Doug Goodwille from Kayne Anderson speaks to Drew Meredith from The Inside Network on market thinkers.
While a surging gold price is on hold as the world adjusts to a Trump presidency, all the factors that saw its price rise more than 50 per during his first term in office – trade disputes, fiscal deficits and geopolitical tensions – are almost certainly guaranteed the second time around.
Three ASX stocks ripe in the current correction
I think this ASX share market decline is a good opportunity to buy some leading stocks at much cheaper prices.
Share prices do fall from time to time. But it’s rare for most businesses to see a decline all at the same time. In other words, the share market can be a good time to buy when there is indiscriminate selling.
In theory, it does make sense for asset prices to drop with interest rates expected to rise in the months and years ahead.
For businesses that we’ve been looking at for a long time, I think the decline presents an attractive time to jump on them:
Australian Ethical Investment Limited (ASX: AEF)
The Australian Ethical share price has fallen by 35% since the start of 2022. Losing more than a third of the value is a major drop in such a short amount of time.
This business is a fund manager that’s helping people invest very ethically, where it avoids a large number of sectors and companies for various environmental, social and governance (ESG) reasons.
It’s benefiting from some strong tailwinds including the growth of superannuation – where a growing number of people are contributing 10% of their earnings each year into their super fund – as well as a rise in investors wanting their money to only be allocated to businesses doing good for the world.
I think this period of decline is very helpful for investing in this ASX share at a more attractive price.
Temple & Webster Group Ltd (ASX: TPW)
Temple & Webster is a fast-growing e-commerce business that sells a very large range of homewares and furniture. The online retail model is attractive because it removes the cost of rent (and all other associated costs with running physical stores).
The ASX share is expecting to benefit from growing profit margins as it gets larger and the fixed costs become a smaller part of the overall costs.
The Temple & Webster share price has dropped 28% since the start of the year. Online shopping is expected to keep growing for a number of years, which should be a strong tailwind for the company.
I think this business can go on to become one of Australia’s blue chips, particularly if it expands overseas, as it has indicated it might.
Brickworks Limited (ASX: BKW)
Brickworks is one of the older businesses in the ASX 200 (ASX: XJO). Since the start of 2022, the Brickworks share price has fallen 12%.
The building products side of the business has a solid future in Australia and the US, though it will be cyclical at times.
However, the other strong assets are what attracts me to Brickworks: the 50% stake of the industrial property trust and the shares it owns of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). Whilst higher interest rates might push down the underlying value of these assets a bit, I think it just offers the ASX share to investors with a more attractive dividend yield.
The property trust continues to make good progress with the large industrial properties that it’s building for large future tenants like Coles Group Ltd (ASX: COL).
At the current Brickworks share price, it has a trailing dividend yield of 4% including the franking credits.
Final thoughts
These types of drops are only opportunities if we jump on them. The decline could be for a few weeks, a few months or it could take even longer to recover from. But I think the best thing to do is to regularly invest in the ASX shares we see as opportunities.
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