The Xero Limited (ASX: XRO) share price has been a strong performer in 2020 despite the market volatility.

In fact, on Thursday the cloud-based business and accounting platform provider’s shares raced to a record high of $91.49.

When Xero’s shares hit that level, it stretched their year to date gain to just under 15%. This compares very favourably to a 10.5% decline by the S&P/ASX 200 Index (ASX: XJO) over the same period.

Why is the Xero share price at a record high?

Investors have been driving the Xero share price higher this year after it continued to deliver strong growth across key metrics.

In FY 2020 Xero delivered a 30% increase in operating revenue to NZ$718.2 million and a 29% jump in annualised monthly recurring revenue to NZ$820.6 million.

This was driven by increases in both its average revenue per user and total subscribers. The latter rose 26% to 2.285 million subscribers thanks to the addition of 467,000 net subscribers during the 12 months.

And due to the benefits of scale, Xero’s earnings grew even quicker. The company reported a 52% increase in earnings before interest, tax, depreciation, and amortisation to NZ$139.17 million.

It also recorded its first net profit. Xero’s profit after tax came in at NZ$3.34 million for the year, compared to a loss of NZ$27.14 million a year earlier.

Is it too late to invest?

While Xero’s shares certainly aren’t cheap, I would still be a buyer of them if you planned to invest with a long term view.

At the end of the year Xero had 2.285 million subscribers. Although this is a large number, it is still on a fraction of its addressable market. Management estimates that less than 20% of the English-speaking addressable cloud accounting market has adopted cloud platforms.

This means there is still a material market opportunity for the company over the next decade. And given the quality of its product, I expect it to capture a growing slice of this market over the long term and drive strong earnings growth.

More reading

• 3 stellar ASX growth shares I would buy right now
• Are Megaport shares the ones to buy and hold beyond 2030?
• 3 large cap shares beating the ASX 200 this year
• Should the Xero share price have a P/E ratio of 4,000?
• 2 cheap ASX 200 shares to buy right now

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 Xero. 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.

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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. 

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.

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The S&P/ASX 200 Index (Index:^AXJO) is poised to open weaker this morning. But the pullback might be an opportune time to buy National Australia Bank Ltd. (ASX: NAB) and Westpac Banking Corp (ASX: WBC).

The broader market weakness is no thanks to weak leads from Wall Street on worries that stocks have run too far ahead of fundamentals.

But there’s value to be found in the NAB share price and Westpac share price, at least that’s according to UBS.

Last few places on the ASX to find value

The broker just upgraded these stocks to “buy” from “neutral” as the sector is one of the last few places you can find value.

It isn’t only the COVID-19 pandemic that’s been weighing on bank shares. Competition from fintechs, pressure from the banking regulator to increase their cash buffers, the fallout from the Haynes Royal Commission and tumbling interest rates are just some of the other punishing headwinds.

Shares in the big banks, excluding Commonwealth Bank of Australia (ASX: CBA), are trading at their lowest multiples in 27 years, noted UBS.

Light at the end of the tunnel

“However, with the economic outlook less bleak than anticipated even a few weeks ago,” said the broker.

“The likelihood of a further deterioration in asset quality and RWA [risk weighted asset] inflation driving additional highly dilutive capital raisings has reduced materially.

“The lower reliance on JobKeeper (wage subsidies) than government expectations also provides some flexibility for further targeted stimulus as current packages, loan deferrals and rental relief expires in October.”

Banks will recover ahead of the economy

While we the coronavirus will continue to have an impact on the economy until a vaccine is found, the broker pointed out that the market factor in the recovery before then, barring a sharp deterioration in the economy.

It’s also worth noting that the damage from the COVID-19 crisis hasn’t been as bad as what many experts (and the government) were expecting. Despite this, the government is adding to its record stimulus to get our economy back on its feet.

ASX banks could re-rate

What this means is that the threat of ballooning bad debt shouldn’t be as bad as forecast, and that will be a trigger for a re-rating in the sector.

“Although sustained low rates will weigh on NIM [net interest margin] and credit growth will be anaemic, a sector ROE of ~9% looks possible,” said UBS.

“At these levels, the banks could re-rate to around book value, and with an 80% payout ratio offer ~7.2% dividend yield.”

More reading

• Is the Westpac share price too high?
• Is today’s BHP, NAB or Afterpay share price a good investment?
• 5 things to watch on the ASX 200 on Friday
• ASX 200 rises 0.8%, travel shares fly higher
• This ASX 200 stock is well placed to beat earnings expectations

Motley Fool contributor Brendon Lau owns shares of Commonwealth Bank of Australia, National Australia Bank Limited, and Westpac Banking. 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 Why today might be a good day to buy NAB and Westpac shares appeared first on Motley Fool Australia.

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