Share market rally: How I’d invest $5,000 right now in ASX shares

The last couple of days of trading has been very strong when looking at some markets. And in my opinion, I think that there are some ASX shares that are looking like attractive buys.

This year has seen plenty of damage done to valuations because of factors like inflation and higher interest rates.

But, with the recent US inflation figure not being quite as strong as expected, some share prices jumped in response. For example, since 9 November 2022 (over two trading days), the S&P 500 (INDEXSP: .INX) has gone up 6.5%. That’s a huge rise in just a couple of trading sessions.

It’s impossible to say what the share market is going to do next. But, with investors seemingly wanting to push share prices higher, I think it’s worthwhile considering what I’d do with $5,000.

Airtasker Ltd (ASX: ART)

Firstly, I would put $2,000 into Airtasker shares. This business operates a platform that seeks to match up people who need work with individuals or businesses that want to do the work.

After a 60% drop in the Airtasker share price in 2022, I think it looks very attractive.

The business is growing quickly in both the UK and the US, though starting from a small base. The UK and the US are both much larger markets than Australia, so there could be plenty of potential there.

One of the most attractive things to me about the ASX share is that it has a gross profit margin of over 90%. That means most of the new revenue translates into gross profit, which can then be re-invested back into the business to grow the company.

Overall growth is going well. In the first quarter of FY23, revenue (excluding the acquired business Oneflare) increased by 36% to $8 million.

Australian Ethical Investment Ltd (ASX: AEF)

I’d also want to put $1,500 into Australian Ethical shares. This is a fund manager that aims to provide investment products that align with an investor’s ethics.

It offers superannuation and managed funds that avoid investing in things that, for example, “pollute land, air or water” or “extract, create, produce, manufacture, or market materials, products, goods or services which have a harmful effect on humans, non-human animals or the environment.”

Over the longer term, the company’s funds under management (FUM) continue to grow, which can provide a natural boost for revenue and profit. I’m particularly attracted to the fact that it provides superannuation, so it’s benefiting from the regular contributions of superannuation guarantee payments for employees.

In the three months to September 2022, the ASX share saw its total FUM (excluding institutional) rise from $6.02 billion to $6.18 billion, which included $150 million of net inflows for superannuation.

I think that ongoing FUM growth will help the Australian Ethical share price rise over time. It can also benefit from the inclusion of the Christian Super members that are being added into Australian Ethical superannuation options.

Temple & Webster Group Ltd (ASX: TPW)

The final $1,500 that I’d invest is into the shares of this furniture and homeware retailer.

I think the Temple & Webster share price looks much better value after dropping by around 60%.

While the business saw an e-commerce boost during the COVID-19 period, I believe that the amount of online shopping that people do will increase over time.

I like the company’s efforts to diversify and grow its earnings by selling more items, specifically in the home improvement categories of paint, plumbing, flooring and so on.

I’m impressed by the technology that the ASX share is now offering customers. For example, it offers augmented reality so that people can ‘see’ a product in their space. It’s also developing an artificial intelligence based interior design service.

While revenue may be volatile in FY23, I think the long-term future looks promising.

The post Share market rally: How I’d invest $5,000 right now in ASX shares appeared first on The Motley Fool Australia.

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More reading

• Goldman Sachs says these ASX growth shares are buys
• These 10 predictions could help you profit from the stock market regardless of inflation, interest rates or even another bear market
• Why Baby Bunting, James Hardie, Sims, and Temple & Webster shares are dropping
• How I’d find ASX growth shares to buy today to double my money
• Here are the 10 most shorted ASX shares

Motley Fool contributor Tristan Harrison 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 Australian Ethical Investment Ltd. and Temple & Webster Group Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Airtasker Limited. The Motley Fool Australia has recommended Australian Ethical Investment Ltd. and Temple & Webster Group Ltd. 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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