It may be April Fool's Day today but, for investors, share market volatility is no joke.
In the first five weeks of 2023, the S&P/ASX 200 Index (ASX: XJO) notched up impressive gains of more than 7%. But just as investors started to relax a little, the worm turned (as it always does!), and those gains were largely wiped out by the end of March.
While watching your shares go backwards is no laughing matter, staying focused on the long term can help keep you smiling during periods of inevitable volatility.
And don't forget, share market falls can create excellent long-term buying opportunities.
So, with that in mind, we asked our Foolish writers which ASX shares they reckon are worth snapping up this month.
Here is what the team came up with:
7 best ASX shares for April 2023 (smallest to largest)
- Imdex Limited (ASX: IMD), $1.13 billion
- MFF Capital Investments Ltd (ASX: MFF), $1.47 billion
- Brickworks Limited (ASX: BKW), $3.45 billion
- Technology One Ltd (ASX: TNE), $4.72 billion
- Treasury Wine Estates Ltd (ASX: TWE), $9.43 billion
- Woolworths Group Ltd (ASX: WOW), $46.10 billion
- Wesfarmers Ltd (ASX: WES), $56.98 billion
(Market capitalisations as of 31 March 2023).
Why our Foolish writers love these ASX stocks
Imdex Limited
What it does: Imdex is a global mining technology company that provides drilling fluid systems, instruments, and software for the minerals exploration, mining, and oil and gas industries. Its products and software are commodity agnostic but are experiencing rapid growth across critical metals.
By Mitchell Lawler: Despite both commodities and tech having a decent start to the year, Imdex shares are down 1.1% in 2023.
My guess is the share price has come under pressure after the company raised capital at a discount to acquire Devico – a global leader in drilling tech based in Norway – for $324 million.
Acquisitions come with risks. If it turns out the acquiring company overpaid, it can have devastating consequences for the share price. Hence, investors are probably treading carefully around this ASX 300 stock for now.
However, this is not Imdex's first rodeo. It has made many acquisitions over the years. I believe the addition of Devico sweetens the investment case for Imdex, adding a higher earnings before interest, taxes, depreciation and amortisation (EBITDA) margin business and cementing the company's global position in the sensor and directional drilling tech markets.
Motley Fool contributor Mitchell Lawler does not own shares in Imdex Limited.
MFF Capital Investments Ltd
What it does: MFF Capital is a listed investment company (LIC) that invests in shares from around the world on behalf of its investors.
By Sebastian Bowen: MFF Capital stock is on my radar this April. Even though it's hardly a household name, MFF has a long history of delivering solid performance and a rising dividend.
This LIC is helmed by the venerable and veteran fund manager Chris Mackay. It usually only invests in US shares, making it a great addition to any ASX portfolio from a diversification standpoint.
But I also like MFF for its Buffett-style investing and tendency to only buy top-tier shares to hold for the long term. At present, some of its holdings include Mastercard, Amazon, and American Express.
MFF has also been steadily building its dividend in recent years and today offers a fully-franked yield of around 3.4%.
Motley Fool contributor Sebastian Bowen owns shares in MFF Capital Investments Ltd, Mastercard, Amazon and American Express.
Brickworks Limited
What it does: Brickworks is one of the largest brick makers in Australia and the US. Furthermore, in Australia, it operates a large masonry and roofing business and produces many other building products. Brickworks also has investments in land, industrial properties, and fellow ASX 200 stock Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).
By Tristan Harrison: Brickworks recently reported some impressive FY23 half-year results. These demonstrated ongoing progress in its industrial property trust, with completed warehouses leading to valuation improvements and new rental profits that could possibly be used to pay higher dividends.
The business is also benefitting from the ongoing growth in the asset base of Soul Pattinson, which increases the underlying value of Brickworks.
In its H123 presentation, the company revealed it has an underlying net asset value per share of more than $35. The Brickworks share price is trading at a 36% discount to that underlying value, which I think makes it a great buying opportunity, despite the uncertainty caused by higher interest rates.
Motley Fool contributor Tristan Harrison owns shares in Brickworks Limited and Washington H. Soul Pattinson and Co. Ltd.
Technology One Ltd
What it does: Tech One is Australia's largest enterprise resource planning (ERP) software company. It provides a global software-as-a-service (SaaS) platform used by more than 1,200 major business and government customers.
By Bronwyn Allen: It's been a tough 12 months for ASX tech shares, yet this one has quietly risen 22% over the period. When a stock is delivering that kind of outlier performance, it's probably worth a look.
Fairmont Equities managing director Michael Gable points out the company's 90%-plus recurring revenue and describes it as having a "highly cash generative business model".
Gable also likes the company's client demographics. He says: "Around 85% of revenue is generated from the government, education and health sectors, which are highly defensive. The company has a customer retention rate of +99% and [a] very low customer churn rate."
In FY22, Technology One achieved its 13th consecutive year of record profits. It's got a 30% profit margin and expects that to rise to 35% by FY26.
Motley Fool contributor Bronwyn Allen does not own shares in Technology One Ltd.
Treasury Wine Estates Ltd
What it does: Treasury Wine is a global wine company that owns a collection of wine brands, including Penfolds, Beringer, Lindemans, 19 Crimes, and Wolf Blass.
By James Mickleboro: I think Treasury Wine could be a quality option for investors in April. Especially given that its shares are trading relatively flat so far this year despite the company delivering strong profit growth during the first half of FY2023.
Furthermore, with alcohol sales traditionally remaining strong even during an economic downturn, Treasury Wine appears well-placed to continue its strong form for the foreseeable future.
Goldman Sachs certainly believes this will be the case. It's forecasting earnings before interest, tax, and self-generating and regenerating assets (SGARA) of $596 million in FY2023, $658 million in FY2024, and then $737 million in FY2025.
Goldman has a buy rating and $14.70 price target on Treasury Wine shares.
Motley Fool contributor James Mickleboro does not own shares in Treasury Wine Estates Ltd.
Woolworths Group Ltd
What it does: Woolworths is an Australian retail giant. It owns and operates the supermarket chain of the same name, along with Big W in Australia and several supermarket chains in New Zealand. The company has more than 1,400 stores across the two nations.
By Bernd Struben: With inflation still running hot and interest rates more likely to rise than fall, I believe Woolworths' defensive qualities earn it a place on this list.
Even if Australia dips into a recession, people still need to eat and buy basic household essentials. And Woolworths is, arguably, well-placed to pass on any cost inflation.
Woolies' half-year results also handily beat expectations. The company reported a 4% year-on-year increase in sales to $33.17 billion and a 14% increase in net profit after tax (NPAT) to $907 million.
Woolworths' fully-franked interim dividend of 46 cents per share was up 17.9% on the previous interim dividend. The stock currently trades on a trailing yield of 2.6%.
The Woolworths share price is up 12% so far in 2023.
Motley Fool contributor Bernd Struben does not own shares in Woolworths Group Ltd.
Wesfarmers Ltd
What it does: Wesfarmers is the company behind Kmart, Officeworks, Bunnings, Priceline, and more. Beyond retailers, it operates chemical, industrial, and fertiliser businesses and even a lithium mine.
By Brooke Cooper: Australians would be hard-pressed to avoid interacting with one or more of Wesfarmers' brands on a regular basis. And in that lies the beauty of the company, in my opinion.
The prominence and price points of many of its retail brands arguably make them 'sticky' and, thereby, defensive by nature.
Wesfarmers also boasts a strong balance sheet and has a history of paying consistent dividends.
I'm not the only one who likes the look of Wesfarmers shares right now. Morgans has an add rating on the stock, slapping it with a $55.50 price target – representing a potential 11% upside to the current share price.
Motley Fool contributor Brooke Cooper does not own shares in Wesfarmers Ltd.
