The share market has taken a battering over recent weeks, with the ASX 200 retreating sharply from its mid-February high.
Global volatility, driven by US trade tariffs and rising geopolitical tension, has rattled investor sentiment.
But while this selloff may have investors feeling nervous, some experts believe it could actually present one of the better buying opportunities we've seen in some time.
According to a note out of Bell Potter, the sharp market drop has been driven more by fear than fundamentals.
The broker explains that earnings expectations have remained "relatively resilient" in recent weeks, suggesting the decline is largely the result of valuation multiples compressing as investors demand a higher risk premium.
In other words, many companies haven't seen their earnings outlook worsen — they are just cheaper now because of sentiment.
Time to take advantage
Bell Potter believes that this sort of environment plays perfectly into the hands of long-term investors who focus on quality. It said:
We believe that our investment philosophy—anchored in Quality—is ideally suited to navigate the current macro environment. We see attributes such as robust balance sheets, high and sustainable returns on equity, and consistent profitability as essential for long-term wealth creation and portfolio resilience over the long run, but also tactically during periods of macroeconomic uncertainty.
It then adds:
However, sentiment-driven selloffs can impact all stocks, meaning even high-quality, fundamentally sound businesses can experience valuation compression unrelated to their intrinsic worth. This creates valuable windows to buy quality stocks at more reasonable valuations.
So, what should investors look for?
Bell Potter has been screening ASX shares with a focus on strong fundamentals like conservative balance sheets, high and stable returns on equity, and consistent earnings growth. From there, it applies a growth overlay to assess future potential, as well as looking at companies that have experienced a significant price-to-earnings (PE) ratio compression.
That process has led to a shortlist of ASX shares that Bell Potter believes offer "quality at a discount."
Quality ASX shares
Among its top picks are the following ASX shares:
Aristocrat Leisure Ltd (ASX: ALL)
A leading gaming content and technology company, Aristocrat has a strong global footprint in both physical slot machines and digital mobile games. Its strong balance sheet, consistent earnings, and expansion into real money gaming position it well for future growth.
Flight Centre Travel Group Ltd (ASX: FLT)
A major name in travel, Flight Centre's business has rebounded strongly from the pandemic. With a leaner business model and improving margins, it remains well-placed to benefit from ongoing recovery in global travel demand.
James Hardie Industries plc (ASX: JHX)
The fibre cement building products giant has deep roots in the US housing market. Its focus on premium, innovative materials and strong market share makes it a standout in the construction space, particularly as housing demand rebounds.
WiseTech Global Ltd (ASX: WTC)
A global logistics software leader with its flagship CargoWise platform, WiseTech has become a key tech player in global supply chains. Known for its high margins and recurring revenue, it is widely regarded as one of the ASX's strongest long-term growth stocks.
