As the market frets over persistent inflation and looming interest rate rises, it's important to pick ASX shares to buy that can withstand macroeconomic shocks.
One expert is thus putting companies through 2 thematic filters to work out whether they're worthy of stuffing into the Christmas stocking.
"Two themes we like right now are what we call Stable Compounders and Structural Winners," said Montgomery Investment Management chief investment officer Roger Montgomery.
"And we have two preferred stocks – one in each theme – that we think will provide solid long-term returns."
For the record, Montgomery personally believes inflation is not a huge threat to shares, as there will be counter-forces at play.
"The economy is cooling," he said on the Montgomery blog.
"While investors may be more excited about the negative influence this potentially has on consumer demand and therefore consumer prices, a less obvious impact will come from these people gaining employment. An increase in labour supply will also place downward pressure on wages."
Longer-term pre-COVID trends of decreasing unionised labour and automation will also conspire to keep a lid on inflation, added Montgomery.
Regardless, here are the 2 ASX shares Montgomery singled out as flag bearers for the 'stable compounders' and 'structural winners' themes:
Australians still need petrol stations
Stable compounders are businesses that offer "growth with a defensive element".
"They tend to be in stable industries, are market leaders and are under-appreciated by the market."
One example that Montgomery likes at the moment is Waypoint REIT Ltd (ASX: WPR), which is the landlord for many petrol station sites around Australia.
Its tenants include Coles Group Ltd (ASX: COL)/Shell, 7-Eleven and Liberty.
"Waypoint properties enjoy 100 per cent occupancy, a 10.5-year weighted average lease expiry (WALE) and 3 per cent weighted average rent reviews."
The stability of its clientele provides for a very reliable income stream.
"Waypoint yields slightly more than 5%, which along with an estimated dividend per share growth equivalent to about 3%, offers a potential total shareholder return of 9%," said Montgomery.
"Management also announced a $150 million capital return buyback on 30 July 2021 which is subject to the settlement from the sale of a portfolio of properties expected to occur this half."
The icing on the cake is that Montgomery believes Waypoint is attractive as an acquisition target.
"Additionally, the potential for further revaluations exists with Waypoint's book of properties appearing to be valued 20% below the prices similar properties are being transacted for in the open market."
Waypoint shares are down 1.45% this year so far, although that's only after losing 4.6% in the past 5 business days.
Australians will need more cloud
Structural winners are those ASX shares taking advantage of a long-term societal or consumer trend that is "agnostic" to economic health.
Montgomery named cloud computing and decarbonisation as two such structural trends, while declaring his fund owns shares in Macquarie Telecom Group Ltd. (ASX: MAQ).
"A data centre operator, it benefits from the trend toward cloud services, which is levelling the playing field for small businesses to compete globally and digitally," he said.
"As the company expands its footprint, the market is also slowly understanding it can sell its last 10% of capacity for 10 times the price of its first 90%. And whether the economy grows or not probably matters little."
Macquarie shares have risen an impressive 49.2% over the past 12 months.
ASX shares that are structural winners have rewarded investors with growth in the past 10 years, according to Montgomery, and "may continue to do likewise over the next decade".
"We currently believe, notwithstanding the ever-present risk of a 10% to 15% setback, financial year 2022 will prove to be as lucrative as FY21."