Tag: Stock pick

Xero Ltd (ASX: XRO) and Zip Co Ltd (ASX: ZIP) are two of the largest fintech shares listed on the ASX. 

Xero stands out of its cloud accounting and financial software, sticky subscriber based and huge growth opportunities. 

Meanwhile, buy now, pay later (BNPL) provider, Zip, stands out for its financially sound business model and aggressive expansion plans.

The other thing the two ASX 200 tech shares have in common is that they’ve both been smashed by an ongoing sector-wide sell-off, which sent their share prices crashing earlier this year.

But over the past month, the tide has turned for one of these tech powerhouses, and investors are reaping the rewards.

Let’s take a look.

Which ASX tech stock has made investors richer over the past month? 

Technology and growth shares have also come under renewed pressure recently as investors reassess valuations and risk appetite.

Both Xero and Zip shares suffered a share price crash late last year which continued through to early-2026.

While both stocks are still significantly lower than trading levels one year ago, when looking at the past month alone, Xero shares have far outperformed Zip shares.

Xero shares fell to around a seven-year low of $61.58 in late July, but have rebounded strongly since. At the time of writing, the shares have recovered around 32% from that point and are changing hands for $81.17 a piece. They’re also up 19% over the past month. 

Zip shares have had a much more volatile run. The shares dipped to an annual low of $1.45 in late-March and have rebounded around 79% ever since. But over the past month the shares have started falling again and are now down around 10%.

What do brokers tip next for Xero shares?

It looks like Xero shares are expected to continue their latest growth rally.

TradingView data shows that the majority (13 out of 15) have a buy/strong buy rating on Xero shares over the next 12 months.

The average $128.56 target price implies a potential 58% upside ahead, at the time of writing. But some think the shares have the potential to jump as much as 197% to $241.36 by this time next year.

What do brokers tip next for Zip shares?

While Zip shares have lagged behind Xero over the past month, the good news is that analysts forecasts are pretty similar.

TradingView data shows that the experts are also very bullish on the outlook for Zip shares. The majority (12 out of 13) have a buy/strong buy rating on the shares. 

The average $4.19 target price implies a potential 61% upside over the next 12 months. Although some think that Zip shares could increase another 115% to $5.59, at the time of writing.

The post Xero vs Zip shares: Which ASX 200 tech stock has made investors richer over the past month? appeared first on The Motley Fool Australia.

More reading

• Buy, hold, sell: Bank of Queensland, Xero, PLS Group shares
• Experts name 3 popular ASX 200 shares to sell today
• 3 ASX tech shares with strong growth potential
• How an Australian could retire with $1 million in superannuation
• Here are the top 10 ASX 200 shares today

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

Pro Medicus Ltd (ASX: PME) shares have surged more than 10% on solid profit results, with the company saying its pipeline of inbound work is “very strong” going forward.

And at least one broker has a bullish share price target on the company, with Barrenjoey expecting the shares to appreciate to $210, up from $197.45 currently, up 12.3% on the day.

Pro Medicus profit increase in the double digits

The digital imaging software company reported full-year revenue of $261.7 million, up 22.9%, while underlying net profit was $144.7 million, up 24.1%.

Pro Medicus remains debt free with cash on hand of $252.3 million, and will pay a fully-franked final dividend of 37 cents per share, up from 30 cents.

On the operational front, the company said it had signed 10 new contracts worth a minimum of $407 million, and renewed six out of six existing contracts worth $141 million on five-year terms.

Pro Medicus Chief Executive Officer Dr Sam Hupert said the result was in line with expectations.

He added:

We were aiming for 30% increases in EBIT and NPAT, and we exceeded both on a constant currency basis. We continue to be able to address a broad range of market segments, with clients ranging from smaller sub specialised health systems through to some of the largest IDNs and academic medical centres in the US. Importantly, we have proven that with one platform and one business model we can address virtually every opportunity in diagnostic imaging, providing us with the largest total addressable market (TAM). Progress made in the cardiology market represents another important string to our bow. We see this trend continuing.

Pro Medicus to get an AI tailwind

Dr Hupert also said the company was becoming more convinced that AI would be a benefit.

He added:

I have always maintained that AI and healthcare are a strong match, particularly in diagnostic imaging, and we are starting to see examples of this emerging. We are ideally positioned to benefit from this transition as we are the radiologist’s desktop and therefore the gateway for the output of image-based AI. Our platform is now used by approximately 11% of the US market, including 11 out of the top 20 healthcare institutions in the US and growing. This gives us a very material base upon which we can layer AI, whether it is via our own algorithms, those we co-develop with our research partners or 3rd party algorithms.

During the year, the company invested $10 million in each of 4DMedical Ltd (ASX: 4DX) and Echo IQ Ltd (ASX: EIQ), which Dr Hupert said were strategic investments which had also done well from a return on capital perspective.

Pro Medicus is valued at $18.4 billion.

The post Why are Pro Medicus shares surging more than 10%? appeared first on The Motley Fool Australia.

More reading

• Why is everyone talking about CSL, Pro Medicus and BHP shares on Tuesday?
• Pro Medicus FY26: Strong earnings growth and higher dividend
• Reporting season half-time report: 5 lessons from August so far
• 5 things to watch on the ASX 200 on Tuesday
• How to build a strong ASX retirement portfolio with 10 shares

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

It’s a big day for two of the smaller S&P/ASX 200 Index (ASX: XJO) bank stocks today.

As well as for their shareholders.

Following the release of their full year FY 2026 earnings results, one of the bank stocks is racing ahead of the 0.3% gains posted by the ASX 200 in late morning trade on Tuesday, while the other is falling hard.

Here’s what’s grabbing investor attention.

Bendigo and Adelaide Bank Ltd (ASX: BEN)

Turning to the falling ASX 200 bank stock first, Bendigo Bank shares are down a sharp 8.2% at the time of writing, trading for $10.24 apiece.

Highlights from the company’s FY 2026 results included a 3% year-on-year increase in after-tax cash earnings to $530.2 million.

While the bank’s net interest margin (NIM) slipped from the 1.98% reported for the first half of the year to 1.95% for the full year, the company achieved a statutory net profit after tax (NPAT) of $375.1 million.

But investors look to be pressuring Bendigo Bank shares today amid ongoing regulatory issues.

As the Motley Fool’s James Mickleboro reported, “Bendigo and Adelaide Bank is facing new APRA-imposed licence conditions following a review of its non-financial risk management.”

Commenting on risk management issues, Bendigo Bank CEO Richard Fennell said:

Our current non-financial risk management capabilities are clearly not where they need to be, and our risk rectification plan will be designed to drive a fundamental shift in our management of non-financial risk.

Which brings us to…

ASX 200 bank stock Judo Capital Holdings Ltd (ASX: JDO)

Judo Bank also reported its FY 2026 results today, with investors responding very positively.

At the time of writing Judo shares are changing hands for $1.01 apiece, putting the ASX 200 bank stock up 9.9% for the day.

Highlights for the financial year just past included a 24% increase in deposits to $12.2 billion.

And Judo managed to increase its NIM by 0.20% from FY 2025 to 3.13%.

On the bottom line, Judo Bank achieved a 29% year-on-year increase in statutory NPAT to $111.1 million.

And the ASX 200 bank stock looks to be catching tailwinds after reaffirming its FY 2027 profit before tax guidance in the range of $210 million to $220 million. That represents an increase of 25% to 31% from FY 2026. Judo also forecast stable NIM for the financial year ahead.

“We have a proven customer value proposition, our balance sheet remains strong, and we remain on course to deliver a return on equity in the low-to-mid teens,” Judo Capital CEO Chris Bayliss said.

The post 2 ASX 200 bank stocks making BIG moves today on results appeared first on The Motley Fool Australia.

More reading

• Bendigo and Adelaide Bank posts FY26 profit as it commits to risk overhaul
• Judo Capital reports FY26 earnings and upbeat outlook
• 3 top dividend stocks to target this week to supplement your superannuation
• Revealed: The ASX bank share with the highest dividend yield today
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Bernd Struben 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 positions in and has recommended Bendigo And Adelaide Bank. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Some businesses make long-term investing feel relatively straightforward.

They have clear opportunities to keep expanding, established positions in their markets, and reasons to believe they could be considerably larger a decade from now.

If I could only check my portfolio once a year, these are three ASX shares I would be comfortable owning.

ResMed Inc. (ASX: RMD)

ResMed would be my first pick because sleep health is a market I expect to keep growing for many years.

The company is best known for its devices and masks used to treat obstructive sleep apnoea. Millions of people already use its products, but a huge number of people around the world remain undiagnosed or untreated.

That gives ResMed plenty of people still to reach.

I also like what happens after someone begins treatment. Masks and other accessories need replacing regularly, creating an ongoing relationship rather than a one-off equipment sale.

Its latest results show that demand remains strong. ResMed’s fourth-quarter revenue increased by 9%, supported by its sleep devices, masks and accessories.

The company is also investing in digital health to help patients remain on therapy. I think combining connected devices, software and replacement products can strengthen those customer relationships over time.

For me, ResMed is a business that could quietly keep growing as more people receive treatment for sleep-related conditions.

TechnologyOne Ltd (ASX: TNE)

TechnologyOne is another share I would happily leave alone for long periods.

Its software is used by councils, universities, government organisations and other institutions to manage important everyday functions.

Once one of these organisations has built its operations around TechnologyOne’s software, changing systems can involve considerable time, disruption and retraining. Meanwhile, the company continues improving what existing customers can do through the platform.

TechnologyOne’s SaaS+ model takes this further by giving the company greater responsibility for implementing and operating its software for customers.

I think its expansion outside Australia could be particularly important over the next decade. UK annual recurring revenue reached $53 million in the first half of FY26, up 23%. That figure caught my attention because it shows TechnologyOne is gaining traction in another large market rather than relying solely on its established Australian customer base.

Artificial intelligence could give customers another reason to deepen their use of the platform, with TechnologyOne investing in technology that can automate tasks inside its software.

There should be plenty more runway if the company can repeat its Australian success overseas.

Coles Group Ltd (ASX: COL)

Coles may seem like the least exciting company of the three, but I wouldn’t let that put you off.

Australians need groceries every week, giving Coles an enormous base of recurring customer demand and defensive earnings.

The business is also changing behind the scenes. Coles has invested heavily in automated distribution centres and customer fulfilment centres, which can make the supply chain more efficient while helping it handle growing online demand.

Ecommerce sales increased by 27% during the first half of FY26, with volumes through its automated fulfilment centres continuing to grow.

I think that shows Coles can continue evolving even in a mature industry.

The company also owns valuable customer relationships through Flybuys and is developing its retail media operations, creating more ways to earn from the enormous amount of shopping activity already passing through its stores and websites.

For a long-term holding, I like that combination of everyday demand and gradual improvement.

Foolish takeaway

I like all three because I can see a reason to stay patient with them through the inevitable market noise.

If the underlying businesses keep progressing, I think these are the sort of shares that could reward investors for simply giving them time.

The post 3 ASX shares I’d buy if I could only check my portfolio once a year appeared first on The Motley Fool Australia.

More reading

• Where to invest $5,000 in Australian shares now
• Reporting season half-time report: 5 lessons from August so far
• How to build a strong ASX retirement portfolio with 10 shares
• How an Australian could retire with $1 million in superannuation
• 8 ASX 200 shares with fresh buy ratings this week

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

Shares in Iress Ltd (ASX: IRE) have been heavily sold off this week following the company’s results announcement, begging the question, are they now looking cheap?

The analyst team at Morgans certainly think so, with a buy recommendation on the shares and a share price target which has some serious upside.

We’ll get to that shortly. First, let’s look at what Iress announced.

Solid results but weaker than expected

The financial data company said on Monday that it had delivered a “solid” result, with improved earnings quality driven by disciplined execution.

Net profit came in at $32 million for the first half, up 85% on the same period in the previous year, while underlying net profit was up 18.4% to $38.8 million.

For the continuing business, revenue increased 2.5% on a constant currency basis to $250 million.

Iress declared a first-half dividend of 14 cents, up 27.3%.

The company’s Managing Director Andrew Russell said of the result:

Execution has shifted from simplifying the business to investing in product evolution and sustainable growth. We are evolving our products, accelerating engineering capability and increasing delivery velocity through our partnership with Thoughtworks and the disciplined adoption of AI. While revenue growth is expected to remain measured in the near term, we are confident in our strategy and in delivering our FY26 Cash EBITDA margin exit run-rate target of 25%. Our focus is on building a higher quality software business with better products, stronger customer relationships and disciplined capital allocation to create sustainable long-term value.

For the full year, the company is expecting to grow underlying profit by 15% to 21%.

Shares in this ASX technology company looking cheap

The Morgans team said the result was softer than expected, “with slower revenue momentum along with currency headwinds the main drivers”.

The broker added:

IRE has executed on stabilising the business over recent years. Further efficiency plans are now underway; however, improving the customer proposition and new product initiatives are required to drive organic revenue growth. We view IRE’s earnings base as more defendable and free cash flow as largely improving. Corporate appeal adds to the investment case.

Morgans said that Iress had delivered on annualised cost savings of $31.5 million ahead of schedule, and was targeting another $6 to $9 million in savings in the second half.

Morgans reduced its price target for Iress from $10.35 to $9.65. This is still 44.4% higher than the current share price of $6.68.

The broker expects Iress to pay a full-year dividend yield of 4% this year, rising to 4.7% by 2028.

Iress is valued at $1.31 billion.

The post After a steep fall on results, this ASX technology stock could be 40% undervalued appeared first on The Motley Fool Australia.

More reading

• Iress half-year earnings: Higher profits, bigger dividend, AI push
• 5 things to watch on the ASX 200 on Monday
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Cameron England 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.

S&P/ASX 200 Index (ASX: XJO) shares are flat at 9,072 points as earnings season continues on Tuesday.

The benchmark index is experiencing a strong start to the new financial year.

Just seven weeks into FY27, and the ASX 200 is already up 3.3%.

That compares to a 2.8% rise over the whole of FY26 (total return, including dividends, of 7%).

Two of the drivers are the healthcare and technology sectors, which are recovering from extended slumps.

Healthcare shares are up 17% so far in FY27, while tech is up 8%.

An increasing number of Australians are turning to ASX exchange-traded funds (ETFs) to make investing easier.

ASX ETFs provide exposure to a basket of stocks, thereby enabling great diversification in a single trade.

They’re also an easy way to gain exposure to international shares via our local exchange.

In today’s rising market, Andrew Wielandt from DP Wealth Advisory has recommended two ETFs to buy.

On The Bull this week, Wielandt explains his recommendations.

Betashares Global Royalties ETF (ASX: ROYL)

The ROYL ETF is $13.89, up 0.3% on Tuesday and up 15% over 12 months.

Wielandt explained his buy rating:

ROYL is a diverse exchange traded fund operating across a number of countries, including the United States, Canada, Brazil and Denmark.

It holds about 40 companies, with investments including ARM Holdings PLC, Texas Pacific Land Corporation and Wheaton Precious Metals at August 11, 2026.

ROYL focuses on companies earning royalty and intellectual property income.

What appeals is relatively steady returns compared to other cyclical investments.

The company posted a return of 15.59 per cent after fees in the past 12 months to July 31, 2026.

Munro Climate Change Leaders Fund Active ETF (ASX: MCCL)

The MCCL ETF is $18.14, up 0.9% today and up 7% over 12 months.

Wielandt discusses his buy recommendation:

This exchange traded fund holds a concentrated portfolio of companies aiming to benefit from decarbonisation during the next decade.

The ETF holds between 15 and 25 positions involved in clean energy, clean transport and energy efficiency.

The fund posted a return of 16.9 per cent for the 12 months to July 31, 2026.

However, given its highly concentrated nature, it’s important to note that returns can be volatile.

In our view, MCCL can also be considered an investment in the future and can be part of a balanced portfolio.

I hold MCCL in my self-managed super fund (SMSF).

Best ASX ETFs of FY26

Check out the 6 best ETFs holding ASX shares of FY26 here.

You can also review the 6 best international ETFs of FY26 here.

The post 2 ASX ETFs to buy as the market gathers strength: expert appeared first on The Motley Fool Australia.

More reading

• Buy, hold, sell: Aristocrat, Telstra, ANZ shares
• Why is everyone talking about CSL, Pro Medicus and BHP shares on Tuesday?
• How to find ASX shares that Warren Buffett might buy
• Here’s what brokers tip for Wesfarmers shares over the next 12 months
• How much do I need in my superannuation to earn $50,000 per year in passive income?

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 positions in and has recommended Arm Holdings. 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.

S&P/ASX 200 Index (ASX: XJO) shares are up 0.4% to 9,105.1 points on Tuesday.

As earnings season continues, top broker Morgans has issued some new ratings on ASX 200 shares.

Let’s check them out.

Aristocrat Leisure Ltd (ASX: ALL)

The Aristocrat Leisure share price is $63.30, down 1.9% today and down 10.3% over 12 months. 

Morgans has downgraded this ASX 200 consumer discretionary share from buy to accumulate.

The broker said: 

We attended the Australasian Gaming Expo (AGE) in Sydney last week, which serves as the key annual showcase for the region’s major slot machine manufacturers.

Alongside meetings with other suppliers and operators, we attended a Q&A session with ALL management and took a guided tour of its product.

Land-based momentum looks solid to us. ALL continues to push new titles onto its existing cabinets while laying the groundwork for the next wave of hardware and the content that comes with it.

Despite the stock trading on c.23x forward PER with a c.2% yield, we continue to see upside potential given the strong momentum entering peak season.

However, following recent share price strength, we revise our rating to Accumulate with a 12-month target price of A$70.00 (prev. A$67.00).

Telstra Group Ltd (ASX: TLS)

The Telstra share price is $4.74, down 1.5% today and down 4% over 12 months. 

Telstra shares fell 5.2% after the telco released its full-year FY26 results last Thursday.

Morgans has a hold rating on this ASX 200 telecommunications share. 

The broker said: 

TLS’s FY26 result and FY27 guidance were largely as expected, with FY26 itself coming in at the middle-to-top end of guidance.

This largely in-line result wasn’t enough for the marginal buyer and TLS shares ended the day down 3%.

We lift FY27/28 EPS by ~4%. Our target price is reduced to $5 as we remove our previously applied premium to valuation.

Hold recommendation retained.

ANZ Group Holdings Ltd (ASX: ANZ)

The ANZ share price is $37.45, down 1.1% today and up 15% over 12 months. 

ANZ shares rose 4.5% after the bank released its 3Q FY26 update last Thursday.

Morgans maintained its trim rating on this ASX 200 bank share. 

The broker said: 

Underlying earnings growth, delivery of cost decline and low bad debts were a feature of the trading update, with lifting momentum behind revenue growth.

Forecast changes are immaterial. 12-month target price reset to $33.53/s.

TRIM retained, with potential TSR at current prices of c.-9% (including 4.4% yield).

The post Buy, hold, sell: Aristocrat, Telstra, ANZ shares appeared first on The Motley Fool Australia.

More reading

• How much do I need in my superannuation to earn $50,000 per year in passive income?
• How much could the Telstra share price rise in the next year?
• These ASX 200 shares could generate $10,000 per year in passive income
• Reporting season half-time report: 5 lessons from August so far
• How much do I need to retire on $100,000 a year at 60?

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

CSL Ltd (ASX: CSL), Pro Medicus Ltd (ASX: PME), and BHP Group Ltd (ASX: BHP) shares are turning heads today.

In morning trade on Tuesday, all three of the S&P/ASX 200 Index (ASX: XJO) heavyweights are charging ahead of the 0.1% gains posted by the benchmark index.

Here’s what’s piquing investor interest.

BHP shares jump on 30% profit surge

BHP shares are leaping higher today, up 3.1% and changing hands for $64.12 apiece.

This follows the release of the ASX 200 mining giant’s full-year FY 2026 results.

Among the highlights that look to have investors reaching for their buy buttons, BHP reported a 15% year-on-year increase in revenue to US$58.8 billion. And underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of US$32.9 billion were up 27%.

The mining giant also achieved a 17% increase in its operating cash flow to US$21.8 billion.

On the bottom line, BHP shares are catching tailwinds with the miner reporting a 30% increase in underlying profit to US$13.2 billion.

On the passive income front, FY 2026 saw US$8.7 billion in dividends determined, equivalent to US$1.72 per share for a 66% payout ratio.

Pro Medicus shares leap on earnings increase

Like BHP shares, Pro Medicus shares are charging higher today following the release of the company’s own FY 2026 results.

Shares in the ASX 200 health imaging company are up a whopping 10.8% at the time of writing, changing hands for $194.78

Investors are piling into Pro Medicus shares after the company reported a 22.9% year-on-year increase in revenue to $261.7 million. And underlying earnings before interest and tax (EBIT) of $196.1 million were up 24.4% from FY 2025.

This helped drive a 24.1% increase in the company’s underlying net profit after tax (NPAT) to $144.7 million.

Pro Medicus also increased its cash and financial assets by 19.7% over the year to $252.3 million.

And the company’s final fully-franked dividend of 37 cents per share is up 23.3% from last year’s payout.

Which brings us to…

CSL shares rocket on profit outlook

Joining Pro Medicus and BHP shares in turning heads – and rocketing higher – today we find CSL.

Shares in the ASX 200 biotech giant are up an impressive 15.4% at the time of writing, trading for $155.37 each. This strong outperformance also follows on CSL’s full-year earnings results.

CSL shares are shooting higher despite the company reporting a 1% year-on-year decline in revenue to US$15.8 billion. And underlying NPATA of US$3.1 billion was down 2% from FY 2025.

Still, management declared a final dividend of US$1.62 per share, in line with last year’s payout.

The big uplift in CSL shares today looks to be driven by the more positive outlook for FY 2027.

“FY26 has been a year of reset. We have taken decisive action and created a clear path to return to sustainable growth,” CSL interim CEO Gordon Naylor said.

Management is forecasting steady revenue in the financial year ahead, while underlying NPAT is forecast to grow by around 5%.

The post Why is everyone talking about CSL, Pro Medicus and BHP shares on Tuesday? appeared first on The Motley Fool Australia.

More reading

• How to find ASX shares that Warren Buffett might buy
• How much do I need in my superannuation to earn $50,000 per year in passive income?
• How many BHP shares do I need to buy for $1,000 per month of passive income?
• Pro Medicus FY26: Strong earnings growth and higher dividend
• BHP Group posts record FY26 earnings and flags copper-led future

Motley Fool contributor Bernd Struben 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 CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has recommended BHP Group, CSL, and Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Warren Buffett has built one of the greatest investing records in history by owning high-quality businesses for very long periods.

Of course, we cannot know which ASX shares Buffett would actually buy. He may look at the Australian market very differently from me, and price would also play a major role in any investment decision.

What we can do is look at the types of businesses he has historically favoured and ask which ASX shares appear to share some of those characteristics.

Here are three that stand out to me.

Wesfarmers Ltd (ASX: WES)

One trait I associate strongly with Buffett is a preference for businesses that are relatively easy to understand.

Wesfarmers certainly fits that description in my opinion.

Its portfolio includes consumer businesses such as Bunnings, Kmart and Officeworks, which sell products millions of Australians regularly buy. These are established brands with large customer bases and strong positions in their respective markets.

I think Bunnings is particularly interesting from a Buffett-style perspective. Its scale, brand recognition and store network would be extremely difficult for a new competitor to replicate.

Wesfarmers also has a long history of allocating capital across different businesses. That is another characteristic I would look for when trying to identify a company Buffett might appreciate. Strong management teams can create significant value when they have the discipline to invest heavily in attractive opportunities while avoiding poor ones.

The price still has to make sense, but I think Wesfarmers has many of the business qualities I would expect a Buffett-style investor to value.

REA Group Ltd (ASX: REA)

Buffett has often invested in companies with powerful competitive advantages.

REA Group is one ASX share I think fits that profile particularly well.

Its realestate.com.au platform has become an important part of the Australian property market. Buyers naturally want to search where the largest number of properties are listed, while sellers and real estate agents want to advertise where the largest audience is looking.

That creates a powerful network effect. As more buyers use the platform, it becomes more valuable to advertisers. That in turn can attract more listings, which helps keep buyers coming back.

Businesses with this type of competitive advantage can potentially protect their market position for a very long time.

REA Group also benefits from a relatively capital-light digital business model, meaning growth does not necessarily require huge spending on physical assets.

For me, those qualities make it the kind of ASX business that deserves a closer look through a Buffett-style lens.

CSL Ltd (ASX: CSL)

Another Buffett characteristic I would look for is a business with a sustainable leadership position in an industry where replacing an established operator would be difficult.

CSL fits that description for me. The healthcare company has spent decades building its plasma collection network, manufacturing capabilities, scientific expertise and relationships across global markets.

Those assets cannot simply be recreated overnight.

Demand for many of CSL’s therapies is also connected to serious medical needs, giving the business exposure to healthcare demand that can persist through different economic environments.

There is also potential for long-term growth as the company expands production, develops new therapies and reaches more patients around the world.

CSL is more complicated than some classic Buffett investments, but I think its competitive position, global scale and long-term focus give it several qualities he has historically looked for in businesses.

Foolish takeaway

Trying to guess exactly what Warren Buffett would buy is unlikely to get investors very far.

I think the more valuable exercise is studying the qualities behind his investments.

Strong competitive advantages, understandable business models, capable management and the ability to generate attractive returns over many years are all characteristics worth looking for.

Wesfarmers, REA Group and CSL each appear to tick several of those boxes in my view.

The post How to find ASX shares that Warren Buffett might buy appeared first on The Motley Fool Australia.

More reading

• Why is everyone talking about CSL, Pro Medicus and BHP shares on Tuesday?
• Here’s what brokers tip for Wesfarmers shares over the next 12 months
• How much do I need in my superannuation to earn $50,000 per year in passive income?
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Motley Fool contributor Grace Alvino has positions in CSL and Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL and Wesfarmers. The Motley Fool Australia has recommended CSL and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Wesfarmers Ltd (ASX: WES) shares have fallen into the red in early morning trade on Tuesday.

At the time of writing, shares in the conglomerate – whose retail subsidiaries include Bunnings Warehouse, Kmart Australia, Officeworks, and Priceline – are down around 1.5% and are changing hands for $83.58 a piece.

Today’s decline follows a 4% drop in the share price yesterday.

Interest rate and inflation concerns, and cost of living pressures have acted as strong headwinds for the company so far this year. 

Wesfarmers shares have been pretty volatile for the year-to-date, swinging anywhere between an annual low of $71.26 in mid-May and a high of $92.96 in mid-July.

The shares are now around 2% higher for the year-to-date but still 7% lower than a year ago.

For context, the S&P/ASX 200 Index (ASX: XJO) is up around 4% for the year-to-date, and roughly 1.5% higher than 12 months ago.

What do brokers tip next for Wesfarmers shares?

Wesfarmers is due to announce its FY26 results on the 27th of August. 

Investors are eager to find out Wesfarmers’ FY26 key group financial metrics and final dividend size. The result is expected to influence the direction of Wesfarmers shares and sentiment about the company’s outlook.

Wesfarmers has already paid a fully-franked interim dividend of $1.02 per share. Consensus estimates point to a final FY26 dividend of around $2.20.

It looks like the experts are pretty bearish on the outlook for Wesfarmers shares ahead of its results announcement.

According to Market Index data, the majority of brokers have a sell rating on the conglomerate’s shares. The $78.16 average target price implies a potential downside of around 7% at the time of writing.

The data is similar on TradingView. Again, the majority (nine out of 15) have a strong sell rating on the consumer discretionary shares. However five still think the shares are a hold and one analyst rates the stock as a buy.

The average $77.56 target price implies a downside of around 7%, at the time of writing. Although some think that the shares have the potential to fall up to 22% to $65.10 over the next 12 months.

Morgan Stanley has a sell rating and a $79 price target. The broker recently warned that the rally in consumer discretionary stocks has “run ahead of fundamentals and is unlikely to prove durable”.

Alto Capital’s Tony Locantro also has a sell rating. He thinks that much of Wesfarmers’ quality and long-term growth outlook is already fully reflected in the current valuation. He added that future upside may be constrained by elevated market expectations.

The post Here’s what brokers tip for Wesfarmers shares over the next 12 months appeared first on The Motley Fool Australia.

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Motley Fool contributor Samantha Menzies 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.