In uncertain times with interest rates rising, rampant inflation and a recession threatening, it might be a prudent idea to turn to quality ASX shares.
Quality can be defined in different ways though.
It could mean that the company is a leader in its field. It could be that the business is profitable and runs with plenty of cash.
Baker Young managed portfolio analyst Toby Grimm this week nominated a couple of examples of these quality ASX stocks that are worth buying:
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'Oversold' stock that's a 'global leader'
Shareholders for construction materials supplier James Hardie Industries plc (ASX: JHX) have watched in horror as the stock price halved this year.
"The stock has materially underperformed in 2022 compared to domestic peers that have been favoured on a relatively stronger outlook," Grimm told The Bull.
But considering the company's strong position in its industry, he reckons this presents a golden buying opportunity.
"We believe the shares have been oversold, and price weakness provides an opportunity to gain exposure to a global leader at relatively attractive prices."
Grimm is not the only one thinking James Hardie shares are a bargain.
According to CMC Markets, a stunning 10 out of 14 analysts rate the stock as a strong buy. Two of the remaining four reckon James Hardie's a moderate buy.
"It's fallen far enough now that, particularly in that growth part of the market for a business of that quality, it looks good value," Sage Capital portfolio manager Sean Fenton told Livewire last week.
'Appealing value at current levels'
Despite worries about an economic downturn, gaming manufacturer Aristocrat Leisure Limited (ASX: ALL) seems to be a favourite among analysts at the moment.
And Grimm is no exception, saying its interim result was "above expectations".
"Operating revenue of $2.745 billion for the six months to March 31, 2022, was up 23.1% on the prior corresponding period," he said.
"Net profit after tax [NPAT] of $530.7 million was up 46.5%."
The stock has discounted almost 28% since the start of the year, which adds to the appeal for Grimm.
"A strong balance sheet underpins share buy-backs in a company we believe offers appealing value at current levels."
Among those who agree with Grimm are T Rowe Price Group Inc (NASDAQ: TROW) head of Australian equities Randal Jenneke and Morgans advisor Jabin Hallihan.
"We're forecasting 16% growth in earnings before interest, taxes and amortisation in the coming year," said Hallihan.
"The slot machine maker remains a high-quality growth business with long-term opportunities."
