It’s been an interesting time for investors this year. The coronavirus pandemic caused the BHP Group Ltd (ASX: BHP), National Australia Bank Ltd. (ASX: NAB) and Afterpay Ltd (ASX: APT) share prices to plummet in March. Furthermore, the S&P/ASX 200 Index (INDEXASX: XJO) has fallen 16.47% from its February high. Whilst both BHP and National Australia Bank have gone on to rebound considerably, the Afterpay share price has not only also done this, but actually reached new, all-time highs.
Share price falls present an opportunity for anyone considering investing in the ASX 200. When taking on board Warren Buffett’s wise words, investors should “be greedy when others are fearful and fearful when others are greedy”.
Even at today’s prices, I believe these 3 ASX 200 shares offer good value and could provide great, long-term returns for investors.
BHP share price
BHP is one of the oldest companies listed on the ASX, known for investing in high-quality resource assets. Currently, BHP is involved with iron ore, coal, copper, nickel, potash and petroleum. It has achieved significant growth over 135 years but recent turmoil has seen its share price trade at a hefty discount. The BHP share price has fallen 11.8% from its January high.
However, I believe BHP’s growth appears set to continue. At the end of March, BHP had 6 projects under development with a combined budget of US$11.4 billion over the life of the projects. These projects mean BHP will continue to maintain and expand its production in the years ahead.
BHP is committed to paying dividends to shareholders. Its current dividend policy states it will payout 50% of underlying profit in a given period. This means shareholders can expect an ongoing income stream from BHP. The policy should also support continued growth of the BHP share price.
At the time of writing, BHP trades on a trailing dividend yield of 6.02% fully franked. This is a huge yield in the current interest rate environment and shows that BHP offers great value to investors at its share price today.
NAB share price
NAB has been in the news lately through its recent decision to raise capital from investors. When analysing the bank, however, it could be seen to offer great value. In February, the NAB share price reached $27.31, it now sits at $18.92 which represents a fall of just over 30%. This drop shows the capital raising and the damage to the bank’s balance sheet brought on by the coronavirus crisis. However, it also represents a good opportunity to invest in NAB shares at today’s price.
If the NAB share price eventually recovers to its previous high, which is very possible assuming no further significant setbacks, shareholders will make a 44% gain on shares purchased at today’s price. This represents great value and suggests that investors can make significant gains from investing in NAB shares.
NAB has a pro forma CET1 ratio of 11.2% after its capital raising. This suggests that the bank is in good financial health by international standards. If several of NAB’s loans turn bad, it still has a solid capital buffer to remain in business and continue lending.
NAB trades on a trailing dividend yield of 6.04% fully franked. Following its capital raising, NAB has promised to continue paying dividends to shareholders.
Afterpay share price
Investors usually invest either for growth or income. While Afterpay does not currently offer income, it does offer growth. At today’s share price, investors could make considerable gains. Especially if Afterpay is successful in its current growth ambitions. Afterpay has over 8.4 million users worldwide and plans to become a major payment service provider. This would see it rival major industry players like Visa or Mastercard.
While it is growing rapidly, Afterpay is already offered by 48,400 retailers worldwide. It’s true that this scale may not be up there with the major payment providers, but it does offer room for considerable expansion. When more retailers and, therefore users, take up Afterpay, it could also become a takeover target as major technology or financial companies attempt to capitalise on the platform’s popularity. The likelihood of this is reinforced by an announcement last month which saw Afterpay welcome an investment by major Chinese technology company, Tencent Holdings Ltd (HKG: 0700).
Tencent currently has revenue per share of $1.51 which is less than the Afterpay share price. However, it is important to consider the scalability of Afterpay’s platform. If this company becomes a major global player as planned, this figure could grow phenomenally, leaving today’s Afterpay price a distant memory.
Foolish takeaway
BHP, NAB or Afterpay shares could be a great investment at today’s prices. When contemplating which company to invest in, buyers should consider if they are primarily targeting growth or income. In my opinion, both NAB and BHP offer great income at their current share prices. Today’s Afterpay share price, on the other hand, offers the potential for phenomenal growth and the possibility of a takeover in the future. Whilst investors should consider their individual needs and invest accordingly, I believe all 3 of these companies offer great value at today’s share prices.
For additional ASX shares to consider for building wealth, take a look at the report below.
NEW. The Motley Fool AU Releases Five Cheap and Good Stocks to Buy for 2020 and beyond!
Our experts here at The Motley Fool Australia have just released a fantastic report, detailing 5 dirt cheap shares that you can buy in 2020.
One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…
Another is a diversified conglomerate trading over 40% off its high, all while offering a fully franked dividend yield over 3%…
Plus 3 more cheap bets that could position you to profit over the next 12 months!
See for yourself now. Simply click here or the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.
More reading
- Is the Westpac share price too high?
- Why today might be a good day to buy NAB and Westpac shares
- Could the Openpay share price signal a wider boom for BNPL?
- 3 small cap ASX tech shares that could be stars of the future
- 5 things to watch on the ASX 200 on Friday
Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO. The Motley Fool Australia has no position in any of the stocks mentioned. 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.
The post Is today’s BHP, NAB or Afterpay share price a good investment? appeared first on Motley Fool Australia.
from Motley Fool Australia https://ift.tt/30b7SFO
Leave a Reply