With inflation and interest rates clouds threatening the stock market, it's never been more important to be selective about which ASX shares to buy.
Prominent investment firm Sage Capital recently held a briefing for clients that named 2 particular stocks that its analysts thought would be resilient to external forces.
Portfolio manager Kelli Meagher said reading "crystal balls" is not how the Sage team operates.
"We manage the portfolio to diversify as much macroeconomic risk as possible, so we can just focus on our stock selection."
She added that, generally, growth shares are vulnerable to interest rate rises.
"But that doesn't mean that all growth stocks are going to struggle."
While no company is completely immune from economic forces, here are 2 that illustrate the types of businesses that have unique attributes that could help investors.
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The ASX share that 'ticks a lot of boxes'
Meagher said her team likes the look of James Hardie Industries plc (ASX: JHX) right now.
"It's a really high quality company that has a really long term growth trajectory and that it'll do just fine regardless of what bond yields do in the short term."
James Hardie "ticks a lot of boxes" in the way that Sage filters for ASX shares. Selling fibre cement products, it's in a growing industry, is gaining market share and has control of its own prices.
"It's not just selling a commodity like brick. There's IP [intellectual property] in the manufacturing process, which are trade secrets," said Meagher.
"So it's really hard for the competition to replicate a James Hardie fibre cement plank."
The big growth driver is the US residential construction sector, giving the company a massive addressable market.
James Hardie shares have risen 42.9% over the year so far.
The ASX miner with strong ESG claims
Minerals business Orocobre Limited (ASX: ORE) is another stock that looks resilient to the Sage Capital team.
Importantly, it produces lithium chemical products, which are important ingredients for battery manufacturing as the world moves to net-zero.
According to Sage managing director Sean Fenton, Orocobre captures "much higher margins" by processing the raw lithium into secondary chemicals that are more useful for its customers.
"They're continuing to invest in downstream refining capacity… it's a pretty accretive return on capital."
Despite its classification as a miner, the contribution to the renewable energy transition puts Orocobre among the good guys.
"It has a strong ESG focus and culture. We see this as a good position on the global cost curve with great exposure to the cash flows from strong lithium prices going forward," said Fenton.
"They're really surging at the moment."
Orocobre shares have more than doubled this year so far. They started 2021 in the mid $4s, but traded for $9.36 at close on Wednesday afternoon.
