Author: therawinformant

When it comes to investing in the ASX, I always prefer to look well into the future. Markets like the S&P/ASX 200 Index (ASX: XJO) already operate based on many forward-looking mechanisms.

But in order to outperform the market over the long-term, you sometimes have to be bolder than the market. This is particularly true when it comes to contemplating how the economy will function in 1, 5 or even 10 years’ time.

So what are the ASX future fortune-making industries?

With this in mind, here are 3 ASX industries I think will be alive and thriving for the foreseeable future and beyond! I think if you invest $3,000 in any of these industries, you have a strong possibility of making a fortune over the next decade.

Healthcare

Healthcare is the very definition of an evergreen industry. Until humanity discovers the elixir of life (not too likely in my view), we’re always going to need medical services and supplies. Furthermore, Australia (along with most of the world’s advanced economies) has an ageing population. This alone should ensure a decades-long tailwind for the healthcare sector.

Luckily, the ASX is full of quality companies that operate in this space. Private hospital operator Ramsay Health Care Limited (ASX: RHC) is one such company. Ramsay has a massive portfolio of well-regarded private hospitals in Australia as well as around the world.

CSL Limited (ASX: CSL) is another consistent winner, as is Cochlear Limited (ASX: COH) and, more recently, Polynovo Ltd (ASX: PNV). Plenty of choices here!

Software-as-a-Service (SaaS)

Software-as-a-Service is a relatively new business concept. This is because it is only enabled by the pervasiveness of the internet and by the cloud infrastructure that now underpins it. But this doesn’t mean it’s not a great place to invest for growth over the coming decade.

Many ASX SaaS companies have already delivered substantial fortunes for their investors on the back of surging share prices over the last few years. Investors have been especially attracted to companies committed to aggressive expansion plans and long-term, strategic outlooks. Altium Limited (ASX: ALU) and Xero Limited (ASX: XRO) are two such examples. Despite the fact both companies’ share prices have rocketed over the past couple of years, I still think this space remains primed for massive growth down the road. I believe this growth is likely to be enjoyed by the ASX’s existing SaaS key players as well as some possible new entrants.

ASX resources

Although this sector is somewhat boring when compared with the first two on my list, I do believe it has the potential to make investors sizeable amounts of money over the coming decade. Whilst some might argue resources is an ‘old-world’ industry, the fact remains that almost all facets of the economy still rely on one resource or another – whether it be steel, copper or aluminium.

And I believe there’s still room for future growth too. The economy of tomorrow is probably going to be less fossil-fuel focused (hopefully) and more reliant on resources used in electronics. Things like silver, lithium and cobalt. Thus, smaller resources players like Galaxy Resources Limited (ASX: GXY) and Pilbara Minerals Ltd (ASX: PLS) could currently be worth investing in for long-term growth potential.

Foolish takeaway

Whilst it’s easy to become obsessed with the coronavirus-led volatility in the market right now, no one can predict what ASX shares will do in the immediate future. I believe, a smarter approach is to focus on the decades ahead and consider investing in ASX industries that are well positioned for long-term, future growth.

More reading

• Down 10% in 2 months. Are Coles shares a buy today?
• Why this ASX 200 stock could surge higher tomorrow
• Do the Altium and Xero share prices still represent good long-term buys?
• Can we value ASX shares with P/E ratios in 2020?
• Why this ASX funeral share is well positioned for future growth

Sebastian Bowen owns shares of Ramsay Health Care Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd., CSL Ltd., and Xero. The Motley Fool Australia owns shares of Altium. The Motley Fool Australia has recommended Cochlear Ltd. and Ramsay Health Care 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 Coles Group Ltd (ASX: COL) share price is down around 10% over the past two months.

Coles shares are today trading at $15.23 at the time of writing. Seeing as Coles shares were over $17 back in March, is this a buying opportunity for this ASX consumer staples giant?

Why are Coles shares falling?

Since mid-March, the broader S&P/ASX 200 Index (ASX: XJO) has surged over 22% in value. In this period, Coles’ share price has gone backwards. So what’s going on?

Well, Coles shares were one of the few stocks that investors were flocking to during March. Investors were evidently drawn to the company’s defensive qualities and were responding to the panic buying of essentials we saw across the country at the time.

Today, the situation is remarkably different.

The initial bump in revenue Coles experienced during the first quarter of 2020 has likely evaporated. We know this because just today, the Australian Bureau of Statistics released its April retail data, which found food retail spending fell by 17.1% in April, compared with March.

Meanwhile, most of the additional spending Coles has had to implement recently on safety equipment and extra store sanitisation looks like it’s here to stay for at least the remainder of 2020. Coles also employed a massive number of new staff over the last few months, which is another cost the company has to absorb.

Are Coles shares a buy today?

Coles shares certainly look a lot more attractive than they did two months ago, but I’m still not convinced they’re a screaming bargain on today’s prices. This is a company that I don’t think will see significant growth over the next few years. Its ‘Smarter Selling’ cost-cutting program has also had a major wrench thrown into it by the coronavirus.

In saying that, dividend income is hard to find on the ASX these days and so I think Coles shares have a lot of merit from an income investing perspective. On current prices, Coles shares are offering a trailing dividend yield of 2.76%, or 3.94% grossed-up with full franking.

That’s a lot better than a term deposit or a non-existent dividend from Westpac Banking Corp (ASX: WBC).

Foolish Takeaway

Coles is a good business with strong fundamentals and many attractive defensive qualities, which it certainly showed off during the market panic we saw in March with aplomb. I wouldn’t buy this company for its future growth prospects, but I think Coles shares remain a sound choice for reliable ASX dividend income today.

More reading

• $3,000 invested in these 3 ASX industries could make you a fortune in the future
• Aussie retail numbers paint a gloomy ASX picture
• The Bubs share price is up 20% in May, will it catch up to the A2 Milk share price?
• Why this ASX 200 stock could surge higher tomorrow
• Can we value ASX shares with P/E ratios in 2020?

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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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Is the Webjet Limited (ASX: WEB) share price a buy?

Just over a week ago I looked at whether the Webjet share price was a buy. I concluded it seemed cheap if travel can return sooner rather than later. Since then it’s gone up about 12% in a week – that’s a quick return if you bought at the time!

I wasn’t expecting it to make such a quick double digit return. So I thought I’d revisit my thinking on the Webjet share price. Investment thoughts can change if something goes up or down over 10% in such a short time.

Why I was feeling bullish 

The company raised around $350 million in a capital raising which is being used to strengthen the balance sheet because of the travel restrictions that are in place globally due to the coronavirus. I think this puts the business in a much stronger position compared to a lot of its travel peers – Webjet should be able to easily survive to December 2020 even if strict restrictions remained. That alone was a boost to the Webjet share price. 

But the restrictions are lifting much earlier than expected. I believe international travel is nowhere close to coming back yet though. But the possibility of domestic travel has been brought forward with some other restrictions ending. The NSW government has said that people will be able to visit regional NSW. I think that’s very promising that domestic bookings could start again sooner rather than later.

I think Webjet also has an advantage in that it delivers its service online. That means it has a lower cost base and customers will still be able to access all of the options, it’s not like a closed physical travel agent shop.

Is the Webjet share price a buy now?

After a quick 12% rise from around a week ago I think I’d be inclined to take profits off the table today. The share market has returned an average of 10% a year over the decades, so making 12% in a week is an attractive return and I’m cautious about investors expecting too much from Webjet this year.

Hopefully it can keep rising and I still believe it could be a solid performer over the next 5 to 10 years, but taking profits off the table today wouldn’t be a terrible decision.

More reading

• Can we value ASX shares with P/E ratios in 2020?
• Why James Hardie, Oil Search, Webjet, & Westpac shares are jumping higher
• 3 industries that may never recover from COVID-19
• Why a buy and hold strategy for ASX shares is best
• Why Qantas, Webjet and these ASX travel shares are dropping lower today

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended 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.

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We all knew the Australian retail numbers for April 2020 would be bad. The coronavirus pandemic and subsequent economic shutdowns have literally closed thousands of shops and businesses around the country since March. For a few weeks, many Australians weren’t allowed to step foot into shopping centres.

But it’s always sobering when reality replaces the hypothetical and that’s just what has happened today.

This morning, the Australian Bureau of Statistics (ABS) released its official retail data for the month of April and the numbers weren’t too good.

A gloomy month for Aussie retail

According to the ABS, Australian retail turnover fell 17.9% in April 2020. That number is seasonally adjusted too and it’s the largest fall ever recorded by the ABS. Compared with April 2019, Aussie retail turnover was down 9.4%.

The ABS reports that every single industry reported falls, with food retailing; cafés and restaurants and clothing, footwear and personal accessories sectors hit the hardest. Turnover in these sectors was “around half the level of April 2019.”

Particularly of note was food retailing, which fell 17.1% in April following a strong rise in March. It appears consumers have stopped buying/hoarding record amounts of non-perishable food and household essentials that we saw in March when the extent of the coronavirus became apparent.

What do these numbers mean for ASX shares?

Unfortunately, there’s not a lot of good news for ASX investors in these numbers. Of course, most of us were expecting extremely dire numbers for April, but seeing them in the flesh isn’t a fun exercise, especially for anyone holding shares of retail-exposed companies, especially for shopping centre REITs like Scentre Group (ASX: SCG).

It’s not good news for shareholders of Coles Group Ltd (ASX: COL) or Woolworths Group Ltd (ASX: WOW), either. It shows that the panic buying that we saw in March was a ‘flash in the pan’ kind of scenario, and I don’t expect the new trends that we see in April to reverse for Coles and Woolies for the rest of the year.

I would suggest keeping on eye on the figures for May and June (once they’re released) for a clearer indication of what the future holds. April’s numbers were always going to be bad because consumers legally had to stay at home unless buying essentials. But it’s the figures that detail how Australians are shopping when we actually have the freedom of doing so that will really paint the picture of what the rest of 2020 has in store.

More reading

• Down 10% in 2 months. Are Coles shares a buy today?
• The Bubs share price is up 20% in May, will it catch up to the A2 Milk share price?
• 3 ASX shares that will have strong dividends in 2020
• 3 ASX 200 blue chip shares I would buy today
• 2 ASX 50 shares for retirees to buy right now

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths 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.

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According to research by Fidelity, as of the end of 2019, the S&P/ASX 200 Index (ASX: XJO) had generated an average total return of 9.2% per annum over the last three decades.

While the current decade has got off to a bad start, I expect the share market to rebound and generate a similarly strong return over the next 10 years.

But you don’t have to settle for the market return. I believe there are a large number of quality shares on the local share market with the potential to outperform the market.

As a result, if you are able to make regular investments into their shares over the period, you could end up with a small fortune.

For example, a $2,500 annual investment for 10 years into a share earning a total return of 11.7% per annum (2.5% greater than the market average) would grow into just under $50,000.

Of course, the more you invest, the greater the potential return. If you can afford to invest $3,000 each year, your investments would be nearing $60,000 after 10 years. If you can put $10,000 in, you’re looking at almost $200,000.

But which shares could beat the market over the next 10 years? Three that I think have the potential to be market beaters are listed below:

Appen Ltd (ASX: APX)

The first option to consider is Appen. As a leading developer of high-quality, human annotated datasets, its looks exceptionally well-positioned to benefit from the machine learning and artificial intelligence (AI) boom. Especially given its leadership position in the industry and its relationships with some of the world’s biggest tech companies. I expect demand to grow over the next decade and underpin strong earnings growth.

Kogan.com Ltd (ASX: KGN)

Another option to consider is Kogan. It is a growing ecommerce company which looks well-positioned for long term growth thanks to the shift to online shopping. At present approximately 10% of all retail spending is made online. I expect this to increase over the next decade and for Kogan to continue growing its market share and ultimately its earnings.

ResMed Inc. (ASX: RMD)

Finally, I think this sleep treatment-focused medical device company’s shares could be market-beaters over the next decade. This is due to its industry-leading products and massive market opportunity. Management estimates that there are 1 billion people impacted by sleep apnoea worldwide. But with only ~20% of these sufferers being diagnosed, it should have a long runway for growth. 

More reading

• Why AP Eagers, Lendlease, Pushpay, & ResMed shares are sinking lower
• 3 ASX 200 healthcare shares I’d buy today
• How you can get very rich with ASX 200 shares
• 2 millionaire-maker ASX internet growth shares
• Where to invest $500 in ASX shares right now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended 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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The Bubs Australia Ltd (ASX: BUB) share price has outperformed the A2 Milk Company Ltd (ASX: A2M) in May by soaring more than 20%. 

Much of Bubs recent share price success can be attributed to its announcement of a new major supply agreement with Coles Group Ltd (ASX: COL) and other domestic retailers. This agreement means Bubs Organic Grass Fed Infant Formula will be on the shelves of more than 480 Coles supermarkets from June 2020, complementing existing products in its Goat Milk Infant formula and Organic Toddler snacks. Other retailers to join Coles in selling Bubs products in-store include Baby Bunting Group Ltd (ASX: BBN) and Woolworths Group Ltd (ASX: WOW). 

Bubs have also expanded their product range to include an organic cow milk formula which will see them cater to a market larger than goat’s milk by moving into the cow’s milk segment which accounts for over 90% of the Australian formula market. 

Bubs half-year result 

The Bubs share price showed it wasn’t impressed with the company’s half-year results released in February. The results may have missed expectations, or the timing of the report may have coincided with the initial outbreak of the coronavirus epidemic and consequent market sell-off. 

The company outlined a 39% increase in net revenue and a significant 24% increase in its gross margins. Its EBITDA loss slightly worsened due to a 269% increase in marketing and promotional costs to support its domestic presence and building brand awareness in China. This is reminiscent of A2 Milk’s significant increase and investment in marketing in its FY19 full-year report. In its 1H20 report, it commented that the increased levels of investment in marketing and capability development translated into accelerated growth in its China label business. 

A strong driver of its growth has been the sales of Bubs’ Goat Infant Formula which grew 77% on the prior corresponding period. Other revenue streams showed moderate growth with its Organic Baby Food growing 23% and Adult Goat Milk Powder increasing 30%. Its fresh milk and yoghurt products looked to struggle the most, falling 49%. 

Foolish takeaway 

Bubs are securing the right partnerships and making worthwhile investments to strengthen its brand, however, while it is making all the right moves, given the fact that it is not yet a cash-generating business I wouldn’t consider it a ‘safe’ investment. All things considered, though, down the track Bubs could prove a worthy buy for the medium to long term. 

More reading

• 2 ASX shares in the firing line of trade tensions with China
• 3 stellar ASX growth shares to buy right now
• 3 ASX shares that will have strong dividends in 2020
• 3 ASX 200 blue chip shares I would buy today
• 2 ASX 50 shares for retirees to buy right now

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 BUBS AUST FPO. The Motley Fool Australia owns shares of A2 Milk, COLESGROUP DEF SET, and Woolworths Limited. The Motley Fool Australia has recommended BUBS AUST 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 Aristocrat Leisure Limited (ASX: ALL) share price is rallying ahead of its first half profit results tomorrow.

Investors are anticipating good news as shares in the gaming machine maker jumped 1.5% to $27.21 during lunch time trade when the S&P/ASX 200 Index (Index:^AXJO) inched up 0.4%.

But there’s still room to climb as I believe management will unveil results that will justify Aristocrat being a $30+ stock.

Growing despite COVID-19

Brokers like Citigroup believe it can deliver double digit earnings growth despite the COVID-19 shutdown that forced casinos like Crown Resorts Ltd (ASX: CWN) and Star Entertainment Group Ltd (ASX: SGR) to close.

“We expect strong growth in Digital and Americas in AUD terms to offset declines in ANZ and International Class III,” said Citigroup.

“No dividend will be declared to shore up liquidity; and the focus will be on the outlook for 2H20e given the gradual reopening of casinos underway in the US and the expected reopening of Australian customers in 4Q20e.”

Focus on digital, not dividend

I doubt the market will be disappointed if Aristocrat canned its interim dividend. It’s a similar case with building materials supplier James Hardie Industries plc (ASX: JHX) where the main reason investors buy these stocks is for their growth potential and not skinny dividends.

The thing to watch closely when Aristocrat releases its results is growth in its digital (social gaming) division. This is likely to be the group’s main growth engine going forward.

Mobile gaming apps were gaining strong traction before coronavirus struck. Measures undertaken around the world to keep people at home to prevent the spread of the disease meant even more are likely to embrace the distraction.

Brightening outlook

Having said that, its traditional land-based business (poker machines) could also have turned a corner as its key US market is easing restrictions.

There is a real danger of a second wave of infections in the US. But looking at attitudes towards the virus in that country, I am not sure if even that will be enough to force states into draconian lockdowns.

Key picks in industrials sector

While there are potential challenges waiting in the wings for Aristocrat, the risk-reward equation justifies the stock as a buy.

Aristocrat is one of my key holdings in the industrials sector, along with James Hardie and glove maker Ansell Limited (ASX: ANN).

More reading

• Can we value ASX shares with P/E ratios in 2020?
• Why this ASX funeral share is well positioned for future growth
• ASX 200 down 0.2%: Big four banks lower and TPG announces demerger plans
• Positive signs for Australia’s jobs market as ABS data points to a recovery
• Is the Newcrest Mining share price in the buy zone?

Motley Fool contributor BrenLau owns shares of Aristocrat Leisure Ltd., Ansell Limited and James Hardie Industries plc. The Motley Fool Australia has recommended Ansell 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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Are you a fan of small cap tech shares? If you are then you’re in luck because there are a good number trading on the ASX right now which I believe have a lot of potential.

Three which I feel would be worth keeping a close eye on are listed below. Here’s why I think they could be stars of the future:

Audinate Group Limited (ASX: AD8)

The first small cap to watch is Audinate. It is a digital audio-visual networking technologies provider that has been growing at a very strong rate in recent years. This has been driven by the increasing demand for its innovative Dante product. This award-winning audio over IP networking solution is being used widely across the professional live sound, commercial installation, broadcast, and recording industries globally. The company also has its eyes on the lucrative Audio & Video (AV) market. If it can dominate this market as well, it could be destined for big things.

ELMO Software Ltd (ASX: ELO)

ELMO is a cloud-based human resources and payroll software company. It provides users with a unified platform that streamlines processes such as recruitment, on-boarding, learning, and payroll. Its platform has been growing in popularity over the last few years thanks to increasing demand and its high retention rate. This has led to ELMO growing its recurring revenues and earnings at a very strong rate. The good news is that it still has a massive addressable opportunity in the ANZ market and the potential to expand globally.

Whispir (ASX: WSP)

A final small cap to watch is Whispir. It is a software-as-a-service communications workflow platform provider. This platform allows companies to deliver actionable two-way interactions at scale using automated multi-channel communication workflows. This helps make operations more efficient and can cut down the number of service desk support calls. I feel a testament to the quality of its offering is it blue chip customer base which includes AGL Energy Limited (ASX: AGL), Foxtel, and Disney.

More reading

• These small cap ASX shares could be stars of the future
• Could these small cap ASX shares be the next Afterpay?
• Why Altium, ELMO, Suncorp, & Webjet shares are sinking lower
• 3 ASX tech shares to buy now for long-term returns
• Leading brokers name 3 ASX shares to buy today

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 Elmo Software. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Whispir Ltd. The Motley Fool Australia owns shares of and has recommended AUDINATEGL FPO. The Motley Fool Australia has recommended Elmo Software and Whispir 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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