The ASX 200 index was soaring at all time highs just last week. The uptrend continued on Monday with the index posing fresh highs, however, fears of inflation have creeped into investors and the past couple sessions have been negative.
The rotation from growth to value stocks is definitely a theme that is becoming more evident as time passes. The good news for us Aussies is that the ASX, which is largely made up of value stocks will perform better than the likes of S&P 500 in the inflationary environment.
The furniture and homewares online retailer is down over 7% this year. Homeware and furniture spending has been soaring since Australia was put on a lockdown. Temple & Webster recently stated that trading has been very positive and exceeding expectations. In order to take advantage of this shift in consumer behaviour, TPW has been increasing their investment in products, technology, marketing, and staff. While EBITDA margins are expected to fall back to pre pandemic levels given this increased cost, it is clear that the company is investing for growth. These investments will deliver long-term returns as ecommerce is set to explode over the coming years. TPW shares are trading at $10.19 a share after regaining momentum over the past month.
The California based medical equipment manufacturing company also now offers a cloud-based software for diagnosis and treatment without the need for a hospital. Telemedicine and out-of-hospital healthcare looks to be booming and the pandemic has accelerated this shift. As a result, ResMed has benefitted and is aiming to serve 250 million patients through its products by 2025. An ambitious growth strategy that is well within reach for the company. Both sleep & respiratory care, and their SaaS offering has seen steady growth in the past few years and all our estimates point towards ResMed being a good investment in the long-term.
RMD shares are down 9% this year, and with their operating environment now looking positive with the passing of Covid19, RMD is an ASX share to watch closely.
NAB is part of the big 4 Aussie banks and as we all know, the banks have been performing extremely well in challenging operating conditions. NAB shares are now trading very close to levels seen prior to the pandemic. Increased lending to retail customers and businesses has increased as the government’s stimulus and deregulations around lending has done its bit. The increased lending has offset the low interest rate and NAB has been able to perform well. Dividends are back for the banks as well and this has caused investors to become upbeat about the banks once again. With inflation creeping in and interest rates set to stay low, NAB can continue to benefit. Currently trading at $26.54 a share after a 17% gain this year, NAB shares are one to keep an eye on.
Growth stocks are potentially one of the hardest to pick as there are a lot of factors that need to be considered – from industry tailwinds to the financial health of the individual stocks and a lot of little things in between them. Shares in the Value research team have picked their top 3 ASX stocks to buy in 2021. Click here to download the report for free.