Don’t panic. The racing share market may have you wondering where to invest, but you haven’t missed it yet. There are still plenty of opportunities to buy great shares for income, growth or value. In fact, there are always opportunities.
If I had $2,000 spare today I would be looking squarely at dividing it between both growth and value opportunities. I believe many of today’s shares are still oversold and represent great value. Personally I would be looking to divide it 25% in growth and 75% in value shares.
Income investing requires a different focus and timeframe, in my experience.
Where to invest for growth
Of the available growth shares, I would be looking very hard at Zip Co Ltd (ASX: Z1P) even after the recent rise. Growth shares can be a risky business and it is difficult to know where to invest. Today, it’s easy to see that Amazon.com (NASDAQ: AMZN) was going to be a behemoth. It was a lot harder to see it clearly in 2010, though.
In fact, I thought it was overpriced!
At Tuesday’s close, Zip Co was valued at $2.4 billion. A massive leap in two days to be sure. But I believe the company still has a long way to go. Potentially further, even, than Afterpay Ltd (ASX: APT).
Zip has more financial products than Afterpay and a track record of making profits. The recent US acquisition gives it access to a $5 trillion retail market. It may be hard to see now, but in the future, I believe we will think today’s price was cheap.
Value investing
When considering where to invest for value, I have always looked for undervalued mature growth shares. The COVID-19 pandemic has created this opportunity for us.
I believe that Altium Limited (ASX: ALU) and Jumbo Interactive Ltd (ASX: JIN) are two really great examples of this.
Altium, the PCB design software producer, has returned investors over 130 times their initial investment since 2010. Its sales growth in the past two years has been better than the previous 7 years. I believe it is slightly undervalued in the market today.
Jumbo Interactive is one of the great shares on the S&P/ASX 200 (INDEXASX: XJO). It has returned 25 times the initial investment since 2010. Despite this, it had a greater leap in sales last year than in any previous years. In addition, it was forecasting another increase this FY before the coronavirus.
In average times, approximately 75% of lottery sales are via retail outlets. With these closed, but lottery continuing, it is likely they have picked up additional revenues via internet sales.
Foolish takeaway
The ASX is full of cheap value opportunities for people with limited funds who are wondering where to invest. You just need to spend some time looking for them.
For example, the five dirt-cheap shares recommended below could be the ones to buy right now.
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As of 2/6/2020
More reading
- Why the shares of Afterpay rival Openpay are up 840% since March
- Is the CBA share price cheap today?
- Meet the ASX stocks to benefit from the new $688m home stimulus
- Why Zip Co and these ASX shares just zoomed to new highs
- Should the Xero share price have a P/E ratio of 4,000?
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and Jumbo Interactive Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO, Altium, and ZIPCOLTD FPO and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia has recommended Amazon and Jumbo Interactive Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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