Recently, analysts from respected broker Bell Potter released a research note on automotive retailer AP Eagers Ltd (ASX: APE). Here’s why analysts think the company’s share price could be turning the corner in 2020 and beyond.

COVID-19 pandemic could see boom in new car sales

AP Eagers is Australia’s oldest listed automotive retail group, operating dealerships across the country. Despite its huge presence, AP Eagers has faced multiple headwinds in recent times with the auto sector struggling to gain traction.

New vehicle sales in Australia have been in a spiralling decline, recording 25 consecutive months of lower sales. The COVID-19 pandemic has accelerated the industry’s decline, with lockdown restrictions hampering demand. Despite the doom and gloom, analysts are optimistic that new car sales could receive a massive boost.

According to analysts, the aftermath of the COVID-19 pandemic could see new car sales receive a much-needed boost as the public avoid taking public transport. This shift in consumer behaviour was recently reflected in China, where new vehicle sales increased on a weekly basis.

How has AP Eagers responded to the pandemic?

The AP Eagers share price has bounced more than 120% from its low in late March. The company released an update in late April informing shareholders that its dealerships remained operational. Management also elaborated that the COVID-19 pandemic has allowed the company to reduce its cost base and reshape its business.

AP Eagers also secured an additional $122 million in working capital that has put the company in a better position than its smaller competitors. As a result, the current pandemic could provide AP Eagers with the opportunity to buy distressed dealerships and improve the company’s overall liquidity.

Should you buy?

Analysts are bullish on the outlook for AP Eagers, slapping a $6.50 price target on the company’s share price. AP Eagers has many positives going for it, with the asset-rich company acquiring market leader Automotive Holdings Group in 2019. In addition, AP Eagers was added to the S&P/ASX 200 Index (ASX: XJO) in the December 2019 quarterly rebalance, which could see increased demand from index funds.

In my opinion, the hypothesis of changed consumer behaviour post-pandemic is interesting. China, however, may not be the best lead indicator of future performance of new car sales in Australia. Chinese consumers have greater incentives and subsidies when it comes to buying new cars.

As a result, I think a prudent strategy for investors would be to keep ASX auto shares like AP Eagers and Carsales.com Ltd (ASX: CAR) on a watchlist so that they may capitalise if the narrative eventuates.   

More reading

• Market close: ASX 200 ends 0.5% higher
• These ASX shares made strong gains last week
• These were the best performing ASX 200 shares last week
• The latest ASX 200 shares to be upgraded by top brokers to “buy”
• These were the best performing ASX 200 shares in April

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

The post Analysts think this ASX auto share could be turning the corner appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3bsi4M8

The good news for growth investors is that the Australian share market is home to a large number of companies growing their earnings at a very strong rate.

Perhaps the hardest thing for investors is deciding which growth shares to buy above others.

To help narrow things down for you, I have picked out three ASX growth shares I would buy right now with $3,000:

Altium Limited (ASX: ALU)

Altium is one of my favourite growth shares and one which I think could generate strong returns for investors over the next decade. It is an award-winning printed circuit board (PCB) design software provider which has been growing at an explosive rate over the last few years. I believe this strong form can continue over the next decade thanks to increasing demand for its innovative and industry-leading PCB software. This is due largely to its exposure to the Internet of Things (IoT) boom. But also supporting its growth will be its other businesses such as the Octopart search engine for electronic and industrial parts.

Nanosonics Ltd (ASX: NAN)

Another of my favourite growth shares is Nanosonics. It is an infection control company which I think could prove to be a great long term investment. This is due to the enormous potential of its trophon EPR disinfection system for ultrasound probes and the impending launch of several new products. These secretive products have similar addressable markets to the trophon EPR system. If these products are a success, they could underpin strong earnings growth over the next decade and beyond.

Pushpay Holdings Ltd (ASX: PPH)

A final growth share to consider buying is Pushpay. It is a fast-growing donor management system provider to the faith sector in the United States, Canada, Australia, and New Zealand. Demand for Pushpay’s product has been growing strongly, even during the coronavirus pandemic. This was evident in its recent full year result release and guidance for FY 2021. After delivering a ~1,500% increase in EBITDAF in FY 2020, the company is now aiming to double it this year. Looking further ahead, the company is aiming to win a 50% share of the medium and large church market. This represents a US$1 billion opportunity for Pushpay.

More reading

• 3 ASX tech shares to buy and hold until at least 2030
• 2 ASX shares that every investor should own
• 3 of the best ASX 200 shares to buy and hold for 10 years
• These are the star ASX shares of the week
• How to make a $1 million share portfolio by investing $1,000 a month

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Nanosonics Limited and PUSHPAY FPO NZX. 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.

The post 3 ASX growth shares to buy immediately with $3,000 appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2WjFGOz