Are you looking to get started in the ASX share market? If so, congratulations! I hope you find share investing as rewarding as I do.
Or maybe you’re looking to add to your current portfolio?
Either way, here are 4 ASX shares that I believe have strong growth prospects over the next five years. Each company also has a strong and established position in the markets in which they operate, which should somewhat minimise market volatility in their share prices.
CSL Limited (ASX: CSL)
With a current market capitalisation of $153 billion, CSL has gone from strength to strength over the past two decades to become the second-largest company on the ASX. It is fast approaching Commonwealth Bank of Australia (ASX: CBA) to take the number one position. The CSL share price has risen by more than 80% in the past 12 months which is truly an amazing feat for a large-cap ASX share.
Despite this impressive recent growth, I still see strong potential for more growth over the next decade. A key factor underpinning CSL’s strong growth has been its high investment in research and development to create new products. In addition, the company’s earnings base is shielded from the impact of business cycle downturns, as vaccines and blood medicines are required regardless of the prevailing market conditions.
Wesfarmers Ltd (ASX: WES)
Wesfarmers is a highly diversified business with primary operations in a broad range of general retail segments. Its subsidiaries include household names such as Bunnings Warehouse, Kmart Australia, Officeworks, and online retailer Catch.
This broad sector diversification is Wesfarmers’ core strength, as it provides a buffer to any industry-specific challenges that could potentially negatively impact any of its subsidiaries. Purchasing Wesfarmers shares unlocks instant access to a diverse portfolio of high-quality businesses, driven by a quality and experienced management team. Wesfarmers shares currently pay an attractive trailing dividend yield of 3.3% that is fully franked.
Macquarie Group Ltd (ASX: MQG)
Macquarie is a global financial services business with a core focus on international investment banking. It is Australia’s largest investment bank and has been a true Australian success story with a strong track record of profitability over the last few decades.
The company continues to grow its revenue and net profit strongly while its cost-to-income ratio has been steadily declining over recent years. I think Macquarie is a great choice for investors looking for both growth and income, and I believe it is placed to outperform the S&P/ASX 200 Index (INDEXASX: XJO) over the next 5 to 10 years.
Carsales.Com Ltd (ASX: CAR)
Carsales is Australia’s leading online automotive classifieds website, with a very dominant position in the Australian market. The company has demonstrated it can continue to build on its dominant position in Australia, providing a protective moat against any market competition, while also very aggressively growing its presence overseas.
Although Carsales’ Australian operations are now quite mature, its overseas markets will fuel the company’s growth over the next five years. Carsales shares also offer a very attractive dividend yield for a growth investment of 2.57% that is fully franked.
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Phil Harpur owns shares of carsales.com Limited, Commonwealth Bank of Australia, and CSL Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended carsales.com 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.