Category: Stock Market

With smart investing and the magic of compounding, a humble sum like $10,000 has the potential to change your life in the long term. You have worked hard and sacrificed for your money, so instead of wasting it, why not put it to work?

For those who are just getting started investing, the coronavirus pandemic has created great long-term opportunities. Here are 4 ASX share ideas that can put your money to work.

Macquarie Group Ltd (ASX: MQG)

I would start by buying $2,500 worth of Macquarie Group shares. Given the uncertain market, Macquarie has the ability to adapt to volatile market conditions by switching between market-facing and annuity-style operations.

Aristocrat Leisure Limited (ASX: ALL)

I would put another $2,500 to work by buying shares in gambling machine manufacturer Aristocrat Leisure. The company has a strong, recurring revenue stream from leasing machines and also makes revenue through outright sales of its machines.

Additionally, the company has excellent growth potential with heavy exposure to the lucrative gaming industry in the US and online operations, which provides it with earnings flexibility. Despite the pandemic shutting down most casinos, Aristocrat is well-positioned to expand its market share when operations restart.

Brambles Limited (ASX: BXB)

I believe most portfolios should be balanced by having exposure to a defensive earner that can generate revenue through all market cycles. Therefore, logistics giant Brambles is the third company I would invest $2,500 in. Brambles owns more than 330 million pallets and crates which are used to transport goods from manufacturers to retail stores and online operators. 

Operating in approximately 60 countries around the world through its iconic CHEP brand, Brambles has a sturdy business model with resilient exposure to the demand for essential consumer goods.

Woolworths Group Ltd (ASX: WOW)

With the remaining $2,500, I would buy shares in Woolworths. Apart from the surge in demand for essential goods during the pandemic, Woolworths is also poised to adapt to future demand with the supermarket giant investing heavily in its e-commerce operations.

Woolworths recently reported a near 11% surge in group sales for the quarter to $16.5 billion, with supermarket sales rising more than 40% in the week ending March 22. Although the costs of larger operations will increase, Woolworths also has exposure to the liquor and hotel industries, which are expected to recover post-pandemic.

Foolish takeaway

The way I have allocated $10,000 in this case is relatively conservative. In my opinion, for long-term and sustainable growth, this is a prudent strategy in building wealth. Although the ASX shares I have chosen may not be to every investor’s taste, I think it reflects how a balanced portfolio should look.

More reading

• Top brokers are urging you to buy this slumping ASX 200 stock next week
• The latest ASX small caps broker picks to buy today
• Is Afterpay an ASX blue chip of tomorrow?
• Brokers name 3 ASX 200 shares to buy right now
• Where growth, income, and value investors can invest right now

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia owns shares of Woolworths 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 Here’s how I would put $10,000 to work on the ASX appeared first on Motley Fool Australia.

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If you’re anything like me, you’re probably hoping your investment in ASX shares will make you a millionaire. But when the S&P/ASX 200 Index (ASX: XJO) plummets lower it can make you question your investment strategy.

But the reality is that the maths behind investing is quite straight forward. Let’s take a look at how ASX shares can help you become a millionaire by the time you reach retirement.

How to use ASX shares to become a millionaire

Let’s check out an example to demonstrate. Consider your average 35 year old investor with a diversified ASX share portfolio. To keep things simple, we’ll ignore taxes and brokerage on shares and assume an 8% per annum average return with dividends reinvested.

This average investor starts with $50,000 in ASX shares and adds $5,000 per year to his portfolio. 

What we can see is that, through the magic of compound interest, his investment in ASX shares can most definitely make this investor a millionaire by the retirement age of 65. Even 10 years prior to retirement, this ASX share portfolio is worth $461,858. However, by retirement age, the portfolio has more than doubled to $1,069,549 and the investor has become a millionaire.

How can you do the same with your ASX share portfolio?

So, what does this example really tell us? The answer is that a diversified share portfolio and long-term outlook can really pay off in the future.

While the Afterpay Ltd (ASX: APT) share price might have rocketed 400% higher since mid-March, it’s not a wise strategy to put all your eggs in one basket.

By constructing a portfolio of high-quality ASX shares and holding for decades ahead, you could generate the 8% per annum average return illustrated in this example.

Of course, it’s wise to invest only what you can afford to lose. You don’t want to be forced to sell at a bad time because you over-invested and suddenly need that cash back.

It’s also important to remember that it’s never too late to start investing. Every day your money is in the market is a day that it can potentially be working towards make you a millionaire.

More reading

• Is the Afterpay share price a buy at $44?
• Top brokers are urging you to buy this slumping ASX 200 stock next week
• 3 ETFs perfect for an ASX growth investor
• ASX 200 drops 1% on Friday
• The latest ASX small caps broker picks to buy today

Motley Fool contributor Ken Hall 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.

The post How to use ASX shares to become a millionaire appeared first on Motley Fool Australia.

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Is the Afterpay Ltd (ASX: APT) share price a buy at $44?

Amazingly, the Afterpay share price has risen by 400% over the past two months from the coronavirus price of $8.90 on 23 March 2020. That’s some recovery.

Perhaps some investors thought that the Afterpay model was about to come unstuck. Maybe they thought that every active customer wasn’t going to pay their most recent balance. Clearly that wasn’t the case.

Afterpay has managed to keep growing despite the worries about the worrying coronavirus economic conditions. I think Afterpay has done the right thing by adjusting its risk settings so that it’s a bit more cautious during this period.

The third quarter of FY20 still saw solid growth with total underlying sales growth of 105% compared to FY19. Within that, US growth was 263% and ANZ growth was 40%.

April saw average daily underlying sales growth of approximately 10% globally compared to the second half of March. Promising signs of a recovery. 

Afterpay US recently announced that it has passed 5 million active customers. 

Not all easy for the Afterpay share price

I fear that investors may be thinking that Afterpay is unstoppable now. It’s true that the buy now, pay later business has revolutionised how people pay in instalments (for no cost). But plenty of competition don’t want Afterpay to have all the limelight.

Global ecommerce player Shopify is launching ‘Shop Pay Installments’. Shopify said that “buyers will be able to pay for purchases in four equal payments over time, with no interest or fees. Merchants will receive the full purchase amount upfront, and Shopify will collect the remaining installment payments, meaning there’s no risk to merchants. This flexible payment option will allow buyers to stretch out their payments, making purchases more convenient. This, in turn, will help merchants increase cart sizes and overall sales.” This could cause trouble for the Afterpay share price. 

At $44 I think the Afterpay share price is far too optimistic and assumes the company won’t have to reduce margins to maintain market share in the future. Even if I were interested in buying Afterpay shares, I wouldn’t remotely want to buy above $40.

More reading

• How to use ASX shares to become a millionaire
• 3 ETFs perfect for an ASX growth investor
• Here are all the ASX 200 shares that have doubled or more since the bottom of the bear market
• Is Afterpay an ASX blue chip of tomorrow?
• Why Aristocrat Leisure, Afterpay, Corporate Travel, and Sydney Airport are pushing higher

Motley Fool contributor Tristan Harrison 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.

The post Is the Afterpay share price a buy at $44? appeared first on Motley Fool Australia.

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The Aristocrat Leisure Limited (ASX: ALL) share price is underperforming again on Friday after it’s disappointing profit results.

But top brokers believe the sell-off is overdone and are urging bargain hunters to use the weakness to buy the gaming machines developer.

The Aristocrat share price fell 1.7% to $25.52 – taking its two day decline to 6.7% when the S&P/ASX 200 Index (Index:^AXJO) lost 1.3% as geopolitical tensions knocked some wind out of global markets.

COVID-19 hit to profits

The sell-off in Aristocrat came as the group’s earnings missed consensus estimates. Its normalised interim net profit of $368 million was well below the $450 million that brokers were expecting.

The weakness was primarily due to its land-based business, which supplies poker machines to hotels and casinos.

The shutdown of gaming venues due to the COVID-19 pandemic more than offset the strength in its digital social gaming division.

Are Aristocrat’s shares cheap?

But UBS is unperturbed as it reiterated its “buy” recommendation on the stock with a 12-month price target of $31.80 a share.

“We remain confident in the pipeline of product and note management comments that the company has not reduced spend within R&D as a cost-saving strategy,” said the broker.

“In a month, we should know if this is a short-term surge or something more sustainable. The outcome of this has the potential to act as a significant catalyst for the share price in our view.”

Well placed for the coronavirus recovery

The bullish sentiment was echoed by Credit Suisse as it too repeated its “outperform” (or “buy”) call on the stock.

“Casino operators – opening with partial capacity – need strong game performance, assistance in moving slot machines, and flexibility in pricing models,” said Credit Suisse.

“We sense that ALL is ahead of the competition on sales and service.”

The broker also noted that Aristocrat’s digital business is performing ahead of its expectations and the group’s balance sheet is able to withstand the downturn in the global casino industry.

Not without risks

JP Morgan was equally impressed with Aristocrat’s digital division, which makes popular mobile apps but believes the downturn in the land-based business will last closer to 24 months than the six months many are expecting.

It also highlighted the risk that management may need to undertake a capital raise to help it ride out the coronavirus storm.

Nonetheless, JP Morgan still regards the stock as a buy and stuck with its “overweight” recommendation, although it lowered its price target on Aristocrat to $28.50 from $30.30 a share.

More reading

• Here’s how I would put $10,000 to work on the ASX
• How to use ASX shares to become a millionaire
• ASX 200 drops 1% on Friday
• The latest ASX small caps broker picks to buy today
• 3 super strong ASX 200 blue chip shares to buy right now

Motley Fool contributor Brendon Lau owns shares of Aristocrat Leisure Ltd. 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.

The post Top brokers are urging you to buy this slumping ASX 200 stock next week appeared first on Motley Fool Australia.

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