The ASX share market has been very volatile in 2025 and the last few weeks have been no exception. Volatility gives investors the opportunity to invest at a cheaper valuation.
We don’t necessarily need to buy a share at a low price to generate good returns – quality businesses have a habit of growing earnings, giving the market plenty of reasons to send a share price higher over time.
Temple & Webster Group Ltd (ASX: TPW)
Temple & Webster looks like one of the most exciting ASX growth shares to me. While revenue growth has slowed in the last few months, the long-term still looks very promising.
Its online and asset-light business model allows it to run a lower (product) delivered margin, allowing the company to pass on savings to customers, further incentivising consumers to shop with Temple & Webster.
The business has strong tailwinds, in my view. The Australian homewares and furniture market only has an online penetration rate of around 20%, compared to 29% in the UK and 35% in the US. Ongoing adoption of online shopping by Aussies can help lift Temple & Webster’s market share and revenue.
A combination of investments in technology and AI is helping the company’s efficiencies, sales conversion, profitability, customer service and satisfaction. With increasing AI utilisation and natural operating leverage from growth, I believe the company’s profit margins can rise.
I think the expansion into New Zealand is a good and natural move for the business, allowing the company reach millions of more customers.
In FY26 to 20 November 2025, revenue grew by another 18% year on year. I think the home improvement segment (which grew revenue by 40%) could become very useful to the business in the coming years. In five years, I think the ASX share could be a much more profitable business.
VanEck MSCI International Quality ETF (ASX: QUAL)
At a time when the outlook is uncertain for a variety of reasons, including difficulties with taming inflation, it could be a good idea to have sizeable allocation to quality shares that can weather virtually any storm.
This exchange-traded fund (ETF) enables investors to own a portfolio of 300 of the highest-quality businesses from various countries and industries, which is plenty of diversification in my book.
The ETF, offered by global provider VanEck, looks for companies with quality characteristics, which is based on three fundamentals.
One, a high return on equity (ROE). That means the businesses make a high level of profit compared to how much equity/money is still held within the company on behalf of shareholders (rather than paid out as dividends or another form of capital return). If it’s being kept, we want to see it’s being used well. The shareholder ‘money’ inside the business isn’t necessarily cash, it could be in other forms of assets (such as property, product inventory and so on).
The second factor the QUAL ETF businesses have is earnings stability. That means profits don’t usually go backwards, therefore earnings are typically climbing each year, which is good news for probable capital gains over time.
The third and final fundamental for these businesses is having low financial leverage. Low debt means a healthier balance sheet, not being beholden to lenders, not paying a lot in interest costs, and having the financial firepower to make acquisitions at the right time.
Pleasingly, the QUAL ETF has returned an average of 14.7% per year over the last decade, which is better than most ASX shares in the last decade.
