said it would invest up to US$900 million to accelerate the development of nuclear energy.
As with most commodities, it takes a lot of time to bring new uranium mines into production. And with demand looking like it will keep rising sharply, I expect uranium supplies will be playing catchup for some years yet.
Motley Fool contributor Bernd Struben does not own units of the Betashares Global Uranium ETF.
Step One Clothing Ltd
What it does: Step One Clothing is a direct-to-consumer online retailer of underwear. According to the company, it offers "high quality, organically grown and certified, sustainable, and ethically manufactured innerwear". It has a presence in Australia, the United Kingdom, and the United States.
By Tristan Harrison: The Step One Clothing share price has dropped by around 25% since 12 April 2024, making it look pretty cheap to me.
The business is gaining traction across its core markets – in the FY24 first-half period, total revenue rose 25.5% to $45 million, with 8.9% growth in Australia, 38% growth in the UK, and 256% growth in the US.
The HY24 result also delivered rising profit margins, which is a great sign for future profit growth as revenue builds. The company's gross profit margin increased 0.5 percentage points to 81.2% and its earnings before interest, tax, depreciation, and amortisation (EBITDA) margin increased 1.7 percentage points to 22.5%. Net profit after tax (NPAT) rose by 34.7% to $7.1 million.
If Step One can grow its presence in the UK and the US, including expanding the distribution of its women's lines, then I think the company's future is very bright.
According to Commsec estimates, the Step One share price is valued at 21x FY25's estimated earnings and it could pay a grossed-up dividend yield of 6.6% in that year.
Motley Fool contributor Tristan Harrison does not own shares of Step One Clothing Ltd.
PWR Holdings Ltd
What it does: PWR Holdings is a leading provider of advanced cooling solutions for motorsports and automotive industries worldwide.
By Kate Lee: PWR Holdings ticks many boxes for me, as I recently covered here.
It is a global market leader in cooling systems, initially recognised for supporting Formula 1 racing teams, but its expertise extends far beyond motorsports.
Notably, its aerospace and defence segment is growing rapidly, contributing 12% of revenue in 1H FY24.
Additionally, PWR Holdings is a founder-led company with high insider ownership and superior return on equity (ROE) ratios, consistently above 20%.
The PWR Holdings share price has dropped 15% from its peak in February, placing its price-to-earnings (P/E) ratio at 34x based on FY25 earnings estimates by S&P Capital IQ. This is at a mid-point of its historical trading range of between 20x and 52x.
Despite its relatively high multiple, the company offers a robust growth outlook, led by a trustworthy management team, in my view.
PWR Holdings shares offer a dividend yield of around 1.25% at Friday's closing price of $10.98.
Motley Fool contributor Kate Lee does not own shares of PWR Holdings Ltd.
Corporate Travel Management Ltd
What it does: Founded by Jamie Pherous 30 years ago, Corporate Travel Management has grown into a global travel management solutions provider, serving customers in the United States, Australia, New Zealand, Europe, and Asia.
By Mitchell Lawler: Corporate Travel Management has all the makings of a great company: it's founder-led, financially disciplined, and has a large opportunity for further growth. Yet, shares in this profitable business are back to 2016 levels.
Corporate Travel has grown its net earnings by 136% since 2016 despite the turbulence caused by COVID-19. Specifically, the travel management company recorded $111.1 million in net profits after tax (NPAT) for the 12 months ended 31 December 2023, recovering from $27.7 million in the prior year.
As economic weakness weighs, the market has punished Corporate Travel stock this year, down almost 33%. Personally, I see it as a rare chance to build a position in a proven and profitable business with a good margin of safety.
Motley Fool contributor Mitchell Lawler does not own shares of Corporate Travel Management Ltd.
What it does: The NDQ ETF tracks the performance of the NASDAQ 100 Index (NASDAQ: NDX) (before fees and expenses).
By Bronwyn Allen: The NDQ ETF gives Aussie investors exposure to the 100 largest companies listed on the NASDAQ. The NASDAQ is full of innovation stocks. These are typically global businesses that are leaders in their fields and bring world-changing products and services to the fore. These include the Magnificent Seven stocks of Meta Platforms, Amazon, Apple, Alphabet, Nvidia, Microsoft, and Tesla.
Secondly, the NDQ ETF is highly complementary for ASX 200 ETF investors because it provides geographical earnings diversification (Fun fact: 50% of earnings are non-US), and its sector composition is the opposite of the ASX 200.
The NDQ ETF is overweight in tech stocks with very minor exposure to financials and materials, while the ASX 200 is overweight in banking and mining shares. And while past performance is no guarantee of future performance, it's hard to ignore the 137% NDQ ETF price lift over five years compared to an approximate 16% gain for the ASX 200.
Motley Fool contributor Bronwyn Allen does not own units of the Betashares Nasdaq 100 ETF.
Transurban Group
What it does: Transurban is the ASX's largest toll road stock, operating several arterial tolled routes across Brisbane, Melbourne, and Sydney.
By Sebastian Bowen: In these uncertain times, I'm increasingly looking for stability and defensiveness in my ASX share portfolio. With that in mind, few companies fit the bill better than toll-road operator Transurban.
If you've ever driven in Sydney, Melbourne, or Brisbane and paid a toll, chances are you've been a Transurban customer. Traffic volumes tend to be highly stable and predictable, which in turn makes the earnings (and dividends) of this company relatively easy to anticipate.
What's more, Tranurban has negotiated very generous contracts for most of its tolled roads. It is often able to raise its tolls every quarter by either the rate of inflation or by an annualised 4%, whichever is higher.
That bodes well for any income investor looking for a reliable stream of cash flow from their portfolios. This July, Transurban shares are trading on a dividend yield of close to 5%. As such, this is a stock that I would happily add to my portfolio right now.
Motley Fool contributor Sebastian Bowen does not own shares of Transurban Group.
ResMed Inc
What it does: ResMed is a medical device company that primarily provides cloud-connectable devices for the treatment of sleep apnoea, chronic obstructive pulmonary disease, and other respiratory conditions.
By James Mickleboro: ResMed shares have been very volatile over the last 12 months. This has been driven by concerns over the emergence of weight loss wonder drugs like Ozempic and Mounjaro. The latter caused a sharp selloff during the final week of June when trial results revealed it was effective at treating sleep apnoea in obese people.
However, it is worth noting that the strongest results were achieved with a combination of Mounjaro and a continuous positive airway pressure (CPAP) device. In light of this, while weight loss drugs are likely to negatively impact ResMed's total addressable market (TAM), they are unlikely to be category killers. I think this makes June's underperformance a great buying opportunity for investors in July.
Ord Minnett certainly does, too. Last week, it put a buy rating and a $33.50 price target on RedMed shares.
Motley Fool contributor James Mickleboro owns shares of ResMed Inc.
