A market-beating portfolio will be one full of quality ASX shares, like the ones I’m going to write about below.
Businesses that are worth owning are ones with proven track records, usually have a market-leading position in their industry and benefit from growing profit margins.
These are five that I think fit the bill:
REA Group Limited (ASX: REA)
REA Group owns Australia’s market-leading property site, realestate.com.au. Owning REA Group shares would mean you get a small slice of earnings of every property listed on the site – a much better way to get exposure to the property sector than actually owning a property.
Being the market-leader means REA Group continually attracts the most buyers and sellers, cementing its number one position and allowing it to steadily increase prices. In the longer-term its investments in overseas property sites should generate the next stage of growth.
Altium Limited (ASX: ALU)
Electronic PCB business Altium may be one of the best ways to benefit from the increasingly technological world we live in. It has clients from Google to Toyota, Space X to John Deere. Its impressive global customer base is one of the main reasons why its revenue keeps increasing at a strong rate every year.
Altium has several different products which could help it become the clear electronic PCB leader in the world over the next decade. Altium continually upgrades it products, which helps maintain its current paying subscribers and helps it win new customers from customers.
Costa Group Holdings Ltd (ASX: CGC)
Costa is Australia’s largest horticultural business. It currently grows avocados, berries, citrus fruit, mushrooms and tomatoes.
I have been impressed by Costa’s efforts to expand its farm operations in Australia, China and North Africa through acquisitions and organic expansion.
Costa management have told the market to expect double digit profit growth for the next few years, returns can compound very nicely when combined with a growing dividend.
Challenger Ltd (ASX: CGF)
Challenger is Australia’s leading annuity provider. The number of people over 65 is expected to grow by 40% over the next decade, which should lead to a rise in the number of annuities sold.
The size of the annuities should go up due to the mandatory superannuation contributions for all employees and the compounding of superannuation balances.
I think Challenger is one of the best ways to ‘play’ the ageing tailwind.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts is one of the oldest businesses in Australia, it’s an investment conglomerate that picks other companies it believes will be long-term performers.
One of the best things about Soul Patts is that management are large shareholders themselves. It doesn’t operate like a typical fund manager that’s trying to make the best return over 12 months, it can choose shares it sees paying off in three years, five years or longer.
Another great reason to consider Soul Patts is that it has been steadily growing the dividend each year since 2000.
Over the next decade I think Altium could be the most exciting share to own, but it’s also trading at the most expensive price.
Motley Fool contributor Tristan Harrison owns shares of Altium, Challenger Limited, COSTA GRP FPO, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Challenger Limited, COSTA GRP FPO, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of Altium. 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.