Category: Stock Market

The listed real estate sector is finding support today, but there’s one stock in particular that’s capturing the attention of brokers.

The stock in the limelight is Charter Hall Group (ASX: CHC) as three leading brokers upgraded their recommendation on the stock to “buy” following its latest update released last week.

The Charter Hall share price jumped 2.5% to a two-month high of $8.10 when the S&P/ASX 200 Index (Index:^AXJO) added 1% on Monday.

More fuel in the tank

While the group may not be the best performer in the sector as the Stockland Corporation Ltd (ASX: SGP) share price surged 4.4% and the Vicinity Centres (ASX: VCX) increased 4% to $1.45, experts believe there’s plenty of room for Charter Hall to outperform.

UBS is one that believes in the upside as it upgraded the stock to “buy” from “neutral”.

“A concern of real estate valuations, funds flows/capital raisings and transactions in a COVID-19 world has seen CHC underperform the AREIT market by 11% over the past 3 months,” said the broker who put a 12-month price target of $9.80 on the stock.

“On rebased earnings CHC is trading on a 14x PE multiplied with growth of 6% from FY21.”

Limited retail exposure

The diversified property portfolio of the group will give some protection against the looming structural risks facing retail landlords.

Credit Suisse believes there is too much focus on Charter Hall’s retail exposure.

“At 30 Apr 2020, CHC had A$18.0bn of Office and A$8.1bn of Industrial FUM pre any gross-up from its Long WALE exposure,” said the broker.

“Importantly, we estimate Retail provides only ~25% of ‘base’ earnings (i.e. pre any performance or transaction fees).”

Credit Suisse lifted its rating on the stock to “outperform” from “neutral” with a 12-month price target of $9.17 a share.

One of the safest ASX property stocks you can buy

JP Morgan also took the opportunity to upgrade its call on Charter Hall to “overweight” from “neutral”. There were a few reasons for this, including management’s update that showed little impact from the coronavirus fallout on group earnings.

It also noted that the group is among the lowest risk and most defensive property stocks in the Australian real estate investment trust (A-REIT) sector.

Further, Charter Hall can grow its industrial platform through transactions like sale and leaseback and JP Morgan sees scope for the stock to re-rate.

The broker’s price target on Charter Hall is $9 a share.

More reading

• 2 high yield ASX dividend shares to buy for 2021
• 3 industries that may never recover from COVID-19
• Why ASX iron ore miners like BHP aren’t afraid of the China trade war
• 3 top Warren Buffett quotes to start off your week
• How is the ASX 200 soaring despite rising unemployment?

Motley Fool contributor Brendon Lau 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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Since bottoming out at $2.90 on March 25, shares in ASX automotive retailer AP Eagers Ltd (ASX: APE) have almost doubled in price in recent weeks and are now back up to $5.43 as at the time of writing. With sales slumping during the coronavirus lockdowns, new investors have responded positively to the raft of cost-cutting measures the company has put in place to see it through the crisis.

Towards the end of April, AP Eagers announced that it had made the difficult decision to cut around 1,200 employees from its workforce at a saving of around $6 million a month. Those at the top of the company will be feeling the pinch as well, with non-executive directors foregoing their director fees and senior executives taking a 50% pay cut. AP Eagers has also been working with its landlords, suppliers and other key stakeholders to defer lease commitments and other payments. It has also frozen all non-essential capital expenditure.

The company’s balance sheet remains strong, with $270 million worth of cash and undrawn debt facilities still at its disposal. Additionally, the company’s suppliers have provided it with $122 million worth of working capital facilities.

Finally, it’s also worth noting that the sale of the company’s refrigerated logistics business to private equity firm Anchorage Capital Partners is still progressing. However, AP Eagers has now had to settle on a $75 million sale price instead of the originally agreed $100 million due to the negative economic impacts from the coronavirus.

Shares in ASX digital car classifieds business Carsales.com Ltd (ASX: CAR) have also performed well recently, up almost 40% from their 23 March low of $10.47 to $14.27 as at the time of writing. In its most recent COVID-19 update, released to the market on 23 April, it announced a similar range of cost-cutting measures that it hoped would see it through the crisis.

As with AP Eagers, Carsales has decreased the size of its workforce, temporarily standing down around 250 mostly frontline staff. Board and executive remuneration for the remainder of the financial year have also been slashed by 20%.

Interestingly, Carsales noted that traffic to its website had remained high throughout the pandemic, despite lead volumes dropping by 25% in April. The international arms of its operations have seen varying impacts from COVID-19: while the Brazilian geography has suffered in recent weeks after escalating outbreaks in that country, revenues in South Korea have continued to grow.

Should you invest?

Even in an economic downturn, people will still have a need for cars and other vehicles. This doesn’t exactly make AP Eagers or Carsales defensive plays, but both should continue to generate revenue even in a prolonged period of economic recession. After all, the AP Eagers company has a history dating back over 100 years.

However, there may still be a shift in demand away from luxury brands and towards cheaper used cars. If this occurs, it could theoretically present a greater rebound opportunity for online classifieds business, Carsales. Consumers may be less inclined to visit dealerships and may instead choose to buy their cars directly from the seller online.

Not only that, but as Carsales is now an internationally diversified company with operations in both Brazil and South Korea, these global revenue streams could also help to keep the company afloat during these uncertain economic times. And with its shares trading almost 25% below their pre-coronavirus highs, Carsales may still offer good value to new long-term investors.

More reading

• 3 ASX shares growing dividends over the last decade
• Carsales share price down 26% since February. Is it now a good buy?
• ASX 200 starts the week strongly, up 1.3%
• Analysts think this ASX auto share could be turning the corner
• Market close: ASX 200 ends 0.5% higher

Motley Fool contributor Rhys Brock owns shares of carsales.com Limited. The Motley Fool Australia has recommended carsales.com 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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I think that one of the most promising areas of the market to invest in at the moment is the tech sector.

In this area there are a good number of companies with the potential to grow strongly over the next decade and generate outsized returns for shareholders.

Three ASX tech shares that I think are worth considering are listed below. Here’s why I like them:

Bravura Solutions Ltd (ASX: BVS)

Bravura Solutions is a provider of software products and services to financial institutions including BNP Paribas, Fidelity, and Mercer. Thanks to the increasing popularity of its Sonata wealth management platform, it has been growing its earnings at a strong rate over the last few years. I believe there is still a long runway for growth for Sonata, which should be complemented by recent acquisitions. These acquisitions look set to provide Bravura with new avenues for growth in industries benefiting from structural tailwinds.

Xero Limited (ASX: XRO)

Another tech share to consider buying is Xero. It is one of the world’s leading cloud-based business and accounting software providers with a high quality and sticky product. Xero recently reported its full year results and revealed further impressive growth in sales and EBITDA. This was driven by strong customer growth and increases in average revenue per user. While the next few months may be trickier than normal because of the pandemic, I believe its long term prospects remain as positive as ever.

Zip Co Ltd (ASX: Z1P)

A final tech share to consider buying is Zip Co. I’ve been very impressed with the performance of the buy now pay later provider over the last couple of years and feel confident its strong growth can continue. Especially given its international expansion and the ever-increasing customer and merchant numbers on its platform. Another big positive was that Zip Co recently released a business update which showed that its growth has continued during the pandemic and its bad debts have remained low.

More reading

• Is the Xero share price a buy after last week’s dip?
• Leading brokers name 3 ASX shares to buy today
• Why Aristocrat Leisure, Newcrest, Santos, & Zip Co shares are charging higher
• 5 ASX 200 winners and 5 losers of the week
• These are the 10 most shorted ASX shares

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 Bravura Solutions Ltd, Xero, and ZIPCOLTD FPO. The Motley Fool Australia 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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Tyro Payments Ltd (ASX: TYR) was once a highly successful IPO, soaring from its offer price of $2.75 per share to a record all-time high of $4.50 in just 2 months. However, coronavirus lockdown measures forced many of its EFTPOS terminal customers to temporarily or partially close business, resulting in its share price sliding almost 80% from peak to tough during the share market crash.

But, as the Australian economy is looking to progressively reopen, could it be time to buy Tyro shares? 

A swift share price recovery 

After hitting a low of just $0.97 per share in March, the Tyro share price has rapidly rebounded. It now sits at a comfortable price level of around $3.50. 

Tyro has remained incredibly transparent throughout the coronavirus pandemic, providing investors with weekly updates regarding its transaction values. So far, it has provided the following updates regarding 2020 vs. 2019:

• January: 27% increase 
• February: 30% increase 
• March: 3% increase 
• April: 38% decrease 
• May to 15 May: 20% decrease 
• Year-to-date: 18% increase 

March appears to be the consistent trough across many retail-related companies. The recent Afterpay Ltd (ASX: APT) business update noted that global underlying sales in the second half of March versus the first half of March were 4% lower. However, its sales rebounded strongly in April, up approximately 10% on the second half of March.  

I believe the relaxation of social distancing measures will result in a graduate recovery of Tyro’s transaction values. In the company’s prospectus, it cited that SMEs have been the main target size category for its terminals. As at 30 June 2019, Tyro provided payment services to over 29,000 Australian merchants, of which 77% were SMEs and 86% were in the health, hospitality and retail verticals. 

Many state governments including New South Wales and Queensland have already acted on stage one, allowing restaurants, cafes and shopping centres to open. Victoria has plans to advance to stage one by 1 June. 

Industry tailwinds 

Cash is declining as a method of payment in Australia in response to the perceived benefits of card payment such as convenience, rewards and security, and availability of electronic acceptance devices. The use of cash for payments in Australia decreased from 69% in 2007 to 37% in 2016. The coronavirus and fears around transmission through coins, notes and transaction contact is another catalyst and tailwind for card transactions. 

Foolish takeaway 

The worst may have passed for Tyro and the reopening of the Australian economy, particularly the hospitality and retail sectors, should see a gradual recovery in its monthly transaction volumes. While the Tyro share price has run up significantly in recent times, I believe the business has much more to look forward to. 

More reading

• Why all ASX investors should avoid this easy mistake in 2020
• Will the Afterpay share price stop at $40 or keep on running?
• These ASX 200 shares are up over 40% in 2020
• 3 fantastic ASX shares to buy when you’re young
• Why a buy and hold strategy for ASX shares is best

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 Tyro Payments. 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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If you want become rich then I think you should start investing in shares today.

There’s a common saying that the best time to start investing is 20 years ago, the second best time is today. You could say the same thing about trees – we only get to sit in the shade of a tree today because someone had the foresight to plant a tree years ago.

It takes a long time to become rich. Becoming rich with shares doesn’t happen in a day or in a month. It takes many years, or a lifetime, of disciplined saving and investing to reach a desired financial goal or wealth position.

Why you should start investing today 

If you delay your investing journey it will dramatically reduce your final wealth balance. Shares have historically made an average of 10% a year. Whether that’s Australian shares as represented by Vanguard Australian Shares Index ETF (ASX: VAS) or international shares represented by something like iShares S&P 500 ETF (ASX: IVV).

Imagine if you give yourself 25 years to build wealth and at the end of it you have $990,000. A great total. But if you delayed and only had 24 years, you’d miss out on that last year of 10% growth and you’d only have $900,000. One year of delay could mean almost $100,000 of growth lost!

Why you should invest in shares to become rich

Why specifically shares? I think there’s a number of good reasons why shares will help you become rich. I prefer shares to property for a number of reasons.

On the one hand, I think property ‘returns’ don’t reflect the full picture. Quoted property returns usually don’t include the effects of negative gearing – which is an alternative description to ‘losing real money’. Returns usually don’t include transaction costs like stamp duty and real estate agent selling fees. The property prices quoted don’t reflect the tens or hundreds of thousands of dollars of renovations (or just repairs) that have gone into the property – it hasn’t simply been growth from a $500,000 property to $1 million with no cost to the investor. And what happens if an investment property doesn’t have a (paying) tenant? The costs are still heading out of the bank account.

With shares you can be invested in the best businesses on the ASX or even the best in the world. I think it’s these shares that will help people become rich. Don’t forget that usually the share return totals don’t include franking credits which is a big bonus for investors. Shares are pretty cheap right now because of the coronavirus. 

Which shares will help you become rich? I like the idea of investments like the iShares S&P 500 ETF, Magellan High Conviction Trust (ASX: MHH), MFF Capital Investments Ltd (ASX: MFF) and Future Generation Global Invstmnt Co Ltd (ASX: FGG).

More reading

• The importance of diversifying your ASX portfolio and how you can do it
• The smartest shares to buy if you have $2,000
• Here’s how to create a $1 million ASX portfolio by investing $1,000 a month
• How I’d invest $50,000 into ETFs
• ASX shares can help millennials retire before their parents

Motley Fool contributor Tristan Harrison owns shares of Magellan Flagship Fund 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.

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I think it’s fair to say that 2020 has been a bad year for dividends. Due to the pandemic, a large number of popular dividend shares have had to defer or cancel their dividends.

While this is disappointing, I’m confident that most dividend payments will resume again next year. In light of this, now could be a good time to look at the dividend shares to own in 2021 and beyond.

Here are two dividend shares I think should be considered:

Stockland Corporation Ltd (ASX: SGP)

Stockland is a property company which owns, manages and develops a diverse range of property assets. These include retirement villages, retail centres, business parks, offices, and logistics centres. Its shares have been hit very hard during the pandemic and are now down almost 50% from their 52-week high. I think this has left them trading at bargain prices for income investors. I’m not the only one that thinks this.

A recent note out of Goldman Sachs reveals that it has a buy rating and $4.43 price target on Stockland’s shares. It has been running the rule over the company and expects it to pay a distribution of ~26 cents per share in FY 2021. This equates to a whopping 9.2% distribution yield.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

The Sydney Airport share price is down 41% from its 52-week high. Investors have of course been selling the airport operator’s shares after travel restrictions left its runways and terminals virtually empty. The good news is that Australia is now reopening and over the coming months Sydney Airport will start to see a recovery in domestic passenger numbers. While a full domestic recovery will take time and international tourism will take even longer, the company looks well-placed to pay a dividend in FY 2021.

Another recent note out of Goldman Sachs reveals that it expects Sydney Airport to pay a 29 cents per share dividend in FY 2021 and then a 37 cents per share dividend in FY 2022. If this proves accurate, it means that the company’s shares offer 5.3% and 6.7% yields, respectively, over the next couple of years. I think this is achievable and makes it well worth being patient with its shares.

More reading

• Why this overlooked ASX 200 stock just got upgraded by 3 leading brokers to “buy”
• 3 industries that may never recover from COVID-19
• ASX 200 Weekly Wrap: Gold miners help edge ASX ever higher
• Top brokers name 3 ASX 200 shares to sell next week
• What to watch on the ASX 200 next week

Motley Fool contributor James Mickleboro 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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The Australian Bureau of Statistics (ABS) released the third Household Impacts of COVID-19 Survey today, conducted throughout the country between 29 April and 4 May 2020.

According to the ABS, the series is designed to provide a snapshot of how people in Australian households are faring in response to the social and economic challenges brought about by COVID-19.

The third survey collected data relating to changes to people’s job situation, working from home arrangements, personal and household stressors, and lifestyle changes, among other topics.

The results of the survey were taken from telephone interviews conducted with around 1,000 Australian households.

Key findings

On the lifestyle front, the survey highlighted changes to people’s daily routines in the period of late April to early May:

• 22% said they were eating more snack foods, such as chips, lollies and biscuits
• 58% said they were spending more time in front of their television, computer, phone, or other devices
• 29% reported less frequent consumption of takeaway or delivered meals
• 38% said they were spending more time baking or cooking.

Additionally, 21% of people reported purchasing additional household supplies, which was much lower than the 47% recorded in April. This is in line with announcements from our major ASX supermarkets Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) that trading is beginning to return to normal levels. As such, both companies have resumed home delivery services.

While ASX supermarket shares have been the beneficiaries of people cooking more at home, so too has meal kit provider Marley Spoon AG (ASX: MMM). The company, which delivers fresh ingredients and recipes to customers’ doors, has reported a surge in demand amid COVID-19.

In terms of employment, the survey found that 46% of working Australians were working from home, while 59% of respondents were working paid hours as of early May. 

The survey also found that loneliness was the most widely reported source of stress for Australians, affecting 22% of the sample, with other factors such as relationship difficulties and mortgage repayment difficulties reported as further stressors.

Importantly, the majority of Australians were continuing to keep their distance from people outside of their household (94%) and avoid public spaces (85%). The most common reasons for leaving the house were shopping for food (88%) and exercising or walking pets (73%).

What next?

This data provides some insight into how a sample of Australian households have been dealing with COVID-19 and the associated restrictions. 

The ABS followed up with the same survey respondents again on 12 May to undertake the fourth cycle of the survey. Topics include superannuation, loan repayments, childcare and schooling arrangements, and temporary living arrangements.

From a financial and investing perspective, the findings relating to superannuation will be one to watch in the wake of the government’s early access to super scheme.

The information from this fourth survey will be released later this month on 29 May 2020.

More reading

• Why is the Woolworths share price flat for 2020?
• ASX 200 Weekly Wrap: Gold miners help edge ASX ever higher
• How this $70m ASX small cap is cutting down a $50bn industry
• 5 things to watch on the ASX 200 on Monday
• ASX shares that could benefit from the Internet of Food

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

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The coronavirus pandemic saw shoppers flock to supermarkets around Australia to panic buy essentials and non-discretionary items. Despite the surge in consumer demand, the share price of Australia’s largest supermarket retailer, Woolworths Group Ltd (ASX: WOW), remains flat for the year.

So, is the Woolworths share price a long-term bargain and should you buy?

How has Woolworths performed?

Late last month, Woolworths reported its strongest quarterly sales growth in more than a decade. The group’s sales surged more than 10% to $16.5 billion for the quarter, with supermarket sales rising more than 40% in the week ending March 22. Long-life items such as toilet paper, pasta, flour and bread mixes fuelled sales growth as consumers rushed to stock up their pantries.

Woolworths saw total sales within its Endeavour Drinks business rise 9.5% for the quarter to $2.25 billion. Boasting brands such as Dan Murphy’s and BWS, Endeavor Drinks reported a surge in sales as consumers stocked up on takeaway liquor amid fears surrounding lockdown restrictions.

All of this should have been a boost for the Woolworths share price. However, following the federal government’s response to the coronavirus pandemic, the company closed the operations of its Hotels business in late March and, as a result, sales dropped more than 12% for the quarter.

$5 million boosts from Marley Spoon

Woolworths has also made a handy profit from its stake in subscription-based meal kit provider Marley Spoon AG (ASX: MMM). The Marley Spoon share price has surged around 400% since mid-March as the company enjoyed a boom in demand for at-home meal consumption.

As a result, according to the Australian Financial Review (AFR), Woolworths stands to make approximately $5 million in profit from its stake in the meal box delivery service. In 2019, Australia’s largest retailer invested $30 million in Marley Spoon through a debt and equity transaction. The deal issued Woolworths with 8.2 million in ASX-listed chess depositary notes in Marley Spoon at 50 cents each.

Why is the Woolworths share price flat?

Despite strong sales growth in its supermarket and liquor divisions, as well as profit from its stake in Marley Spoon, Woolworths has also incurred increased costs. According to the company’s management, increased costs for wages, security, supply chain and e-commerce will partially offset sales growth.

In order to satisfy consumer demand whilst also maintaining social distancing measures, Woolworths saw costs soar between $70 million and $90 million in March. These costs are expected to increase to a range of between $220 million and $275 million for the June quarter as Woolworths looks to prepare itself for future trading amid a potential second wave of the pandemic.

Should you buy?

The Woolworths share price is currently trading on a price-to-earnings ratio of around 27 times future earnings, which could prompt some investors to assess the stock as being too expensive. In my opinion, even though Woolworths has seen a surge in costs and substantial losses in its hotel business, the company’s share price still looks attractive for long-term growth.

There are, however, many moving parts in the short term, given the uncertain trading environment resulting from the coronavirus pandemic. For this reason, I think a prudent strategy would be to see how Woolworths handles future costs before making an investment decision.

More reading

• Latest ABS data reveals how Australians are responding to COVID-19
• ASX 200 Weekly Wrap: Gold miners help edge ASX ever higher
• How this $70m ASX small cap is cutting down a $50bn industry
• ASX shares that could benefit from the Internet of Food
• 4 top ASX 200 shares for blue chip investors

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. 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.

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The Ramsay Health Care Limited (ASX: RHC) share price is continuing its momentum today, up by 3.46% at the time of writing after providing 2 positive updates to the ASX this morning.

Ramsay announced it will provide support for the UK healthcare system for a 14-week period during the COVID-19 pandemic. This continues support it has been providing the UK National Healthcare Service (NHS) since 23 March. 

This new deal continues Ramsay’s strategy of making its private hospital beds available for public health sectors across Australia. Today, the company also announced it has finalised a deal with the Western Australian Government where, in return for maintaining full workforce capacity at its facilities, Ramsay will receive net recoverable costs for its services. 

On Friday, Ramsay announced a similar binding heads of agreement with NSW. Both Queensland and Victoria have already reached similar deals with the company.

Shoring up finances

The Ramsay share price finished last week up 5.3% from Monday’s opening price. Given today’s news and the market’s response so far, I believe it will continue its upward share price momentum. These agreements replace revenue the company had lost due to pandemic restrictions, in particular the cancellation of all non-urgent elective surgeries. The company wisely withdrew its FY20 guidance on 18 March in response to rising uncertainty in Europe particularly at the time. 

The deals over the past 4 to 5 weeks will cover the company’s costs. Also, the capital raising will shore up its finances and place it in a good position as we all emerge from lock down. 

Is the share price momentum justified?

At the time of writing, the Ramsay share price remains down by 8.65%, year to date. At this price, it is trading at a price-to-earnings ratio of 24.7. This is ~2 points higher than its 10-year average and underscores investors belief in the company as a growth opportunity. I personally think it is a great opportunity.

Ramsay has achieved high 10-year compound annual growth rates (CAGR) across all major valuation indicators. This marks it as a very well managed company with a product that is in demand.

Its performance includes a 12.9% CAGR in sales, a 42.4% CAGR in free cashflow and a 13.7% CAGR in earnings per share (EPS). 

Foolish takeaway

Ramsay is set to continue its share price momentum after striking a number of revenue replacement deals across Australia and now in the UK. This underscores the very strong management as shown by its historic financial performance. The company has delivered strong growth over a decade. 

More reading

• How to invest $5,000 in ASX 200 healthcare shares today
• 5 ASX 200 winners and 5 losers of the week
• These small cap ASX shares could be stars of the future
• 3 ASX healthcare shares to buy for strong long-term growth
• The next ASX sector in a post COVID-19 earnings upgrade cycle

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. 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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There are some industries that may never recover from the COVID-19 global pandemic. What are you supposed to think about the shares in those industries?

It’s clear that some shares are going to see a long-term boost to user numbers and growth, such as Pushpay Holdings Ltd (ASX: PPH) and Kogan.com Ltd (ASX: KGN).

But what about some of the industries that are seeing the opposite? A huge drop off of activity, perhaps a permanent shift in the mindset of their customers?

Travel is one industry that many never recover from COVID-19

Australia has virtually blocked international travel because of the ongoing coronavirus pandemic. I think the travel industry may never be able to fully recover from COVID-19. Particularly if there are permanent costs and screenings of passengers. I’m somewhat confident that domestic travel will be available sooner rather than later. But international travel and tourism could be limited for some time.

How long will it take Sydney Airport Holdings Pty Ltd (ASX: SYD) to see most of its international volume to come back? The physical retail network of Flight Centre Travel Group Ltd (ASX: FLT) may never be the same again. When will Air New Zealand Limited (ASX: AIZ) be able to report good passenger numbers again?

I do think that Webjet Limited (ASX: WEB) and Qantas Airways Limited (ASX: QAN) could be some of the strongest ASX travel performers due to Australia’s good infection position, the need for flights to travel to most parts of Australia and the desire of people to travel.

Physical retail stores

Forcing everyone to stay at home for a few weeks may have caused a fundamental shift in people’s mindsets about shopping. Online shopping can be very convenient. You don’t have to drive all that way, find a car park spot and so on. I think the physical retail store industry may never recover from COVID-19. We’re already hearing some shares like Adairs Ltd (ASX: ADH) and Premier Investments Ltd (ASX: PMV) report huge online growth, and those shoppers may stay online. Retailers reliant on their physical stores could struggle. 

There are some shares that have been doing eCommerce very well such as City Chic Collective Ltd (ASX: CCX).

Property trusts in general

The knock-on effects of COVID-19 will be very interesting for property. Some commercial property bulls are claiming that social distancing will require businesses to rent twice as much space so all employees can be appropriately separate. I’m not so sure that will happen.

I think this period is going to kickstart a longer-term shift to a lot of workers working at home. Imagine the costs that could be saved if businesses can downsize or completely leave their expensive CBD building.

It’s also an interesting question for shopping centres and hotels. Almost the entire real estate investment trust (REIT) industry may never recover from COVID-19.

There are some interesting questions for REITs like Scentre Group (ASX: SCG), Vicinity Centres (ASX: VCX), Hotel Property Investments Ltd (ASX: HPI) and DEXUS Property Group (ASX: DXS). They all still have significant value, I’m not not sure they’ll command the same premium as before. 

But I do believe that REITs like Goodman Group (ASX: GMG) and Rural Funds Group (ASX: RFF) still have promising futures.

Foolish takeaway

There are industries out there that will fully recover from COVID-19. Those shares could be cheap, but you have to consider each idea carefully.

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Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd, Premier Investments Limited, PUSHPAY FPO NZX, RURALFUNDS STAPLED, and Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and 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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