Category: Stock Market

One area of the market that I think has a large number of top long-term options for investors to consider buying is the mid cap space.

Three mid cap shares which I believe could generate strong returns for investors over the next decade are listed below. Here’s why I like them:

Bravura Solutions Ltd (ASX: BVS)

The first mid cap share to look at is Bravura Solutions. It is a fintech company providing software and services to the wealth management and funds administration industries in the Asia, Europe, Middle East, and Africa regions. The company has a number of different products in its portfolio which combined appear to have positioned it for strong long term growth. The key product for me is the Sonata wealth management. It is used by many large financial institutions to connect and engage with their clients anytime, anywhere, via computers, tablets or smartphones.

Jumbo Interactive (ASX: JIN)

Jumbo is an online lottery ticket seller and the operator of the Oz Lotteries website. Its shares have pulled back materially in recent months due to concerns over its slowing growth. However, it is worth noting that this has been caused by the company’s investment in its future growth and is only expected to be temporary. As a result, I believe its shares have been oversold and are now trading at an attractive level. Especially when you consider that Jumbo is aiming to generate $1 billion in ticket sales annually through its platform by FY 2022. This will be triple what it achieved in FY 2019.

Megaport Ltd (ASX: MP1)

A final mid cap share to consider is Megaport. It is an elasticity connectivity and network services company. Its service allows users to increase and decrease their available bandwidth in response to their own demand requirements. This is instead of being tied to fixed service levels on long-term and expensive contracts. Due to the popularity of its service, its growing footprint in data centres globally, and the seismic shift to the cloud, it has been growing at a rapid rate in recent years. And given that larger and larger amounts of computer infrastructure continue to move from local servers to cloud providers, Megaport appears well-placed to continue its strong form in the 2020s.

More reading

• Where to invest $2,500 in the ASX for strong long term returns
• These All Ords shares have just hit 52-week highs or better
• Market close: ASX 200 finishes 0.4% lower
• 3 exciting ASX tech shares to buy and hold in the 2020s
• 2 top ASX growth shares to buy this week

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 Jumbo Interactive Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Bravura Solutions Ltd and MEGAPORT FPO. The Motley Fool Australia has recommended Bravura Solutions Ltd, Jumbo Interactive Limited, and MEGAPORT 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.

The post These mid cap ASX shares could be long term market beaters appeared first on Motley Fool Australia.

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It can be hard to know which ASX shares to buy when you’re just beginning. I mean, the S&P/ASX 200 Index (ASX: XJO) alone has roughly 200 shares to buy.

I think keeping things simple is the key when you’re first investing. That means you don’t need to bet on the “next Afterpay” or worry about someone that made millions in bitcoin.

Here are a few of my top ASX shares to purchase as a beginner looking to invest in ASX shares today.

3 ASX shares to buy for beginners

When times are uncertain like this, a few large-cap dividend shares can be just the ticket. Large-cap shares often have strong balance sheets, steadier earnings and less volatility compared to some of the smaller ASX shares.

I think it’s good to start by looking at BHP Group Ltd (ASX: BHP). BHP is among the largest ASX-listed shares on the market with a $149 billion market capitalisation. The group’s shares also have a handy 6.79% dividend yield and are trading at a price-to-earnings (P/E) ratio of 10.88. That means for every $10.88 you pay for BHP shares, you should see roughly $1 in company earnings.

BHP is a solid buy for almost any portfolio. The mining sector could have some tough times ahead but the technical environment looks alright to me. China’s increasing development and major Australian Government infrastructure investments are a couple of the tailwinds I can think of for BHP shares.

Another great share for beginners is Telstra Corporation Ltd (ASX: TLS). Telstra has been a staple of the average investment portfolio for decades and is yielding 3.30% right now. With more demand for mobile infrastructure and a shift towards working from home, I see Telstra’s business booming despite the NBN Co competition.

Finally, an Australian real estate investment trust (A-REIT) could be the way to go. A-REITs invest in a portfolio of property and you can then buy ASX shares in those funds for easy property exposure. That seems easier to me than saving for an investment property with strong dividend income and diversification benefits. 

An A-REIT like Scentre Group (ASX: SCG) could be on the cheap side right now. Scentre shares are down more than 40% in 2020 but things are looking up for the Aussie economy. With an 8.73% dividend yield, Scentre could be a top ASX dividend share for beginners to buy today.

Foolish takeaway

While ASX dividend shares are great for any portfolio, there are inherent risks. Dividends are at the discretion of management and when times are tough, they may restrict these payments. That means you can’t bank on dividend income being steady forever.

When it comes to buying ASX shares as a beginner, slow and steady wins the race. Consistently putting away extra cash into a diverse range of high-quality companies is the way to build long-term wealth.

More reading

• 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
• Top broker urging you to buy this ASX 200 retail stock next week

Motley Fool contributor Ken Hall 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 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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Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were bearish.

Three sell ratings that caught my eye are summarised below. Here’s why top brokers think investors ought to sell these shares next week:

Afterpay Ltd (ASX: APT)

According to a note out of UBS, its analysts have retained their sell rating and lowly price target of $13.00 on this payments company’s shares. The broker has held firm with its rating despite news that Tencent Holdings has snapped up a 5% stake in the buy now pay later provider. While it acknowledges that this validates the Afterpay business model, it feels it is unlikely that Tencent will give Afterpay access to WeChat payments in the China market. In light of this, it sees no reason to change its rating at this point. The Afterpay share price ended the week at $39.88.

AGL Energy Limited (ASX: AGL)

A note out of the Macquarie equities desk reveals that its analysts have retained their underperform rating and cut the price target on this energy retailer’s shares to $15.88. According to the note, the broker expects AGL Energy to be hit with a double whammy of weak commodity prices and financial relief for customers. And while it has retained its guidance for FY 2020, the broker expects next year to be much more challenging. The AGL Energy share price last traded at $16.49.

SEEK Limited (ASX: SEK)

Analysts at Morgans have downgraded this job listings company’s shares to a reduce rating with a $15.55 price target. According to the note, the broker was surprised to see SEEK’s share price rally so hard over the last few weeks considering the tough trading conditions it is facing. It isn’t expecting a rebound in job advertisements to happen quickly and expects it to be a slower recovery than the market appears to believe. The SEEK share price ended the week at $17.41.

More reading

• 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
• Top broker urging you to buy this ASX 200 retail stock next week
• Afterpay shares are up 400% in 6 weeks: Is it too late to invest?

Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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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There aren’t many ASX shares that I think every investor should own.

Many businesses aren’t “great” businesses. For plenty of shares it’s hard to be quite certain about their long-term growth prospects. There’s a lot of change and disruption happening out there all the time due to competition and the ongoing coronavirus pandemic.

But there is a small group of shares that I could see weathering most problems, including the current issues. These shares have long-term growth prospects, great management and operate in reliable industries.

Here are two of my favourite ASX shares that I think every investor should own:

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) 

I believe that Soul Patts is one of the best shares on the ASX. It’s an investment conglomerate that has been going for over a century. I think it could go for another hundred years because of its style of operations.

It’s invested in a variety of different shares in different industries like TPG Telecom Ltd (ASX: TPM), Brickworks Limited (ASX: BKW), Clover Corporation Limited (ASX: CLV) and Palla Pharma Ltd (ASX: PAL). It also owns plenty of unlisted businesses outright like resources, agriculture and swimming schools.

It has been recently reported that it’s going to start investing in regional data centres alongside a business called Leading Edge Data Centres.

Soul Patts is diversified, it’s long-term focused and it has a growing dividend. There’s a lot to like and it’s one of those ASX share ideas you can own for a very long time.

Altium Limited (ASX: ALU) 

I believe that Altium is one of the best ASX growth shares around. It’s a world leader in providing electronic PCB software to help engineers design the devices, items and vehicles of the future.

It already has an impressive list of clients using its software including Amazon, Microsoft, Google, Disney, John Deere, Tesla, Space X, NASA and so on.

Over the past several years it has been steadily growing its profit margins thanks to its operating leverage and growing scale. That’s the advantage of a software business – once you’ve developed the software there aren’t many more costs, it mostly falls to the profit lines. That’s a sign of a great ASX share.

Altium has an ambitious goal of 100,000 Altium Designer subscribers and US$500 million revenue by 2025. These are large goals, particularly under the current circumstances. But its cloud offering of Altium 365 could be perfect to convince potential clients to switch over in this period of disruption.

The company’s balance sheet is great because it doesn’t have any debt and its cash balance is steadily growing despite paying (attractive) growing dividends each year. This growing cash pile can be used for bolt-on acquisitions or simply to ride out tougher times like this.

Altium’s share price has performed strongly since 23 March 2020. It’s not cheap, but it could be one of those long-term winners.

Foolish takeaway

I think both of these shares could be some of the best ASX shares out there.

At the current prices I’d go for Soul Patts. Altium may have recovered too strongly (in the short term) given the uncertain economic circumstances. However, with interest rates now at very low levels, both of these shares look very attractive compared to holding cash or even bonds.

More reading

• 3 ASX dividend shares raising dividends like clockwork
• 3 of the best ASX 200 shares to buy and hold for 10 years
• Why I’m even more confident about the Soul Patts share price
• How to make a $1 million share portfolio by investing $1,000 a month
• How to build your first ASX share portfolio

Tristan Harrison owns shares of Altium and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Clover Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of Altium. 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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Just ‘buying the index’ is often derided as the ‘easy way out’ or investing for those who don’t like to invest. After all, if you compare the ease of just buying a plain-Jane index fund instead of doing the research, finding ASX shares that you think are winners and buying at the right price, it indeed seems like the easy way out.

Normally, the goal of any ‘active’ investor is to outperform the broader market – the return you can get from just buying an index fund like the Vanguard Australian Shares Index ETF (ASX: VAS). If you can get a market return so easily, you might as well aim higher if you’re actually interested in investing, after all.

But according to reporting in the Australian Financial Review (AFR), the lazier you are as an investor, the more likely you are to get a better investment return.

According to the AFR report, the period of immense market volatility we saw over February and March saw a massive increase in retail investors buying and selling ASX shares – double that of the preceding 6 months.

Volatility breeds risky behaviour

The AFR quotes a study from ASIC (the Australian Securities and Investment Commission), which found that, during this period, more than half the days on which retail investors were net sellers, they watched the stock prices of investments rise the following day.

Yet if an index investor just ignored the markets during this time, they would have been up close to 20% from the lows we saw in March – without any brokerage fees, transaction costs or taxes that come from dipping in and out of shares to worry about.

This type of behaviour has been proven to bring wealth destruction time and time again. It’s the reason why Warren Buffett always says things like “if you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes”.

I’ll add another quote from Buffett’s right-hand man Charlie Munger, who once said: “I succeeded because I have a long attention span.”

Do you really think these 2 investing legends would be darting in and out of shares during a bear market? No! They both have made a habit of making big purchases of shares during times of volatility and then sitting on their buys for years and decades afterwards.

It’s something of a lazy approach, but as we’ve seen – the lazy investors usually end up on top. So even if you just ‘buy the index’, your chances of high returns are far greater than someone who thinks they can time the market!  

More reading

• How to invest $500 in ASX shares today
• 3 high quality ASX dividend shares to buy next week
• Why diversifying your ASX shares is so important
• Why invest in ASX ETFs?
• Does this ASX share have the safest dividend on the market?

Motley Fool contributor Sebastian Bowen 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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There are some ASX dividend shares out there raising dividends like clockwork.

I think it’s particularly important to find businesses growing their dividends. If a business isn’t growing their dividend then it suggests the business is struggling to grow their earnings. It may suggest that the board thinks the business needs to hang onto cash just to tread water.

After Ramsay Health Care Limited’s (ASX: RHC) recent dividend suspension due to coronavirus impacts, there aren’t many shares left with solid dividend records.

Here are three ASX dividend shares that are growing their dividends like clockwork:

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) 

Soul Patts is now the ASX dividend share king of Australia. It is the only business to have increased its dividend every year since 2000.

The investment conglomerate has a diversified portfolio of listed and unlisted businesses. Some of its biggest holdings include shares like TPG Telecom Ltd (ASX: TPM) and Brickworks Limited (ASX: BKW).

Its investments and other assets provide an attractive source of dividends, distributions, interest and so on. Soul Patts retains a certain amount of this each year to re-invest into more opportunities. It retained around 20% of its net regular operating cashflow in FY19.

Soul Patts has paid a dividend every year in its existence, which is a record that extends over a century.

Management have already guided that the dividend is expected to increase at the full year result later this year.

APA Group (ASX: APA) 

APA is another of the ASX dividend shares that has a record going back before the GFC. It has increased its distribution every year for a decade and a half.

What is APA? It owns a vast network of 15,000km of natural gas pipelines around Australia with a presence in every mainland state and the Northern Territory. It also owns or has interests in gas storage facilities, gas-fired power stations and renewable energy generation (wind and solar farms). APA owns, or manages and operates, a portfolio of assets worth more than $21 billion and delivers half the nation’s natural gas usage.

There continues to be solid demand across the country for gas. More people are cooking at home. It’s getting into the colder months in the southern states.

APA funds its annual distribution from the cashflow that it makes. The distribution and cashflow have been growing nicely over the past decade.

The infrastructure giant continues to invest in new projects that will earn more cashflow in the future. This should help the distribution to keep growing.  

Rural Funds Group (ASX: RFF) 

Rural Funds is a farmland real estate investment trust (REIT). It owns an impressive portfolio of farms including almonds, cattle, cotton, vineyards and macadamias.

The farmland trust aims to grow the distribution by 4% a year, this goal comfortably beats the current inflation rate. It’s able to go for that level of growth through contracted rental indexation and investing in productivity improvements at its farms. It will occasionally make an acquisition which will presumably be accretive for unitholders.

It could be one of the best ASX dividend shares.

Farmland has been a solid performer over the years and 2020 is predicted to be another good year. Food security will become more important over the next decade, particularly if the global population keeps growing and some global farmland degrades in the 2020s.

It hasn’t been listed on the ASX that long, but its distribution increase record has been on target over the past five years.

Foolish takeaway

All three of these ASX dividend shares have been increasing their payments for many years. I think Soul Patts is by far the best dividend share on the ASX in terms of reliability and growth. It would be my pick dividend pick.

More reading

• 2 safe ASX dividend shares for income investors to buy right now
• Why I’m even more confident about the Soul Patts share price
• How to make a $1 million share portfolio by investing $1,000 a month
• Bring your portfolio to life with these quality ASX healthcare shares
• 2 blue chip ASX healthcare shares to buy right now

Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of APA Group. The Motley Fool Australia has recommended 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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Last week saw a large number of broker notes hitting the wires once again. Three buy ratings that caught my eye are summarised below.

Here’s why brokers think investors ought to buy them next week:

Collins Foods Ltd (ASX: CKF)

A note out of UBS reveals that its analysts have upgraded this quick service restaurant operator’s shares to a buy rating with a slightly reduced price target of $8.95. According to the note, the broker was pleased to see the company’s KFC Australia operations have been performing well during the pandemic. In light of this, its defensive qualities, and attractive valuation, the broker believes Collins Foods’ shares are in the buy zone. I would agree with UBS on this one and feel it would be a good option for investors.

Harvey Norman Holdings Limited (ASX: HVN)

According to a note out of Goldman Sachs, its analysts have upgraded the retailer’s shares to a buy rating with an improved price target of $3.85. The broker made the move after industry feedback suggested that sales trends are proving more resilient across the sector than expected only a few months ago. In light of this, the broker has updated its forecasts for Harvey Norman in FY 2020 and FY 2021. While not my favourite option in the retail sector, I think it could be worth a closer look at this level.

NEXTDC Ltd (ASX: NXT)

Analysts at Morgan Stanley have retained their overweight rating and lifted the price target on this data centre operator’s shares to $10.50. According to the note, the broker believes NEXTDC is well-positioned for growth thanks to its ability to take advantage of the accelerated demand for cloud services. This follows the announcements of major new contracts in Melbourne and Sydney in recent weeks. The latter has led to the company pushing ahead with the construction of its third data centre in the city. I agree with Morgan Stanley and feel NEXTDC would be a great long term option.

More reading

• 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
• Top broker urging you to buy this ASX 200 retail stock next week
• Why I’d buy and hold CSL shares forever
• These were the best performing ASX 200 shares last week

Motley Fool contributor James Mickleboro owns shares of Collins Foods Limited and NEXTDC Limited. The Motley Fool Australia has recommended Collins Foods 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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