I really like the look of some high-quality ASX shares that have the potential to create solid long-term returns.
There is a lot more volatility this year as investor fears appear to be rising when it comes to interest and inflation.
These two ASX shares are ones that I think could be smart additions to a portfolio:
Betashares Global Quality Leaders ETF (ASX: QLTY)
This is one of my favourite exchange-traded funds (ETFs) on the ASX. I think it ticks lots of boxes. Only businesses that rank well on return on equity, debt-to-capital, cash flow generation ability and earnings stability make it into the portfolio.
In terms of diversification, it has a portfolio of 150 names. That reduces the individual company risk. Those names come from across the world, so there’s some useful geographic diversification as opposed to an entirely Australian or US ETF.
Around 45% of the portfolio is invested in IT shares, which is the best place to find businesses with high margins and good profit growth in my opinion.
Some of the biggest positions in this ASX share’s portfolio at the moment includes Visa, Johnson & Johnson, Pfizer, Alphabet, Cisco, Intel, Roche and SAP.
I think the ETF is pretty cheap for what it does, with an annual management fee of 0.35%. Some active fund managers would charge at least double for creating this type of portfolio.
Past performance is no guarantee of future performance, but since inception in November 2018 the QLTY ETF has returned an average of 22.1% per year.
Volpara Health Technologies Ltd (ASX: VHT)
The Volpara share price has fallen 17% since the start of the year.
However, I think February 2022 looks like an opportunistic time to jump on this growing business. It provides breast screening technology and administrative tools. Management are trying to increase the company’s capabilities when it comes to managing a patient’s risk of breast cancer.
The ASX share has one of the highest gross profit margins I’ve seen on the ASX. It’s more than 90%. This allows for a very strong increase of spending for growth as revenue grows.
In the third quarter of FY22, Volpara’s cash receipts soared 50% to NZ$7 million. Annual recurring revenue continues to rise, it’s now US$21.5 million. That’s up almost US$1.1 million in the second quarter of FY22.
Its customer loyalty remains strong, the market share of around a third of US women having their images is enviable. That market share is now 35%, up from 34%.
The average revenue per user (ARPU) continues to rise as it wins new clients and tries to upgrade existing clients. The ARPU in the third quarter in the already-installed base was US$1.47, with the average ARPU for new deals in the third quarter being US$1,65,
