Why I’d buy BHP and these ASX shares with $5,000

There are plenty of ASX shares to choose from when investing $5,000.

I would want to use the money on businesses I can see owning for years, with enough growth ahead to make patience worthwhile.

These three would be high on my list.

BHP Group Ltd (ASX: BHP)

I would put $2,000 into BHP.

The mining giant gives investors exposure to commodities that should remain important as the global economy develops, including iron ore and copper.

Copper is particularly interesting to me over the longer term. Electrification, renewable energy infrastructure, data centres, and expanding power networks all require significant amounts of the metal.

BHP already has major copper operations and continues investing to increase its output.

Its enormous iron ore business also remains important. BHP generates substantial cash flow that can support investment elsewhere in its portfolio, as well as dividends for shareholders when conditions allow.

Commodity prices will always move around, so BHP is unlikely to deliver smooth earnings growth every year.

But I think its scale, asset quality, and exposure to resources the world will continue needing make it a strong long-term holding.

Wesfarmers Ltd (ASX: WES)

I would invest another $1,500 in Wesfarmers.

What I like about Wesfarmers is the collection of businesses under its control.

Bunnings has built a particularly strong position in Australian home improvement, while Kmart has become an increasingly important contributor through its low-cost retail model. Officeworks and the group’s other operations add further sources of earnings.

These businesses also give Wesfarmers plenty of opportunities to keep improving rather than relying on one major expansion project.

Management can reinvest in existing operations, develop new opportunities, or direct capital towards areas where it sees better returns.

Wesfarmers shares are rarely priced like a bargain, and I would still pay attention to valuation. But for a long-term investment, I think there is value in owning a company with strong brands, experienced capital allocation, and several ways to grow over time.

NEXTDC Ltd (ASX: NXT)

My remaining $1,500 would go into NEXTDC.

This would be the most growth-focused investment of the three. NEXTDC develops and operates data centres across Australia and other Asia-Pacific markets. Demand for this infrastructure is increasing as businesses move more workloads into the cloud and artificial intelligence drives much greater computing requirements.

What gives me confidence in the opportunity is that NEXTDC is not simply building capacity and hoping customers eventually arrive.

The company has secured substantial contracted demand for future data-centre capacity, which gives it visibility over facilities that are still being developed.

There is plenty of execution risk. Data centres require enormous amounts of capital, and NEXTDC needs to deliver new projects efficiently while managing its funding requirements.

I still think the potential reward is attractive if demand continues growing as expected.

Foolish takeaway

If I had $5,000 available today, I would be comfortable spreading it across these three ASX shares.

BHP shares would give me exposure to long-term commodity demand, Wesfarmers brings a collection of high-quality Australian businesses, and NEXTDC offers much stronger exposure to the expansion of digital infrastructure.

I think that gives the money several opportunities to grow without relying on one company or one part of the economy.

The post Why I’d buy BHP and these ASX shares with $5,000 appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.