I think that some ASX shares are going to be able to outperform the ASX 200 (ASX: XJO) in FY24 and the longer-term.
There are no guarantees when it comes to investment returns. The market could suddenly go through a crash. But, volatility doesn’t worry me because over the long-term I believe that good investments will recover and keep going higher.
To most people, a year is a long time, but in the investment world it’s relatively short.
If I had to put some money on the line for two ASX shares that could do well in FY24, I’d rate these two as buys:
Lovisa Holdings Ltd (ASX: LOV)
I like using short-term price weakness as a way to buy quality businesses at a great price.
The Lovisa share price has dropped around 25% since 24 April 2023. I really like the jewellery retailer because of its worldwide store expansion plans. It’s expanding in North America, South America, Africa, Europe and Asia.
The ASX 200 share’s product costs are so cheap, so the business doesn’t need to invest much to open a new store, and it can achieve good profit margins.
I don’t think it will ever trade with a tech stock valuation, but all it needs to do is keep growing profit and then share price growth will hopefully take care of itself.
As a useful bonus, the dividend is steadily growing, which is helping with shareholder returns.
Vaneck Morningstar Wide Moat ETF (ASX: MOAT)
This exchange-traded fund (ETF) has consistently shown that it’s capable of producing strong returns by targeting undervalued companies that Morningstar thinks possess strong economic moats, or strong competitive advantages.
I love the investment strategy – buying quality businesses at market-beating prices. Most active fund managers would easily charge management fees of 1% per year (plus performance fees) for this sort of investing style, yet the MOAT ETF’s fee is only 0.49%.
With this active investment style, the portfolio is regularly changing and represents a group of businesses that could beat the market.
Over the year to 31 March 2023, the ETF’s net return was 21.6%. In the past five years the average net return was around 17% per year.
I believe FY24 could be another pleasing year for this ASX share, or at least deliver outperformance for investors if markets were to fall.
