Author: openjargon

I think some of the best ASX 200 growth shares are businesses that solve important problems for customers.

They may not always have the loudest stories on the market, but they can become more valuable by building better products, winning larger customers, and becoming harder to replace over time.

These are two ASX 200 shares I would consider buying for powerful long-term growth.

TechnologyOne Ltd (ASX: TNE)

TechnologyOne is one of the ASX 200’s best tech shares, in my opinion.

The company provides enterprise software to councils, government departments, universities, and other large organisations. Its products help customers manage things such as finance, payroll, property and rating, student systems, and other core operations.

This is not glamorous software, and that is what I like about it.

Large organisations need systems that work. They need reliability, security, compliance, reporting, and support. Once software is built into daily operations, changing providers can be disruptive and costly.

That gives TechnologyOne a strong position with customers.

I also like the company’s long-running shift to software-as-a-service. Recurring revenue can make the business more predictable, and cloud-based products can support ongoing upgrades and stronger customer relationships.

The valuation is often demanding, so investors need to be sensible about price. But I think TechnologyOne has the rare combination of a focused market, strong execution, and a long runway beyond Australia.

Pro Medicus Ltd (ASX: PME)

Pro Medicus is another ASX 200 share where highly specialised work can be the powerful part.

The company provides medical imaging software through its Visage platform. Hospitals and radiology networks need technology that can handle huge imaging files, support fast workflows, and help doctors access the information they need.

This is a serious job.

Medical imaging is central to diagnosis and treatment. As scans become more detailed and healthcare systems become more digital, software quality becomes increasingly important.

Pro Medicus has built a strong reputation in this specialist area. Its contracts can be large, long term, and strategically important to customers.

What I like is that the company is selling into a market where performance is important. Hospitals and healthcare groups are not buying software because it sounds fashionable. They need tools that improve speed, usability, and reliability in clinical settings.

The risk, again, is valuation. Pro Medicus often trades at a premium because the market already recognises its quality. But I think exceptional software businesses can keep surprising investors if they continue winning important customers and expanding their role inside large markets.

Foolish takeaway

What I like about TechnologyOne and Pro Medicus is that both companies sell software into areas where reliability, speed, and product quality really count.

That gives them a useful kind of growth profile. Their customers are not buying a passing trend, they are using systems that help run important operations, whether that is a council, a university, a hospital, or a radiology network.

If these companies keep improving their products and winning larger customers, I think they can become even more valuable over time. That is why both ASX 200 shares would be on my buy list for long-term growth.

The post 2 ASX 200 shares I’d buy for powerful growth appeared first on The Motley Fool Australia.

More reading

• 3 buy-rated ASX tech shares with bright futures
• US chip stocks were smashed overnight. So why are ASX tech shares rising?
• Down 16%: What on earth is going on with TechnologyOne shares?
• 5 ASX growth shares I want in my portfolio in FY27
• Where to invest $500 on the ASX right now

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 positions in and has recommended Technology One. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has recommended Pro Medicus and Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

On Wednesday, the S&P/ASX 200 Index (ASX: XJO) fought hard and finished the day with a decent gain. The benchmark index rose 0.25% to 8,808.4 points.

Will the market be able to build on this on Thursday? Here are five things to watch:

ASX 200 expected to edge higher

It looks set to be a mildly positive session for Australian investors on Thursday after a mixed night on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 9 points or 0.1% higher this morning. In the United States, the Dow Jones was up 0.35%, but the S&P 500 fell 0.1% and the Nasdaq tumbled 0.45%.

Buy Ioneer shares

Ioneer Ltd (ASX: INR) shares could be undervalued according to Bell Potter. In response to news of non-binding letters of intent with South Korean entities, the broker has retained its speculative buy rating on the ASX lithium stock with an improved price target of 40 cents. This is more than double its current share price. It said: “Rhyolite Ridge is strategically important as a fully permitted, near-term and US-located source of lithium and boron supply. Both lithium and boron are USGS-designated critical minerals. […]  Lithium markets have recently strengthened, and we expect continued growth in underlying demand and limited new sources of supply will support lithium chemicals prices over the medium to long term.”

Oil prices sink

It could be a poor session for ASX 200 energy shares Woodside Energy Group Ltd (ASX: WDS) and Santos Ltd (ASX: STO) after oil prices sank again overnight. According to Bloomberg, the WTI crude oil price is down 4.6% to US$69.82 a barrel and the Brent crude oil price is down 5.15% to US$73.11 a barrel. This was driven by reports that tankers are successfully transiting through the Strait of Hormuz.

BHP and Rio Tinto shares on watch

BHP Group Ltd (ASX: BHP) and Rio Tinto Ltd (ASX: RIO) shares could have a poor session on Thursday after their NYSE-listed shares dropped on Wall Street overnight. BHP shares were down almost 2% and Rio Tinto shares were down over 1.5%. This may have been driven by a pullback in commodity prices. This includes a 2.6% decline in the copper price to US$5.99 per pound.

Gold price tumbles

It could be a difficult session for ASX 200 gold shares Newmont Corporation (ASX: NEM) and Northern Star Resources Ltd (ASX: NST) on Thursday after the gold price tumbled overnight. According to CNBC, the gold futures price is down 3.35% to US$4,010.3 an ounce. The gold price hit a seven-month low on rising US interest rate hike bets.

The post 5 things to watch on the ASX 200 on Thursday appeared first on The Motley Fool Australia.

More reading

• New to ASX shares? Avoid these 3 beginner mistakes
• Are Fortescue shares a strong buy or a value trap?
• Here are the top 10 ASX 200 shares today
• Buying Woodside shares? Here’s the dividend yield you’ll get today
• Why Aurelia Metals, Beach Energy, IAG, and Rio Tinto shares are falling today

Motley Fool contributor James Mickleboro has positions in Woodside Energy Group Ltd. 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.

ASX dividend stocks remain a favourite for income-focused investors looking to generate steady passive income while still participating in long-term capital growth.

That income stream can also act as a useful buffer during periods of share market volatility, which remains a key theme right now as markets continue to fluctuate.

With that in mind, two of the ASX’s most established defensive dividend payers stand out today. They offer reliable cash flows, essential infrastructure exposure, and long track records of shareholder returns.

Let’s take a closer look.

APA Group (ASX: APA)

APA Group is one of Australia’s most important energy infrastructure businesses.

It owns and operates a vast portfolio of gas, electricity, solar, and wind assets across the country, including pipelines, storage facilities, and gas-fired power stations. In fact, APA transports more than half of Australia’s natural gas through its network.

That scale and essential service exposure make APA a classic defensive ASX dividend stock. Demand for energy infrastructure remains relatively stable through economic cycles, and much of APA’s revenue is underpinned by long-term, often inflation-linked contracts.

This structure helps smooth earnings and supports consistent income for shareholders.

APA has paid regular distributions for close to two decades, reflecting the reliability of its infrastructure-based earnings model.

The company typically pays two distributions per year and most recently paid an interim distribution of 27.5 cents per security. It is guiding to a full-year FY26 distribution of 58 cents per security.

At current levels, this equates to a forward yield of around 5.6%, making it an attractive option for income investors seeking stability and yield.

Transurban Group (ASX: TCL)

Transurban Group is another high-quality defensive dividend stock that operates one of the largest urban toll road networks in the world.

The company owns and operates 22 toll road assets across Australia, the US, and Canada, including major motorways, tunnels, and bridges.

Its appeal lies in the essential nature of its assets. Even during economic downturns, people still need to travel for work, freight needs to move, and cities continue to function. That helps ensure relatively stable traffic volumes and resilient cash flow.

The ASX dividend stock also benefits from inflation-linked pricing mechanisms on many of its roads, allowing it to increase tolls annually in line with inflation. That provides a natural hedge in higher price environments.

The company paid an interim distribution of 34 cents per share in February and has guided to a full-year FY26 distribution of 69 cents per share.

At current levels, that represents a forward yield of approximately 4.6%, reinforcing its appeal as a dependable income generator.

Foolish takeaway

Together, APA Group and Transurban offer investors exposure to essential infrastructure assets with long-term contracted or regulated revenue streams.

They may not be the most exciting growth stories on the ASX, but for investors seeking steady income and defensive characteristics, these ASX dividend stocks remain two of the market’s most reliable dividend payers.

The post $5,000 buys 194 shares in these 2 top ASX dividend stocks appeared first on The Motley Fool Australia.

More reading

• How much do I need in my superannuation to get $1000 per week in passive income?
• Want passive income? These 3 ASX dividend stocks could deliver
• Transurban Group declares FY26 distribution; announces AGM date
• How I’d build $50,000 of ASX passive income
• 3 ASX dividend shares to buy and hold for years of income

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 Transurban Group. The Motley Fool Australia has positions in and has recommended Apa Group and Transurban Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Some ASX shares spend long periods in the market’s bad books.

That can be frustrating for existing shareholders, but it can also create opportunities for patient investors. When expectations are already low, a business does not need perfection to improve the investment case. It may only need steadier execution, better confidence, or a clearer path to growth.

Here are two ASX shares I would consider buying before sentiment improves.

CSL Ltd (ASX: CSL)

CSL is one share I think investors may come back to over time.

The healthcare giant has been through a difficult period, and confidence is lower than it once was. But I still think the core business has plenty of value.

CSL operates in markets that are difficult to enter and require deep expertise, global scale, regulatory experience, and long relationships with healthcare providers. Plasma therapies, vaccines, and other specialist healthcare products are not areas where new competitors can simply arrive and quickly take market share.

What interests me now is the reset in expectations. CSL no longer needs to be viewed as a perfect compounder to be a worthwhile investment. A period of steadier margins, better execution, and clearer earnings growth could be enough to change the conversation.

The business still needs to deliver, of course. But I think the market may be underestimating how valuable CSL’s global healthcare infrastructure remains.

Zip Co Ltd (ASX: ZIP)

Zip is a very different idea. This is a higher-risk growth share, but I think it has become more interesting as the business has matured.

The old buy now, pay later excitement has faded. That may be a good thing. Zip is now being judged more on earnings, credit quality, operating discipline, and whether it can build a sustainable payments business.

I like that shift. A company that can grow while controlling risk has a much better chance of creating long-term value than one chasing volume at any cost. Zip still needs to prove that its model can keep scaling profitably, especially in large markets such as the United States.

But if management keeps improving credit settings, customer quality, and operating leverage, I think the upside could be meaningful.

Zip remains speculative compared with a blue-chip share. Still, I think it is the kind of stock that can move quickly if the market starts to believe the earnings story has changed.

Foolish takeaway

Buying before sentiment improves is uncomfortable by nature.

The easier moment usually comes later, after the share price has already started to recover and the story sounds cleaner. That is why I think shares like CSL and Zip are worth watching closely now.

Both businesses have something to prove, but both also have a credible path to becoming more valuable if execution improves. That is the kind of setup I like when looking for opportunities.

The post Why I’d buy CSL and Zip shares before they recover appeared first on The Motley Fool Australia.

More reading

• New to ASX shares? Avoid these 3 beginner mistakes
• Down 54%: What should I do with my CSL shares now?
• Is this broker right about CSL shares?
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• Why A2 Milk, Calix, CSL, and Ioneer shares are charging higher today

Motley Fool contributor Grace Alvino has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This ASX healthcare stock has become one of the biggest success stories on the ASX.

4DMedical Ltd (ASX: 4DX) has surged 26% over the past five trading days, climbed 37% in the past month, and rocketed an astonishing 1,900% over the past year.

The remarkable rally has now caught the attention of one of the world’s largest investment firms. Let’s take a look at who it is and why it has purchased millions of 4DMedical shares.

Sizeable new stake

According to an ASX update released on Wednesday, JP Morgan Chase & Co. (NYSE: JPM) has acquired more than 31 million shares in 4DMedical, giving it a stake of approximately 6.3% in the company.

The move suggests the investment giant sees potential in a business that is rapidly emerging as a major player in healthcare imaging technology.

It’s not hard to see why investor interest in the ASX healthcare stock has surged.

Intersection AI and medical imaging

4DMedical develops advanced respiratory imaging technology that allows clinicians to assess lung function in ways traditional imaging methods cannot.

Its proprietary software and artificial intelligence tools create detailed functional images of the lungs, helping doctors diagnose and manage respiratory conditions more effectively.

As healthcare providers increasingly adopt AI-powered diagnostic tools, 4DMedical is positioning itself at the intersection of two powerful long-term growth trends: medical imaging and artificial intelligence.

Recent company announcements have only strengthened that investment case.

Expanding globally

One of the company’s biggest recent moves was its acquisition of Austrian AI imaging company Contextflow.

The deal immediately expands 4DMedical’s European footprint and adds lung cancer screening capabilities. It also provides access to existing reimbursement arrangements in Germany.

Management of the ASX healthcare stock believes the acquisition could increase the company’s addressable market by around 50%, significantly expanding its long-term growth opportunity.

For investors, it represents another step in transforming 4DMedical from an emerging Australian healthcare company into a global imaging technology business.

Making progress in the US

The company has also been gaining traction in the world’s largest healthcare market.

Recently, 4DMedical announced a major agreement with SimonMed. This is one of the largest outpatient imaging providers in the US, with more than 170 imaging centres.

The partnership supports the rollout of the company’s CT:VQ lung imaging technology. It provides access to a large network of healthcare providers and potential patients.

Earlier this month, management also launched its CLEAR clinical program targeting acute pulmonary embolism.

Importantly, the ASX healthcare stock believes this initiative could expand the US addressable market for CT:VQ to approximately US$3 billion. This highlights the scale of the opportunity if adoption continues to grow.

Raised expectations

Despite the excitement, investors should remember that expectations are now much higher than they were a year ago.

After a 1,900% gain, the market is increasingly focused on execution. The ASX healthcare stock must continue converting clinical success into commercial adoption. It also needs to grow revenue, expand reimbursement coverage, and successfully integrate its European operations.

Any slowdown in adoption or commercial progress could lead to heightened volatility.

Even so, JP Morgan’s new stake suggests at least one major institutional investor believes the growth story still has room to run. For shareholders, that vote of confidence is unlikely to go unnoticed.

The post This ASX healthcare stock is up 1,900%. One top fundie wants more appeared first on The Motley Fool Australia.

More reading

• Up 1,700% and more, what’s next for these ASX 200 shares?
• Here are the top 10 ASX 200 shares today
• Here are the 10 most shorted ASX shares
• Healthcare shares led the ASX 200 last week. Is a sector comeback underway?
• Here are the top 10 ASX 200 shares today

JPMorgan Chase is an advertising partner of Motley Fool Money. 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 JPMorgan Chase. 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.

Starting out in the share market can feel straightforward: buy a few popular ASX shares like BHP Group Ltd (ASX: BHP) and CSL Ltd (ASX: CSL), wait, and watch wealth grow. In reality, many new investors fall into avoidable traps that can hurt long-term returns.

The good news is that most of these mistakes are behavioural rather than technical. Once identified, they are relatively easy to fix. Here are three of the most common investing mistakes beginners still make.

1. Trying to time the market

One of the biggest mistakes new investors in ASX shares make is trying to predict short-term market movements.

It often starts with good intentions. Investors see headlines about falling markets and decide to “wait for a better entry point.” Or they sell during periods of volatility, hoping to buy back later at a lower price.

The problem is that timing the market consistently is extremely difficult, even for professionals. Markets tend to recover quickly, and missing just a handful of strong trading days can significantly reduce long-term returns.

A more effective approach is time in the market rather than timing the market. Regular investing, regardless of short-term noise, helps smooth out volatility over time.

2. Chasing hot stocks and trends

Another common mistake is buying ASX shares purely because they have recently surged.

This often happens during periods of market excitement. A stock doubles, gets attention on social media, and suddenly feels “safe” because everyone is talking about it.

But strong recent performance does not guarantee future returns. In many cases, the best part of the rally has already passed by the time retail investors enter.

Chasing momentum can also lead to concentration risk, where portfolios become overly exposed to a small number of high-flying growth stocks.

A more balanced approach focuses on business quality, earnings growth, and valuation rather than recent price action.

3. Ignoring diversification

Many beginners also underestimate the importance of diversification.

It is common for new investors to hold just a few ASX shares, often in sectors such as banking, mining, or technology. While this can work in strong markets, it creates significant risk if one sector underperforms.

Diversification helps reduce the impact of any single company or industry on overall portfolio performance. It can be achieved across sectors, geographies, and even asset classes.

Exchange-traded funds (ETFs) are among the simplest ways to achieve diversification without having to pick individual stocks. Broad-market ETFs provide exposure to hundreds of companies in a single investment.

Foolish takeaway

Most investing mistakes do not come from complex errors. They come from behaviour: reacting emotionally, chasing performance, and underestimating risk.

By focusing on long-term investing, prioritising quality businesses, and maintaining diversification, beginners can avoid many of the pitfalls that derail returns early on.

Investing does not need to be complicated, but it does require discipline.

The post New to ASX shares? Avoid these 3 beginner mistakes appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Why I’d buy CSL and Zip shares before they recover
• Are Fortescue shares a strong buy or a value trap?
• Down 54%: What should I do with my CSL shares now?
• There are still some well-priced ASX dividend shares. Here’s where to look

Motley Fool contributor Marc Van Dinther has positions in BHP Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has recommended BHP Group and CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX tech names Xero Ltd (ASX: XRO) and WiseTech Global Ltd (ASX: WTC) exploded yesterday. 

WiseTech shares rose 14% yesterday while Xero shares rose 8%, making them two of the top performers on the ASX. 

Both companies were heavily impacted over the last year by AI takeover fears, with SaaS companies hit hard. 

Investors who have held these tech shares through 60%+ losses over the last 12 months will be hoping this marks the beginning of a long-term recovery. 

Why did Xero and WiseTech shares jump yesterday?

There are a couple of factors that might have impacted WiseTech shares yesterday. 

After falling 20% across Monday and Tuesday, it’s possible investors were simply buying the dip on this battered tech stock. 

However it may have also been influenced by the company’s response to recent media reports involving founder Richard White.

Meanwhile for Xero shares, investors are likely searching for value options after it once again received positive guidance from the team at Citi. 

What’s next?

These ASX tech shares now appear at a crossroads. 

The bull case for WiseTech shares is based on its position as a leading global logistics software provider. 

Its CargoWise platform benefits from high customer switching costs, recurring revenue, and long-term growth in global trade digitalisation. 

However, it appears right now the most important factor is regaining investor confidence after allegations against its CEO. 

Meanwhile, for Xero shares, the bull case centres around its strong market position in cloud accounting software, recurring subscription revenue, high customer retention, and continued growth opportunities in international markets. 

The bear case is that its valuation relies on sustained growth, making the stock vulnerable to slower subscriber growth, stronger competition, economic weakness, or delays in improving profitability.

What are experts saying about Xero and WiseTech shares?

Despite very real concerns, experts seem to believe both stocks are trading at attractive valuations.

WiseTech shares closed yesterday at $32.86 each. 

However, the team at Ord Minnett see this as a serious discount. 

The broker has a recent price target of $60 on WiseTech shares along with a retained buy recommendation. 

This indicates an upside potential of 82%. 

Meanwhile, for Xero shares, the team at Citi recently reaffirmed its buy rating and $113.60 price target on the cloud accounting platform provider’s shares.

Based on yesterday’s closing price of $70.31, this indicates 61% upside potential. 

The post Is the tech recovery finally here for Xero and Wisetech shares? appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Top brokers name 3 ASX shares to buy now
• Why Benz Mining, Collins Foods, WiseTech, and Xero shares are shooting higher today
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Motley Fool contributor Aaron Bell has positions in WiseTech Global. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended WiseTech Global and Xero. The Motley Fool Australia has positions in and has recommended WiseTech Global and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX healthcare share Telix Pharmaceuticals Ltd (ASX: TLX) continued its strong run on Wednesday, rising 8% to $15.73.

Telix is now up 18% over the past month and 40% in 2026, although it remains down 36% over the past 12 months.

After a difficult year, investor sentiment has clearly improved. Here are three reasons the rally may still have further to run.

A powerful competitive moat

The ASX healthcare share operates in one of the most specialised areas of healthcare: radiopharmaceuticals.

These products combine radioactive isotopes with targeted therapies and diagnostics, helping doctors detect and treat diseases such as cancer with greater precision.

Importantly, this is not an industry that newcomers can easily enter.

Developing radiopharmaceuticals requires specialised expertise, manufacturing capabilities, regulatory approvals, and distribution networks that are expensive and difficult to replicate. Those barriers create a strong moat and help protect established players such as Telix from potential competitors.

As the market for precision medicine continues to expand, that competitive advantage could become increasingly valuable.

Momentum is building

The company has delivered a steady stream of positive developments in recent months.

In late February, Telix secured a key regulatory approval filing in Europe, marking an important step in expanding its commercial footprint beyond existing markets.

Momentum continued into April when the company announced that the US Food and Drug Administration had accepted its New Drug Application for TLX101-Px (Pixclara®). The acceptance represents a significant regulatory milestone and moves the product closer to potential commercialisation.

Telix also revealed a major collaboration with US biotechnology giant Regeneron Pharmaceuticals, strengthening confidence in its long-term growth strategy and pipeline potential.

Investors appear to be responding positively to the increasing number of catalysts emerging across the business.

Strong growth outlook

Telix’s financial performance continues to support the bullish investment case.

In April, the company reported first-quarter 2026 group revenue of US$230 million, representing an 11% increase on the previous quarter and a 23.7% rise compared to the prior corresponding period.

Management of the ASX healthcare share continues to guide to FY2026 revenue of US$950 million to US$970 million, supported by growth in its Precision Medicine business and contributions from its radiopharmacy operations.

The company also expects to invest between US$200 million and US$240 million in research and development this year.

That investment is helping advance multiple late-stage clinical programs and upcoming regulatory milestones across the pipeline.

Management also estimates its Precision Medicine and Therapeutics portfolio addresses a potential US$32 billion market opportunity in the United States alone, highlighting the scale of the growth runway ahead.

Analysts remain bullish

Market experts continue to see significant upside.

According to TradingView data, the majority of analysts covering the ASX healthcare share rate it as a strong buy. The most optimistic price target is $31.64, implying approximately 101% upside from current levels.

Morgans is also positive on the stock, with a $24.33 price target. That suggests upside of roughly 55%.

The broker recently noted that increasing consolidation across the healthcare sector could generate additional interest in Telix shares.

The post 3 reasons to buy this recovering ASX healthcare share appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today
• 2 ASX growth shares that could double your money
• Here are the 10 most shorted ASX shares
• Healthcare shares led the ASX 200 last week. Is a sector comeback underway?

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

Commonwealth Bank of Australia (ASX: CBA) and Wesfarmers Ltd (ASX: WES) are often seen as two of the highest-quality shares on the ASX.

I can understand why. Both have strong positions, long track records of success, and attract plenty of investor attention.

But quality does not stop there. There are other ASX shares with durable customer relationships, strong market positions, and the ability to compound over time.

If I were looking beyond CBA and Wesfarmers, these are three quality ASX shares I would consider buying.

Reece Ltd (ASX: REH)

Reece is one of those businesses that can look plain from a distance and more impressive up close.

The company supplies plumbing, bathroom, heating, ventilation, air conditioning, and waterworks products to trade customers. That may not sound glamorous, but the business sits inside an important part of the economy.

Plumbers and contractors need product availability, speed, reliability, and technical support. A delayed part can delay a job, upset a customer, and cost money. That gives a trusted supplier a meaningful role in the daily work of its customers.

I think that is one of Reece’s strengths. It has spent decades building relationships, branch networks, systems, and product knowledge. Those things are hard to copy quickly.

The US opportunity also makes the story more interesting. Reece has a much larger market to pursue, and success there could support growth for many years.

Housing cycles will still affect demand, and international expansion is rarely smooth. But I like businesses that can keep improving through better service, better systems, and deeper customer relationships.

Aristocrat Leisure Ltd (ASX: ALL)

Aristocrat is another quality ASX share I would consider.

The gaming company has built a global business around content, hardware, mathematics, design, and customer insight.

It is easy to think of gaming as purely a consumer business, but I see Aristocrat as a product development company with valuable intellectual property. It has to keep refreshing its content pipeline, improving cabinets, understanding player behaviour, and helping customers earn returns from their floor space.

It delivers on this by investing around 12% of revenue in R&D activities each year. And with Aristocrat consistently reporting a strong return on invested capital, this money isn’t being wasted.

The balance sheet also gives Aristocrat flexibility. A strong financial position can support investment, acquisitions, and capital returns when conditions allow.

Regulation and digital competition remain important risks. Still, I think Aristocrat’s track record, product engine, and global reach make it one of the more interesting quality businesses on the ASX.

Hub24 Ltd (ASX: HUB)

Hub24 is the wealth platform share I would include.

Australia’s wealth management industry is still changing. Advisers need better tools, clients expect clearer reporting, and portfolios are becoming more personalised.

Hub24 is one of the businesses helping that shift happen. Its platform gives advisers a way to manage administration, reporting, managed accounts, and investment portfolios more efficiently. That can make advice practices easier to run and help clients receive a better experience.

I like that Hub24 is connected to a large pool of Australian wealth. Superannuation, retirement planning, intergenerational wealth transfer, and demand for advice can all support long-term platform growth.

The business is exposed to market movements and competition, so valuation discipline is still important. But I think Hub24 has the type of usefulness that can support a high-quality growth story.

Foolish takeaway

CBA and Wesfarmers deserve their reputations, but they are not the only ASX shares with quality characteristics.

That is why I like looking at businesses such as Reece, Aristocrat, and Hub24. They operate in very different markets, yet each has built a position that would be difficult to recreate quickly.

For long-term investors, quality can show up in many forms. It can be a trade supplier with deep customer relationships, a gaming company with a strong product engine, or a wealth platform becoming more embedded in adviser workflows.

Those are the kinds of strengths I think are worth paying attention to beyond the most familiar ASX names.

The post 3 quality ASX shares I’d buy (that aren’t CBA or Wesfarmers) appeared first on The Motley Fool Australia.

More reading

• Should I sell my CBA shares before the end of June?
• If I invest $5,000 in Wesfarmers shares, what passive income will I get in 2027?
• How much is needed in superannuation to target an $11,000 monthly passive income?
• 5 ASX growth shares I want in my portfolio in FY27
• 3 ASX shares I’d buy for long-term wealth creation

Motley Fool contributor Grace Alvino has positions in Commonwealth Bank Of Australia, Hub24, and Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Hub24 and Wesfarmers. The Motley Fool Australia has recommended Hub24 and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Fortescue Ltd (ASX: FMG) shares have come under pressure recently.

The iron ore miner is trading around $19.27 at the time of writing, down from its 52-week high of $23.38. The share price has also fallen by around 12% over the past month.

That kind of pullback can make a high-profile share look tempting. Especially given that Fortescue has a long history of generating big cash flows when iron ore prices are strong.

But investors may need to look beyond the first-year numbers before deciding whether this is a bargain.

The valuation looks cheap at first

On near-term forecasts, Fortescue does look reasonably priced.

According to CommSec, consensus estimates point to earnings per share of $1.75 in FY26. Based on the current share price, that puts Fortescue on a price-to-earnings (P/E) ratio of about 11 times FY26 earnings.

That is not demanding on the surface.

The dividend also looks attractive. CommSec estimates dividends per share of $1.20 in FY26, implying a forward dividend yield of around 6.2%.

For income-focused investors, that number may stand out. A 6%-plus yield from a major ASX mining share can look appealing, especially for investors who believe iron ore prices can remain supportive.

But the real question is whether those numbers can last.

The forecasts get tougher

The issue is what happens after FY26.

CommSec consensus estimates suggest Fortescue’s earnings per share could fall to $1.44 in FY27 and $1.04 in FY28. At the current share price, that would lift the P/E ratio to around 13.4 times FY27 earnings and 18.5 times FY28 earnings.

That changes the picture.

The share may look cheap on FY26 earnings, but it looks much less cheap if profits fall as expected over the following two years.

The same applies to the dividend.

CommSec estimates dividends per share of 95.3 cents in FY27 and 67.7 cents in FY28. That implies yields of roughly 4.9% and 3.5%, respectively, based on the current share price.

A 6.2% forecast yield is attractive. A 3.5% yield from a highly cyclical iron ore miner is a different proposition.

That is why I think Fortescue has some value trap characteristics at current levels.

Why I’m cautious

Fortescue remains a very successful company. It has built a world-class iron ore business and has rewarded shareholders well over time.

But I think investors need to be careful when buying miners, mainly because the near-term yield looks high.

Iron ore earnings can move quickly. Prices, demand from China, shipping costs, currency movements, and operating costs can all affect profits. If earnings are already expected to decline, investors need to be comfortable with the possibility that dividends may also become less generous.

Fortescue is also spending heavily on future growth and energy ambitions. That may create opportunities, but it also adds another layer of execution risk.

For me, the cleaner mining exposure remains BHP Group Ltd (ASX: BHP).

BHP has broader commodity exposure, including copper, which I think has stronger long-term demand support from electrification, power grids, data centres, and energy infrastructure. It also has a larger and more diversified asset base.

Fortescue may still perform well if iron ore prices stay higher than the market expects. But if I were choosing between the two, I would prefer BHP shares.

Foolish Takeaway

Fortescue shares may look cheap after their recent fall, especially on FY26 earnings and dividend forecasts.

But the later-year estimates make me cautious. If earnings and dividends decline as expected, the valuation becomes less compelling, and the income appeal fades.

That does not make Fortescue a poor business. It does mean the current setup looks less attractive than the headline numbers suggest.

For investors wanting ASX mining exposure, I would avoid Fortescue shares for now and look more closely at BHP instead.

The post Are Fortescue shares a strong buy or a value trap? 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.