Have money to invest? 2 ASX shares that could be buys

The 2 ASX shares in this article could be good options to buy.

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A number of ASX shares could be ideas to consider with investing money.

Businesses that are good value may be long-term opportunities, particularly if analysts call them out as ideas.

Share prices are always changing, so different businesses can turn into opportunities, depending on the value.

These two ASX shares might be worthwhile considering:

VanEck Morningstar Wide Moat ETF (ASX: MOAT)

This exchange-traded fund (ETF) is offered by VanEck, one of the larger ETF providers.

As VanEck says, the idea behind the ETF is that it gives investors exposure to a diversified portfolio of attractively priced US companies with sustainable competitive advantages according to Morningstar's equity research team.

The only businesses that are even candidates to make it into the ETF's holdings are ones that have wide economic moats that can be sustained for a long period of time.

From those potential candidates, Morningstar assesses what a fair value for each of them is. If the business is at a good value compared to that fair value assessment then it may make into the portfolio.

At 27 August 2021, there were 48 businesses in the portfolio. Some of the names in there included Salesforce.com, Facebook, Alphabet, Kellogg, McDonalds, Microsoft, Pfizer, Yum! Brands, Adobe, Amazon.com, Blackrock and Berkshire Hathaway.

Past performance is not an indicator of future performance. However, VanEck Morningstar Wide Moat ETF has outperformed the S&P 500 over the longer-term. Over the last five years the ETF has returned an average return per annum of 19.35%, compared to 17.46% for the S&P 500. That's after the annual fee of 0.49%.

Reject Shop Ltd (ASX: TRS)

Reject Shop is an ASX share that operates a national chain of discount stores.

It's currently rated as a buy by Morgan Stanley, with a price target of $10. That suggests the Reject Shop share price could increase by over 60% in the next year, if the broker is right.

The broker noted the FY21 result in its assessment of the company's valuation.

Reject Shop slightly beat its sales guidance, with sales falling 5.1% to $778.7 million. COVID-19 and lockdowns caused various impacts on its store network around the country during FY21.

Stores in large shopping centres and CBD locations saw a significant reduction in footfall with comparable store transactions down 19% on FY19. But the remaining store portfolio saw sales growth of 0.1% compared to FY19.

Approximately half of its stores are metro and country stores in neighbourhood and strip locations, which count as those in the 'remaining store portfolio'. That cohort of stores generated comparable store sales growth of 3.4% on FY19 and are, on average, the most profitable. These stores are the key focus of the company's future growth strategy.

The ASX share continues to partner with Doordash for its online offering. It's looking to grow online sales, but at this stage these sales are "not material".

But, whilst sales fell, the business saw its profitability metrics rise. Underlying earnings before interest and tax (EBIT) rose 110% to $9.4 million and underlying net profit surged 134% to $6.4 million.

Management explained the company reduced its underlying costs by $22.5 million, which included $8.8 million of administrative costs and $13.7 million of store expenses. It managed to reduce labour costs to 13.9% of sales, down from 14.5% in FY20.

It's going to invest some of these savings into technology and systems across the business, as well as prepare for growth. It continues to look for new stores in profitable locations. In the first two months of FY22, it opened a new store in Bendigo and closed an underperforming store, taking the national footprint to 361, up from 354 at June 2020. It wants to open another 20 stores in FY22, whilst closing five underperforming stores.

According to Morgan Stanley, the Reject Shop share price is currently valued at 14x FY23's estimated earnings.

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 recommended VanEck Vectors Morningstar Wide Moat ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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