December 2023 looks like a great month for beginners to start investing in ASX shares.
Beginners may like to go with the security of blue-chip businesses because of their stability and long-term strength.
But I wouldn't go with just any business. It's a good idea to consider the competitive environment – for example, ASX bank shares are all competing for the same borrowers with essentially the same offering.
If we can find companies that are market leaders and have good growth prospects, then they can be good opportunities to hold for the long term. Customer growth and profit growth are a good combination.
Telstra Group Ltd (ASX: TLS)
Telstra owns the largest and most popular telco network in Australia.
Being the biggest has its advantages – it allows the company to attract the most subscribers, generate the most revenue, invest the most in its network, and therefore continue to have the strongest network. It's a self-fulfilling cycle.
For example, Telstra recently invested $546 million in more spectrum to deliver "even better 5G experiences to mobile customers across most parts of Australia through an additional 55 MHz to 110 MHz of spectrum." It bought some of the new spectrum in the key markets of Sydney and Melbourne.
As the world becomes increasingly technological, more and more devices need the internet. It's a powerful tailwind for Telstra, particularly if it can get more households to change to (5G-powered) wireless internet instead of the NBN, so it can capture much more of the margin.
I like how the ASX share is looking to diversify its earnings base, such as its recent acquisition of a telco business that services Pacific island nations. Another investment gives it greater exposure to the increasingly important cybersecurity sector.
Telstra has a great brand and it's expected, according to projections to Commsec, that it will grow its profit and dividend over the next few financial years.
Wesfarmers Ltd (ASX: WES)
Wesfarmers is not exactly a household name, but many of the businesses that it owns are very well-known, such as Bunnings, Kmart, Officeworks, Target, Priceline and more.
This ASX share has managed to deliver solid long-term performance for investors by focusing on what's best for shareholders rather than empire-building. For example, a few years ago, it decided to split off Coles Group Ltd (ASX: COL) into its own listed business when it really didn't need to.
The current leading brands of Kmart and Bunnings have very strong market positions, and I'd argue are leaders in their respective sectors, particularly Bunnings. I'm excited by Wesfarmers' future because of its constant evaluation of the market as it looks for industries to invest in for long-term growth.
Another thing the ASX share is investing in is healthcare. The first move was Australian Pharmaceutical Industries (API) which came with Priceline and Clear Skincare Clinics. It has also moved to acquire Silk Laser Australia and InstantScripts.
In another five years, the Wesfarmers portfolio could be noticeably different, but I'm sure it will be improved further with promising businesses.
