There are some ASX shares which could be solid outperformers over the rest of 2020.
The share market has performed strongly since March 2020. The S&P/ASX 200 Index (ASX: XJO) has gone up 31.2% from 23 March 2020.
Some ASX shares don’t look like good value to me any more, particularly with how much COVID-19 uncertainty there still is.
But there are some shares that I think could be star performers for the rest of 2020:
Share 1: Pushpay Holdings Ltd (ASX: PPH)
Pushpay is an electronic donation business. It facilitates digital giving to not-for-profits. Its main customer base is large and medium US churches. They have large congregations which donate large amounts of money. Pushpay management believe this is a $1 billion revenue opportunity.
Over the past year the company has regularly increased its profit guidance as the business continually under-promises and over-delivers.
In the recent Pushpay annual general meeting the company increased its earnings before interest, tax, depreciation and foreign currency (EBITDAF) to a range of US$50 million to $54 million, up from US$48 million to US$52 million. That means the ASX share is now expecting to approximately double its EBITDAF in FY21. That’s predicted to be a strong year.
Pushpay’s share price has been a strong performer. Since the start of May 2020 the Pushpay share price is up 121%. I wouldn’t be surprised to see the share price hit $10 by the end of 2020 if social distancing continues in the US due to COVID-19 social distancing.
Share 2: A2 Milk Company Ltd (ASX: A2M)
A2 Milk sells a variety of different dairy products including liquid milk, powdered milk and infant formula.
The company is one of the rare ASX shares that is still reporting growth despite the tough COVID-19 times. A2 Milk continues to increase the footprint of its distribution, particularly in the US. The ongoing pandemic is causing people to stock up on A2 Milk products.
A2 Milk said it’s expecting FY20 revenue to be in the range of $1.7 billion to $1.75 billion. This would be growth of 30% to 34% on FY19’s revenue.
FY21 could be another bumper year, particularly if the A2 Milk is successful at capturing more market share in the US.
Over the longer-term I believe that this ASX share still has a long growth runway ahead. A2 Milk is expanding into the Canadian market with Agrifoods for the production, distribution, sale and marketing of A2 Milk branded liquid milk. Canada is a sizeable potential market for A2 Milk.
A2 Milk is trading at 27x FY22’s estimated earnings.
Share 3: Vitalharvest Freehold Trust (ASX: VTH)
Agriculture is one of the sectors that could be a good performer even with the ongoing pandemic. People will always want food, particularly quality Aussie-grown fresh food.
Vitalharvest owns a portfolio of berry and citrus farms. But it will soon have a new manager that will pivot the real estate investment trust (REIT) to target real agricultural property assets and assets that are critical to the agricultural supply chain in both Australia and New Zealand.
The ASX share will be renamed Primewest Agri-Chain Fund. The ticker will be changed to ASX:PWA, subject to ASX confirmation.
It will still target farms, but it will also search for processing and manufacturing facilities of food, food and beverage packaging facilities and storage facilities related to food. The potential new assets will be leased on long-term leases with attractive terms.
I think investors will like how Vitalharvest evolves and could start trading at a premium to its net asset value (NAV) in time.
At 31 December 2019 it had a NAV of $0.95. The current share price is trading at a 16% discount to the NAV.
Rural Funds Group (ASX: RFF) has shown how an acquisition strategy can work out as long as they are wise purchases at a good price.
Foolish takeaway
I believe each of these shares have a good chance of beating the market over the rest of 2020, particularly there is another COVID-19-related selloff. Vitalharvest looks like it could be a cheap buy, whilst Pushpay and A2 Milk have excellent international growth credentials.
We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
More reading
- Why Xero and these ASX tech shares just hit record highs
- 3 high quality ASX shares I would buy if there were another market crash
- 5 things to watch on the ASX 200 on Thursday
- Why the risks of a market correction for the ASX 200 is rising
- 3 of the best ASX growth shares to buy today
Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended PUSHPAY FPO NZX and RURALFUNDS STAPLED. The Motley Fool Australia owns shares of A2 Milk. 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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