In this article, we take a look at 10 best ASX stocks to buy now. If you want to see more best ASX stocks to buy now, go directly to 5 Best ASX Stocks to Buy Now.
Australia is a remarkable country.
Australia is the only country that occupies a continent.
Australia is also a country with substantial land area. While the United States has land area of 3.797 million square miles, Australia has a land area of 2.968 million square miles, giving it over 78% of the land area of one of the largest countries in the world.
While it has a huge land area, Australia only had 25.69 million people in 2021, versus 331.9 million in the United States in the same year.
With a huge land area, substantial resources, and relatively low population, Australia has long term economic growth potential.
In addition to having substantial land, Australia is well positioned as it is located in the Asia Pacific region which includes economic powerhouses such as China, Japan, and South Korea that need a lot of natural resources that Australia has such as iron ore. For those of you interested, check out 15 Fastest Growing Countries in Asia.
Furthermore, Australia isn't far from India, whose demand for iron ore could increase in the future as the country continues its economic development.
ASX, which stands for the Australian Securities Exchange, is one of the largest stock exchanges in the Asian Pacific region given the size of the Australian economy. As one of the leading exchanges in the country, over 2,000 companies are listed on the ASX, including some of Australia's biggest blue chip companies.
Some of the biggest stocks listed on the ASX are leading Australian banks given that the banking sector in the country is relatively consolidated. As of June 2022, the combined assets of Australia's four largest banks were A$4.291 trillion, or over 72% of the A$5.951 trillion assets of the entire banking sector in Australia.
Like many other banks in 2022, the shares of the four biggest Australian banks have declined recently given the global financial system isn't as stable as before as several regional U.S. banks have failed and Credit Suisse has had to sell itself to UBS.
Nevertheless, the credit default swaps of the four biggest Australian banks, Commonwealth Bank of Australia (ASX:CBA.AX), National Australia Bank Limited (ASX:NAB.AX), Westpac Banking Corporation (ASX:WBC.AX), and ANZ Group Holdings Limited (ASX:ANZ.AX) have not risen very much since February 20.
While leading Australian bank stocks could decline if leading American bank stocks decline in the near term given relative valuation, the fundamentals of the four biggest Australian bank stocks are still pretty attractive in the long term.
Nevertheless, if the global economy slows, Australia's economy could slow as well. Given the near term uncertainties, it could be a good idea for long term investors to own a well diversified portfolio of leading stocks across many different sectors.
Photo by Zane Lee on Unsplash
For our list of 10 Best ASX Stocks to Buy Now, we selected 10 stocks with competitive advantages that are among the top 50 largest companies listed on the ASX by market capitalization as of 3/20.
Given commodity prices are volatile, we excluded commodity companies from our list.
We ranked the companies by their market capitalization as of 3/20.
For those of you interested, check out 10 Best ASX Stocks to Buy Heading into 2023.
10 Best ASX Stocks to Buy Now
10. Coles Group Limited (ASX:COL.AX)
Market Capitalization as of 3/20 in Australian Dollars: 23.516 billion
Coles Group Limited (ASX:COL.AX) is a leading Australian retailer with more than 2,500 retail outlets nationally. Coles Group Limited (ASX:COL.AX)'s businesses include Coles Supermarkets which includes over 800 supermarkets across the country, Coles Online, which offers home delivery including same day delivery for many items, and also Coles Liquor, which includes 900 stores. Given its businesses, Coles Group Limited (ASX:COL.AX) has substantial scale. For 2022, the company had total sales of A$39.4 billion and EBIT of A$1.9 billion. In 2021, Coles Group Limited (ASX:COL.AX) had 28.4% market share of grocery retailers in Australia according to Statista.
As of March 20, Coles Group Limited (ASX:COL.AX) has a market capitalization of A$23.516 billion, ranking the company #10 on our list of 10 Best ASX Stocks to Buy Now.
9. Goodman Group (ASX:GMG.AX)
Market Capitalization as of 3/20 in Australian Dollars: 35.074 billion
Goodman Group (ASX:GMG.AX) is an integrated industrial property group with operations in Australia, New Zealand, Asia, and Europe that does property investment, funds management, property development, and property services. Goodman Group (ASX:GMG.AX) is also one of the largest REITs in Australia with substantial scale.
While its stock has done well from 2012, Goodman Group (ASX:GMG.AX) shares have declined from the end of 2021 given rising interest rates which has decreased the values of many property stocks and REITs. With substantially higher interest rates, U.S. Treasury yields are considerably higher and capital, some of which is increasingly global, has flowed out of REITs and into U.S. Treasury yields as a result. While interest rates in the U.S. could still go higher this year, many expect inflation to eventually normalize in the long term and interest rates to eventually normalize as well. As a result, Goodman Group (ASX:GMG.AX) might not face as many headwinds in the long term as it does currently.
8. Woolworths Group Limited (ASX:WOW.AX)
Market Capitalization as of 3/20 in Australian Dollars: 44.341 billion
Woolworths Group Limited (ASX:WOW.AX) is Australia’s largest retailer with over 190,000 team members across Australia and New Zealand. Given the higher inflation, more Australians are eating at home rather than dining out and Woolworths Group Limited (ASX:WOW.AX) has benefited from higher sales as a result. Since the start of 2023, the company's food sales have increased 6.5%, about the same as inflation, versus growth of 2.4% in the six months to the end of December. In 2021, Woolworths Group Limited (ASX:WOW.AX) had 37.4% market share of grocery retailers in Australia according to Statista.
Although inflation could decrease in the long term, the company still has potential given the future population growth in Australia over the next decades. Woolworths Group Limited (ASX:WOW.AX) ranks #8 on our list of 10 Best ASX Stocks to Buy Now given its market capitalization of A$44.341 billion as of 3/20.
7. Wesfarmers Limited (ASX:WES.AX)
Market Capitalization as of 3/20 in Australian Dollars: 54.74 billion
Wesfarmers Limited (ASX:WES.AX) is an Australian conglomerate that owns one of the country's leading home improvement retailers, Bunnings. Over the years, Bunnings has evolved from a warehouse model to an omnichannel business with more than 110,000 home, commercial, and lifestyle products. As a result of its growth, Wesfarmers Limited (ASX:WES.AX)'s Bunnings business has 507 trading locations and employs over 53,000 team members. For the future, Bunnings has invested substantially in online and digital which could increase demand further. For the half year ended December 31, 2022, Wesfarmers Limited (ASX:WES.AX) had free cash flow of A$1.365 billion and revenue of A$22.558 billion.
6. Macquarie Group Limited (ASX:MQG.AX)
Market Capitalization as of 3/20 in Australian Dollars: 64.859 billion
Macquarie Group Limited (ASX:MQG.AX) is a global financial services group that includes a leading investment bank. Given it has a leading investment bank, Macquarie Group Limited (ASX:MQG.AX)'s stock is arguably one of the riskier stocks on our list as declines in global banking stocks could affect Macquarie Group Limited (ASX:MQG.AX) as well. While there could more downside in the short term, Macquarie Group Limited (ASX:MQG.AX) has long term growth potential given the growth of Australia's economy will likely increase capital markets demand assuming that the company manages its risk correctly.
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Disclosure: None. 10 Best ASX Stocks to Buy Now is originally published on Insider Monkey.