If we look at the ASX share market, around half of the weighting consists of ASX bank shares and ASX mining shares. Therefore, I think it could be a good idea to diversify by investing in different industries.
Ideally, we want to choose investments that can diversify and grow. I don't think investing in something with a high chance of not delivering any long-term growth is ideal. Hence, that's why I like the potential of the below three ASX shares.
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Propel Funeral Partners Ltd (ASX: PFP)
Propel is the second-largest funeral operator in Australia and New Zealand. It's a morbid industry, but it's a necessary service. Indeed, as the saying goes, there are two things certain in life – death and taxes.
The company describes how a "death boom" is expected in the next two decades. The number of deaths in Australia is expected to grow at a compound annual growth rate (CAGR) of 2.5% between 2024 to 2030 and then 2.9% between 2031 to 2040.
Propel's average revenue per funeral continues to grow – in the first half of FY24, it saw a 4.5% year-over-year increase, driven by inflation. The average revenue per funeral has increased every year since FY14, at a CAGR of around 3.1%.
Revenue is growing at a fast rate organically, and the company is also regularly making acquisitions to expand geographically.
HY24 revenue was up 22.8% and operating earnings before interest, tax, depreciation and amortisation (EBITDA) increased 18.5%.
In the long-term, this business could make stronger profits with Australia's growing and ageing population.
Corporate Travel Management Ltd (ASX: CTD)
This ASX share describes itself as a leader in business travel management services in Australia, New Zealand and beyond. It also has a presence in North America, Asia and Europe.
It has done a good job of growing its market share over the years, partly due to its very high client retention rate of 97%. The return of travel after COVID-19 has been very beneficial for its earnings.
The business has a goal of delivering revenue growth of at least 10% per annum over the next five years, partly by winning new clients. Any acquisitions would be an extra. It's aiming to grow its EBITDA by an average of 15% per annum in the next five years.
Corporate Travel Management is aiming to maintain a 50% dividend payout ratio, invest in high-performing projects, use excess cash for share buybacks, and make acquisitions.
According to Commsec, the Corporate Travel Management share price is valued at under 13x FY26's estimated earnings.
VanEck MSCI International Quality ETF (ASX: QUAL)
This ASX exchange-traded fund (ETF) is all about investing in high-quality global shares that score well on a few different quality metrics – high return on equity (ROE), earnings stability and low financial leverage. When you combine those metrics, you're left with a group of strong businesses.
In total, this fund is invested in 300 businesses, so that's more diversification (in terms of the number of stocks) than the S&P/ASX 200 Index (ASX: XJO).
Banking and mining make up half of the ASX but account for less than 10% of this fund. Instead, it has large allocations to stocks like Nvidia, Microsoft, Meta Platforms, Apple, Eli Lilly, Alphabet, Novo Nordisk and Visa.
The QUAL ETF has performed well over the long term, and I'm optimistic it can beat the ASX 200 share index over time because of the screening process for quality.
