The 2023-24 financial year may have been a choppy ride for ASX investors, but overall, it turns out that FY24 was also pretty lucrative!
Despite all the ups and downs, geopolitical headwinds and the ever-present fear of unfettered inflation, the ASX 200 managed to deliver returns of 12.1% (including dividends) in FY24. Not too shabby!
So, if you sat on the shore last financial year, hoping for calmer waters before diving into the stock market, these are the potential gains you missed out on.
While an encore performance in FY25 is not guaranteed, the ASX 200 has delivered average annual returns of around 9% over the past 30 years.
Therefore, the longer you sit on the sidelines, the less time those returns have to compound your wealth.
So, if you’re ready to take the plunge, you’re in luck because we asked our Foolish writers which ASX shares should be on your buy list for FY25.
Here is what they told us:
6 best ASX shares for the new financial year (smallest to largest)
- Johns Lyng Group Ltd (ASX: JLG), $1.59 billion
- MFF Capital Investments Ltd (ASX: MFF), $2.23 billion
- Betashares Nasdaq 100 ETF (ASX: NDQ), $4.98 billion
- Steadfast Group Ltd (ASX: SDF), $6.85 billion
- NextDC Ltd (ASX: NXT), $10.68 billion
- Resmed Inc (ASX: RMD), $41.89 billion
(Market capitalisations as of market close 5 July 2024).
Why our Foolish writers love these ASX stocks
Johns Lyng Group Ltd
What it does: Johns Lyng specialises in building and restoration services in Australia and the United States. It restores properties and contents after insured events. Customers include major insurance companies, commercial enterprises, local and state governments, body corporates and retail customers.
By Tristan Harrison: The Johns Lyng share price has fallen almost 20% since 26 February 2024, making the company better value to buy today.
Johns Lyng is growing at a good pace. The normalised business as usual (BAU) net profit after tax (NPAT) grew by 15.8% to $26.4 million in the first half of FY24, and I think its underlying NPAT can continue to grow strongly as well.
The company is expanding its geographic presence, with New Zealand being one source of recent good news after Johns Lyng signed a contract with Tower Ltd (ASX: TWR) — the first agreement signed with a major national insurer in New Zealand.
In addition, Johns Lyng USA has been appointed to the Allstate emergency response and mitigation panel. Allstate is one of the largest insurance companies in the US.
The ASX share has also hinted that there could be further geographic expansion in the future.
The business can also grow profit if there is more catastrophe response work. The company has previously said that although inherently unpredictable, workflows stemming from catastrophe events continue to exhibit “larger and more enduring characteristics”, with work from prior events taking some time to finalise.
Motley Fool contributor Tristan Harrison owns shares of Johns Lyng Group Ltd.
MFF Capital Investments Ltd
What it does: MFF Capital is a listed investment company (LIC) that, like all LICs, manages an underlying portfolio of investments on behalf of its shareholders.
By Sebastian Bowen: MFF Capital is one of the best-performing and longest-held investments in my ASX share portfolio. As such, I would happily recommend it to anyone as a potential buy for FY2025.
MFF is run by Chris Mackay, one of Magellan‘s co-founders. Mackay is a disciple of Warren Buffett and aims to emulate Buffett’s style in MFF’s portfolio — a trait that very much draws me to this company.
As such, you’ll normally find high-quality American companies with strong moats in said portfolio, which are typically held for years at a time.
At the last count, these stocks included Amazon, Bank of America, L’Oreal, JP Morgan Chase, Mastercard and Home Depot.
This approach has worked well for MFF in the past, and I don’t see why it won’t continue to be effective in the future. With one share, you can get access to some of the best companies in the world, run by a world-class fund manager.
That’s why I’m happy to hold MFF and think it will continue to be a top-quality investment over the 2025 financial year.
Motley Fool contributor Sebastian Bowen owns shares of MFF Capital Investments Limited, Amazon and Mastercard.
Betashares Nasdaq 100 ETF
What it does: NDQ is an exchange-traded fund (ETF). You can buy and sell shares just as you would with any other ASX stock. The ETF is intended to track the performance of the NASDAQ-100 Index (NASDAQ: NDX). NDQ currently holds 102 technology-focused shares.
By Bernd Struben: NDQ provides investors with diversified exposure to some of the world’s leading tech companies with a single investment.
Individual tech stocks may go higher or lower in the financial year ahead. But I’m a firm believer in the ongoing power of the artificial intelligence (AI) revolution to lift most, if not all, of the world’s leading tech stocks in FY 2025.
And you’ll find most of those top global tech stocks listed on the Nasdaq 100.
Indeed, NDQ’s top four holdings are: Microsoft, Apple, Nvidia and Amazon.
Between them, these companies are investing billions of dollars in advancing their own AI ambitions, with Nvidia producing the chips that make it all happen.
The NDQ share price is up 29% over 12 months. The ETF also pays two annual distributions, with shares trading on a 2.7% unfranked trailing yield.
Annual management fees run at 0.48%.
Motley Fool contributor Bernd Struben does not own any of the shares mentioned.
Steadfast Group Ltd
What it does: Steadfast Group is Australia’s largest general insurance broker network, providing businesses and individuals with a broad range of insurance products and services.
By Kate Lee: I firmly believe that ‘time in the market’ is more crucial than ‘timing the market.’ Holding high-quality shares for the long term is, in my view, the key to successful investing.
With that said, it’s also beneficial to understand where we stand in the investment market cycles. As I highlighted, we’re likely in the later stage of the bull cycle, which makes me cautious about cyclical shares.
In light of this, I believe Steadfast Group is a company that fits both strategies, as it operates in a non-cyclical industry.
Its earnings per share (EPS) have consistently grown from 7 cents in FY15 to 18 cents in the last 12 months to December 2023, with only two exceptions due to the COVID-19 pandemic.
Similarly, the company has increased its dividends-per-share every year for the last decade.
The Steadfast share price has lifted 12.5% over the past month since we last highlighted this stock, but hasn’t moved significantly from its price of $6.09 a year ago.
Currently, Steadfast shares are valued at 20x its FY25 earnings estimates by S&P Capital IQ, compared to their trading range of 15x to 25x. I think this PE multiple is still attractive, considering the last time it reached 15x PE was in April 2020 during the COVID-19 pandemic.
Motley Fool contributor Kate Lee does not own shares of Steadfast Group Ltd.
NextDC Ltd
What it does: NextDC is a technology company enabling business transformation through innovative data centre outsourcing solutions, connectivity services, and infrastructure management software.
By James Mickleboro: I think NextDC could be a great ASX share to buy for the new financial year.
The data centre solutions company has been growing rapidly for many years and appears well-placed to continue this trend long into the future. This is due to the insatiable demand for data centre capacity thanks to the cloud computing and artificial intelligence megatrends.
The team at Morgans agrees with this view. The broker thinks that “NXT is especially well placed to succeed given its partner ecosystem (enterprise users of cloud are also AI users).” In fact, the broker believes that if “NXT can fund and fill the planned pipeline, then it could be a $40+ stock.”
For now, though, the broker has an add rating and a $19.00 price target on the company’s shares.
Motley Fool contributor James Mickleboro owns shares of NextDC Ltd.
Resmed Inc
What it does: Resmed is the global leader in sleep apnea treatment devices. The company is known for its continuous positive airway pressure (CPAP) machines, delivering improved sleep and respiratory care to people in more than 140 countries.
By Mitchell Lawler: After surging 49% from its September low to around $32, Resmed shares are back on the ropes following new data on GLP-1s, dubbed weight-loss drugs, last month.
On June 24, Eli Lilly and Co (NYSE: LLY) revealed a substantial reduction in sleep apnea events among people treated with its tirzepatide injection (branded Mounjaro) compared to the placebo during trials.
The findings unsurprisingly rattled Resmed investors, resulting in an 11% fall in the share price since then.
Personally, I see the retreat as an opening to buy more Resmed shares at an undemanding price.
Weight-loss drugs may erode the company’s total addressable market. Still, given that the market is forecast to reach 1.2 billion people by 2050 (versus Resmed’s 23.5 million patients in 2023), there’s ample room for both treatment methods to coexist.
Motley Fool contributor Mitchell Lawler owns shares of Resmed Inc.