I think ASX shares are the way to go for mum and dad investors to create wealth, particularly in this era of falling (investment) property prices.
Sometimes I feel that the term ‘mum and dad’ investing is a little condescending, but I think it’s a useful term to describe the types of investments that are simple to understand, long-term and should generate solid returns.
With that in mind, here are three shares that could fit the bill:
REA Group Limited (ASX: REA)
REA Group is the owner of Australia’s leading property side, realestate.com.au. Whether the property market is up or down, REA Group takes a slice of the sale price with its advertising offering.
A property owner would be silly not to advertise on the leading website. That allows REA Group to steadily increase its advertising price over time with little detrimental effect. However, the advertising price rises may be a little slower if property prices keep falling.
REA Group also has a number of investments in leading property sites in other regions like North America and Asia which could be useful in the coming years.
It’s currently trading at 29x FY19’s estimated earnings.
BetaShares NASDAQ 100 ETF (ASX: NDQ)
Everyone uses products or services from Apple, Facebook, Alphabet (Google), Microsoft and Netflix most days of the week. These businesses have changed the world significantly over the past decade and are likely to be at the forefront of more change in the coming years.
Their core products are still delivering good growth, which mostly adds to the bottom line due to the scalability of platform businesses. But most of the FAANG shares have new initiatives that could drive the next stage of growth. For example, Facebook is working on virtual reality and Alphabet has its automated car division.
This exchange-traded fund (ETF) gives investors exposure to all of the leading tech shares that are listed in the US. The recent pull-back of their share prices presents a nice opportunity to buy into these leaders.
Costa Group Holdings Ltd (ASX: CGC)
Everyone can ‘feel’ good about owning Costa – it is the largest grower of healthy fresh food in Australia. It produces avocados, berries, citrus fruit, mushrooms and tomatoes.
However, I don’t think it’s worth investing in Costa just because of the industry it operates in. Costa has a good diversification strategy of generating earnings in Australia, China and North Africa.
It has made a number of bolt-on acquisitions in the avocado segment to increase its production and make better use of its core ‘hubs’.
I like that Costa continues to invest for further capacity, economies of scale and sustainable returns. Management believe underlying earnings can grow at double digits annually over the next few years. It’s currently trading at under 22x FY19’s estimated earnings.
All three of these shares are trading at better prices after the share market’s recent pull-back. Whilst I am drawn most to Costa at the current prices, I believe all three will beat the ASX index’s return over the next five years fairly convincingly.
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Motley Fool contributor Tristan Harrison owns shares of COSTA GRP FPO. The Motley Fool Australia owns shares of and has recommended BETANASDAQ ETF UNITS and COSTA GRP FPO. The Motley Fool Australia has recommended REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.