Is it safe to buy ASX shares right now?

And if it is, what's the one ASX share to pick up at the moment? One expert gives his take.

We've all heard expert advice that in times of downward markets like now, we should hold onto our portfolios rather than locking in losses with mass sales.

But what about buying bargains? Is it wise to do that right now or are there more falls to come?

Is it safe to invest right now?

Marcus Today senior market analyst Henry Jennings gave his answer on this vexed topic.

A worried woman sits at her computer with her hands clutched at the bottom of her face.

Image source: Getty Images

Nothing is safe, but we take the chance

For Jennings, the answer is the same regardless of what the economic circumstances are.

"The answer is 'no'. But it is never safe. Not truly. Nothing ever is. Life is not safe," he said on a Marcus Today blog post.

"It is a question of risk versus reward."

What he means is that investors will never gain meaningful returns unless they take on meaningful risk.

And ASX shares are inherently risky. They are, in that way, not safe.

But getting out of bed in the morning, driving your car and cooking a hot meal are all risky activities. But we do them because the potential reward exceeds the risk of harm.

Bargains for long-term investors

This is the same philosophy Jennings recommends investors take with investing in ASX shares.

"Finding stocks that have been unfairly treated, with valuations now back to attractive levels and believing in the business," he said.

"Doing the research and putting in the effort. Taking the risk after evaluating the reward."

The risk vs reward equation also dramatically changes in the punter's favour when the investment horizon becomes long.

"If you are a long-term investor there could be some extraordinary bargains around," he said.

"If you are a short-term trader looking for the bounce, fortune favours the brave (or the plain lucky). By the time we get confirmation that this is more than a bear market bounce, we will be in the next bull run. It is never safe at all."

Jennings also tells those scared to buy in right now whether they feel the same about other goods that are discounted.

"When we see the 'sale' sign at David Jones, do we walk off and avoid the mall?" he asked.

"No. We take advantage of the sale. Even if it's a bit out of season. We will need those board shorts come summer."

So what's an example of such a bargain at the moment?

The best buy at the moment

Gaming provider Aristocrat Leisure Limited (ASX: ALL) is Jennings' pick.

Its share price has plunged more than 23% since the start of the year, with a failed acquisition bid for Playtech PLC (LON: PTEC) not helping.

"It has suffered as tech stocks have fallen. It has suffered from missing out on Playtech. It has suffered from costs involved in scaling up its online gaming offerings and supply chain issues."

The Russian invasion of eastern Europe has also been a drag on the business.

"The digital games launch has been delayed with the Ukrainian war probably not the best time to launch 'Magic Wars: Army of Chaos'," said Jennnings.

"It's not easy being a Pixel United (formerly Aristocrat Digital) employee in Ukraine either. Of the 1000 employees, 70% have had to be relocated."

But Jennings feels like these headwinds are now behind it, and the stock is ready to rally in the long term.

"The gaming pipeline now looks strong," he said.

"The US opportunity is still huge, and the company is at the forefront of gaming technology. The North American total addressable market could reach US$25 to US$30 billion by 2030."

Aristocrat shares are trading at a price-to-earnings ratio of 19 on 2023 projections, said Jennings, with "a strong balance sheet"

"Worth pushing the button for a chance at a jackpot."

Motley Fool contributor Tony Yoo 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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