It should be the objective of many investors to buy dead-easy ASX shares because it makes investing a lot simpler and helps ensure we stick with understandable businesses.
When it's easy to measure how successful a company is, we can gain more confidence and follow along with its success. It's much easier to measure the achievements of a business like Bunnings or JB Hi-Fi Ltd (ASX: JBH) compared to a biotech business like CSL Ltd (ASX: CSL) developing new treatments.
I'm going to highlight two businesses that have already delivered good results and I think they could be strong contenders for future returns with a $1,000 investment.
Xero Ltd (ASX: XRO)
Xero is one of the largest global cloud accounting software providers.
It helps individuals and business owners keep track of the business performance, ensures they're on top of their debtors and creditors, they can conduct payroll and they can submit tax-related forms to the ATO.
The various tools and processes help users with significant time saving. Time is money for time-poor business owners. It's not a surprise to me that Xero's loyalty rate is very high at around 99% each year.
The number of subscribers is a key measure of success for the business. In FY25, the business reported that its subscribers reached 4.4 million, following underlying subscriber additions of 414,000 in FY25.
This dead-easy ASX share has excellent operating leverage thanks to the software nature of its business. New revenue largely turns into new gross profit thanks to its 89% gross profit margin. I'm not surprised net profit rose 30% and free cash flow soared 48%.
The world is becoming increasingly digital and governments increasingly want taxation forms submitted online. This is a powerful tailwind for Xero shares and can help grow its bottom line over time.
Telstra Group Ltd (ASX: TLS)
In my eyes, Telstra is the clear leader when it comes to telecommunications in Australia.
The business has the most subscribers, the widest network coverage, the leading spectrum assets and it has invested the most in 5G.
Telstra is benefiting from a number of tailwinds including population growth and digitalisation of the Australian economy, with a growing number of devices connected to the internet (in and out of the home). I think that bodes well for this dead-easy ASX share.
One of the best things about a compelling business is operating leverage. That's when profit margins increase as revenue rises, leading to the net profit growing much faster than revenue.
As Telstra adds more users to its network, it's able to spread the fixed costs among more subscribers, enabling higher margins.
One of the things I'm excited about with Telstra is how the business could grow its 5G fixed wireless customer base. In other words, a broadband connection for consumers and small businesses (C&SB) is serviced by Telstra's 5G network, rather than an NBN connection.
Winning more 5G fixed wireless customers means capturing that margin from the NBN and further utilising its network. In FY25, Telstra's 5G wireless C&SB customer base grew by 36,000 (or 42%) to 121,000. While this is a small number today, I think ongoing growth bodes well for future profit margin expansion.
