The saying “Don’t throw all your eggs in one basket” is commonly thrown around when considering investments. If I had $20,000 I wanted to spend to construct a portfolio, I’d consider the following five ASX shares.
CSL Limited (ASX: CSL)
CSL Limited is a global biotechnology manufacturer that researches, develops, and markets products to treat and prevent rare and serious diseases.
It’s currently Australia’s fourth biggest company and has a history of churning out fantastic growth figures. Whilst the CSL share price looks expensive at ~$186, underpinned by a P/E of 32, this is because the company has a proven record of developing and marketing new products across many global regions.
Westpac Banking Corp (ASX: WBC)
Westpac is Australia’s first bank and oldest company, one of four major banking organisations in Australia and one of the largest banks in New Zealand.
It’s currently Australia’s third biggest company and derives a major proportion of its earnings from retail banking. The Westpac share price currently trades ~14% below its 52-week high of $31.40 and has a fantastic dividend yield of 7.1%.
Altium Limited (ASX: ALU)
Altium Limited is a public software company that provides PC-based electronics design software for engineers who design printed circuit boards.
The Altium share price has recently surged to a 52-week high and currently sits at $34.60. It looks expensive at a P/E of ~71 but this seems justified after producing fantastic results, once again. Its earning per share is currently 39.6c and this is expected to continue growing at a rapid rate.
Macquarie Group Ltd (ASX: MQG)
Macquarie is a diversified financial group providing clients with asset management and finance, banking, advisory and risk and capital solutions across debt, equity and commodities.
The Macquarie Group share price is currently at ~$128 at trades at a P/E of ~14. It produces an impressive $8.31 in earning per share and provides a dividend yield of 4.3%.
Clinuvel Pharmaceuticals Limited (ASX: CUV)
Clivunel Pharmaceuticals Limited is a global biopharmaceutical company committed to developing drugs for the treatment of a range of severe skin disorders.
The Clinuvel share price is trading at ~$23.87 on a P/E of 89. The company is a relatively speculative bet in nature due to the heavy regulation involved in getting products approved to sell commercially. It’s already turning a profit though so could represent a good risk play.
This five-share portfolio would be driven by a range of different earning streams, including Healthcare products, retail banking, financials and technology. Along with this, you would also have a small speculative play in CUV as a minor percentage of the portfolio.
This portfolio would also have earnings coming from different geographical regions and not only Australia. This is important to help mitigate risks that may be caused by one country having an economic downturn.
If I was starting up a portfolio, I’d start with a few blue-chip shares. like these three, before taking on too much risk and ensure that they cover the bulk of the portfolio in % terms. It can give some peace of mind knowing that you’re invested in some of Australia’s best companies.
So instead of throwing your eggs in one basket, be sure to spread them around.
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Motley Fool contributor Michael Guinery owns shares in CSL Limited and Altium. The Motley Fool Australia owns shares of Altium. 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.