The Wesfarmers Ltd (ASX: WES) share price has drifted lower in recent weeks. I think this makes the business a compelling buy for several reasons.

Wesfarmers is not exactly a household name, but the company is the owner of several recognisable businesses including Bunnings, Kmart, Officeworks, Target and Priceline.

The company has a healthcare division and a chemicals, energy and fertiliser division called WesCEF.

Regular earnings compounding

It’s my belief that the best businesses to own over the long term are those that can significantly grow earnings.

That doesn’t mean they need to grow profit by 25% per year. Instead, growing at a solid rate can make a big difference over several years. For example, if earnings grow at a compound annual growth rate (CAGR) of 8%, they double in nine years.

We don’t know exactly how Wesfarmers will perform, but it has a track record of compounding earnings at a solid pace over the past few years.

In the 2026 financial year, the company reported that its underlying earnings per share (EPS) grew 8.3%, driven by 3.4% revenue growth, despite difficult trading conditions.

I think the quality of the Kmart and Bunnings businesses will allow Wesfarmers to continue earnings growth at a good single-digit pace in the coming years.

The business reported that its return on equity (ROE) (excluding significant items) improved by 4.3 percentage points to 35.5% in FY26, showing that the business usually generates a great return on additional money invested in the company.

I think Kmart Group and Bunnings Group can continue to generate returns on capital (ROC) of around 70% going forward, which is another strong signal of future profit growth for Wesfarmers.

Rising profits are a great tailwind for the Wesfarmers share price over time.

Well-suited to succeed during high cost of living

Customers always want good prices for the products they buy. Kmart and Bunnings are considered leaders in their respective retail categories.

Australia is facing a high cost of living for the foreseeable future – I think this period will be an opportunity for Wesfarmers to capture further market share with the perceived lowest prices.

I like how Wesfarmers, particularly Bunnings, is working on expanding into new product categories, which increases its addressable market. Two of the latest areas of focus were pet care and auto care.

In the coming years, I reckon Wesfarmers will be able to improve its profit margins thanks to strong operating leverage, despite offering customers such low prices.

It’s possible that financial growth could accelerate during this period, rather than seeing a slowdown.

Better valuation of the Wesfarmers share price

The Wesfarmers share price is down 21% since July 2026, which is a significant and rapid drop. I think that makes it an appealing long-term buy, especially given how Wesfarmers continues to invest in new growth avenues like healthcare and lithium mining.

According to CommSec’s projection, Wesfarmers’ share price is valued at 27x FY27’s estimated earnings.

The post 3 reasons why the Wesfarmers share price is a buy appeared first on The Motley Fool Australia.

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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 Wesfarmers. The Motley Fool Australia has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Many ASX investment experts reckon the changes to capital gains tax (CGT) will encourage a switched focus from growth to yield.

The 50% CGT discount for assets held longer than 12 months will be replaced by a cost base indexation method on 1 July next year.

The new rules grandfather existing ASX shares investments. So, the 50% CGT discount will apply to gains made before 1 July, 2027.

After that date, capital gains on existing investments, and new investments purchased thereafter, will be subject to cost base indexation.

A minimum 30% tax on net capital gains will apply.

Morgans has buy ratings on two ASX dividend shares that offer 6% to 7% annual distribution yields.

Centuria Industrial REIT (ASX: CIP)

The Centuria Industrial REIT share price is $2.89, down 0.5% today and down 14% over 12 months.

Morgans has an accumulate recommendation on this ASX real estate investment trust (REIT).

The broker said the ASX dividend share offers a 6% annual distribution that should continue to grow.

In a recent note, Morgans said:

CIP delivered FY26 FFO of 18.2cpu and distributions of 16.8cpu, both in line with guidance but at the bottom of the upgraded 18.2-18.5cpu range, and 1% below MorgansF of 18.4cpu.

CIP produced +5.2% like-for-like NOI growth, a near record 226,200sqm of leasing completed, spreads moderating to 30%, and +$116m like-for-like valuation gains, resulting in NTA up 2.3% to $4.01/unit.

FY27 FFO guidance of 18.8-19.2cpu was above market expectations, while the 17.3cpu of distribution guidance in FY27 reflects a more modest 3% growth (vs pcp), driven by rent reversion leasing in the second half.

We rate CIP ACCUMULATE, with a $3.25/sh PT, as the 6% distribution should continue to grow as rental income grows through a mix of positive rent reversion and lease indexation.

Waypoint REIT Ltd (ASX: WPR)

The Waypoint REIT share price is $2.27, down 1.1% today and down 17% over 12 months.

Morgans also has an accumulate rating on this ASX dividend share, which offers a 7% annual distribution.

The broker commented:

WPR’s 1H26 result was marginally ahead of our expectations, with management reaffirming CY26 Distributable EPS (DEPS) guidance of 17.14cps.

With limited expiries in CY27/28 (13% of NLA), WPR remains sensitive to the wider rate environment, and physical asset transactions point to some incremental softening in cap rates, albeit highly contingent on asset quality and location.

Trading at a c.7% distribution yield and 20% discount to NTA we do see value.

However, higher rates are likely to remain a headwind to earnings growth over CY27/28.

To this end, our target price remains broadly unchanged at $2.55, as we reiterate our ACCUMULATE recommendation on valuation grounds.

The post 2 ASX dividend shares offering 6% to 7% yields buy-rated by Morgans appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

It’s turning into a pretty horrid week for the S&P/ASX 200 Index (ASX: XJO) and many ASX shares. The ASX 200 started the week at just over 9,000 points – a psychological threshold that the market has continuously traded above for more than a month. However, after a 1% drop on Tuesday, a further 0.1% decline yesterday, and a nasty 1.5% drop so far this Thursday, the index is now sitting at just 8,777 points. As such, many investors may be wondering whether we are seeing the start of a stock market crash unfolding in real time.

Let’s dig into that uncomfortable question.

Well, it’s no secret that the markets are currently rattled. It’s not hard to see why. There are still some positive aspects of the global economy, of course. For example, corporate investment, particularly into AI infrastructure, remains elevated by historical standards in some corners of the global economy.

But the potential negatives seem to be overtaking this optimism in the minds of investors around the world. There are many troubling developments to point to here.

For one, the situation in the Middle East remains unresolved. Various tit-for-tat moves between Iran and the United States have kept the Starits of Hormuz effectively closed. Oil prices are responding accordingly, with Brent crude oil now back over US$101 a barrel. High oil prices spill over into the costs of transport, production and most other economic inputs, as well as dampen economic activity throughout the global economy.

Higher oil prices also increase inflation, which we’ll touch on in a moment.

So there’s that.

What could cause an ASX stock market crash?

Additionally, investors in the global bond market have also begun to bid up the price of government debt across the board. That includes US government debt, as well as Australian bonds.

That might not sound consequential. But it has profound implications for investors. High bond prices reflect a loss of confidence in those governments’ fiscal foundations. That’s not great news for a world that is reliant on the US economy and the supremacy of the US dollar for stability and growth.

These concerns seem to stem from ever-widening budget deficits, as well as sticky inflation. Inflation is still well above where the governments of both the United States and Australia want it to be. And, as we touched on above, it could get even worse if oil prices keep climbing. Australia has already had three interest rate rises in 2026, and markets are bracing for at least one more. Although this may eventually tame inflation, it will come with a cost to households and businesses across the country.

All in all, we have a potentially potent cauldron of factors that could bode very ill indeed for the global economy. So it’s perhaps no wonder that the markets seem to be losing confidence, and fast.

Foolish takeaway

Now, whether the markets will continue to drop, and even hit correction or crash territory, is something that no one can predict. The markets may well bounce back on the back of some positive development in the Middle East, or within any other arena that we’ve discussed. Or, things could just keep getting worse.

I think investors should be preparing themselves for either scenario. It’s important to wargame these scenarios before they happen and avoid decisions you may later regret (selling shares during a crash, for example). So if you’re worried about a potential stock market crash, today is the day to take stock of your portfolio and draw up a battle plan.

The post Is the ASX heading for a stock market crash? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.