ASX shares haven’t had an easy run. Even quality businesses have been sold off, leaving some strong operators trading at prices that look more like value stocks than growth stocks.
Quality ASX shares such as Aristocrat Leisure Ltd (ASX: ALL), The Lottery Corporation Ltd (ASX: TLC) and GQG Partners Inc (ASX: GQG) are trading at levels that could deliver attractive long-term upside.
Let’s have a closer look.
Aristocrat Leisure Ltd (ASX: ALL)
The shine on this ASX share has dulled. Valuation pressure and rising uncertainty has pushed Aristocrat into cheap screens relative to its long-term growth track record.
Recent sales and revenue were mixed. Some softness spooked the market. That’s happened despite record machine deployments and strong recurring earnings from digital gaming. The result? Shaken confidence and a weaker share price.
The business itself remains high quality. The $31 billion ASX share operates across land-based gaming machines and digital and mobile gaming. That diversification is a big advantage as player behaviour evolves. Few competitors can match its scale or depth of content.
But risks are real. Gaming spend is cyclical. Regulation can bite without warning. Currency moves can swing earnings. All of that makes short-term results uneven.
On the plus side, capital management is disciplined. Buybacks and debt reduction support earnings quality. Optionality from mergers and acquisitions and expansion of the online portfolio could drive a re-rating if growth steadies.
For investors seeking growth with some defensive characteristics, the current price range looks interesting. Analysts seem to think so. They see a potential upside of 41% with an average 12-month target set at $71.61.
The Lottery Corporation Ltd (ASX: TLC)
If you’re chasing quality with defensive earnings, The Lottery Corporation could be worth a closer look.
This $11 billion ASX share operates Australia’s leading lottery brands, including Oz Lotto, Powerball, Set for Life and instant scratch-its. Since demerging from Tabcorp, the business has become a pure-play lotteries operator with a simple, high-margin model built on recurring demand.
Its biggest strength is predictability. Lottery ticket sales tend to hold up well regardless of economic conditions. Cash flow is strong, margins are attractive, and capital requirements are low.
That supports reliable dividends and steady earnings growth. Digital ticket sales are another tailwind, lifting customer engagement and efficiency.
There are weaknesses to note. Growth is incremental rather than explosive. The business is also tightly regulated, limiting flexibility. Jackpot cycles can cause short-term earnings volatility.
From an analyst perspective, sentiment on the ASX share is broadly positive. Many see TLC as a defensive compounder with dependable dividends and modest share price upside.
Analysts have set the average 12-month price target at $5.68, a potential gain of 8% compared to the current share price.
GQG Partners Inc (ASX: GQG)
This ASX share has been left for dead by the market. Shares are down close to 25% over the past year as fund flows slowed and performance lagged benchmarks.
That’s weighed heavily on sentiment. Net inflows declined. Investors headed for the exits.
Yet the underlying numbers tell a different story. Revenue and net profit still grew at double-digit rates. Margins remain high. Dividends are generous and among the strongest in the sector, with a dividend yield of 12% at the current levels.
The risk is flows. GQG is highly sensitive to investor behaviour. Periods of underperformance can quickly shrink assets under management and fee income.
Still, valuation has reset. Brokers see potential catalysts ahead. If flows stabilise or performance improves, the rebound could be sharp.
For value-focused investors willing to ride the volatility, GQG’s risk-reward profile is starting to look compelling. Most brokers have a buy-rating on the ASX share. They set a price target for the next 12 months of $2.10, a 24% upside.
The post 3 quality ASX shares to buy with $10,000 appeared first on The Motley Fool Australia.
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Motley Fool contributor Marc Van Dinther has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended The Lottery Corporation. The Motley Fool Australia has recommended Gqg Partners and The Lottery Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.