Share market interest kicks into high gear from today as ASX companies update investors this month on how they fared in the 2023 financial year. Welcome to the August 2023 earnings season.
It sure has been a year of ups and downs in this volatile market impacted by high inflation and interest rates. So, will you be woeful or wowed as the company numbers unfold?
To shed some light, we asked our Foolish contributors for their thoughts on which ASX shares they reckon have done the work this year and are worth investing in. Here is what the team came up with:
6 best ASX shares for August 2023 (smallest to largest)
- VanEck Vectors Gold Miners ETF (ASX: GDX), $433.38 million
- Metcash Ltd (ASX: MTS), $3.48 billion
- Treasury Wine Estates Ltd (ASX: TWE), $8.12 billion
- Endeavour Group Ltd (ASX: EDV), $10.89 billion
- Sonic Healthcare Ltd (ASX: SHL), $16.56 billion
- CSL Limited (ASX: CSL) $129.53 billion
(Market capitalisations as of market close 31 July 2023).
Why our Foolish writers love these ASX stocks
VanEck Vectors Gold Miners ETF
What it does: This gold ETF gives investors exposure to a diversified portfolio of companies involved in the gold mining industry. The exchange-traded fund (ETF) currently has 51 holdings. Its top four holdings are Newmont, Barrick Gold, Franco-Nevada and Agnico Eagle Mines.
By Bernd Struben: The gold price has soared 12% in a year to US$1,978 per ounce. That’s helped drive the GDX share price up 28% over the same period. And I believe that trend is likely to continue.
Why?
First, central banks have been buying record amounts of gold amid rising geopolitical risks. Second, central bank tightening around the globe appears to be near the end of this cycle. Lower rates generally support higher gold prices.
While investors could buy bullion to get in on this trend, gold stocks tend to rise (and fall) far more than any moves in the gold price. Their cost to mine an ounce of gold is fixed, so any gains in the gold price go straight to their profit line.
JP Morgan Chase has an average gold price target of US$2,175 per ounce for Q4 2024. That’s 10% above the current price.
Motley Fool contributor Bernd Struben does not own shares in the VanEck Vectors Gold Miners ETF.
Metcash Ltd
What it does: Metcash supplies IGA supermarkets around Australia and multiple independent liquor retailers such as IGA Liquor, Bottle-O, Cellarbrations and Porters Liquor. It’s also the second largest player in Australia’s hardware market with Mitre 10, Home Timber & Hardware and Total Tools in its portfolio.
By Tristan Harrison: There has been a strong share price rebound for a number of sectors this year, but Metcash is not an ASX share that’s higher than it was at the start of 2023.
Yet, the consumer defensive company is one of the most obvious beneficiaries of the ongoing population growth in Australia – more mouths to feed in Australia should mean more demand at IGA supermarkets. More people in the country should support construction demand in the long term, which should help its hardware division.
In the first seven weeks of FY24, all three divisions reported sales growth, with total sales up 2.3%.
According to Commsec, the Metcash share price is valued at 12x FY24’s estimated earnings, which seems low to me, and the grossed-up dividend yield could be 8.2% in the current financial year. That’d be a rewarding cash payout, whatever happens with the Metcash share price.
Motley Fool contributor Tristan Harrison does not own shares of Metcash Ltd.
Treasury Wine Estates Ltd
What it does: Treasury Wine is a global wine company with a portfolio of wine brands and viticultural assets. The former includes wine brands such as Penfolds, Beringer, Lindemans, Wolf Blass and 19 Crimes.
By James Mickleboro: With the Treasury Wine share price down sharply this year, I think investors have been presented with a great opportunity to buy a high-quality company at an attractive price.
The team at Goldman Sachs agrees with this view and highlights its “long-term moat and global scalable upside” as reasons to pounce on its shares while they’re down.
Particularly given that despite Treasury Wine’s troubles this year, the broker is still forecasting an earnings per share compound annual growth rate of 12% between FY 2022 and FY 2025.
Goldman has a buy rating and a $13.40 price target on its shares.
Motley Fool contributor James Mickleboro owns shares of Treasury Wine Estates Ltd.
Endeavour Group Ltd
What it does: Endeavour is not exactly a household name, but if you enjoy the occasional drink, chances are you’d be familiar with its flagship bottle shop chains, BWS and Dan Murphy’s.
By Sebastian Bowen: Endeavour has popped back up on my radar in recent weeks thanks to the company’s dramatic share price slump that we saw last month.
Although investors have since clawed back most of the falls of early July, I still think Endeavour is worth a look this August. With this company, you get what is indisputably the most dominant retailer of take-home alcoholic beverages in the country.
This alone is enough to pique my interest, seeing as this corner of the economy is highly defensive and resistant to inflationary pressures or recessions. But Endeavour is also a solid dividend payer as well, with recent (and fully franked) dividend yields of well over 4.5%.
Motley Fool contributor Sebastian Bowen does not own shares of Endeavour Group Ltd.
Sonic Healthcare Ltd
What it does: When it comes to medical diagnostics companies, few surpass the scale of Sonic Healthcare. Over 89 years, Sonic has become the largest laboratory medicine company in Australia, Germany, the United Kingdom and Switzerland. The company also holds the mantle as Australia’s second-largest diagnostic imaging provider – operating more than 100 centres nationwide.
By Mitchell Lawler: When selecting great companies to invest in, I search for quality businesses largely insulated from economic cycles. That way, I don’t need to worry about trying to ‘time the market’ to add to my position.
Personally, I consider Sonic Healthcare to be such a company. It provides essential services that are almost always non-elective. When you feel sick, your doctor orders a blood test because it’s needed. When you slip and break a bone, the hospital will request an X-Ray because it’s necessary.
Sonic continues to expand its presence globally, acquiring three companies since April. At a free cash flow yield of 9.4%, I believe the market is undervaluing this incredibly well-run staple of the healthcare world.
Motley Fool contributor Mitchell Lawler owns shares of Sonic Healthcare Ltd.
CSL Limited
What it does: CSL is an Australian-based global biotech company that develops and produces vaccines and other treatments for life-threatening medical conditions.
By Bronwyn Allen: It’s hard to ignore the fact that 12 brokers and fund managers are recommending we buy CSL shares right now.
Citi and UBS are the most bullish of the bunch, with 12-month share price targets of $340. That’s more than 25% higher than where the CSL share price is now (in the late $260s).
CSL is also one of the most reliable ASX 200 blue-chip growth shares in the market. Since listing in 1994, the share price has gone up by 5,579% compared to a 59% rise for the ASX 200.
Motley Fool contributor Bronwyn Allen owns shares in CSL Limited.
