Tag: Stock pick

It was another busy week for Australia’s top brokers. This has led to the release of a number of broker notes.

Three broker buy ratings that you might want to know more about are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

Electro Optic Systems Holdings Ltd (ASX: EOS)

According to a note out of Bell Potter, its analysts retained their buy rating on this defence company’s shares with a reduced price target of $8.10. This followed the completion of the acquisition of the MARSS Group’s drone interceptor business for $10 million last week. Bell Potter notes that interceptor drones are an emerging hard-kill counter-unmanned aerial systems (C-UAS) technology that is expected to grow in demand in the coming years. Although it will be 12 to 24 months until EOS has developed a commercial product, Bell Potter thinks it will be worth the wait. It is estimating that interceptor revenue will come in at $6 million in 2027 then consistently grow in the double digits in the years that follow. In addition, it once again highlights that EOS is positioned as a market leader in C-UAS solutions and is leveraged to increasing budget allocations to C-UAS technologies. The EOS share price ended the week at $4.55.

Lovisa Holdings Ltd (ASX: LOV)

A note out of Morgans revealed that its analysts upgraded this fashion jewellery retailer’s shares to a buy rating with a trimmed price target of $40.00. This followed the release of a trading update from Lovisa for the first 20 weeks of FY 2026. Morgans notes that the company’s sales and store growth have slowed over the past three months. However, given that Lovisa is still growing sales at 20%+, which is impressive given the challenging retail trading conditions, it remains very positive. Especially with the recent pullback in its share price, which Morgans thinks has created an opportunity to buy a high quality retailer with a global store rollout strategy. It also highlights that its shares are trading back around their average 10-year forward earnings multiple despite offering ~20% earnings per share compound annual growth over the next 3 years. The Lovisa share price was fetching $32.13 at Friday’s close.

WiseTech Global Ltd (ASX: WTC)

Another note out of Bell Potter revealed that its analysts retained their buy rating on this logistics solutions software provider’s shares with a trimmed price target of $100.00. The broker was pleased to see management reiterate its FY 2026 guidance at its annual general meeting this month. It believes this was the first hurdle cleared by management and is now looking forward to its investor day event next week. Bell Potter is expecting an update on its new commercial model and the launch of its Container Transport Optimisation (CTO) offering. The WiseTech Global share price ended the week at $73.02.

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

More reading

• Why today’s cheap ASX shares could double my money during the next bull market
• Here are the top 10 ASX 200 shares today
• Brokers name 3 ASX shares to buy today
• What’s driving the dramatic drop in ASX 200 tech shares?
• Why HMC Capital, Select Harvests, Web Travel, and WiseTech shares are pushing higher today

Motley Fool contributor James Mickleboro has positions in Lovisa and WiseTech Global. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Electro Optic Systems, Lovisa, and WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. The Motley Fool Australia has recommended Lovisa. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

There are few ways to get as cheap exposure to the ASX share market as the Vanguard Australian Shares Index ETF (ASX: VAS). What’s not to love about a low management fee and plenty of diversification?

Impressively, the VAS ETF has an annual cost of 0.07% per year, which is very close to zero. Investors can hold this fund and be charged very little, while plenty of fund managers may charge 1% or more of the net assets of the fund. That’s pleasing for net returns.

Another strength of the investment is the number of holdings it has. The fund tracks the S&P/ASX 300 Index (ASX: XKO), which is an index of 300 of the biggest businesses on the ASX. That certainly helps diversification.

How much of an investor’s portfolio should the VAS ETF comprise?

There isn’t a ‘right’ answer of course – it depends on what an investor is looking for.

For an investor wanting a passive investment that can provide a solid dividend yield, this ASX ETF certainly ticks the box and could play a key role. At the end of October 2025, it had a dividend yield of 3.1% (with franking credits being a bonus on top of that).

But I think we’d be missing out on other appealing investments if the VAS ETF were to be 100% of our portfolio.

Some of the most respected and diversified investment options in Australia have a minority weighting in ASX shares.

For example, the Vanguard Diversified High Growth Index ETF (ASX: VDHG) is invested in a variety of assets, including ASX shares, international shares, emerging market shares, and bonds. The VDHG ETF has a target allocation of 36% to Australian shares.

Meanwhile, AustralianSuper’s ‘high growth’ investment option has a current allocation of 32.2% to Australian shares.

So, for Australian-based, diversified juggernauts, they have around a third of their portfolios invested in Australian shares. I think that’s a very reasonable allocation for Australians who are considering the VAS ETF.

However, we should keep in mind that the ASX accounts for only around 2% of the global share market; we shouldn’t ignore the excellent opportunities overseas.  

My own portfolio

Currently, none of my portfolio is invested in the VAS ETF for two key reasons.

Firstly, the fund is heavily weighted to the largest ASX blue-chip shares – around 45% of the portfolio is invested in the biggest ten positions. That makes the Vanguard Australian Shares Index ETF seem a bit less appealing on the diversification side of things than at first glance.

I also believe that there are plenty of investments on the ASX that can grow faster than the VAS ETF, which is why I allocate money to the best opportunities I can see every chance I get.

The post How much of my portfolio should Vanguard Australian Shares Index ETF (VAS) be? appeared first on The Motley Fool Australia.

More reading

• The 10-year wealth plan: how to turn small savings into life-changing results
• The easy set and forget ASX share portfolio I’d build today
• 3 defensive ASX ETFs for a rocky 2026
• What $100 a week in ASX shares could become in 20 years
• 5 ASX ETFs to buy with $10,000 in December

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 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.

The market may be close to record levels, but plenty of high-quality ASX shares are still sitting well below their recent highs.

Short-term uncertainty, from interest rates to weak consumer confidence to sector-specific issues, has created rare pockets of value, even as the broader market edges into bullish territory.

History shows that buying quality ASX shares at depressed prices can be one of the most effective ways to capitalise on a bull market.

And with several elite ASX names currently trading at significant discounts, this could be the moment long-term investors look back on as a major turning point.

Buying undervalued ASX shares

Purchasing strong ASX shares when their share prices are temporarily depressed can dramatically improve long-term returns. When sentiment sours, prices often fall far more than fundamentals justify, and this disconnect can set the stage for powerful rebounds once confidence returns.

Many ASX leaders are in that position right now.

For example, CSL Ltd (ASX: CSL) is trading miles below historical valuation multiples due to temporary margin and regulatory concerns. REA Group Ltd (ASX: REA) has been dragged down by market volatility despite maintaining unrivalled pricing power. Treasury Wine Estates Ltd (ASX: TWE) has tumbled as premium wine demand softens due to consumer spending weakness, even though its brand strength and Asian strategy remain intact.

Meanwhile, market darlings like WiseTech Global Ltd (ASX: WTC) and Xero Ltd (ASX: XRO) have suffered heavy selloffs after investors rotated out of growth.

These companies may look out of favour now, but structurally, their long-term outlooks remain extremely compelling.

Not all cheap shares are equal

A falling share price doesn’t automatically make a stock a bargain. Some ASX shares trade at low valuations because their earnings outlook is deteriorating or their competitive positions are weakening.

That’s why focusing on businesses with strong balance sheets, sustainable competitive advantages, and clear long-term growth drivers is crucial.

CSL controls a global network of plasma centres that would take competitors decades to replicate. REA dominates Australia’s online real estate sector with enormous brand power. WiseTech owns mission-critical software deeply embedded in global supply chains. Xero continues to expand into a vast global market of small businesses. Treasury Wine holds some of the most recognised premium labels in the wine industry.

These are exactly the kinds of companies that can recover and thrive in a long bull market.

Doubling an investment faster

Even matching the long-term market returns of around 10% per year could double an investment in seven years. But buying high-quality businesses while they are undervalued can accelerate that timeline significantly.

When the bull market fully takes hold, sentiment often swings sharply. Companies that were punished during downturns frequently become some of the strongest performers on the way back up, especially when their fundamentals remain intact.

Given the scale of recent declines, CSL, REA, Treasury Wine, WiseTech and Xero could be among the ASX names that rebound the hardest once conditions stabilise. As a result, owning them at today’s prices may offer the kind of upside that long-term investors dream of.

The post Why today’s cheap ASX shares could double my money during the next bull market appeared first on The Motley Fool Australia.

More reading

• I’d listen to Warren Buffett’s advice to buy undervalued ASX shares today
• 5 ASX 200 large-cap shares re-rated by Morgans
• Here are the top 10 ASX 200 shares today
• What’s driving the dramatic drop in ASX 200 tech shares?
• Why HMC Capital, Select Harvests, Web Travel, and WiseTech shares are pushing higher today

Motley Fool contributor James Mickleboro has positions in CSL, REA Group, Treasury Wine Estates, WiseTech Global, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, Treasury Wine Estates, WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended Treasury Wine Estates, WiseTech Global, and Xero. 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 article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Peter Thiel is a legendary personality in the tech space. He’s a cofounder of PayPal and Palantir, and was one of Facebook’s (now Meta Platforms) first outside investors. That’s an impressive resume, and makes following his investment moves a wise idea.

During Q3, Thiel’s fund made two surprising moves: It sold a ton of Tesla (NASDAQ: TSLA) stock and completely exited its Nvidia (NASDAQ: NVDA) position. In its place, he purchased Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT). 

Those are some interesting moves, but are they the right ones? Let’s find out. 

Peter Thiel is sitting on a large pile of cash after Q3

There are many reasons why someone might sell a stock. The most obvious is that they’ve lost faith in a position or feel that a stock has gotten overvalued, and it’s time to move on. Another possibility for someone like Peter Thiel is that he may have found something else more lucrative to invest in. Lastly, Thiel could be making a substantial purchase and just wants the money to fund that.

However, there’s only one reason why Thiel is purchasing stocks like Microsoft and Apple: He thinks they will go up.

To determine if he rolled the money from Tesla and Nvidia into Microsoft and Apple, let’s look at the sales and buys and see if it was a direct transfer or if he’s sitting on a big pile of cash. Determining exactly when Thiel sold the stocks isn’t possible, so we need to make a few assumptions.

During Q3 2025, Tesla’s stock traded at a low of $294, an average of $347, and a high of $445. Nvidia’s stock traded at a low of $153, an average of $174, and a high of $187. That’s a wide range of prices Thiel could have sold at, so we’ll use the average to determine the total dollar figure of the sales.

Thiel sold nearly 208,000 shares of Tesla during Q3, which works out to about $72 million worth of Tesla stock. He sold 538,000 shares of Nvidia in Q3, which is $94 million worth of Nvidia stock.

Switching gears to Microsoft and Apple, he owned zero shares of each during Q2, so it’s easy to figure out the average value of these investments. With Thiel owning 49,000 shares of Microsoft and 79,000 shares of Apple, these two positions would have cost him about $25 billion for the Microsoft purchase and $18 billion for the Apple purchase.

That is nowhere near the amount of money he cleared from the Tesla and Nvidia sales, so it’s fairly obvious that Thiel is sitting on a big pile of cash after his Q3 transactions. He may use that to invest in an exciting artificial intelligence (AI) or even a quantum computing start-up, or he could be getting worried about the valuation of the market.

Either way, the move from Nvidia and Tesla conveys that he’s de-risking his portfolio. Microsoft and Apple are much safer stocks than Tesla or Nvidia, so this move is clearly a defensive one. However, I don’t think one of the moves was correct.

The move to sell Nvidia and buy Apple is questionable

While I have no problem selling Tesla to buy Microsoft, the biggest question for me is: Why would he sell Nvidia to buy Apple? Apple is growing at an incredibly slow pace, with revenue rising at less than 10% for multiple years. Contrast that with Nvidia, which has delivered explosive growth for several years and isn’t slated to slow anytime soon due to massive data center buildouts.

NVDA Revenue (Quarterly YoY Growth) data by YCharts

Despite this massive growth mismatch, Apple and Nvidia trade for nearly the same valuation when next year’s forward earnings are considered.

NVDA PE Ratio (Forward 1y) data by YCharts

To me, Nvidia looks like the much better stock to buy and hold, but Peter Thiel also has a longer and far more legendary track record than I do. This mismatch of ideas is what makes the market, and investors need to do their own research and thinking to determine if a move like selling Nvidia and buying Apple is right for them. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Billionaire Peter Thiel just sold Nvidia and Tesla for these other two “Magnificent Seven” stocks appeared first on The Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

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• 2 reasons to distance yourself from Tesla in 2025, according to Warren Buffett logic
• The most jaw-dropping number you may have missed from Nvidia’s latest earnings report

Keithen Drury has positions in Meta Platforms, Nvidia, PayPal, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Meta Platforms, Microsoft, Nvidia, Palantir Technologies, PayPal, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft, long January 2027 $42.50 calls on PayPal, short December 2025 $75 calls on PayPal, and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Apple, Meta Platforms, Microsoft, Nvidia, and PayPal. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Like many investors around the world, I own Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B) shares in my investing portfolio. And, like I suspect all of those shareholders, I am not looking forward to the imminent retirement of Berkshire’s CEO, and patron saint, Warren Buffett.

Earlier this year, Buffett surprised investors (to the extent that a 95-year-old can) with the announcement of his retirement at the end of 2025. Buffett is set to step down as CEO of Berkshire on 1 January 2026, to be replaced by long-time lieutenant Greg Abel.

It’s a momentous changing of the guard at Berkshire, which cannot be understated. Buffett has been CEO at the sprawling conglomerate since the early 1960s. Over that time, he rebuilt Berkshire Hathaway, with the help of the late Charlie Munger, from a failing textiles company to the US$1.1 trillion company it is today. That success was enabled by a compounded rate of return that is estimated to be about 20% per annum over those many decades – an unrivalled achievement in financial history.

Almost every person who has bought Berkshire Hathaway stock in living memory has probably done so to try and hitch their financial wagons to that of Buffett. That includes this writer. After all, the track record has been there for all to see.

But this spectacular era of American capitalism is sadly drawing towards its inevitable conclusion. Sure, Buffett has promised to remain as chairman of Berkshire. But no one can deny that this is the dawning of a new era for Berkshire.

So, as we approach the final month of Buffett’s decades-long stint as Berkshire’s CEO, is it a good time to sell out of the company that he built?

With Buffett retiring, is it time to sell Berkshire stock?

Well, I don’t think so. I personally don’t plan to offload my shares anytime soon, anyway.

There are two reasons why I will continue to hold Berkshire in my portfolio.

The first is its nature. Although Buffett is stepping down from the top of Berkshire, his investments will remain. Warren Buffett has built his success on picking the very best businesses for Berkshire’s portfolio, and holding them indefinitely. They famously include Coca-Cola Co (NYSE: KO), American Express Co (NYSE: AXP), Apple Inc (NASDAQ: AAPL), and more recently, Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL). But those are just some of the public ones. In addition, Berkshire owns a bevy of private companies outright. These include Duracell, Dairy Queen, See’s Candies, BNSF Railway, and Geico.

Buffett picked these companies for a reason, and on the assumption that they will continue to pour ever-rising profits into Berkshire’s coffers. This is Buffett’s legacy that I think will continue to deliver long after he steps off the stage.

Secondly, it’s my view that Buffett has set the company up well for success. The succession plan has been in the works for years and has the legendary investor’s full approval (and influence). Although I’d wager every shareholder would be keen to see Buffett remain at the helm until Judgement Day, this is the next-best option in my view.

Here’s some of what Buffett has said on the succession himself:

I would leave the capital allocation to Greg and he understands businesses extremely well. If you understand businesses, you’ll understand common stocks… I think the prospects of Berkshire will be better under Greg’s management than mine.

Abel has also stated that:

It’s really the investment philosophy and how Warren and the team have allocated capital for the past 60 years. Really, it will not change. And it’s the approach we’ll take as we go forward.

Although I am sad to see Buffett step away from the company he built from almost nothing, I am confident that its future is rosy. As such, I won’t be selling my shares anytime soon.

The post Buffett’s retirement imminent: Should you sell Berkshire Hathaway stock? appeared first on The Motley Fool Australia.

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• Bill Gates just sold 2.4 million shares of Berkshire Hathaway — Should investors panic?
• Billionaire Warren Buffett sold 74% of Berkshire’s stake in Apple and has piled more than $4 billion into a “Magnificent” stock that’s up over 11,000% since its IPO
• Warren Buffett’s Berkshire Hathaway just bought one of my favorite stocks. Is it time to pile in?

American Express is an advertising partner of Motley Fool Money. Motley Fool contributor Sebastian Bowen has positions in Alphabet, American Express, Apple, Berkshire Hathaway, and Coca-Cola. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Apple, and Berkshire Hathaway. The Motley Fool Australia has recommended Alphabet, Apple, and Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Most people assume you need a huge salary, an early inheritance or perfect market timing to build real wealth.

The truth is far from that. With the right plan, even modest weekly savings can compound into something genuinely life-changing over a decade.

The key is consistency, smart asset selection and giving compounding the time it needs to quietly work in your favour.

Here’s how a small savings strategy can transform your financial future over the next 10 years.

Start small

You don’t need to invest thousands at a time. Even $100 a week can make a big difference. What matters most is being consistent.

At a 10% average annual return (not guaranteed, but historically achievable for a diversified ASX share portfolio), investing $100 a week over 10 years could grow to more than $85,000. That’s from saving small amounts most people barely notice leaving their bank account.

The magic doesn’t come from one big contribution, it comes from hundreds of small ones compounding quietly in the background.

Focus on long-term growth

To build real wealth, your money needs to work where long-term growth is most likely. For Australian investors, this usually means blending a mix of blue-chip ASX shares, global growth leaders, and ETFs for diversification.

A simple and effective small savings portfolio could include the likes of the Vanguard Australian Shares Index ETF (ASX: VAS), the iShares S&P 500 ETF (ASX: IVV), and perhaps a thematic booster such as the Betashares Asia Technology Tigers ETF (ASX: ASIA).

These types of investments allow you to benefit from global economic growth, rising corporate earnings, and powerful technology trends, all without needing to pick individual stocks.

Stick with the plan

The next 10 years won’t be smooth. There will be corrections, recessions, elections, supply chain shocks, and headlines designed to trigger panic. The investors who achieve the best long-term outcomes are rarely the ones who react to every wobble. They stay invested.

If anything, downturns make your plan even more powerful. Regular contributions automatically buy more units at cheaper prices, which is known as dollar-cost averaging.

Give compounding the time it needs

Compounding doesn’t reward the impatient. In the early years, it feels slow. But by year seven, eight, nine and ten, the curve begins to steepen and that’s when most of your gains start to appear.

And the real breakthrough comes when you stick with the plan beyond 10 years. The difference between quitting early and letting compounding explode in the later years is enormous.

For example, $100 a week could turn into $85,000 after 10 years, then approximately $315,000 after 10 more years.

Foolish takeaway

You don’t need perfect timing or large sums to build financial security, just a steady plan, the right investments and patience. Small contributions, invested consistently for a decade, can snowball into a foundation for long-term wealth.

The post The 10-year wealth plan: how to turn small savings into life-changing results appeared first on The Motley Fool Australia.

More reading

• 3 of the best ASX ETFs to build significant wealth
• The Warren Buffett golden rule that investors can’t ignore
• The easy set and forget ASX share portfolio I’d build today
• 3 defensive ASX ETFs for a rocky 2026
• Want to build wealth? Here’s how Warren Buffett does it

Motley Fool contributor James Mickleboro has positions in Betashares Capital – Asia Technology Tigers Etf. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended iShares S&P 500 ETF. The Motley Fool Australia has recommended iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If you’re retired, or at least approaching retirement, chances are you have different goals from other ASX investors. While those who are working can enjoy a primary stream of income from their jobs, retirees often have to depend on passive, secondary income, either from ASX dividend shares or other sources, to pay their bills.

That makes maximising dividend income a priority for these investors, even above maximising overall returns.

With this in mind, let’s discuss three top ASX dividend shares that retirees might like to consider buying for income today.

Two top ASX dividend shares for a comfortable retirement

Vanguard Australian Shares High Yield ETF (ASX: VHY)

First up, we have this exchange-traded fund (ETF) from Vanguard. As you might know, ETFs usually hold an underlying portfolio of other shares that one buys a stake in when purchasing that ETF’s units. In this case, VHY holds about 75 ASX dividend shares that have all been selected based on both their history of paying out sizeable dividends, as well as their perceived capacity to continue to do so.

In this ETF’s portfolio, you’ll typically find the usual suspects, ranging from the major banks to BHP Group Ltd (ASX: BHP), Telstra Group Ltd (ASX: TLS), Woodside Energy Group Ltd (ASX: WDS), and Transurban Group (ASX: TCL).

The Vanguard Australian Shares High Yield ETF pays out a quarterly dividend distribution. At recent pricing, VHY units were trading at a trailing yield of 8.54% (although investors shouldn’t expect that to continue indefinitely).

Coles Group Ltd (ASX: COL)

Next up, we have what is no doubt a familiar face in Coles Group. Coles runs the second-largest network of supermarkets in the country, as well as the Liquorland bottle-shop chains. I like this ASX dividend share for income as it is able to pay out its fully franked dividends out of a highly defensive earnings base. As its stores sell items that we tend to need rather than want, it should see customers continuing to come through its doors as long as it remains competitive with its pricing.

Coles has also spent the seven years since its ASX listing building up a strong dividend track record. It has delivered an annual dividend increase to its shareholders since 2019, including in 2025.

This ASX dividend share has increased markedly in value over the past two years or so, which has whittled its dividend yield somewhat. Even so, the company still has a fully franked yield of just over 3% on the table.

The post 2 top ASX dividend shares for retirees appeared first on The Motley Fool Australia.

More reading

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• Buy Telstra and these ASX dividend shares for passive income

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 positions in and has recommended Transurban Group. The Motley Fool Australia has positions in and has recommended Telstra Group and Transurban Group. The Motley Fool Australia has recommended BHP Group and Vanguard Australian Shares High Yield ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Here at the Motley Fool, we often encourage investors to diversify their portfolios. Not just using ASX shares, or exchange-traded funds (ETFs), mind you, but buying stocks from other markets as well. The ASX is a wonderful place to invest. But it represents just a tiny fraction of the world’s best businesses.

I have long recommended that Australian investors diversify into US stocks. The US, with its world-class companies like Microsoft, Alphabet, and Mastercard, is fertile ground for finding some of the best companies in the world.

However, chances are most Australians are already quite heavily invested in the American markets thanks to their superannuation funds. Many Australians might also feel a little queasy about investing Stateside right now for various reasons. One might be the high correlation that the ASX and the US stock markets have historically shown.

So, if you are looking for true stock market diversification, you might wish to consider using an ASX ETF that many investors haven’t considered, or may not have even heard of.

The Vanguard FTSE Emerging Markets Shares ETF (ASX: VGE) is a massive investment in scope and scale. It holds more than 4,000 underlying stocks, drawn from about two dozen countries’ stock markets. The economies of these countries, as you might guess from the fund’s name, are classified as emerging. They range from China, India, and Taiwan to Kuwait, Malaysia, and South Africa.

Those are markets that most investors have very little exposure to, if at all. Some of this ETF’s largest holdings are stocks you may have heard of, such as Taiwan Semiconductor Manufacturing Co. or Alibaba. Others, like Saudi National Bank and Petroleo Brasileiro, are more obscure.

An ASX ETF to instantly diversify a stock portfolio

Using an ETF like VGE enables investors to diversify away from both the ASX and the United States as much as one practically can in Australia. For investors who have already done so in recent years, the results have been quite lucrative. As of 31 October, the Vanguard FTSE Emerging Markets Shares ETF has returned 18.57% year to date and 20.96% over the preceding 12 months. Over the past three years, the returns have averaged 17.43% per annum.

Going back further, though, those returns are more tempered. VGE units have averaged 7.71% per annum over the ten years to 31 October, and 7.6% per annum since this ASX ETF’s inception 12 years ago this month. These figures all take into account VGE’s management fee of 0.48% per annum.

ASX investors also have to keep in mind that this ETF is not currency hedged. That means that international currency movements (which can be volatile in emerging markets) have the potential to both positively and negatively influence returns when brought back to Australian dollars.

Even so, this ASX ETF from Vanguard is arguably a great option if you want to meaningfully diversify your ASX investments.

The post Is this the best ASX ETF to diversify your portfolio with? appeared first on The Motley Fool Australia.

More reading

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• 3 of the best ASX ETFs to build significant wealth
• I’d listen to Warren Buffett’s advice to buy undervalued ASX shares today
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Motley Fool contributor Sebastian Bowen has positions in Alphabet, Mastercard, and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Mastercard, Microsoft, and Taiwan Semiconductor Manufacturing. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Alibaba Group and has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Alphabet, Mastercard, and Microsoft. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Every now and then, the market serves up a great business at a very attractive price.

Right now, I believe ResMed Inc. (ASX: RMD) is one of those opportunities.

A global health giant hiding in plain sight

ResMed has quietly grown into one of Australia’s most successful global healthcare companies. It dominates the market for sleep apnoea devices and masks, and its software platforms support millions of patients and providers worldwide.

And yet, despite that leadership, its shares have only risen by 9% since this time four years ago due largely to concerns about weight-loss drugs. But when you zoom out, the long-term outlook becomes impossible to ignore.

Sleep apnoea is one of the most underdiagnosed medical conditions on the planet, with more than one billion people estimated to suffer from it globally. The vast majority are undiagnosed and untreated. That gives ResMed a total addressable market so large that even modest gains in diagnosis and treatment can fuel years, if not decades, of growth.

Long term opportunity

The market became preoccupied with fears that weight-loss medications could meaningfully reduce sleep apnoea cases. But real-world data has shown that isn’t happening. Independent analysts and sleep specialists continue to report that while weight loss helps, it rarely eliminates the condition entirely. In many cases, patients still require ongoing treatment.

At the same time, ResMed has been consistently improving margins through cost efficiencies, manufacturing improvements, and strong demand for its latest devices.

Big potential returns

Despite its world-class fundamentals, ResMed is trading at a sharp discount to what many analysts believe is fair value.

For example, analysts at Citi have a buy rating and $51.00 price target on this Australian stock.

Based on its current share price of $39.31, this implies potential upside of approximately 30% for investors over the next 12 months.

The team at Macquarie isn’t far behind with its outperform rating and $49.20 price target, which offers a potential return of 25%.

Investors don’t often get a chance to buy a healthcare leader of this calibre at a discount, and they rarely get two chances.

Foolish takeaway

Fast-forward 10 years, and this Australian stock is likely to be even bigger, more technologically advanced, and more profitable than it is today.

The sleep apnoea market is vast, underpenetrated, and growing. ResMed’s competitive position is formidable. And the current share price simply doesn’t reflect that long-term potential.

The post 1 Australian stock you’ll probably kick yourself for not owning a decade from now appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of Motley Fool Money. Motley Fool contributor James Mickleboro has positions in ResMed. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group and ResMed. The Motley Fool Australia has positions in and has recommended Macquarie Group and ResMed. 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 post 3 of the best ASX ETFs to build significant wealth appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Betashares Capital – Asia Technology Tigers Etf. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, BetaShares Global Cybersecurity ETF, Cisco Systems, CrowdStrike, Palantir Technologies, Taiwan Semiconductor Manufacturing, Tencent, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Alibaba Group and Palo Alto Networks. The Motley Fool Australia has recommended Alphabet, CrowdStrike, and Visa. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.