Australian shares have proven to be helpful wealth-builders over the long term. The ASX share market has returned an average return per annum of approximately 10% over the ultra-long term. That level of return can help secure anyone's future – it doubles someone's money in around eight years.
I believe there are certain ASX stocks that can deliver returns even stronger than 10% per year following recent sell-offs.
Owning businesses with both capital growth and dividend potential is compelling. The passive income rewards shareholders for holding shares during their ownership. Hence, I think the current valuations make the below Australian shares very appealing.
Accent Group Ltd (ASX: AX1)
Accent is an ASX retail share that distributes several global shoe brands in Australia, including Hoka, Kappa, Vans, Skechers, Henleys, Merrell, Dr Martens, and Ugg. The company also has its own brands, including The Athlete's Foot, Stylerunner, Platypus, Nude Lucy, and Glue Store.
The chart below shows that the Accent share price has dropped around 30% from April 2023.
I think this is the right time to buy while investors are worried about factors like inflation, interest rates and retail spending. I view retail as a cyclical sector, so it's good to pounce when conditions appear weak in the short term.
Accent continues to expand its store network, which I believe will enable its earnings to bounce higher in a couple of years once households are able and willing to spend more on retail. A recovery could take two years (or more) because interest rates may take a while to be cut. Having a larger store network could mean more sales and greater scale benefits.
According to the 2026 financial year forecast on Commsec, the Accent share price is valued at just 11x FY26's estimated earnings with a possible grossed-up dividend yield of almost 11%.
Universal Store Holdings Ltd (ASX: UNI)
This Australian share owns a number of premium youth fashion brands including Universal Store, THRILLS, Worship and Perfect Stranger.
It's another ASX retail share where the valuation has declined. The Universal Store share price is more than 40% lower than it was in November 2021, as we can see on the chart below.
There are three reasons why I think it's a buy.
First, its store count continues to grow, giving the company additional scale. In the first half of FY24, it added another six stores to its network, bringing the total network to 100 in Australia.
Second, it is rolling out Perfect Stranger as a standalone retail format. This brand is growing quickly, and HY24 Perfect Stranger sales increased by 59.7% to $6.6 million.
Third, the dividend is appealing. It has grown its dividend each year since 2021 and is projected to pay a grossed-up dividend yield of just under 10% in FY26, according to Commsec. It's valued at around 10x FY26's estimated earnings.
Johns Lyng Group Ltd (ASX: JLG)
This Australian share specialises in repairing and restoring buildings and contents after damage from events like storms, flooding, fire and so on. The company has a segment that provides catastrophe response services.
This is another stock where the valuation looks much more appealing after a decline. Since February 2024, the Johns Lyng share price has fallen more than 20%, as shown on the chart below.
The company's core division continues to grow steadily in Australia and the US. In the HY24 result, the company reported its insurance building and restoration services (IB & RS) revenue increased 13.7% to $426.1 million, and the IB & RS 'business as usual' (BaU) earnings before interest, tax, depreciation and amortisation (EBITDA) increased 28.1% to $55 million. I like seeing profit rise faster than revenue.
Compounding earnings at a double-digit pace could see Johns Lyng make significantly more profit in three to five years.
I'm also bullish about the business because it's growing into adjacent areas that offer defensive earnings. For example, it's acquiring strata management businesses, which could also unlock synergies with the core business.
According to Commsec, the Johns Lyng share price is valued at around 22x FY26's estimated earnings.
