I believe Aristocrat Leisure Limited (ASX: ALL) shares are one of this week’s great investing opportunities. The company provides systems, machinery and platforms for games of chance. It operates in many markets including the US and Asia. In addition, it has been announced it will be included in the S&P/ASX 20 (INDEXASX: XTL) from 22 June. 

For years I associated Aristocrat shares purely with poker machines. Although today their product and service offering now far exceeds that narrow revenue stream. I think Aristocrat shares are a very good buy at the current price, and the following 3 numbers are important for any would-be investor.

Sales growth rates

It is wise to analyse companies over a reasonable period of time, in most cases, this is between 5 – 10 years. Aristocrat has grown the company’s sales approximately 20% per year on average over a 10-year period. This means the company has developed new revenue streams and entered new markets while sustaining high levels of sales growth. It speaks volumes about its market knowledge and trust within the industry and gives me more confidence in Aristocrat shares. 

Return on equity

Return on equity (ROE) is also called return on net assets (RONA) because it is the net income of the company divided by its net assets. In other words, how effectively the company uses its assets to create profits. It is a good all-round indicator of the financial management of the company. 

Aristocrat has averaged an ROE of 28% over 10 years; an outstanding result in my view. In comparison, gigantic miner Rio Tinto Limited (ASX: RIO) is an asset-intensive company. It mines one of the world’s most profitable commodities. Yet Rio has a lower 10-year average ROE of 21.9.

Cash flow growth rate

Cash flow is the ability of a company to generate cash or cash equivalents. In my view, this is the most fundamental capability any company needs to generate value for investors. Free cash flow means a company can reinvest in itself, reduce future debt or return cash to investors via dividends.

Aristocrat has been able to grow its free cash at an average rate of 29.1% per year over 9 years. Understanding this helps to understand the company’s ability to drive the two figures.

Foolish takeaway

I think the coronavirus lockdown has presented investors with a unique chance to buy Aristocrat shares at a low entry price point. Today it is selling at a price-to-earnings ratio (P/E) of 9.9. This is more than 50% lower than its 10-year average P/E of 23. 

With good results in sales, ROE and cash flow, the company appears well managed. In addition, it will be in the ASX 20 on 22 June. I have a sneaking suspicion it is going to have better than expected full-year results due to increased online gambling. 

More reading

• Why the ASX 200 tumbled lower on Monday and 2 shares to buy
• 3 excellent ASX growth shares to invest $3,000 into right now
• 3 ASX shares to buy now with $10,000
• Can this ASX dividend share afford its 11% yield?
• How to turn $20,000 into $275,000 in 10 years with ASX 200 shares

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. 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 I think Aristocrat shares are outstanding value appeared first on Motley Fool Australia.

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There are a number of beaten-down ASX shares in the current market. After the S&P/ASX 200 Index (ASX: XJO) fell 2.2% yesterday, here are a few potential buys at their current prices.

5 beaten-down ASX shares that could be in the buy zone

There are a lot of big-name companies that shed billions in value during the recent bear market.

The Scentre Group (ASX: SCG) share price has slumped 42.6% lower this year. While big falls don’t usually occur without reason, quick declines can be an indication of a share being oversold.

Aussie real estate has a lot of question marks given the current restrictions. Scentre is a retail real estate investment trust (REIT) that has spooked investors in the current market.

The Woodside Petroleum Limited (ASX: WPL) share price has also been hit by the coronavirus pandemic. 

Oil prices fell through the floor as manufacturing and travel demand slumped lower. That’s bad news for Woodside’s earnings but easing restrictions could be good news for ASX oil shares in 2020.

The Woodside share price is down 39.9% in the year-to-date which could mean it’s back in the buy zone if a quick economic rebound is on the cards.

It’s not just retail and oil that have been hit hard. The Aussie banks have also been hit hard by the recent restrictions.

Westpac Banking Corp (ASX: WBC) shares are down 28.3% this year. The economic downturn has the potential to hit bank balance sheets and earnings hard in 2020 and 2021.

It’s a similar story for National Australia Bank Ltd (ASX: NAB) shares. NAB’s value is down 26.5% this year which is underperforming the ASX 200 benchmark index by 12.1%.

Finally, Telstra Corporation Ltd (ASX: TLS) is another blue-chip company that has slumped lower this year. Demand for the Aussie telco’s services has skyrocketed during the pandemic but investors are worried.

That could mean Telstra is a cheap buy right now but there’s definitely risk involved in buying underperforming shares in the current market.

Foolish takeaway

These are just 5 beaten-down ASX shares that could be in the buy zone right now. As always, take your own appetite for risk into account when investing in the share market. 

More reading

• Is the Altium share price the steal of the century?
• 5 things to watch on the ASX 200 on Tuesday
• Why MOAT is my favourite ASX ETF
• Can ASX big banks generate an attractive sustainable dividend yield from FY21?
• ASX 200 falls 2%, ASX travel shares drop heavily

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended 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 Got $3,000? These 5 beaten-down ASX shares are begging to be bought appeared first on Motley Fool Australia.

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If you’re looking to add a few dividend shares to your portfolio, then I think the ones listed below would be worth considering.

Here’s why I think all three would be top options for income investors right now:

Sydney Airport Holdings Pty Ltd (ASX: SYD)

I think Sydney Airport is a dividend share to buy if you can afford to be patient. Times are hard for the airport operator right now, but things will improve once border restrictions lift and domestic travel resumes. Especially given reports of pent up demand for travel in Australia after months of lockdowns and restrictions. I believe this will be enough for the company to pay a 29 cents per share distribution in FY 2021. This represents a forward 4.7% distribution yield based on its last close price.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

Another dividend share to consider buying is the Vanguard Australian Shares High Yield ETF. I think this exchange traded fund is a great option for investors that don’t have enough funds to build a truly diverse portfolio. This is because the fund provides investors with exposure to many of the highest yielding shares on the ASX through just a single investment. This includes the banks, telcos, and mining giants. At present I estimate that its units offer a forward dividend yield of at least 5%.

Wesfarmers Ltd (ASX: WES)

A final dividend share I think would be worth buying is Wesfarmers. I like the conglomerate due to the quality and diversity of its portfolio and management’s long track record of making earnings accretive acquisitions. Overall, I’m confident that Wesfarmers is well-positioned to deliver robust earnings and dividend growth over the next decade. This could lead to solid total returns for investors over the period. For now, I estimate that Wesfarmers’ shares offer investors a forward fully franked ~3.6% dividend yield.

More reading

• ASX 200 falls 2%, ASX travel shares drop heavily
• 2 of the best ASX dividend shares for retirees to buy today
• Got $5,000 spare? Consider Wesfarmers shares and these 2 other ASX companies
• Why ASX, Domain, Tyro, & Wesfarmers shares are dropping lower
• ASX 200 Weekly Wrap: ASX bears take control as market volatility returns

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers 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 Why I would buy Wesfarmers and these ASX dividend shares appeared first on Motley Fool Australia.

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