Why I'd buy Woolworths, ResMed, and CBA shares

Some of the best ASX investments are companies that Australians already know well.

Woolworths Group Ltd (ASX: WOW), ResMed Inc. (ASX: RMD), and Commonwealth Bank of Australia (ASX: CBA) have each built leading positions in their markets, and I think all three still have room to improve.

Here is why I would buy them.

Woolworths shares

Woolworths increasingly looks like a retail logistics and data business as well as a supermarket operator.

Its stores remain central to the investment case, but online shopping, automated distribution centres, delivery services, Everyday Rewards, and customer data are becoming more important to how the company competes.

I like the opportunity created by that combination. Woolworths can use its understanding of customer behaviour to improve promotions, stock the right products, personalise offers, and make shopping more convenient. Its scale also allows the company to invest heavily in technology and supply chains while spreading those costs across an enormous sales base.

Recent sales momentum suggests customers are responding to its sharper focus on value and availability. Higher transport costs and continued investment in lower prices could place some pressure on near-term margins, so execution remains important.

Even so, grocery demand is relatively defensive, and Woolworths has plenty of scope to become a more efficient retailer. I think that makes the shares a good long-term buy.

ResMed shares

ResMed gives investors exposure to a healthcare market that remains significantly underpenetrated.

Millions of people are living with sleep apnoea and other breathing conditions, while many have never been diagnosed or started treatment. Greater awareness, easier testing, and the continued shift towards healthcare in the home could bring many more patients into the market.

Each new patient can also create a relationship that lasts for years. ResMed sells devices, but masks, accessories, monitoring, support, and connected software all contribute to the treatment journey. These ongoing needs can generate recurring revenue while helping patients remain engaged with their therapy.

The business continues to show strong momentum. Third-quarter revenue increased by 11%, supported by demand across sleep devices, masks, and accessories. Operating income also grew faster than sales as margins improved.

New treatments and stronger competition could change how sleep apnoea is managed over time. I still think ResMed's brand, global distribution, product range, and digital capabilities leave it well placed to take part in that change.

CBA shares

CBA is the Australian bank I would feel most comfortable owning for the next decade.

Its strength begins with millions of customer relationships covering transaction accounts, deposits, mortgages, credit cards, business banking, and investments.

The CommBank app has become the main way many customers interact with their finances. That digital position gives CBA regular contact with users and allows it to keep improving payments, fraud prevention, lending decisions, and customer service.

I think that connection is difficult for competitors to recreate quickly.

The bank's latest half-year result showed continued growth across lending and deposits, while cash profit increased by 6%.

The CBA valuation usually sits above the other major banks, and investors are paying for continued quality. Banking also brings exposure to credit losses, regulation, mortgage competition, and the wider Australian economy.

But I am still prepared to pay a premium for the bank I believe has the strongest overall franchise.

Foolish takeaway

Familiar companies can sometimes be overlooked because their investment cases feel too obvious.

I think there is still plenty happening beneath the surface at Woolworths, ResMed, and CBA. Each company is using technology, customer relationships, and scale to strengthen a position that has taken years to build.

Their progress will not be perfect, and the price paid will always influence future returns. With a long holding period, I would be comfortable buying all three ASX shares today.

The post Why I'd buy Woolworths, ResMed, and CBA shares appeared first on The Motley Fool Australia.

Motley Fool contributor Grace Alvino has positions in Commonwealth Bank Of Australia. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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