Category: Stock Market

Due to the coronavirus pandemic, the S&P/ASX 200 Index (ASX: XJO) has fallen heavily over the last three months.

And while it has rebounded notably from its lows, it is still a long way off the highs it reached in February.

Although this is disappointing for investors, I remain optimistic that the share market will bounce back strongly once the crisis blows over.

In light of this, I think now is the time to look for the shares to buy before the market rebounds. Three that I would buy are listed below:

EML Payments Ltd (ASX: EML)

EML Payments is a payments solutions company with a focus on digital gift cards and pre-paid cards. In respect to the latter, the company provides branded cards that can store customer account credit. This includes the cards that online bookmakers like Ladbrokes, Neds and BetEasy often use to transfer betting winnings to their customers. It also provides the cards for a number of large salary packaging companies. EML has been growing at a very strong rate over the last few years and looks well-positioned to continue this trend once the crisis passes. Especially following the acquisition of Prepaid Financial Services. This will allow the company to enter the emerging field of banking as a service (BaaS) and could be a key driver of growth in the coming years. So with its shares down 25% year to date, now could be an opportune time to take a closer look.

Ramsay Health Care Limited (ASX: RHC)

It has been a difficult couple of years for this private healthcare company and its 480 global facilities. Unfortunately, the coronavirus pandemic isn’t making things any easier and more tough times lie ahead. However, I believe its shares have more than priced in this short term headwind. As a result, I think it would be well worth focusing on its long term outlook, which remains very positive thanks to its world class global network and expansion/acquisition opportunities.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

The Sydney Airport share price has come under significant pressure in 2020 and is down 37% year to date. Investors have of course been selling the airport operator’s shares due to the coronavirus pandemic and the impact this is having and will continue to have on passenger numbers. While the short term is admittedly bleak, I don’t think it will take too long for it to bounce back. Barring a second wave, it looks as though domestic travel will start its recovery in July. International travel will take longer, but a recovery will come in time. This could make it worth being patient with Sydney Airport’s shares and holding them with a long term view.

More reading

• 3 ASX dividend shares for income investors to buy next week
• 2 bargain ASX shares to buy with $2,000
• 3 ASX shares to buy as a beginner
• Top brokers name 3 ASX 200 shares to sell next week
• 3 ASX dividend shares raising dividends like clockwork

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 Emerchants Limited. The Motley Fool Australia has recommended Emerchants Limited 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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Despite the widespread carnage across financial markets, there are some shares that could emerge relatively unscathed from the coronavirus pandemic. Defensive shares have the potential to deliver stable earnings and dividends due to the essential nature of their goods and services.

Here are 4 defensive shares on the ASX that could help protect your portfolio from share market volatility.

Amcor PLC (ASX: AMC) 

In my opinion, Amcor is one of the most defensive shares on the ASX. The company is a well-renowned producer of flexible and rigid packaging, allowing Amcor to generate revenue by providing packaging for defensive consumer products such as food, beverages, pharmaceuticals and medical equipment.

Amcor could be a beneficiary of the changed consumer behaviour that has resulted from the COVID-19 pandemic. In addition, the company has a strong balance sheet and is also in the process of realising cost synergies from its $9 billion buyout of US group Bemis.

Brambles Limited (ASX: BXB)

Brambles is another defensive share that services essential goods and services. The company is best known for its iconic and reusable CHEP brand of pallets and crates, of which there are 330 million in circulation. The company is a logistics giant with a resilient supply chain and great exposure to essential consumer goods.

Brambles generates around 80% of its revenue from the consumer staples sector and has recently noted record levels of pallet demand from its grocery supply chains. The company cited that the defensive and resilient nature of its business was reflected in the strong volume growth.

Sonic Healthcare Limited (ASX: SHL)

Sonic is the third-largest pathology provider in the world, generating defensive revenue from radiology and pathology services. Although the company withdrew its earnings guidance for FY20, Sonic has been awarded a contract from the Australian Government to provide testing for COVID-19 in residential aged care facilities.

Despite being initially sold down heavily, the Sonic share price has bounced back around 30% from its low in mid-March. In addition to playing a crucial frontline role, Sonic has a strong financial position with a balance sheet boasting almost $1 billion in cash on hand.

Xero Limited (ASX: XRO)

With accounting software being an essential for all business owners, the services offered by Xero gives the company excellent defensive qualities in my view. The company has a resilient and sustainable revenue stream, reporting over 2 million subscribers in 2019.

Xero also boasts a strong balance sheet with NZ$111 million cash in the bank that could see the company navigate through the coronavirus crisis. In addition, Xero is poised for growth in overseas markets with the company expecting to exceed 5% in average revenue per user growth.

Foolish takeaway

In my opinion, a prudent strategy for long-term investors is to hedge their portfolio with defensive shares in order to provide some protection from further market volatility. I would recommend that investors compile a watchlist of defensive shares that are exposed to essential sectors and could blossom post-pandemic.

More reading

• 3 ASX tech shares to buy and hold until at least 2030
• What to watch on the ASX 200 next week
• Invest your first $10,000 in these cheap ASX shares today
• Top brokers name 3 ASX 200 shares to sell today
• Could this ASX healthcare share surge on COVID-19 testing?

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Amcor Limited. The Motley Fool Australia owns shares of Xero. The Motley Fool Australia has recommended Sonic Healthcare 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 Protect your portfolio with these defensive ASX shares appeared first on Motley Fool Australia.

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With the cash rate at a record low of 0.25% and unlikely to increase any time soon, the interest rates offered with term deposits and savings accounts look set to stay lower for longer.

In light of this, I believe income investors ought to consider investing in some of the high quality dividend shares on the ASX in order to generate a sufficient income.

Three that I would buy are listed below:

Fortescue Metals Group Limited (ASX: FMG)

If you don’t mind investing in the resources sector, then Fortescue could be a good option. Iron ore prices have been very resilient during the pandemic, putting Fortescue in a position to deliver another bumper profit in FY 2020. And given the strength of its balance sheet, I suspect the majority of its free cash flow will find its way back to shareholders. Estimating what dividend the iron ore producer will pay is difficult, but most analysts agree that it will be somewhere in the region of a 6% to 7% yield in FY 2021. Not only is this a very attractive yield, but its shares could be a good way of diversifying your portfolio across sectors.

Telstra Corporation Ltd (ASX: TLS)

Another dividend share I would buy is Telstra. Thanks to its ongoing operating cost reductions, improving industry conditions, the arrival of 5G, and the near completion of the NBN rollout, I think Telstra is a great option for income investors right now. In addition to this, it recently reaffirmed its guidance. And while it might decide to be prudent because of the pandemic, I believe its guidance leaves it well-placed to maintain its 16 cents per share dividend in FY 2020. This equates to a fully franked 5.3% dividend yield.

Vanguard Australian Shares Index ETF (ASX: VAS)

A final option for income investors to consider buying is the Vanguard Australian Shares Index ETF. Rather than invest in individual shares, this exchange traded fund gives investors the option to invest in the 300 shares that are listed on the S&P/ASX 300 index through a single investment. This includes the shares above, the big four banks, and dividend favourites such as Sydney Airport Holdings Pty Ltd (ASX: SYD) and Transurban Group (ASX: TCL). While its current yield is likely to be impacted by dividend deferrals and cancellations that have occurred recently, I expect things to return to normal again in FY 2021. At which point I estimate that its units will provide an attractive yield of over 4%.

More reading

• 3 ASX shares to buy as a beginner
• Here’s why the laziest ASX investors end up the richest
• The ASX 200 blue chip shares I would buy with $5,000 after the market crash
• Invest your first $10,000 in these cheap ASX shares today
• Is the Telstra share price a buy?

Motley Fool contributor James Mickleboro 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 owns shares of Transurban 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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While the S&P/ASX 200 Index (ASX: XJO) has seen a partial rebound since its lows in late March, I believe there are still some excellent buying opportunities for investors to purchase quality ASX shares at more favourable share prices.

So with this in mind, here are 2 of my top picks right now:

Bapcor Ltd (ASX: BAP)

Leading second-hand car parts distributor Bapcor saw a sharp decline in its share price in the weeks following the market crash that began in late February. While there has been some recovery in its share price since late March, the Bapcor share price is still well below what it was in mid-February. This provides, in my opinion, a good buying opportunity for patient long-term investors.

Bapcor recently provided a trading update, indicating strong company-wide performance during January and February of 2020, with revenue at the end of February up 12.7% year-to-date over the prior corresponding period. While the company performed solidly in March in Australia, New Zealand was more significantly impacted due to harsher lockdown restrictions.

The company’s fundamentals appear to remain strong, and its current expansion into Thailand looks to be very promising. This should provide the company with a useful launching pad for further expansion into Asia in the years to come.

Bapcor’s balance sheet looks to be very solid after its recent capital raising of $180 million to see it through any prolonged downturn caused by the coronavirus pandemic. Also, as lockdown restrictions now look set to begin to be eased in both Australia and New Zealand, business activity is likely to pick up, which I believe could translate to a further uplift in the Bapcor share price.

SEEK Limited (ASX: SEK)

Between mid-February and late March, shares in online employment classifieds business SEEK fell by around 50%. This came as investors reacted negatively to a sharp fall-off in listing volumes across all its markets. In the company’s ANZ and Asia regions, billings were down by as much as 60% during the week ending 29 March.

While there has been some bounce back since then, the SEEK share price is still down by around 26% since its recent high of $23.64 on 14 February.

With lockdown restrictions set to be eased in Australia in the months ahead, and strong encouragement by the government for Australians to return to work, I feel confident that listing volumes will gradually start to ease higher. New Zealand looks likely to follow a similar road to recovery.

I believe that SEEK remains well-positioned to continue to deliver strong revenue and profitability growth over the next decade, due to its entrenched and market-leading position.

More reading

• 3 ASX shares to buy as a beginner
• Top brokers name 3 ASX 200 shares to sell next week
• Top brokers name 3 ASX 200 shares to buy next week
• What to watch on the ASX 200 next week
• The ASX 200 blue chip shares I would buy with $5,000 after the market crash

Motley Fool contributor Phil Harpur owns shares of Bapcor and SEEK Limited. The Motley Fool Australia owns shares of and has recommended Bapcor. The Motley Fool Australia has recommended SEEK 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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Once again in 2020 the information technology sector is outperforming the S&P/ASX 200 Index (ASX: XJO).

Since the start of the year, the S&P/ASX 200 information technology index has fallen just 1.8%. This compares to a decline of over 19% by the benchmark ASX 200.

Due to the quality and growth potential of many companies in the tech sector, I expect this outperformance to continue throughout the 2020s.

In light of this, I think having exposure to the tech sector would be a very good thing for a portfolio.

But which tech shares should you buy? Three top tech shares I would buy right now are listed below:

Appen Ltd (ASX: APX)

Appen is the global leader in the development of high-quality, human annotated datasets for machine learning and artificial intelligence. It creates the data that goes into the machine learning models of many of the biggest tech companies in the world. Demand for its services has been growing strongly in recent years due to the increasing importance of artificial intelligence for businesses. This certainly was the case in FY 2019, with Appen smashing expectations with a 42% increase in underlying EBITDA to $101 million. Similarly strong growth is expected again this year and, thanks to the expected increase in spending on machine learning and artificial intelligence over the next decade, I feel it is well-placed to continue its strong form for many years to come.

Pushpay Holdings Ltd (ASX: PPH)

Pushpay is a fast-growing donor management system provider. The New Zealand-based company’s system includes donor tools, finance tools, and a custom community app which are being used widely in the faith sector in the United States, Canada, Australia, and New Zealand. Demand for its solutions has been growing strongly, even during the coronavirus pandemic. This led to Pushpay delivering a 1,506% increase in EBITDAF to US$25.1 million. The good news is that more strong growth is expected in FY 2021, with management providing guidance for a 91.2% to 107% year on year EBITDAF increase. But it won’t stop there. Pushpay is targeting a 50% share of the medium and large church market in the future. This represents a US$1 billion opportunity and is many times more than the US$127.5 million revenue it posted in FY 2020.

Xero Limited (ASX: XRO)

Another top tech share to consider buying with a long term view is Xero. It is a leading business and accounting software provider which has been growing its market share at a rapid rate over the last few years. This has been driven by the increasing popularity of its high quality software and its expansion globally. The good news is that with less than 20% of the global (English-speaking) addressable market estimated to be using cloud accounting software, it still has a significant runway for growth.

More reading

• What to watch on the ASX 200 next week
• These are the star ASX shares of the week
• These were the best performing ASX 200 shares last week
• Invest your first $10,000 in these cheap ASX shares today
• 3 star ASX shares to buy for the rest of 2020

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended PUSHPAY FPO NZX. The Motley Fool Australia owns shares of Appen Ltd and Xero. 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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With the share market still down materially from its highs, I believe there are ample opportunities for investors with a long term focus.

Three top growth shares which I think could be market beaters over the next five years are listed below. Here’s why I would invest $3,000 into them:

Aristocrat Leisure Limited (ASX: ALL)

I think the recent share price weakness experienced by Aristocrat Leisure’s shares has brought it down to a very attractive level for a long term investment. The gaming technology company’s performance this year will inevitably be impacted by the closure of casinos globally because of the pandemic. But once the crisis passes I don’t think it will be long until demand for its poker machines increases again. In the meantime, the company’s Digital business is likely to be benefiting greatly from these closures and lockdowns. In FY 2019 the segment delivered revenue of $1.23 billion and $370 million segment profit from its 7.5 million daily active users.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

Another good option for investors to consider buying is Domino’s Pizza. Its shares haven’t fared too badly during the pandemic because of the increasing consumption of its pizzas due to restaurant closures and lockdowns. However, they are still trading 14% lower than their 52-week high. I think this could be a buying opportunity due to its positive long term growth outlook. Over the next five years the company is aiming for solid like for like sales growth and the expansion of its global store network by 7% to 9% per annum. Combined, this should lead to strong earnings growth over the period. 

Zip Co Ltd (ASX: Z1P)

Finally, although the Zip Co share price gained almost 50% last week, it is still down 44% from its 52-week high. I think this could be a buying opportunity for investors that are looking for buy and hold options. There had been concerns that Zip Co’s business model might struggle if trading conditions deteriorated materially, but this hasn’t proven to be the case. Last week it revealed that at the height of the pandemic in April, it delivered an 86% jump in monthly transaction volume to $181.6 million. Another big positive was that its net bad debts came in at just 1.99%. I’m optimistic its strong growth can continue for some time to come thanks to new verticals, its international expansion, and the growing popularity of the payment method.

More reading

• These are the star ASX shares of the week
• Federal Government outlines 3-step plan to reopening Australia
• Why ASX payments shares might be the biggest winners of the 2020s
• Afterpay competitor Zip Co rockets higher after reporting 86% increase in April volumes
• Why Harvey Norman, Propel, REA Group, & Zip Co are charging higher

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 has recommended Domino’s Pizza Enterprises 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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