As we turn to a new chapter where lockdown measures are being eased and the community slowly returns back to life pre-COVID-19, what are the smartest S&P/ASX 200 Index (ASX: XJO) and All Ordinaries (ASX: XAO) shares to buy?

Here are 3 industries that are positioned to benefit from the easing restrictions. 

1. Telecommunications 

Smaller ASX telecommunications shares such as 5G Networks Ltd (ASX: 5GN) and Uniti Group Ltd (ASX: UWL) are positioned to benefit from increased levels of working from home, online learning and domestic internet consumption that look set to stick around as a lasting result of the pandemic. While they may represent high risk/high reward investments, I believe both companies may be positioned at the right place at the right time. 

In Uniti’s March 2020 quarter business update it highlighted that increased levels of working and learning from home has “strengthened underlying demand for the company’s superfast fibre-to-the-premises services provided by its wholesale and infrastructure business unit.”

For investors interested in high growth companies, I would certainly place 5G Networks and Uniti shares on the watchlist. 

2. Fintech payments 

ASX fintech shares such as Tyro Payments Ltd (ASX: TYR) and EML Payments Ltd (ASX: EML) both depend in large part on physical retail and hospitality consumption, so they will be looking forward to the return to normal trading. 

Tyro provides more than 32,000 customers with EFTPOS terminals, a vast majority of which are SMEs in the retail, hospitality and health sectors. The company has been providing the market with weekly updates regarding its transaction values. On Tuesday, it highlighted that its transaction values for the week ended 5 June (date-on-date for FY20 vs. FY19) increased by 11%. This has been the first positive increase since April. 

Likewise, EML’s gross debt volume dropped 29% in March on the prior corresponding period, reflecting mall closures across the globe. It expects that the gradual reopening of malls in various countries should see an improvement to its trading conditions. 

3. Airlines and travel 

ASX airline and travel shares have seen eye watering rallies despite domestic and international borders still being closed. On Tuesday, Air New Zealand Limited (ASX: AIZ) saw its share price soar 20% after announcing its plan to return to revenue and profitability.

Qantas Airways Limited (ASX: QAN) has announced that it plans on doubling its existing domestic schedule to more than 300 return flights per week by the end of June. Flights would continue to increase in July, with capacity to reach approximately 40% by month end.

Increasing domestic flights will be positive for the likes of travel agencies including Webjet Limited (ASX: WEB), Corporate Travel Management Ltd (ASX: CTD) and Flight Centre Travel Group Ltd (ASX: FLT).

Foolish takeaway

I believe investors should pivot their investment decisions to ASX shares in sectors that are expecting to benefit from pent-up consumer demand, post-COVID-19. 

More reading

• ASX 200 jumps 2.4%, unloved shares keep rising
• Fund managers have been buying these ASX shares
• Why the Air New Zealand share price is up 17% today
• Flight Centre share price and other ASX 200 travel shares look set to continue rising
• Is the Webjet share price a cheap buy today?

Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Emerchants Limited and Tyro Payments. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Webjet Ltd. The Motley Fool Australia has recommended Emerchants Limited and Flight Centre Travel Group 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.

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The ELMO Software Ltd (ASX: ELO) share price will be on watch this morning after the company released a business update subsequent to the close of trade yesterday.

ELMO is a cloud-based provider of human capital management software, primarily in Australia and New Zealand. Its integrated product suite covers the entire gamut of an employee’s lifecycle, such as recruiting, onboarding, rostering, payroll, and performance management.

What did ELMO announce?

After the market closed yesterday, ELMO released a trading update in which it provided updated FY20 guidance.

Highlights include the reinstatement of annual recurring revenue guidance to between $55 million and $57 million, and upgraded earnings before interest, tax, depreciation and amortisation (EBITDA) guidance. 

FY20 EBITDA guidance has now been set to between negative $2.5 million and negative $4.5 million. This is up from the previously guided range of negative $4 million to negative $6 million.

Meanwhile, revenue guidance remains unchanged at between $50 million and $52 million.

Along with the updated guidance, ELMO revealed it remains well-capitalised with a cash balance of $140.3 million and no debt as of 31 May 2020. The company’s cash reserves have been boosted by a recently completed $72.8 million capital raising. These funds will be used to support organic growth initiatives and acquisition opportunities.

In terms of operations, ELMO noted that staff have been working remotely since 23 March. As such, its operations have continued without disruption. In line with the easing of lockdown restrictions, the company has commenced the re-opening of offices in Australia and New Zealand.

With a shored up balance sheet, ELMO believes it is well-positioned to take advantage of the current market conditions. Widespread remote-based working has created tailwinds for cloud-based software adoption, and there are increased acquisition opportunities in the ANZ region and the UK. 

More reading

• ELMO Software and 2 other ASX growth companies see businesses adapt to a “new normal”
• 3 small cap ASX tech shares that could be stars of the future
• 2 exciting small cap ASX shares that could have big futures
• 5 exciting small cap ASX shares to watch in June
• Are these exciting small cap ASX tech shares the next Afterpay?

Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Elmo Software. The Motley Fool Australia has recommended Elmo Software. 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 set to tumble this morning but there’s a group of ASX stocks that could buck the downtrend.

The Brent crude oil price staged a late turnaround last night after Libya’s ceased production from its top oil field, according to Bloomberg.

The Brent price jumped 1% to US$41.18 a barrel after falling below US$40 a barrel earlier in the trading session.

Why ASX energy stocks can outperform

This could set the Santos Ltd (ASX: STO) share price, Woodside Petroleum Limited (ASX: WPL) share price and Oil Search Limited (ASX: OSH) share price on a positive footing.

If so, the sector will stand in contrast to the expected broad-based weakness on the ASX as US and European share markets fell overnight.

The weakness stems from concerns that risk assets are overbought with investor optimism running ahead of the COVID-19 reality.

What’s supporting the oil price

But it isn’t only the shutdown of Libya’s main oil field that’s supporting crude. Demand for gasoline is also rising as some major US cities, such as New Jersey end their lockdowns.

The latest data from the Energy Information Administration showed gasoline consumption increased for a second week, reported Bloomberg.

However, other crude products such as diesel and jet fuel declined with the former down 20% and the latter crashing 80% from this time last year.

Diesel rains on gasoline’s parade

No surprises as diesel is tied to industrial production, which is still scraping the floor due to the coronavirus shutdown.

Meanwhile, airlines are still largely grounded and are likely to stay that way for a long while. This is why refineries are switching to producing more diesel.

But some experts believe that low diesel prices will cap any rally in gasoline because refineries cannot limit the production of diesel without negatively impacting on gasoline output.

Oil headwinds aren’t abating

Further, the expended supply curbs by Saudi Arabia is expected to end this month, and that means rising inventories of crude is likely to overwhelm any increase in demand from consumers.

The price of crude is also at a level where US shale oil producers can profitably restart pumping again, assuming that oil stabilises around current levels.  

The oil market is walking a tightrope and its easy to see how the unstable Libyan regime can send prices swinging wildly.

If ASX energy stocks don’t find support when the market opens, it will probably be because the outlook for the market remains too difficult to predict.

More reading

• Why you can’t afford not to invest in ASX 200 shares in 2020
• Is the Woodside Petroleum share price cheap today?
• 5 things to watch on the ASX 200 on Wednesday
• Why you should be buying the dip in ASX gold stocks
• Why the CSL share price continues to trail the ASX 200

Motley Fool contributor Brendon Lau 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.

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