The S&P/ASX 200 Index (ASX: XJO) is down 5% since the start of the year and the tech-heavy Nasdaq index is down a devastating 23%. It is clear to see there’s plenty of blood on the investing battlefield. Nonetheless, this month I’ll be channeling my inner Warren Buffett and buying shares in what I believe are high-quality companies.
Make no mistake, it is difficult to look at a volatile market dead in the eyes and still pull the trigger. However, I personally haven’t been this motivated to invest heavily since the COVID-19 crash.
Hindsight is a beautiful thing. Though the reality is this might turn out to be one of those rare chances to get highly profitable shares at a discount — only time will tell.
This brings me to the two ASX shares and one US stock that I will be loading up on this month.
Two ASX shares I’m buying
As we all know, the share market has not been in its finest form as of late. Rather than looking at my portfolio in despair, I’ve been trawling through my watchlist. The exciting attribute I have found about the current selloff is its indiscriminate nature.
If investors want to pull the plug on unprofitable companies as rates go higher (though, I think some of those still have potential too), fair enough. But liquidating positions in companies with high profitability and a track record of high capital efficiency… ludicrous (in my opinion).
That’s why this month I will be buying shares in Pro Medicus Limited (ASX: PME) and Jumbo Interactive Ltd (ASX: JIN). Both companies have been in my portfolio for more than three years. During that time, these businesses have demonstrated continued growth in the face of adversity. Yet, these shares have fallen harder than the benchmark index, as shown below.
Firstly, Pro Medicus is a provider of medical imaging software across several regions around the world. For the 12-months ending 31 December 2021, the company made $37.99 million in profits with a margin of ~47%. In addition, it has an immaculate balance sheet without a spec of debt on it. To top it off, it offers a 0.5% dividend yield — a pleasing sight from a high-growth company.
The second ASX share I’ll be buying this month is online lottery operator Jumbo Interactive. Excitingly, Jumbo has stretched its wings and expanded abroad since I first invested in the company. With the acquisitions of Gatherwell, StarVale, and Stride; Jumbo has stepped its feet into the United Kingdom and Canada. For the 12 months ending December 2021, the company boasted an earnings margin of ~32%.
Keeping the portfolio beautiful
Venturing further abroad, there is also one US share I’ll be buying this month. InMode Ltd (NASDAQ: INMD) supplies a range of proprietary medical products that are used in predominantly non-invasive aesthetic surgeries.
According to the latest data, InMode is operating with an earnings margin of ~45%. At the same time, it has a US$399.5 million stash of cash and zero debt. Yet, the share price is down nearly 60% from where it was at the beginning of the year.
As a result, InMode currently trades on a price-to-earnings (P/E) ratio of 13.2. This is despite the company holding a formidable track record for high earnings growth.
The post Here are 3 highly profitable shares I’ll be buying this month appeared first on The Motley Fool Australia.
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Motley Fool contributor Mitchell Lawler has positions in Jumbo Interactive Limited and Pro Medicus Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Jumbo Interactive Limited and Pro Medicus Ltd. The Motley Fool Australia has positions in and has recommended Pro Medicus Ltd. The Motley Fool Australia has recommended Jumbo Interactive Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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