One of the simplest and potentially most effective ways of building your wealth is to invest with a long term view.

This is because buying and holding shares lets investors benefit fully from the power of compounding.

But which shares should you buy? I believe the three ASX shares listed below could generate strong returns for investors over the long term. Here’s why I would buy them today:

Altium Limited (ASX: ALU)

The first buy and hold option to look at is Altium. It is a printed circuit board (PCB) design software provider which I believe has significant potential. This is due to the growing demand for sophisticated electronic design automation software such as Altium Designer because of the Internet of Things boom. This year management is aiming to reach 50,000 software subscriptions. It then wants to double this to 100,000 by FY 2025. Given the quality of its product and favourable industry tailwinds, I believe Altium will achieve this.

Bubs Australia Ltd (ASX: BUB)

Another buy and hold option to consider is Bubs. It is a goat’s milk-focused infant formula and baby food company which has been growing at a strong rate over the last few years. Pleasingly, I believe this strong form can continue for some time to come. Especially given increasing demand in China and its supply agreements with Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) supermarkets. Another positive is that it has recently expanded its offering into cow’s milk infant formula. Given the size of this side of the infant formula market, it could be a big contributor to its future growth.

Nearmap Ltd (ASX: NEA)

A final buy and hold option to consider is Nearmap. It is a leading aerial imagery technology and location data company that allows businesses to instantly access high resolution aerial imagery and integrated geospatial tools. Last month Nearmap revealed that it is on course to achieve annualised contract value of $103 million to $107 million in FY 2020. This is still only a fraction of the global aerial imagery market, which is estimated to be worth US$10.1 billion. I believe its quality offering, which is being boosted by the release of an AI product, puts the company in a position to capture a growing slice of this market over the next decade.

More reading

• ASX shares I’d buy if this decline is a second COVID-19 crash
• Tech shares! Should we even invest in anything else?
• Have $1,000? You should pick one of these 8 ASX shares
• How the A2 Milk and Bubs share prices have performed during the pandemic
• 2 ASX shares I’d buy if the ASX crashes again

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 Altium, BUBS AUST FPO, and Nearmap Ltd. The Motley Fool Australia has recommended BUBS AUST FPO and Nearmap Ltd. 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 S&P/ASX 200 Index (Index:^AXJO) is clawing its way back from the abyss, but any bounce could be an opportunity to sell shares that have just been hit by broker downgrades.

The top 200 benchmark is trading 1.7% lower in after lunch trade but that’s only around half of what it lost this morning.

The sharp sell-off was triggered by fears of a second wave of COVID-19 infections in the US and I think any pullback is an opportunity to buy as I don’t see the market returning to its March bear market low.

But not all popular stocks should be on your watchlist, not according to some leading brokers who just downgraded these two ASX shares to “sell”.

Paying more than full price

One that got its recommendation cut by Credit Suisse is JB Hi-Fi Limited (ASX: JBH). The broker lowered its rating on the electrical and white goods retailer to “underperform” from “neutral” today even after management’s positive trading update.

But Credit Suisse is urging investors to take the opportunity to take profit after JB Hi-Fi sales benefited from stay and work at home restrictions to curtail the pandemic.

While the retailer is seen as a quality stock given managements propensity to under promise and overdeliver, the broker pointed out that it’s trading on a significant premium to peers like Harvey Norman Holdings Limited (ASX: HVN) and its own historical multiples.

The broker also believes that FY21 earnings are “very likely” to be lower despite the tailwinds and it sees its sell recommendation on the stock as a relatively low risk call.

Credit Suisse’s 12-month price target on the stock is $34.52 a share.

Wings clipped

Meanwhile the Webjet Limited (ASX: WEB) share price crashed 6.8% ahead of the close to $3.90 after Morgan Stanley downgraded the stock to “underweight” from “equal weight”.

The broker made the cut as it pointed out six reasons why it preferred Corporate Travel Management Ltd (ASX: CTD) over the online travel agent.

For one, Corporate Travel looks to be better priced than Webjet based on market cap and enterprise value.

The corporate travel group’s cash burn is also lower than Webjet and its exposure to the collapse Virgin Australia airline is smaller.

Further, CTD’s earnings are expected to recovery quicker than Webjet’s as more of its bookings are for domestic travel.

Morgan Stanley also prefers CTD for its direct relationship with its business customers while Webjet is used more as a price comparison service.

Lastly, the broker thinks CTD is better placed to acquire a bargain. The group has access to capital and a long list of potential takeover targets.

Morgan Stanley’s price target on Webjet is $3.30 a share.

More reading

• What would I rather buy today: TPG or Telstra shares?
• Brokers name 3 ASX shares to buy right now
• Tech shares! Should we even invest in anything else?
• Keep a watch on these 3 ASX trends next week
• ASX 200 down 2.2%: Westpac tumbles, TPG reveals special dividend plans

Motley Fool contributor Brendon Lau owns shares of Webjet Ltd. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Webjet Ltd. 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 The latest ASX shares to be hit by broker downgrades to “sell” today appeared first on Motley Fool Australia.

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The TPG Telecom Ltd (ASX: TPM) share price has been an extraordinary performer in 2020 so far. TPG shares are up more than 23% year to date, compared with the S&P/ASX 200 Index (ASX: XJO) which is still down around 13% from where it started the year.

In contrast to TPG, the Telstra Corporation Ltd (ASX: TLS) share price is having a pretty average year. Telstra shares have more or less tracked the ASX 200 and are down around 11.5% year to date.

But despite the disparity in these 2 companies’ fortunes in 2020 so far (not to mention the excitement TPG has been generating of late), I would much rather buy Telstra shares today for a long-term buy.

Why TPG shares are outperforming in 2020

TPG shares have been benefiting from a perfect storm in their favour. Firstly, the long-proposed merger between TPG and Vodafone has been green-lit by the Federal Courts. This was despite the ACCC attempting to block the marriage on competition grounds.

The two companies are set to become one over the next few months, which will also involve a hefty special dividend and another spin-off of TPG’s Singapore operations.

Investors are liking what they see here, and have subsequently pushed up TPG shares over the last few months.

Why Telstra shares are a better bet

Despite all this exciting news, I’m still betting on Telstra as an investment. TPG is a well-run company with a great CEO and a great brand. However, I still don’t think it has the firepower to really compete with Telstra. Telstra already commands a significant pricing premium on its mobile data products in the current market. It is able to do so (in my view) due to the superiority of its network coverage.

Many people go with Telstra because other providers simply can’t offer the coverage that Telstra can.

Telstra has a very well-known brand which I think is superior to all of its competitors in attracting and keeping customers.

The company also offers more dividend potential that TPG. On current prices, Telstra shares come with a trailing yield of 5.05% (taking into account Telstra’s special nbn dividend payments).

In contrast, TPG shares are only offering a 0.61% trailing yield on current prices. Even if you threw in the prospect of a post-merger special dividend, Telstra is still more attractive to me.

I also expect Telstra to be the market leader in the new 5G technology. Since the Chinese giant Huawei was banned from operating 5G networks in Australia, TPG has fallen behind in the 5G race. Thus, I would still bet on Telstra’s heavy investment and brand power to carry it over the line first against TPG, Optus or any other competitor.

Foolish takeaway

TPG is a great company and one that has been especially lucrative to own in 2020. However, going forward  I think Telstra will make a better investment overall, and that’s why I would rather buy cheap Telstra shares today than TPG shares despite them being near their 52-week highs.

More reading

• The latest ASX shares to be hit by broker downgrades to “sell” today
• Tech shares! Should we even invest in anything else?
• Keep a watch on these 3 ASX trends next week
• ASX 200 down 2.2%: Westpac tumbles, TPG reveals special dividend plans
• Estia Health share price tumbles after being cut from the ASX 200

Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra 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 What would I rather buy today: TPG or Telstra shares? appeared first on Motley Fool Australia.

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