Top ASX shares to buy in October 2022

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Top ASX stocks for October represented by variety of different halloween balloons

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Feeling spooked by September's share market tricks?

As Halloween draws near, we asked our Foolish contributors to compile a list of some of the ASX shares they reckon are not so scary in October. Here's what they came up with.

5 best ASX shares for October 2022 (smallest to largest)

  • Objective Corporation Limited (ASX: OCL), $1.25 billion
  • Johns Lyng Group Ltd (ASX: JLG), $1.66 billion
  • Paladin Energy Ltd (ASX: PDN), $2.23 billion
  • New Hope Corp Ltd (ASX: NHC), $5.24 billion
  • Wesfarmers Ltd (ASX: WES), $48.44 billion

(Market capitalisations as of 30 September 2022)

Why our Foolish writers love these ASX shares

Objective Corporation Limited

What it does: Objective Corp may not be a household name, but the company is well established with customers across local government, the public sector, regulators, and other significant institutions. It offers a suite of software solutions, including enterprise content management, information governance, file collaboration, and regulation management. 

By Mitchell Lawler: I previously wrote about Objective Corp last month, where I compared the software company to its larger peer, Technology One Ltd (ASX: TNE). Both companies are similar in what they offer. However, Objective Corp is roughly one-third the size – in terms of market capitalisation and revenue. 

At first glance, this minnow of the ASX tech sector appears to be richly valued. The company currently trades on a price-to-earnings (P/E) ratio of approximately 64 times. Yet, I believe the premium is warranted given the profitability, growth potential, and impeccable balance sheet on offer. 

The Objective share price is down nearly 35% in 2022. This pullback in valuation means this ASX share is now on my radar.

Motley Fool contributor Mitchell Lawler does not own shares of Objective Corporation Limited.

Johns Lyng Group Ltd

What it does: Johns Lyng Group is an Aussie building services company with a focus on insurance and restoration work, as well as commercial building and construction.

By Brooke Cooper. Johns Lyng Group has been on a roll. It was added to the S&P/ASX 200 Index (ASX: XJO) just weeks after it posted a 40% increase in net profit after tax (NPAT) for the financial year 2022, coming in at $38.5 million.

And it doesn't expect to slow down. The company forecasts its earnings will grow as much as 26% in financial year 2023.

Despite such positive momentum, the stock has tumbled 31% year to date to trade at $6.28 at the close of trade on Friday. Fortunately, Goldman Sachs has tipped that to change.

The broker has slapped Johns Lyngs shares with a $10.20 price target and a buy rating, noting the company's guidance appears conservative.

Motley Fool contributor Brooke Cooper does not own shares in Johns Lyng Group Ltd.

Paladin Energy Ltd

What it does: Paladin Energy is a uranium miner and exploration company with operations in Australia and Africa.

By Matthew Farley. I believe that we're in the very early stages of witnessing a revival of nuclear energy and that the potential of these shares hasn't yet been priced in by the market.

The energy crisis in Europe and the rising urgency to reduce emissions have catalysed change, along with the development of miniaturised nuclear reactors. Countries such as Japan, China, France, India, and the United States all have ambitions to harness more nuclear energy in the future.

Paladin also grew its revenues substantially last financial year and reduced its statutory net loss after tax by 39%. The demand for uranium is set to increase exponentially, too, with a mean price of the commodity expected to reach US$65/LBS in 2023, up from US$51.04/LBS at the time of writing, according to Trading Economics.

Motley Fool contributor Matthew Farley does not own shares in Paladin Energy Ltd.

New Hope Corporation Limited 

What it does: New Hope is a diversified company that generates the lion's share of its income from thermal coal exploration and production. Most of that production is sold into the seaborne thermal coal export markets.

By Bernd Struben. New Hope shares have benefited from rocketing energy prices. In early January, thermal coal was trading for US$160 per tonne. Prices reached record highs of US$460 per tonne earlier in September and are currently around US$438 per tonne.

This helped New Hope deliver $2.6 billion in revenue in FY22, up 144% year on year. NPAT rocketed 1,139% from FY21 to $983 million. And shareholders were rewarded with a 700% increase in the final dividend payout.

While that's water under the bridge, I believe the world is nowhere near the end of the energy crisis, as witnessed by the recent explosions on the Nord Stream gas pipeline. With Europe weaning itself off Russian oil and gas, demand for thermal coal is likely to keep prices high in the months ahead.

Motley Fool contributor Bernd Struben does not own shares in New Hope Corporation Limited.

Wesfarmers Ltd

What it does: Wesfarmers is a major retail conglomerate with businesses across a number of different sectors. These include national brand names Bunnings, Kmart, Officeworks, Target, Catch and Priceline, as well as operations in chemicals, energy and fertilisers (WesCEF).

By Tristan Harrison. In this volatile environment, plenty of ASX shares have been sold down, including Wesfarmers. Shares in the company were swapping hands for $42.72 at Friday's close. That's down almost 28% in 2022.

I think this lower price for Wesfarmers is attractive. It's now valued at around 20x FY23's estimated earnings, according to CMC Markets.

Bunnings continues to earn a high return on capital for Wesfarmers, which I like a lot. The company's new health division also has a compelling long-term future, and the WesCEF division is doing really well in the current economic climate.

I appreciate the dividends Wesfarmers pays its shareholders and I like that it can add diversification by investing in other sectors, like lithium.

Motley Fool contributor Tristan Harrison does not own shares of Wesfarmers Ltd.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Johns Lyng Group Limited and Objective Corporation Limited. The Motley Fool Australia has positions in and has recommended Wesfarmers Limited. The Motley Fool Australia has recommended Johns Lyng Group Limited. 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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