The Wesfarmers Ltd (ASX: WES) share price is ahead of the S&P/ASX 200 Index (INDEXASX: XJO) year to date, over the past year, and over the past week. In fact, despite lockdowns and bushfires, the Wesfarmers share price is up by 4% year to date. 

Like JB Hi-Fi Limited (ASX: JBH) and Harvey Norman Holdings Limited (ASX: HVN), Wesfarmers found itself well-positioned for the lockdowns.

The brands boosting the Wesfarmers share

Officeworks’ sales performance, up to the end of May for 2H20, rose by 27.8% against the prior corresponding period. This is a major step up from the 11.5% growth in 1H20. Similarly, Bunnings has seen its sales performance for 2H20 increase, so far, by 19.2% versus the 5.8% rise in 1H20.

This is a significant increase likely due to the company’s customers continuing to spend more time working, learning and relaxing at home. In a performance update on 9 June, the company claimed Bunnings had seen growth across all Australian trading regions and product categories. Pretty impressive.

Wesfarmers secret weapon

There are 2 secret weapons fueling the performance of Wesfarmers shares. First is the online company they purchased last year, Catch. Catch followed in the footsteps of permission marketing pioneer site, Daily Candy. The initial newsletter was ‘Catch of the Day’. Today it has evolved into an online marketplace. 

Catch is not just an e-commerce site to sell products from K-Mart or Bunnings. It is trying to compete directly with Amazon.com, Inc. (NASDAQ: AMZN) or Kogan.com Ltd (ASX: KGN). Moreover, it sells products directly in competition with Kogan.

Catch saw its 2H20 sales performance so far improve by an astounding 68.7% against the previous corresponding period. In contrast, 1H20 reported a gross sales increase of 21.4%. 

Across all their retail operations, Wesfarmers have seen total online sales growth of 89%. 

Strong management

The Wesfarmers management team has made quite a few tough decisions in recent time. They sold down their stake in the Coles Group Ltd (ASX: COL) at a near all-time high share price. In addition, they took the decision to close loss-making Target stores and to refocus on K-Mart and acted swiftly to permanently close 7 small-format Bunnings stores during the half.

Foolish takeaway

Wesfarmers unintentionally holds a range of assets which were perfectly suited to the recent lockdown. It has also bought a company that places it directly in competition with Kogan for growing online sales.

Lastly, Wesfarmers management have shown the capacity to make hard decisions. These include, as mentioned, closing underperforming Bunnings formats, releasing capital from Coles for business growth and closing the door on underperforming Target stores.

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Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why the Wesfarmers share is beating the ASX 200 appeared first on Motley Fool Australia.

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If you’re interested in building your wealth, then I believe that thinking long term is the best way to do it.

This is because by investing with a long time horizon, you can benefit from the power of compounding.

This is essentially earning a return on your return, which accelerates the process. It explains why $50,000 generating an annual return of 10% per annum would turn into ~$130,000 in 10 years.

With that in mind, I have picked out three ASX shares that I believe could provide strong returns for investors over the next decade and beyond:

BetaShares NASDAQ 100 ETF (ASX: NDQ)

I think the BetaShares NASDAQ 100 ETF is well worth considering. It provides investors with exposure to the 100 largest non-financial shares on the NASDAQ. This includes behemoths such as Amazon, Facebook, and Microsoft. As I believe the majority of the companies on this index have the potential to grow at a quicker rate than the global economy, I expect the ETF to provide investors with strong returns for many years to come.

NEXTDC Ltd (ASX: NXT)

Another ASX share I would suggest you look at is NEXTDC. It is a leading Data Centre-as-a-Service provider with a portfolio of world class centres in key locations across Australia. I believe the company is perfectly positioned for growth thanks to the structural shift to the cloud. Another positive is its recent $672 million equity raising, which will strengthen its balance sheet and fund its strategic expansion plans.

SEEK Limited (ASX: SEK)

I think this job listings company would be a top option for investors. While I’m a big fan of its ANZ business, I think its rapidly growing China-based Zhaopin business is the real reason to invest. In the first half Zhaopin contributed 47.8% of SEEK’s total revenue, compared with 25.6% by the ANZ business. Given how lucrative the China market is, I expect Zhaopin to underpin strong growth for many years once the crisis passes.

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Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited and SEEK Limited. The Motley Fool Australia owns shares of and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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The ResMed Inc. (ASX: RMD) share price has been a very strong performer over the last 12 months.

Since this time last year the sleep treatment focused medical device company’s shares have stormed 43% higher.

Is it too late to buy ResMed shares?

I don’t believe it is too late to buy ResMed’s shares. In fact, I continue to believe it is one of the best buy and hold options on the local share market.

This is due to its industry-leading masks and software in an obstructive sleep apnoea (OSA) tipped to grow materially over the next decade and beyond.

One leading broker that is also a fan of the company is Goldman Sachs. This morning the broker has reaffirmed its buy rating and $27.00 price target on the company’s shares.

Why is Goldman Sachs positive on ResMed?

According to the note, Goldman hosted a call with ResMed’s management yesterday and notes that demand for OSA products has remained robust during the pandemic.

Goldman commented: “… we came away from the discussion comforted that the demand profile for OSA masks appears robust (indeed, elevated in many markets due to a heightened appreciation of respiratory care, and facilitated by effective access/distribution through Brightree/resupply).”

While it acknowledges that OSA diagnoses are down year on year, volumes are recovering quickly and are currently at approximately 85% to 90% of last year’s levels.

And the broker suspects that things could get better from here due to an unexpected consequence of the pandemic.

It explained: “In our view, an interesting development through this period is the potential for accelerated adoption of home diagnoses. Prior to Covid-19, this pathway constituted c.40% of new patient volumes in the US and, though greater reliance was initially borne out of necessity, the company is now seeing significantly more clinical/payor support than previously, potentially improving the overall penetration story through the mid-term.”

So, with research estimating that there could be almost 1 billion people globally with OSA, I feel this development bodes well for its future growth and leaves ResMed well-positioned to be a market beater again over the next decade.

More reading

• 5 things to watch on the ASX 200 on Friday
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why the ResMed share price could still go higher from here appeared first on Motley Fool Australia.

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