You don't have to be super-rich to scoop up some top ASX shares in these challenging economic times.
With inflation refusing to yield and interest rates continuing to rise, there is a wealth of ASX share opportunities going for less than the price of a coffee.
We asked our Motley Fool writers to nominate their top ASX shares under $5 and here's what they came up with:
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6 top ASX shares under $5 to buy in June (smallest to largest)
- Appen Ltd (ASX: APX), $465.13 million
- Temple & Webster Group Ltd (ASX: TPW), $579.09 million
- Siteminder Ltd (ASX: SDR), $844.45 million
- Accent Group Ltd (ASX: AX1), $911.56 million
- Harvey Norman Holdings Limited (ASX: HVN), $4.25 billion
- Telstra Group Ltd (ASX: TLS), $49.92 billion
(Market capitalisations as at market close 7 June 2023)
Why our Foolish writers love these top ASX shares under $5
Appen Ltd
What it does: Appen develops data solutions and provides services for machine learning and artificial intelligence (AI) applications.
By Bernd Struben: Year to date, Appen shares gained 55% through to market close on 2 June. After a sharp retrace earlier this week, likely driven by profit-taking, Appen shares rebounded almost 10% yesterday. And I think the stock is priced to potentially deliver further outsized gains.
Appen shares are still down 39% since this time last year. But with its AI focus and new cost-cutting measures being rolled out, this tech stock is well-placed to benefit from the computing advancements highlighted by Nvidia Corporation. In fact, Appen counts Nvidia as one of its clients. The two companies recently expanded their collaborations.
Just how big is the global AI opportunity?
According to KPMG, 77% of executives believe generative AI could be the most disruptive technology ever. And Appen gives ASX investors direct exposure to that disruptive tech.
Motley Fool contributor Bernd Struben does not own shares in Appen.
Temple & Webster Group Ltd
What it does: Temple & Webster operates its namesake online store, selling furniture and homewares.
By Brooke Cooper: The Temple & Webster share price has struggled recently amid high inflation and cost of living pressures, as have many other ASX retail stocks.
Unlike many of its peers, however, the company is an online pure-play. I think that could see it bearing fewer costs than many other retailers.
In a recent update, CEO Mark Coulter said:
In the face of turbulent macroeconomic conditions, it's incredibly satisfying to see Temple & Webster back in growth mode as we cycle out of periods impacted by COVID.
Not to mention, the company is switching things up to target customers seeking value.
And I'm not alone in expecting big things from the stock. Goldman Sachs has a buy rating and a $6.40 price target on Temple & Webster shares – a potential 32% upside.
Motley Fool contributor Brooke Cooper does not own shares in Temple & Webster Group Ltd.
Siteminder Ltd
What it does: The business describes itself as the world's "leading open hotel commerce platform". It provides software services to "tens of thousands of hotels, across 150 countries" and enables them to advertise, sell, manage, and grow their business.
By Tristan Harrison: COVID-19 border closures are a thing of the past and travel demand is booming, yet the Siteminder share price is close to its 2023 low.
The company is growing revenue at a very fast pace. In the third quarter of FY23, its revenue had risen 28.7% to $37.3 million, while annualised recurring revenue (ARR) had gone up by 28.5% to $150.3 million. It also said that net subscriber additions "accelerated" in the third quarter, compared to the FY23 first half and second quarter.
As a software business, the company's economics seem scalable. It demonstrated in the FY23 first half a 20% increase in the average revenue per user (ARPU), as well as an increased number of hotels using its software. Management is expecting Siteminder to be free cash flow neutral on a quarterly basis by the end of FY24.
Motley Fool contributor Tristan Harrison does not own shares of Siteminder.
Accent Group Ltd
What it does: Accent is a digitally integrated consumer business in the retail and distribution of branded performance and lifestyle footwear, apparel, and accessories.
By James Mickleboro: It is worth remembering that a share price under $5 doesn't necessarily mean a stock is cheap compared to one trading at $150. In fact, it is possible for a stock to be incredibly overvalued despite trading below 50 cents, such as Brainchip Holdings Inc (ASX: BRN). That's because price and value are very different things.
But one ASX share that ticks both boxes for me is Accent. This footwear retailer's shares are currently changing hands for 12x estimated forward earnings, which is a deep discount to the market average.
That's despite the company operating in a relatively defensive retail category, having a very positive long-term growth outlook, expansion opportunities, and offering a forecast 4.5% dividend yield in FY2024.
Goldman Sachs is a fan and has a buy rating and a $2.80 price target on its shares. Accent Group closed trading yesterday at $1.67 a share.
Motley Fool contributor James Mickleboro does not own shares of Accent.
Harvey Norman Holdings Limited
What it does: Harvey Norman Holdings is the franchisor of leading Australian furniture, electricals, and computers retailer Harvey Norman.
By Bronwyn Allen: Three things make me interested in Harvey Norman shares this June. Firstly, they just hit a new 52-week low of $3.30 because of negative sentiment on retail shares in today's inflationary economy.
But experts say the market may not be taking into account the company's $3.9 billion in property holdings, which have delivered a three-year compound annual growth rate (CAGR) of 74% in capital value, not to mention 36% of operating profits.
The company's market cap is currently $4.25 billion, so the property holdings alone are worth 92% of the business at the current share price. That's ridiculous!
Secondly, the chair Gerry Harvey bought $70 million worth of stock for his personal portfolio in March at about $3.70-ish, which is 10% higher than where the share price is today.
Finally, Goldman Sachs has a 12-month price target of $4.70, implying a potential 41% upside, with annual dividend expectations of 36 cents in FY23 and 30 cents in FY24.
Motley Fool contributor Bronwyn Allen owns shares in Harvey Norman.
Telstra Group Ltd
What it does: Telstra is the leading provider of telephony and telecommunications services in Australia. Telstra evolved out of the government-owned monopoly Telecom in the 1990s, but today competes against many other telco rivals as a public company.
By Sebastian Bowen: Yes, blue chip stalwart Telstra is my pick for a cheap stock this June. Telstra shares have been slowly but steadily climbing in value over 2023 thus far, but remain under $5. I think Telstra has a lot to offer investors as we near the halfway point of 2023.
The famous, fully franked dividend is going strong of course. But I also like Telstra's inherent defensiveness, its ongoing cost-cutting plans, and its dominance of its crowded sector.
If Telstra continues to be able to unlock value from its infrastructure assets, it could bring even more good news for shareholders.
Motley Fool contributor Sebastian Bowen owns shares of Telstra.
