I think that the Vanguard Australian Shares Index ETF (ASX: VAS) share price is a buy.

At the moment the Vanguard Australian Shares Index ETF share price is down around 17.5% from the pre-coronavirus selloff high. That’s still a pretty large decline if you ignore where it was in March 2020. We don’t have a time machine to go back to that price.

All we can decide is whether today is a good time to buy or not to buy the exchange-traded fund (ETF).

Things are certainly looking up compared to a couple of months ago. The infection numbers are very low across the country and not as many people are on jobkeeper as feared.

Perhaps that means that the Australian economy won’t be as bad as expected? Let’s hope so.

In that context, I think it’s good to consider if the Australian share market is worth buying.

Is it time to buy Vanguard Australian Shares Index ETF?

At the moment the ASX banks like Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group (ASX: ANZ) are at low share prices. It’s a large reason why the Vanguard Australian Shares Index ETF share price is down as much as it is.

I’ve always said that I’m not a big fan of investing in banks. So being able to buy the ETF when the banks are a smaller allocation than before is attractive to me. I’d rather get more exposure to shares like CSL Limited (ASX: CSL), Macquarie Group Ltd (ASX: MQG) and Wesfarmers Ltd (ASX: WES).

As time goes on it’s growing shares like A2 Milk Company Ltd (ASX: A2M), Altium Limited (ASX: ALU), Aristocrat Leisure Limited (ASX: ALL), Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) and Amcor Plc (ASX: AMC) that become a bigger part of the ETF.

We can’t decide how much each share makes up of the Vanguard Australian Shares Index ETF, we can just buy the whole ETF at today’s price. In the future the ETF may have shares like CSL, Wesfarmers and Xero Limited (ASX: XRO) at the very top of the holdings.

So, I think it could be a good idea to buy the ETF at a lower price, particularly as the Australian dollar is so strong right now. It means we can buy the earnings of shares that make earnings in US dollars, such as CSL, at a lower price in Australian dollars. I’d happily buy the Vanguard Australian Shares Index ETF today for the long-term.

More reading

• How to become a millionaire by investing in ASX shares
• 3 investing secrets for success with ASX shares
• I don’t normally buy ETFs, but I would buy these 2
• How teenagers can beat the share pros at investing
• How I would build a $100,000 ASX portfolio with ETFs

Tristan Harrison owns shares of Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Amcor Limited and Macquarie Group Limited. The Motley Fool Australia owns shares of A2 Milk, Altium, Wesfarmers Limited, and Xero. 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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The Zip Co Ltd (ASX: Z1P) share price has been a very strong performer again on Wednesday.

In morning trade the payments company jumped a further 30% to a record high of $6.74.

This means the Zip Co share price is now up a massive 81% over the last two trading days.

Why is the Zip Co share price up 81% in two days?

The catalyst for this strong gain was a major announcement by the buy now pay later (BNPL) provider on Tuesday.

That announcement reveals that Zip Co has entered into an agreement to acquire New York-based buy now pay later provider QuadPay. This deal will see the company go head to head with Afterpay Ltd (ASX: APT) in the United States market.

What is QuadPay?

QuadPay is a leading, high growth, instalment provider disrupting the credit card industry. It has a strong focus on innovation and customer centricity.

It has 1.5 million customers and 3,500 merchants on its platform. From these it is currently generating annualised total transaction value of over $900 million and annualised revenue of $70 million.

As with Afterpay, QuadPay splits purchases into four interest free repayments over a period of six weeks.

How is Zip Co funding the deal?

Zip Co intends to fund the deal through the issue of shares. If shareholders vote in favour of the acquisition at an upcoming extraordinary general meeting, the company will issue approximately 119 million Zip Co shares to QuadPay stockholders. This will represent the equivalent of 23.3% of the issued share capital of Zip at completion.

This implies an enterprise value of approximately US$269 million or A$403 million.

That won’t be the only thing shareholders are voting on. To support its expansion into a U.S. retail market estimated to be worth $5 trillion per year, the company intends to raise funds via the issue of convertible notes.

Zip Co has entered into an agreement with CVI Investments, Inc., an affiliate of Susquehanna International, to raise up to $200 million by way of the issue of convertible notes and the exercise of warrants. These convertible notes have an initial conversion price of $5.5328, which was a 47.7% premium to Friday’s close price.

Is it too late to invest?

I think this acquisition is a big positive for Zip Co and the U.S. market could be a key driver of growth for the company in the future.

However, although I’m a big fan of the company, I feel its shares are looking fully valued now after this strong gain. As such, I would class Zip Co as a hold until it starts to demonstrate that it can crack the U.S. market like Afterpay has.

More reading

• Afterpay and these top ASX tech shares are on fire in 2020
• ASX 200 rises 0.3%, Zip rockets higher
• These ASX shares were among the best performers in May, surpassing the ASX 200
• Zip Co share price rockets 44% higher on U.S. expansion news
• The 3 ASX tech stocks that helped this fund manager outperform in May

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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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