There are few ASX shares that I would buy today in this current climate. We are living in uncertain times with COVID-19 causing disruptions and impacting businesses across the globe.
Yet despite this, valuations on some companies have soared these past few months. You only have to look at Afterpay Ltd (ASX: APT) and Domino’s Pizza Enterprises Ltd (ASX: DMP) to see how their share prices have skyrocketed.
What happens next to these shares is anyone’s guess, however there are still some absolute bargains on the ASX that I believe will provide strong returns in the near future. Here are 3 ASX shares that are worth a closer look today.
WiseTech Global Ltd (ASX: WTC)
The WiseTech Global share price has fallen 28% since 18 February 2020. In the early phase of the pandemic, the company was hit hard as global trade came to a standstill. Since then, economic trade has slowly started to pick up again and WiseTech Global has seen its operations get back to normal levels.
WiseTech’s latest business update to the market reaffirmed its FY20 guidance of revenue of $420–$450 million (growth of 21–29%), and earnings before interest, taxes, depreciation and amortisation (EBITDA) of $114–$132 million (growth of 5–22%).
I am confident that the long-term prospects of WiseTech Global remain strong and the company is well-placed to expand into new markets.
PolyNovo Ltd (ASX: PNV)
The PolyNovo share price has gained 73% from its March lows, meaning a $5,000 investment would have already netted you a $3,600 profit. A decent return for having your spare cash working for you rather than sitting in a savings account accumulating 1% interest per annum.
PolyNovo develops biodegradable material that is used for skin tissue repair to treat burn and skin trauma patients. Although the PolyNovo share price has stormed higher in recent months, in my view this Australian-based medical device company still has a long way to go and could be the next CSL Limited (ASX: CSL) in the years to come.
Just last month, PolyNovo addressed the market with a trading update stating that it had reached record US sales in June, and announced its first sales to the UK. The company expects its FY20 product sales to be at least double of that in FY19. In light of this, I think that the PolyNovo share price is undervalued and represents a buy today.
Qantas Airways Limited (ASX: QAN)
The Qantas share price has fallen from grace with investors, sitting 55% below its all-time high reached back in December 2019. Whilst the travel industry has been decimated from the coronavirus pandemic, I think that all the bad news has already been priced into this company.
The International Air Transport Association (IATA) has painted a bleak picture of international travel not returning to pre-COVID-19 levels until 2024. While short haul and domestic flights are likely to rebound more quickly, it’s predicted that travel within the country will return to normal by the end of 2020. I believe this is a big positive for Qantas as the Melbourne–Sydney route is the 2nd busiest domestic service in the world.
As Australia’s largest airline, I am convinced that Qantas will be able weather the storm and come out through the other side. The strong pullback on the Qantas share price is a buying opportunity for patient investors.
Foolish takeaway
I think these ASX shares are trading at very attractive prices for what profit they may be generating in the next few years. If I had to pick 1 of the 3, it would be PolyNovo based on its sizeable $1.5 billion addressable opportunity and management’s drive to expand into new markets.
These 3 stocks could be the next big movers in 2020
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More reading
- Bank savings rates fall as Buffett racks up record cash pile and analysts tip Qantas share price rebound
- ASX 200 jumps 1.2%: Big four banks rise, Qantas update, Mesoblast surges
- Qantas share price higher despite share purchase plan flop
- Top brokers name 3 ASX shares to buy next week
- Alliance Airlines reports 24% increase in profits
Aaron Teboneras owns shares of CSL Ltd. and WiseTech Global. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and POLYNOVO FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO and WiseTech Global. The Motley Fool Australia has recommended Domino’s Pizza Enterprises 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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