If you’re looking at adding a few new shares to your portfolio, then I think the five listed below are worth considering.

I believe all five have the potential to generate strong returns for investors over the next decade.

Here’s why I would buy them:

Aristocrat Leisure Limited (ASX: ALL)

I think this gaming technology company could be a long term market beater. Although it looks likely to experience a short term reduction in demand for its poker machines due to the pandemic, I expect its social and mobile gaming apps to thrive during lockdowns. If it can retain these users when casinos reopen, Aristocrat Leisure will be well-placed for growth over the next 10 years.

Bigtincan Holdings Ltd (ASX: BTH)

Bigtincan is a provider of enterprise mobility software which allows sales and service organisations to improve mobile worker productivity through smart devices. It counts a growing number of blue chip companies such as Australia and New Zealand Banking Group (ASX: ANZ), sports giant Nike, and global beauty retailer Sephora as customers. I believe this is a testament to the quality of its offering.

Bravura Solutions Ltd (ASX: BVS)

Bravura Solutions is a fintech company providing software and services to the wealth management and funds administration industries. It has a number of different products in its portfolio, but the key one for me is the Sonata wealth management platform. 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. It is aiming to generate $1 billion in global ticket sales annually through its platform by FY 2022. This will be triple what it achieved in FY 2019. If it delivers on this, then I suspect its shares will be trading notably higher than where they are today. 

Kogan.com Ltd (ASX: KGN)

A final share to consider as a buy and hold option is Kogan. I think the ecommerce company would be a good option for investors due to continued shift to online shopping. In addition to this, its expansion into potentially lucrative verticals such as energy and mobile and the launch of Kogan Marketplace should support its earnings growth in the future.

More reading

• Is this ASX 200 share market recovery “fool’s gold”? This ASX fundie thinks so
• Where to invest $20,000 into ASX shares for strong long term returns
• 3 top ASX growth shares to buy with $3,000 after the market crash
• These mid cap ASX shares could be long term market beaters
• ASX shares and investing trends that could boom post COVID-19

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. The Motley Fool Australia owns shares of and has recommended BIGTINCAN FPO and Kogan.com ltd. The Motley Fool Australia has recommended Bravura Solutions Ltd and Jumbo Interactive 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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If you want to become wealthy then you just need to do one main thing for your personal finances. Save.

The biggest difference for your money will be how much money you save. If you have enough income then it’s easier to save an extra $5,000 a year than it is to earn an extra 2% annual returns from your investments.

There are a number of good phrases when it comes to saving. “Live below your means”. “Spend less than you earn”. It’s true. It’s certain that you can make your money work harder by simply spending less, whereas investment returns are uncertain.

When you look at a compound interest calculator like the one from Moneysmart, you can see what a difference it makes. Let’s assume your investments return 10% per annum no matter how much you invest. Over 20 years if you invest $750 a month you end with $569,000. If you invest $1,000 a month you get $759,000 after 20 years. It’s clear how becoming wealthy can be decided by how much you save. 

The coronavirus is certainly causing a lot of difficulty at the moment. But if you’re able to keep saving during this time then investing into shares is a really good thing to be doing right now.

How saving can help your investing to become wealthy

Your long-term returns can be boosted when you buy assets at cheaper prices. Good saving allows you to buy more of those assets. Exchange-traded funds (ETFs) like BetaShares Australia 200 ETF (ASX: A200) and Vanguard Australian Shares Index ETF (ASX: VAS) are now much cheaper than they were a few months ago.

High-quality long-term ASX shares like Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Wesfarmers Ltd (ASX: WES) and Brickworks Limited (ASX: BKW) are also at attractively cheaper prices and can help you become wealthy over time.

More reading

• These 3 ASX 200 retail shares are absolutely thriving right now
• 3 high quality ASX shares for a retirement portfolio
• 3 of the best ASX dividend shares for income
• Where I’d invest $1,000 into ASX shares right now
• ASX 200 Weekly Wrap: New ASX bull run continues

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company 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 Wesfarmers 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 S&P/ASX 200 Index (Index:^AXJO) re-entered a bull market with every sector rallying this afternoon.

The top 200 stock benchmark jumped 1.5% as we headed into the close – near the its intraday high! This puts the index’s gain at just over 20% since its March 23 bear market low.

This could be an opportunity to dump some stocks as the market rally only fuels fuel debate about overstretched valuations and a looming second market sell-off.

Bulls vs. bears

The pessimists are convinced that the wave of terrible economic data and a deep recession triggered by the COVID-19 pandemic will send the ASX 200 tumbling back into bear territory.

On the other end of the argument, the optimists point to the flattening coronavirus curve and the record stimulus from central banks and governments around the world.

Whether the Australian and global economy experiences a “V”, “U” or “L” shaped recovery will determine the sustainability of the current bull market, in my view.

Knowing when to hold and fold

But whichever the recovery religion you subscribe to, Morgans believes this is an opportune time to lock in some profits and cut stocks that have run too far ahead of fundamentals.

“In April, key equity indices including the S&P500 (+13%) enjoyed their biggest monthly gains since 1988,” said the broker.

“However there remains a much larger than usual range of uncertainties driving equities, and a large range of potential economic outcomes in the coming months.

“Defensive asset classes tried, but failed to match the risk-tolerance displayed in equity markets in April by largely trending. This ongoing disagreement in key asset classes is conspicuous and is cause for our broader caution on the market.”

ASX stocks to sell

Even in the most optimistic scenario where the economy bounces back strongly in the near-term, businesses won’t be the same as we learn to adapt to the post COVID-19 world.

This is why the indiscriminate rally on the market is concerning. It’s more important than ever for investors to pick the right stock to hold and the wrong ones to fold.

Morgans believes the ASX stocks with too much good news priced into their shares include iron ore miner Fortescue Metals Group Limited (ASX: FMG), share market operator ASX Limited (ASX: ASX), job advertising website SEEK Limited (ASX: SEK) and online real estate classifieds group Domain Holdings Australia Ltd (ASX: DHG)

Weaker than their rivals

The broker is also wary of another group of shares. While Morgans rates these stocks “hold”, it notes that they are poorly positioned compared to their peers.

These include dairy products company Bega Cheese Ltd (ASX: BGA), our largest gold miner Newcrest Mining Limited (ASX: NCM) and waste management company Bingo Industries Ltd (ASX: BIN) – just to name a few.

More reading

• Will high unemployment be the last straw for this ASX bull run?
• Is this ASX 200 share market recovery “fool’s gold”? This ASX fundie thinks so
• Webjet share price jumps 25%: Is it good value?
• Is the Woolworths share price a buy?
• 3 ASX 200 pandemic winners and 3 losers

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. 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.

The post Morgans warns investors to sell these ASX 200 shares in the rally appeared first on Motley Fool Australia.

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