Author: therawinformant

The stock market crash could mean there are more bargain shares now available to buy. Company valuations have fallen drastically across a wide range of sectors. While in some cases they may be deserved due weak financial outlooks, other businesses appear to offer excellent value for money given their financial strength and market position.

As such, now could be the right time to invest money in undervalued stocks. They could deliver impressive returns in the coming years that help you to retire early.

Identifying bargain shares

Of course, determining which companies can be viewed as bargain shares is not an exact science. However, it is likely to mean that the price at which a stock is trading does not fully value its long-term potential. This may be because investors are cautious about company prospects ahead of a possible second market crash. They may demand wider margins of safety to compensate them for an uncertain near-term outlook.

As such, a number of companies with strong balance sheets and robust market positions may be trading at low prices at the present time. Certainly, they could struggle to return to previous record highs in the short run due to political and economic risks. But on a long-term basis, they may prove to be very attractive investments that offer sizeable return potential.

Rising valuations in the coming years

Buying bargain shares may provide long-term growth because of improving company financial performance. For example, company profits are likely to increase as the economic outlook strengthens. This may not appear to be a likely outcome at the present time, given the existence of risks such as COVID-19, Brexit and the US election. However, major fiscal and monetary policy stimulus suggests that an economic recovery that boosts corporate profits is ahead in the coming years.

As well as rising profitability pushing share prices higher, improving investor sentiment could lead to capital growth for investors in the long run. As the financial pressure on businesses subsides and investors become less risk averse, they may accept higher valuations for stocks across the market. This could mean that undervalued stocks become more fully valued, thereby producing capital returns for existing investors.

A relatively attractive opportunity

Bargain shares could present the best means of improving your retirement prospects at the present time. Low interest rates are likely to mean disappointing after-inflation returns from cash and bonds, while high house prices may limit capital return prospects in the property market.

Certainly, a second stock market crash in 2020 cannot be ruled out. However, this risk provides investors with an opportunity to buy high-quality businesses when they are trading at low prices. Over time, they may produce impressive returns that boost your financial situation and help you to retire earlier than planned.

More reading

• How to turn $20k in ASX shares into $1 million in 30 years
• 3 brilliant ASX growth shares to buy
• Beat the rate cuts with these ASX dividend shares
• Is the Redbubble Ltd (ASX: RBL) share price a buy after soaring 30% this week?
• 10 must-buy ASX shares to snap up before it’s too late

Motley Fool contributor Peter Stephens 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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For ASX share investors, turning a small nest egg into more than $1 million seems impossible. When you make that timeline just 30 years, it seems outrageous.

However, it isn’t impossible and the numbers really do make sense. With some disciplined investing, modest contributions along the way and the magic of compounding returns, a $1 million ASX share portfolio could be within reach.

How the numbers work

I’ve whipped up a very quick example to illustrate just how simple the numbers are. This scenario assumes a starting portfolio of $20,000, an annual return of 9.0% and $5,000 in yearly contributions.

This fictional investor would start out with an ASX share portfolio of just $20,000 in year 0 which would climb to $27,250 by the end of year 1. However, the power of compounding returns really kicks in beyond the 20-year mark.

Just by reinvesting these returns and contributing $5,000 per year, our average Aussie investor builds a $1.01 million portfolio within 30 years. That means if they started at the age of 25, they could have built that nest egg by the age of 55.

The best part? That $1 million portfolio only includes $170,000 of invested money with the rest coming from compounding returns.

Setting up an ASX share portfolio

The numbers show that it’s possible to turn $20,000 into over $1 million in the space of 30 years. That was clearly a simplified example with an assumed set return always reinvested back into the portfolio.

But even in a simplified example, we can see that the numbers work. The hard part is how to build out a portfolio to generate that target return.

There are many ways to set up such a portfolio. It could be done through buying (and eventually selling) ASX growth shares or choosing high-yield dividend shares.

If we go with the latter, it’s easy to see how a 9.0% return is possible. Shares like Scentre Group (ASX: SCG), New Hope Corporation Limited (ASX: NHC) and Westpac Banking Corp (ASX: WBC) all have dividend yields around that mark.

Even the historical averages for major share market indices like the S&P/ASX 200 Index (ASX: XJO) are around 9% per annum.

Foolish takeaway

Portfolio construction is not something that happens overnight. It’s worth taking the time to consider long-term investment goals before diving into buying ASX shares.

Shares can be expensive to buy and sell once you factor in taxes and transaction costs. A high-yield ASX share portfolio can help many Aussie set themselves up for retirement with a bit of hard work and a touch of luck.

More reading

• These were the worst performing shares on the ASX 200 last week
• These were the best performing shares on the ASX 200 last week
• ASX 200 falls, Tyro (ASX:TYR) up on merchant deal
• Class action lawsuit a new challenge for Rio Tinto (ASX:RIO) share price
• Why Afterpay’s (ASX:APT) Nick Molnar is embracing the fashion world

Motley Fool contributor Ken Hall 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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If you’re interested in adding some growth shares to your portfolio next week, then you might want to consider the three listed below.

I believe these ASX growth shares could provide market-beating returns for investors over the long term. Here’s why I think they are in the buy zone:

a2 Milk Company Ltd (ASX: A2M)

I think A2 Milk Company is a growth share to buy. The New Zealand-based infant formula and fresh milk company has been growing its earnings at a rapid rate over the last years. This has been driven largely by strong sales in the daigou channel and on mainland China. And while the daigou channel has been impacted in FY 2021 by lockdowns and will weigh on its near term growth, I expect a swift rebound once the crisis passes. After which, I expect further strong growth thanks to its modest market share in China, strong brand, increasing distribution footprint, and potential value accretive acquisitions.

REA Group Limited (ASX: REA)

Another ASX growth share that I would buy is REA Group. I think the owner and operator of the realestate.com.au website is well-placed for growth over the next decade thanks to its dominant ANZ business and its growing international operations. Another positive is its cost cutting during the pandemic. If a portion of these cost reductions can be maintained, then it should be supportive of margin expansion. Especially given the company’s price increase opportunities and new revenue streams.

Zip Co Ltd (ASX: Z1P)

A final ASX growth share to consider buying is this buy now pay later provider. I think it could be a great long term option due to the growing popularity of the payment method, the demise of credit cards, and its global expansion. While there is a fair bit of uncertainty because of PayPal’s entry into the market in the United States, I believe there is plenty of room for multiple players to operate successfully in the $5 trillion market. Pleasingly, business is booming in the United States for Zip’s QuadPay business. Last week it revealed that QuadPay customer numbers had reached 2.2 million at the end of September. This means almost half of its customer base is now in the United States. If it can build on this momentum during the holiday season, it could be a big year for Zip.

More reading

• 10 must-buy ASX shares to snap up before it’s too late
• These were the worst performing shares on the ASX 200 last week
• 3 shares with intelligent fanatics I would invest in today
• Zip (ASX:Z1P) share price slumps 10% this week: is it a buying opportunity? 
• Should you stay invested in an ASX share after a strong run?

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 ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia has recommended REA 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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According to the latest ASX 30 Day Interbank Cash Rate Futures, the market is pricing in a 73% probability of a rate cut to zero by the Reserve Bank next month.

While I’m not sure the central bank will take rates to zero, I do suspect a cut from 0.25% to 0.1% could be coming. If this happens, it is likely to further pressure on the interest rates offered with term deposits and savings accounts.

In light of this, I think income investors would be better sticking with dividend shares for the foreseeable future. But which dividend shares? Two I would buy are:

Bravura Solutions Ltd (ASX: BVS)

The first ASX dividend share that I would buy is Bravura Solutions. It is a leading provider of software products and services to the wealth management and funds administration industries. The key product in its portfolio for me is the Sonata wealth management platform. This has been underpinning its growth over the last few years and looks well-placed to continue doing so thanks to its quality and sizeable addressable market.

Bravura also has a number of other quality products supporting its growth. This includes the Rufus transfer agency solution, the Midwinter financial planning solution, and the recently acquired Delta Financial Systems. All in all, I believe this portfolio of products has put Bravura in a great position to grow its dividend at a strong rate over the 2020s. For now, I estimate that it will pay an 11.5 cents per share dividend in FY 2021. Based on the current Bravura share price, this equates to a 3.45% dividend yield.

National Storage REIT (ASX: NSR)

Another ASX dividend share that I think would be a great option is National Storage. It is one of Australasia’s largest self-storage providers. From its 190+ centres across Australia and New Zealand, National Storage tailors self-storage solutions to residential and commercial customers.

It has been growing at a solid rate over the last decade thanks to a combination of organic and inorganic growth. While trading conditions are tough at present because of the pandemic, I believe its exposure to ecommerce and a potential rebound in the housing market in 2021 will underpin further growth over the medium term. In the meantime, based on the current National Storage share price, I estimate that it offers investors a forward 4.2% dividend yield.

More reading

• 10 must-buy ASX shares to snap up before it’s too late
• These ASX growth shares could be great options in October
• ASX 200 ends higher, Link (ASX:LNK) share price shoots 24% higher
• ASX 200 Weekly Wrap: Budget, US election sparks 5% surge in ASX shares
• Why the Bravura Solutions (ASX:BVS) share price is one to watch today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bravura Solutions 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 Redbubble Ltd (ASX: RBL) share price has delivered Afterpay Ltd (ASX: APT) like returns after soaring more than 1000% from March trough to today’s peak. After an outstanding FY21 first quarter trading update, is it too late to buy the Redbubble share price? 

Record first quarter FY21

Redbubble is in a prime position to leverage the global opportunity presented by the shift to online activity and increasing adoption of e-commerce platforms. It delivered an outstanding FY21 first quarter trading update with Q1 revenue increasing 114% to $175.8 million and an EBIT of $22.1 million compared to a $1.5 million loss in Q1 FY20. 

The company’s products are diverse across T-shirts, accessories, stationery and stickers, artwork, homewares and other apparels. T-shirts and accessories contributed to 56% of its revenues in Q1. The accessories segment experienced more than 500% revenue growth in Q1 year on year, likely to be driven by the increased purchases of face masks.  

North America contributes to more than 70% of the company’s revenue. Other regions such as Europe, the UK and ANZ contributed 12%, 10% and 6% respectively. All major regions delivered triple digit growth excluding the EU.

Moving forward, the company is focused on 4 key initiatives to generate ongoing profitable growth. This includes: 

• Artist acquisition, activation and retention 
• User acquisition and transaction optimisation 
• Customer understanding, loyalty and brand building 
• Further physical product and fulfilment network expansion  

Is the Redbubble share price a buy?

It’s a tough call for the Redbubble share price as it soared more than 1000% since its March lows without taking any breathers. The increasing number of COVID-19 cases in major economies around the world and the upcoming US election could increase the general market volatility in the near term. This could make Redbubble susceptible to sharp sell offs and profit-taking. 

Notwithstanding the risks to the broader market, Redbubble delivered an outstanding Q1 FY21 update and paints a roadmap to profitability. The company maintains a strong balance sheet with $58 million in cash as at 30 June 2020. It is also trades at a cheaper revenue multiple than US-listed competitor, Etsy. 

Foolish Takeaway

I would prefer the Redbubble share price to take a breather and healthy pullback before considering it a buy. However, given the strong Q1 FY21 update, it appears that the share price is likely to stay near record high levels or continue to push higher. If you’re a believer of the Redbubble business, I would pay closer attention to its share price for any buying opportunities. 

More reading

• 10 must-buy ASX shares to snap up before it’s too late
• Why Afterpay’s (ASX:APT) Nick Molnar is embracing the fashion world
• Brokers name 3 ASX shares to buy right now
• Why Beacon Lighting, Medibank, Redbubble, & Tyro shares are racing higher today
• How this fund manager’s 60% UP in the year of COVID-19

Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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 Australian share market is home to thousands of companies for investors to choose from.

Given the large number of options, it can be hard to decide which ones to add to your portfolio.

To help you on your way, I have picked out 10 of the best ASX shares I think you can buy now. They are as follows:

a2 Milk Company Ltd (ASX: A2M)

a2 Milk Company is a leading fresh milk and infant formula company. While FY 2021 looks set to be a rare off-year because of negative impacts from the pandemic, I believe it will bounce back strongly in FY 2022. Looking further ahead, I think it has the opportunity to grow its market share materially in China. This should underpin solid earnings growth over the 2020s.

Altium Limited (ASX: ALU)

Another option for investors is Altium. It is the electronic design software platform provider responsible for the award-winning Altium Designer product. Due to its exposure to the rapidly growing Internet of Things and AI markets, I believe it is well-placed for long term growth.

Afterpay Ltd (ASX: APT)

I think Afterpay would be an ASX share to consider buying with a long term view. Thanks to its international expansion and the increasing popularity of the buy now pay later payment method, I believe Afterpay can continue growing its underlying sales at a rapid rate for the foreseeable future. 

Appen Ltd (ASX: APX)

Appen is a leading developer of high-quality, human-annotated training data for machine learning and artificial intelligence. Given the size of these markets and their rapid growth, I believe Appen is likely to experience a sustained increase in demand over the next few years. This should underpin solid earnings growth over the medium term.

Bravura Solutions Ltd (ASX: BVS)

Bravura Solutions is the financial technology company behind the Sonata wealth management platform. This platform allows financial advisers to connect and engage with clients via computers, tablets, or smartphones. It also has a number of other solutions with large addressable markets.

CSL Limited (ASX: CSL)

Due to the quality of its core plasma business, the growing Seqirus influenza business, and its lucrative R&D pipeline I believe CSL could be a long term market-beater. And while plasma collections are difficult right now and could weigh on costs, I’m optimistic that heightened demand for flu vaccines will offset some of this. All in all, I believe this makes it an ASX share to buy.

Goodman Group (ASX: GMG)

Goodman Group is a commercial and industrial property company which I think would be a great long term option. I’m a big fan of the company due to the strength of its portfolio and its exposure to growth markets such as ecommerce. Goodman’s customers include Alibaba, Amazon, DHL, eBay, and Net a Porter.

Pushpay Holdings Ltd (ASX: PPH)

One of my favourite ASX shares right now is Pushpay. It is a fast-growing donor management and community engagement provider to the church market. Thanks to the quality of its platform, its leadership position, and the shift to a cashless society, I’m confident Pushpay will continue its rapid growth for the foreseeable future.

ResMed Inc. (ASX: RMD)

Another ASX share I’m bullish on is ResMed. It is a sleep treatment focused medical device company which has an enormous market opportunity. Management estimates that upwards of 1 in 7 people are impacted by sleep apnoea. However, the vast majority of these sufferers are undiagnosed. I believe this provides ResMed and its industry-leading products with a significant runway for growth.

Xero Limited (ASX: XRO)

A final option to buy is this cloud-based business and accounting software provider. Over the last few years Xero has evolved from being an accounting platform to a complete small business solution. This has been attracting a growing number of small to medium sized businesses to its platform, underpinning strong revenue growth. I’m confident there is still plenty more to come from Xero. 

More reading

• How to make $50,000 of passive income with ASX dividends
• Where I’d invest $10,000 in ASX shares for growth
• Why Afterpay’s (ASX:APT) Nick Molnar is embracing the fashion world
• 3 outstanding ASX shares to buy with $10,000 right now
• How this fund manager’s 60% UP in the year of COVID-19

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 and recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd., PUSHPAY FPO NZX, and Xero. The Motley Fool Australia owns shares of and has recommended A2 Milk and Bravura Solutions Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen Ltd. The Motley Fool Australia has recommended PUSHPAY FPO NZX and ResMed Inc. 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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Warren Buffett has a long track record of taking advantage of once-in-a-lifetime buying opportunities. He has frequently been a buyer of stocks when other investors are selling. This has allowed him to purchase high-quality businesses when they are trading at discounted prices.

By following his strategy, you could generate relatively high returns in the long run. With investor fears still high after the stock market crash, now could be the right time to build a portfolio of stocks while they trade at attractive prices.

Rare buying opportunities

Warren Buffett’s investing career may have spanned many decades, but he has had relatively few opportunities to buy stocks at extremely cheap prices. That situation usually only occurs when investor sentiment is exceptionally weak, which often coincides with periods of economic uncertainty.

Since those instances are relatively few and far between, investors are unlikely to have a plethora of chances to buy a range of high-quality companies at low prices during their lifetimes. Therefore, it is important to use them to your advantage when they occur. Doing so may enable you to obtain a market-beating return in the long run that makes a positive impact on your financial situation.

Warren Buffett’s long-term focus

Of course, Warren Buffett does not expect to make short-term gains when buying any stock. History shows that it can take many months, or even years, for the stock market to recover from its declines. For example, the most recent global recession (excluding this year) occurred during the global financial crisis. While stock indexes such as the FTSE 100 Index (FTSE: UKX) declined by over 50%, they recovered in the following years to trade at new record highs.

With the stock market having always recovered from its lows, buying during a period of economic weakness has been a sound plan for those investors with long time horizons. As the economic outlook improves, the financial performances of companies does likewise. This encourages investors to take more risks, which supports the recovery and subsequent bull market.

Today’s buying opportunities

The recent stock market crash could mean there are buying opportunities for investors who wish to follow a strategy similar to that used by Warren Buffett. Risks such as the ongoing coronavirus pandemic and political uncertainty in North America and Europe mean that investor sentiment towards a wide range of sectors is weak. This could mean there are a number of high-quality companies trading at low prices that offer long-term growth potential.

Of course, diversifying across sectors and geographies is important in an uncertain economic period. This reduces overall risks, and could improve your long-term return prospects as a result of having exposure to a wider range of growth opportunities. The end result could be a growing portfolio that benefits from having taken advantage of low prices during a weak period for the stock market.

More reading

• How to make $50,000 of passive income with ASX dividends
• Where I’d invest $10,000 in ASX shares for growth
• These were the worst performing shares on the ASX 200 last week
• These were the best performing shares on the ASX 200 last week
• 2 ASX shares I plan to hold til I’m 100

Motley Fool contributor Peter Stephens 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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Earning a passive income of $50,000 a year from the share market is entirely possible for regular investors.

You’ll just need a combination of time and patience.

How can you achieve this?

I think the best way to achieve this is by investing in quality companies that share their profits with shareholders and have strong long term growth potential.

My favourite example of this is CSL Limited (ASX: CSL). Very few people would consider the biotherapeutics giant as a dividend share in the same vein as Telstra Corporation Ltd (ASX: TLS) or Westpac Banking Corp (ASX: WBC). However, if you invested in its IPO back in 1994 you would feel very differently.

As I mentioned here last week, adjusting for a 3-1 stock split in 2007, CSL shares hit the ASX boards 26 years ago for just 76 cents per share.

In FY 2021, the company is forecast to pay shareholders a dividend of $3.04 per share. Based on this forecast dividend payment, if you wanted to earn an income of $50,000 from CSL shares, you need to own approximately 16,450 shares.

If you had invested in its IPO in 1994, it would have cost you just $12,500 to acquire those 16,450 shares.

So there you go, a $12,500 investment is now generating $50,000 of dividends each (and growing).

While CSL’s success is certainly not common, it does happen. Northern Star Resources Ltd (ASX: NST) is another example.

It listed on the ASX for 20 cents in 2004. In FY 2020 it paid shareholders a 27 cents per share dividend. This means a $37,000 investment in 2004 would be yielding $50,000 in dividends this year.

What about the future?

I think that companies like Altium Limited (ASX: ALU), Appen Ltd (ASX: APX), and Kogan.com Ltd (ASX: KGN) could be dividend stars of the future.

Their yields may be minimal at present, but due to their very strong long growth potential, I believe their dividends could grow materially over the 2020s and beyond.

More reading

• 3 shares with intelligent fanatics I would invest in today
• Aussie Broadband (ASX:ABB) share price rockets 122% following IPO
• 3 outstanding ASX shares to buy with $10,000 right now
• Should you stay invested in an ASX share after a strong run?
• 2 safe ASX shares for your retirement portfolio

James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended Kogan.com 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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I think there are always ASX share ideas to buy for growth with $10,000.

It’s true that a number of some of the ASX’s most promising businesses have been going up recently. Two of the ASX shares I’ve covered a lot over the past couple of months – Redbubble Ltd (ASX: RBL) and Citadel Group Ltd (ASX: CGL) have both shot up since the start of September. Though I reckon Redbubble is still one to watch.

There are other ASX shares that I think still look like good long-term buys for growth today:

Pushpay Holdings Ltd (ASX: PPH) – $4,500

Pushpay is one of the ASX shares that I still have high conviction in at this level. The Pushpay share price has gone up 121% over the past six months, but I think the market still hasn’t completely the recognised the longer-term opportunity with Pushpay.

If you don’t know what it does, it facilitates digital giving to clients, namely large and medium US churches. Pushpay thinks the sector is a huge opportunity. Over the long-term it’s aiming for US$1 billion of annual revenue.

Not only does that goal represent a huge revenue growth opportunity, but it’s the scalability of the business that is very attractive to me. In FY20 alone it increased its gross profit margin by 5 percentage points from 60% to 65% and it also managed to increase its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) margin from 17% to 22%. Pushpay expects to at least double its EBITDAF in FY21.

I think that Pushpay can become a much more profitable business. The Pushpay share price is trading at 41x FY21’s estimated earnings. I think the COVID-19 conditions will accelerate the adoption, causing profit in FY22 and beyond to be better than expected.

City Chic Collective Ltd (ASX: CCX) – $3,500

City Chic is a plus-size retailer of clothes, footwear and accessories for woman.

Compared to many other retailing ASX shares, City Chic managed to sell an impressive amount of product online in FY20. Of total sales, 65% were online in FY20. What’s also pleasing about City Chic’s sales is that it is becoming an increasingly global retailer.

In FY20, 42% of its global sales were from the northern hemisphere. This has come about from both organic sales to North America and Europe as well as a few targeted acquisitions by the retailer.

This COVID-19 period is difficult for retailers that don’t have a good online presence. I like City Chic’s tactic of trying to buy distressed competition globally for a discounted price, then turning them into online-only offerings.

At the current City Chic share price it’s trading at 19x FY23’s estimated earnings.

BWX Ltd (ASX: BWX) – $2,000

BWX is a fairly unique ASX share. It manufactures and sells natural beauty products under a number of a brands including Sukin, Mineral Fusion and Andalou Naturals.

In FY20 BWX revealed net revenue growth of 26% to $187.7 million, earnings before interest, tax, depreciation (EBITDA) went up 30% to $27.5 million and statutory net profit grew 59% to $15.2 million.

That was a really good turnaround from a couple of years ago. One of the most pleasing factors from the report was that BWX said it is continuing to gain market share.

The beauty industry is a huge market. As long as BWX remains agile and innovative, I think it has a long growth runway. I like the plan to build a new manufacturing hub in Melbourne which will help it deliver growth for years to come.

In FY21, management are expecting to grow revenue and EBITDA by at least 10%.

Its valuation still looks reasonable when you look at the longer-term. At the current BWX share price, it’s priced at 22x FY23’s estimated earnings.

There are also other ASX shares if you’re looking for growth besides BWX, City Chic and Pushpay.

More reading

• My top 5 ASX growth shares to buy right now
• Top ASX tech shares to buy in October 2020
• 3 hot ASX shares to buy when you’re young
• Where I’d invest $20,000 into ASX shares right now
• 2 exciting ASX payments shares to buy

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia owns shares of and has recommended BWX Limited. The Motley Fool Australia has recommended PUSHPAY FPO NZX. 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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Despite a subdued end to the week, the S&P/ASX 200 Index (ASX: XJO) managed to record another solid weekly gain. The benchmark index climbed 1.2% over the five days to end it at 6,176.8 points.

Unfortunately, not all shares on the index pushed higher with the market. Here’s why these were the worst performers on the ASX 200 last week:

Flight Centre Travel Group Ltd (ASX: FLT)

The Flight Centre share price was the worst performer on the index last week with a 9.1% decline. This appears to have been driven by a broker note out of Credit Suisse. According to the note, the broker has downgraded the travel agency’s shares to a neutral rating with a $15.31 price target. It made the move after pushing back its travel bookings recovery forecast by six months to reflect a recent surge in COVID-19 cases in the northern hemisphere.

Mesoblast limited (ASX: MSB)

The Mesoblast share price was out of form and dropped 7.7% lower over the five days. That was despite there being no news out of the biotech company. However, it is worth noting that short interest has been building. Short sellers have been targeting the company after the US FDA didn’t approve its remestemcel-L application for steroid-refractory acute graft versus host disease (SR-aGVHD). At the last count, 8.9% of its shares were held short.

Webjet Limited (ASX: WEB)

The Webjet share price was a poor performer and dropped 7.2% last week. I suspect that this was driven by a combination of increasing COVID-19 cases in New South Wales and Victoria and a surge in cases in Europe and North America. This, as Credit Suisse suggested above, appears to have pushed back the tourism recovery.

Zip Co Ltd (ASX: Z1P)

The Zip Co share price wasn’t far behind with a 7.1% decline over the period. This was despite the buy now pay later provider releasing a strong first quarter update. Big increases in customer numbers and transaction growth led to Zip reporting record quarterly transaction volume of $943.1 million. This was up 96% on the prior corresponding period. It also led to the company reporting an 88% increase in quarterly revenue to a record of $71.7 million. Judging by the share price decline, some investors may have been expecting even stronger growth.

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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 ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended 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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