ASX shares are falling again. The S&P/ASX 200 Index (ASX: XJO) is down by 1.6%, though it has bounced back from earlier today. The ASX 200 was down more than 3% in the morning.
Investors seem to be scared after US Federal Reserve boss made comments suggesting that the US economy isn’t likely to recover as quickly as some are hoping. It probably isn’t going to be a V-shaped recovery.
The original COVID-19 crash caused the ASX 200 to fall around 35% by 23 March 2020. Since then the share market has been recovering. Some ASX shares have made astonishing gains. For example, the Afterpay Ltd (ASX: APT) share price has gone from $8.90 to over $50.
There have been plenty of other ASX shares that have made large gains since March like Webjet Limited (ASX: WEB), Zip Co Ltd (ASX: Z1P), Qantas Airways Limited (ASX: QAN) and EML Payments Ltd (ASX: EML). It has been getting harder to find good value after such a strong recovery.
If the ASX keeps falling then I’d buy ASX shares:
Share 1: Altium Limited (ASX: ALU)
I believe that Altium is one of the highest-quality businesses on the ASX.
It is trying to become the global leader of electronic PCB software. It’s aiming to do this by achieving 100,000 Altium Designer subscribers by 2025. Reaching that goal is a large part of hitting another goal of US$500 million revenue by 2025.
The company has warned that the ongoing conditions has caused the company to respond with “attractive pricing and extended payment terms to drive volume”. Lower-than-expected short-term revenue isn’t ideal, but gaining subscribers is more important for the long-term goals I mentioned above.
Altium recently launched a cloud offering called Altium 365. I think this service will prove popular because COVID-19 has caused more engineers to work from home.
In the FY20 half-year result the ASX share reported it had US$80.7 million of cash. This means it’s well funded to keep going through these uncertain times.
I’m hoping to buy Altium at a share price under $30.
Share 2: A2 Milk Company Ltd (ASX: A2M)
I think A2 Milk is another high-quality ASX share. A2 Milk has been one of the most successful ASX businesses at growing beyond Australia and New Zealand.
In its FY20 half-year result the ASX share generated NZ$317.2 million of revenue from its China and other Asia segment. That revenue total was 76.7% higher than the prior corresponding period. This division generated earnings before interest, tax, depreciation and amortisation (EBITDA) of NZ$117.5 million, up 60.3%.
In the US the ASX share generated revenue of NZ$28 million, representing growth of 116%.
I think these Asia and US alone give A2 Milk an attractive growth runway. It’s also about to start generating earnings from Canada with an exclusive licensing agreement with Agrifoods Cooperative.
COVID-19 doesn’t seem to be slowing A2 Milk down. I think it’s one to watch. I’d like to buy it at a share price under $17.
Share 3: Brickworks Limited (ASX: BKW)
Brickworks is best known for being a building products business. It manufactures a variety of things like bricks, paving, masonry, roofing, precast and so on.
Construction is expected to suffer this year as the impact of COVID-19 flows through the economy. If that’s true, it will probably hurt Brickworks’ building product earnings in Australia (and the US too, where COVID-19 is also a problem).
However, Brickworks has two other divisions to provide stability to the ASX share. It has a 50% stake in an industrial property trust alongside Goodman Group (ASX: GMG). Ecommerce demand is expected to further strengthen the demand for industrial properties.
Brickworks also owns a large shareholding of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares. Soul Patts has been delivering steady and growing earnings and dividends for Brickworks for decades.
I think Brickworks looks like a very good long-term buy at a share price under $15.
Foolish takeaway
I really like each of these ASX shares. At the current prices I think Brickworks is the best buy for 2020. Particularly because Australia is lifting many COVID-19 restrictions. However, if they were all trading at a good price I’d go for Altium first. I really like high-quality tech businesses.
Altium isn’t the only ASX growth share I think that could be good buys in this environment, here are some more great ideas…
3 “Double Down” stocks to ride the bull market higher
Motley Fool resident tech stock expert Dr. Anirban Mahanti has identified three stocks he thinks can ride the bull market even higher, potentially supercharging your wealth in 2020 and beyond.
Doc Mahanti likes them so much he has issued “double down” buy alerts on all three stocks to members of his Motley Fool Extreme Opportunities stock picking service.
*Extreme Opportunities returns as of June 5th 2020
More reading
- 3 fantastic ASX shares to buy and hold to make you wealthy
- Tech shares! Should we even invest in anything else?
- S&P quarterly rebalance: A2 Milk added to ASX 50 & NEXTDC in the ASX 100
- Have $1,000? You should pick one of these 8 ASX shares
- Why is the A2 Milk share price underperforming?
Tristan Harrison 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, Emerchants Limited, and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Brickworks and Webjet Ltd. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended Emerchants 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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