In uncertain times like now, one school of thought is that investing in businesses that sell directly to consumers is a bad move.
It makes sense — interest rates are rising and Australians have less to spend.
In fact, that’s exactly what the Reserve Bank of Australia wants. Reduce demand, therefore knock down inflation.
So if you’re not buying ASX shares of companies that sell to consumers, what’s left?
Companies that provide goods and services to other businesses.
Bell Potter Securities investment advisor Christopher Watt this week named two such stocks that he recommends as a buy:
‘Low risk income stream’ with stable clients
Moreover, Charter Hall is a landlord to reliable, long-term tenants.
“This real estate investment trust invests in quality assets that are mostly leased to government and corporate tenants,” he told The Bull.
“We’re attracted to Charter Hall Long WALE’s low risk income stream, secured by a sector-leading lease term of 14 years.”
Charter Hall Long WALE shares closed Tuesday at $4.82.
The wider professional community is somewhat divided on Charter Hall.
According to CMC Markets, four of seven analysts consider it a buy, with the remaining three recommending it as a hold.
‘Strong cash flow growth’ and huge development pipeline
Watt picked another real estate stock as the other tempting buy at the moment.
Industrial property manager Goodman Group (ASX: GMG) is a landlord for warehouses — or fulfilment centres, as its e-commerce clients would call them.
“Goodman offers exposure to global property development and property funds management,” said Watt.
“While investors may be concerned about rising interest rates, Goodman management has flagged that quality assets are generating strong cash flow growth, which should support asset value growth.”
The stock has lost almost 26% since the start of the year, presenting a potential entry point.
According to CMC Markets, eight out of 12 analysts currently recommend Goodman shares as a strong buy.
Medallion Financial Group advisor Jean-Claude Perrottet said last week that Goodman is different to the typical real estate stock in that it has much potential growth ahead of it.
“It has $13.4 billion of development work in progress across 89 projects,” he said.
“Goodman has high quality tenants and an occupancy rate that increased to 98.7%. [It] is a quality business, with about $68.7 billion in assets under management.”