S&P/ASX 200 Index (ASX: XJO) shares are great place to look for long-term investment opportunities.

Plenty of ASX 200 shares are market leaders in their industry. Owning the largest, best business in an industry can help generate stronger returns for our portfolios.

The best way to generate long-term returns is to invest for the long-term. So, here are three shares I think are opportunities for this year and beyond:

Share 1: REA Group Limited (ASX: REA)

REA Group is the owner of Australia’s most popular real estate portal. The REA Group share price is still down 7% from where it was on 21 February 2020. That’s despite the lower interest rate. 

The ASX 200 share has a strong market position as the clear property leader in Australia. Potential property buyers will go to the site with the most properties for sale. Potential sellers will want to list on the site with the biggest buying audience. It’s a very beneficial loop for REA Group.

There wasn’t much volume of property listings during the worst period of the coronavirus lockdowns. But now there’s more activity. Once jobkeeper ends in September there could be forced sellers, so more properties could come onto the market.

Over the long-term I’m excited by REA Group’s stakes in overseas property sites in regions where the population is much higher than Australia. One property site services the US. 

Share 2: Service Stream Limited (ASX: SSM)

Service Stream is an ASX 200 share that specialises in network infrastructure. It’s involved in the designing, construction, maintenance and operation of networks like telecommunications, electricity, gas, water and ‘new energy’.

The company had been consistently growing its earnings over the past few years before COVID-19. It’s expecting to report another solid result in FY20. Federal, state governments and businesses plan to continue spending on infrastructure over the coming years which should be good for Service Stream. The construction of the new 5G networks should be helpful for earnings too.

Service Stream has also been steadily growing its dividend. The ASX 200 share offers a grossed-up dividend yield of 6.8%. That looks pretty good to me. The Service Stream share price is down 27% since 5 February 2020.

Share 3: Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Patts is my favourite ASX 200 share, so I had to include it. It’s an investment conglomerate that takes long-term stakes in a variety of businesses like Brickworks Limited (ASX: BKW), TPG Telecom Ltd (ASX: TPM) and Bki Investment Co Ltd (ASX: BKI). It’s also invested in unlisted businesses like swimming schools and agriculture.

The investment house itself makes long-term investment decisions, so I think it’s easy to be a long-term investor in Soul Patts.

I like that it’s a conservative investor, and contrarian when there are unloved opportunities. Investing in agriculture during one of Australia’s worst droughts is the sort of brave investing that Soul Patts has done.

I believe Soul Patts has a great chance of outperforming the ASX 200 over the longer-term. The TPG merger is compelling. Brickwork’s expansion into the US is exciting. Soul Patts is about to start investing in regional data centres in Australia.

Foolish takeaway

I think each of these ASX 200 shares have a great future. Service Stream could be the strongest performer over the next 18 months if Australia’s economy keeps rebounding. But Soul Patts would be the share I’d buy today if I wanted a share to hold for many, many years.

More reading

• What is the ASX impact of a fall in house prices?
• 3 great shares to buy now if you’re an ASX 200 investor in your 20s
• Why do I own this ASX 200 share?
• 3 ASX 200 shares to add to your watchlist in 2020
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended REA Group Limited and Service Stream 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.

The post 3 ASX 200 shares I’d buy for 2020 and beyond appeared first on Motley Fool Australia.

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Recently I’ve been looking at how investments in the IPOs of a number of ASX shares have fared.

Today, I thought I would turn my attention to one of the most popular shares on the market at present – Zip Co Ltd (ASX: Z1P).

Zip Co is a fast-growing payments company which competes with Afterpay Ltd (ASX: APT) in the buy now pay later market.

The Zip Co IPO.

It has been almost five years since Zip Co listed on the Australian share market.

Its shares hit the ASX boards in September 2015 after raising $5 million through the issue of 20 million shares at 20 cents per share.

This means that if you had invested $10,000 into its IPO, you have would have received 50,000 shares.

Since then the company has gone from strength to strength thanks to the increasing popularity of buy now pay later with both consumers and retailers globally.

Consumers, particularly those in the millennial and Gen Z demographic, are turning to platforms like Afterpay and Zip Co instead of credit cards. This has led to Zip Co delivering stellar underlying sales growth over the last few years.

This has continued during the pandemic. After smashing expectations in the third quarter, Zip Co’s explosive growth continued in April when it delivered monthly transaction volume of $181.6 million. This was an 86% increase on the prior corresponding period.

The good news is that this is still only scratching at the surface of its overall market opportunity. Especially now it is expanding into the $5 trillion U.S. retail market via the acquisition of QuadPay.

It is largely because of this strong form and acquisition that the Zip Co share price hit a record high of $6.97 this morning.

When its shares hit that level, the 50,000 shares you would have received by investing in its IPO would have been worth a massive $348,500. That certainly is an impressive return in less than five years, right?

More reading

• ASX growth companies including Zip Co cash in on the rise of e-commerce
• My share investing journey during the pandemic
• 3 ASX shares to buy now with $10,000
• Afterpay share price up 7%, ASX 200 edges higher
• Afterpay share price overbought says analyst

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 AFTERPAY T FPO and ZIPCOLTD 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 A $10,000 investment in the Zip Co IPO would be worth $350,000 today appeared first on Motley Fool Australia.

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I don’t know about you but I’m starting to get a feeling in my bones that our febrile ASX is headed for trouble. For me, the market seems to have recovered too quickly and the cynics are starting to become very loud. Moreover, I think real estate is likely to be the bellwether sector. From retail to housing to commercial real estate, the indicators lie somewhere between confusing and concerning. So if there is a fall in commercial property values and residential house prices, how will this impact the ASX?

The retail sector

GPT Group (ASX: GPT) yesterday downgraded the value of its seven directly held retail assets by $476.7 million. This is approximately 8.8% of book value at 31 December 2019. This resulted from an independent valuation. GPT’s Chief Executive Officer Bob Johnston explained the revaluation as resulting from the effects of COVID-19. He held up reduced foot traffic, reduced rental growth, as well as increasing vacancy and abatement rates as contributing factors. 

The recent release of the Australian Bureau of Statistics official retail data for April painted a further bleak picture. The report contained the strongest seasonally adjusted fall ever published from the retail trade survey.

Scentre Group (ASX: SCG) and Vicinity Centres (ASX: VCX) also have high exposure to the same retail headwinds.

The housing sector

The third-quarter update from Commonwealth Bank of Australia (ASX: CBA) forecasts a fall in the Australian house price index, a proxy for house prices, of between 11% to a worst-case scenario of 32%. REA Group Limited (ASX: REA) also reported a 33% slide in residential real estate listings during April.

According to its 2019 portfolio report, Stockland Corporation Ltd (ASX: SGP) has a development pipeline of 76,000 lots of residential real estate. The company estimates this has an end market value of $21.4 billion. In the event of falling house prices, the negative financial impact on this ASX 200 company is inevitable, in my view. 

Of course the impact of falling house prices spreads a lot wider than just ASX listed real estate investment trusts (REITs) and developers. Boral Limited (ASX: BLD), for example, is likely to see the impact of a real estate downturn on its earnings, among its other issues. Furthermore, the major banks will also likely see a reduction in lending, with CBA being the country’s largest mortgage lender.

Commercial real estate

The commercial real estate market is still very uncertain. It remains to be seen what the impacts of the ‘work from home model’ and widespread business closures will be on this sector. GPT Group also has significant exposure in this sector as it has 41% of its funds invested in premium office space. 

Another major participant in the commercial real estate sector is DEXUS Property Group (ASX: DXS). Dexus is a ‘pure play’, Australian office REIT. It has around $15 billion invested in office real estate across central Sydney, Melbourne, Brisbane and Perth.

Foolish takeaway

A real estate downturn is likely to weigh heavily across many sectors on the ASX. However, I believe Vicinity Centres has the balance sheet to withstand this disruption. I also feel that with all major REITs on the ASX underperforming the market since the 23 March trough, they should still see high share price growth once the market stabilises.  If you can withstand the near-term volatility, the Vicinity Centres share price is currently selling at a P/E ratio of 5.42.

More reading

• 3 ASX 200 shares I’d buy for 2020 and beyond
• 3 ASX shares to buy now with $10,000
• CBA share price lower on Slater & Gordon class action news
• Leading brokers name 3 ASX 200 shares to sell today
• Are Aussies still withdrawing cash like crazy?

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA Group Limited and Scentre Group. 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 What is the ASX impact of a fall in house prices? appeared first on Motley Fool Australia.

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