I think there are always some good opportunities to find with ASX shares. Some investments have lots of growth potential, whilst others may be options for dividend income.
The two I’m going to focus on today are ones with good capital growth characteristics, though nothing is guaranteed of course.
Here are two I like the look of:
Redbubble Ltd (ASX: RBL)
The Redbubble share price has surged 37.5% since 18 August 2021, but I believe that it’s still a good long-term opportunity.
In FY21, marketplace revenue rose by 58% to $553 million and gross profit increased by 66% to $223 million. Operating cash inflow was $55 million, up 17% from FY20. It made $31 million of net profit after tax (NPAT). That means, even after the big rise, Redbubble shares are valued at 32 times FY21’s earnings. Not too demanding at all.
But Redbubble has plans to grow significantly over time. It’s going to invest in all areas of the business to improve the experience for customers, artists and increase the efficiency of the supply chain.
Excluding mask sales, Redbubble is expecting a slight increase of marketplace revenue in FY22. It’s also expecting a return to growth in the second half of FY22.
If it can keep growing market share and marketplace revenue, then I think it has a very promising long-term future. The ASX share wants to be the biggest artist product-designed e-commerce business in the world.
Betashares Global Quality Leaders ETF (ASX: QLTY)
This exchange-traded fund (ETF) owns a global portfolio of businesses across the world. But companies only make it into the ETF’s holdings if they rank well on four factors: return on equity, debt-to-capital, cash flow generation ability and earnings stability. If a business is doing well on these four factors, then it’s hard for it to not do well on the longer-term.
Building a portfolio of just these types of businesses should do pretty well. There are a total of 150 names in the portfolio. Under two thirds of the portfolio is based in the USA, so it’s more geographically diversified than some global ETF portfolios.
In terms of actual names, some of the ASX share’s biggest positions currently include: Advanced Micro Devices, Novo Nordisk, Adobe, Nvidia, Accenture, Intuit and Alphabet.
IT makes up 40% of the portfolio and healthcare another 20.6%. I think these are the two best sectors for non-cyclical growth. There is also 8.5% allocated to communication services, which includes businesses like Alphabet and Facebook.
Past performance is not a reliable indicator of future performance. But over the past five years, the index this ETF tracks has delivered an average return per year of 19.6%. But investors should also take into account the annual management costs of 0.35%.
If you’re looking to learn how to do your own ASX company valuations, take our free share valuation course, which takes you through 6 common share valuation techniques, step by step. Or try our Beginner Shares Course if you’re just starting out. Both are free.
