January 2023 seems like a great time to invest in ASX shares. Market confidence is low and share prices are down.
A large part of investing is buying assets at a good price and watching them grow. The current situation of higher interest rates has made many investments cheaper.
The two ideas I’m about to write about are ASX share investments I believe can deliver long-term earnings growth. Hopefully, share prices will follow the earnings higher.
Betashares Global Cybersecurity ETF (ASX: HACK)
This is an exchange-traded fund (ETF) that gives investors access to the leading companies in the global cybersecurity sector.
One of the sad factors is that cybercrime is on the rise – just look at what recently happened to Optus and Medibank Private Limited (ASX: MPL). More cybercrime could lead to even more demand for cybersecurity services, boosting the underlying earnings of these businesses.
There are 37 businesses in the portfolio, with the biggest weightings to Broadcom, Cisco Systems, Infosys, Fortinet, Palo Alto Networks, Okta, Splunk and Verisign.
After a 25% fall of the unit price of the past year, I think it looks like much better value. I believe that cybersecurity is both a defensive and growth area of the market.
Adore Beauty Group Ltd (ASX: ABY)
Adore Beauty is Australia’s leading online retailer of beauty products. It sells a wide range of brands – it’s also starting to sell its own branded products.
The business continues to see growth of the number of returning customers. The first quarter of FY23 showed 85% growth of returning customers over a 2-year period, and 14% growth year on year. That quarter showed revenue of $45.4 million, revealing it has retained a lot of the COVID-era demand.
It is seeing success with a number of strategic initiatives. Adore Beauty said that first quarter mobile app sales accounted for 18% of revenue, and loyalty program members contributed over 60% of sales. The ASX share also launched its second owned-brand, AB Labs and onboarded the international brands Dior and Huda Beauty.
The company is also scaling its New Zealand operations, which offers an attractive additional market. ASX shares that grow internationally give themselves a longer growth runway in my opinion.
Adore Beauty is focused on strategic initiatives to deliver scale benefits and improving the EBITDA (EBITDA explained) margin over time. Revenue growth and profit growth could be a very useful mix for shareholder returns over time. The Adore Beauty share price has dropped over 70% in the past 12 months, so I think it looks like a bargain at these levels.