If I were investing with $1,000 then there are a few ASX shares that I’d really consider for that money.
I believe that over the long term, it’s best to be invested in businesses that are generating good profit growth. This should lead to solid investment returns.
But the current business valuation has to make sense for a buy. I love how successful Afterpay Ltd (ASX: APT) has been at changing the retail industry. But I don’t love its valuation.
However, I do really like these ASX shares:
BetaShares Global Sustainability Leaders ETF (ASX: ETHI)
This is one of my favourite exchange-traded funds (ETFs) for a number of different reasons.
ETHI ETF is about investing in businesses that pass standards relating to sustainability and ethics. Everyone has different ethics, but I think the ethical screens that are utilised by this ETF are good, including a focus on good climate change policies.
It gives good diversification with a global portfolio of 200 names spread across the world, though just over 70% of the portfolio is from the US.
Almost 40% of the ETF is invested in IT shares, which is what I want because of the strength and profit margins of those in that industry. Its portfolio position weightings of at least 3% includes: Apple, NVIDIA, Tesla, Mastercard, Home Depot, PayPal, Visa and ASML.
The management fee is very reasonable for what it does at 0.59% per annum.
Its net returns since inception have been very good, at 21.4% per annum.
Pushpay Holdings Ltd (ASX: PPH)
Pushpay is a high conviction ASX share idea for me right now. The operating leverage that the digital donation is generating right now is really impressive. In the last result alone, the HY21 result, it saw its EBITDAF (EBITDA explained – the F stands for foreign currency) margin go up from 17% to 31%. I’m not expecting the HY22 result to show an EBITDAF margin to 45%, but I think it could be closer to 40% than 30% if the gross margin keeps increasing.
Higher and higher margins means that more of the new revenue will translate into higher profit as the business gets bigger. That should be good news for the Pushpay bottom line profit, share price and perhaps shareholder returns (like dividends) over time.
I think the market is underestimating how profitable Pushpay can become and how long its growth runway is if it can profitably expand to other countries outside of the US.
Kogan.com Ltd (ASX: KGN)
Kogan.com is another ASX share that I think has a very good potential, particularly as the Kogan.com share price has almost halved over the last six months.
Its profit margins aren’t growing as quickly as Pushpay’s, but Kogan.com is investing heavily for growth and improving its capabilities.
The total addressable market for Australian retail is huge. Kogan.com can keep growing for a long time if it can steadily grow its customer base and/or get its customer to shop for more products from its site.
Despite the heavy investing, the company’s EBITDA margin and net profit margin continues to rise. It’s getting more profitable for each $1 of new revenue. I think that’s a great sign for the future.
If Kogan.com can keep growing its total addressable market with new offerings and acquisitions, whilst capturing market share in existing markets, it has a very promising outlook.
The valuation looks particularly good when combined with its current growth rate and rising dividend. The Kogan.com share price is valued at 22 times the estimated earnings for the 2022 financial year, according to CommSec.
If I had even more money to invest, I’d be thinking about some other quality ASX growth shares that usually fit the Rask Investment Philosophy.
