The rising gold price over recent months may mean that many investors see it as a sound means to make a million. After all, with the world economy’s outlook being uncertain, gold’s popularity could continue to rise among increasingly risk-averse investors.

However, over the long run, dirt-cheap shares could offer higher returns than the precious metal. The stock market’s track record of recovery means that buying undervalued stocks may be a means of obtaining high capital returns in the coming years.

As such, now could be the right time to build a diverse portfolio of bargain stocks instead of purchasing gold.

Gold’s prospects

Gold’s strong performance since the start of the year means that it may be increasingly seen as a means to make a million by investors. However, its recent price rise may not continue uninterrupted over the long run.

The precious metal has historically been highly popular during periods of low interest rates, when income-producing assets have less appeal on a relative basis. Furthermore, gold is seen as a store of wealth by many investors, which is a key reason why its price has spiked in recent months in response to a downgrade in the global economy’s growth forecasts.

However, over the long run the world economy’s performance is likely to improve. This could lift investor sentiment, and may encourage investors to focus their capital on riskier assets such as equities. Eventual rises in interest rates may also reduce demand for gold, which could mean that its capacity to deliver further strong price rises in the coming years is somewhat limited.

Stock market valuations

While the price of gold has risen close to record highs so far in 2020, investors aiming to make a million from the stock market have been highly disappointed. However, the wide margins of safety available across many sectors of the stock market could provide an opportunity to generate high returns in the long run.

The stock market has an excellent track record of recovering from its various downturns to produce new record highs. Sometimes this can take a number of years. However, as the economic outlook gradually improves, investors are likely to become more bullish about the prospects for riskier assets such as equities. This could mean that the stock market offers substantial long-term growth potential from its current price level, with many of its members appearing to offer good value for money after their recent declines.

Building a portfolio

As such, buying a diverse range of stocks could be a sound means of generating high returns over the long run. They may not outperform lower-risk assets such as gold in the short run, but may prove to be a more likely means to make a million over the coming years as the economic outlook improves and investor confidence is restored.

More reading

• These were the worst performing ASX 200 shares last week
• How to turn $20,000 into over $200,000 in 10 years with ASX shares
• Is the ANZ, APA or CSL share price a strong buy?
• 10 more top broker ASX share picks for FY21
• Looking to start a share portfolio? Here are 3 quality ASX shares to begin with

Motley Fool contributor Peter Stephens 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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Is the Australia and New Zealand Banking Group (ASX: ANZ), APA Group (ASX: APA) or CSL Limited (ASX: CSL) share price a strong buy?

The ASX has plenty of quality blue chip shares. However, I prefer to either buy ASX shares that I think will provide better growth than the market or better dividends. If you’re not going for either of those goals then you may as well just invest in BetaShares Australia 200 ETF (ASX: A200) for the ultra-low-cost and ultra-low effort.

We need to be selective with the prices that we pay for individual shares. The way you produce better returns is by buying at the right time. Either earlier on with in share’s growth journey or during a dip.

The COVID-19 selloff was definitely a bad time for many ASX shares, with some falling by over 50%. Some shares have recovered, whereas others haven’t. I’m going to look at whether the following ASX blue chips are strong buys:

CSL 

The CSL share price is still down more than 10% from its pre-coronavirus high in February 2020. That’s despite the company reaffirming its profit guidance for FY20 of between US$2.11 billion to US$2.17 billion.

The healthcare giant is involved in trying to help patients with COVID-19. The company warned that there may be modest delays with its capital projects and clinical trials. But that doesn’t put me off. 

I continue to be impressed by CSL’s commitment to research and development. It’s the creation of new and improved products that will continue to drive earnings higher as CSL helps solve healthcare problems around the world.

The company has been one of the best ASX share performers over the past two decades. I don’t expect the same growth of the CSL share price, but it could still provide good compounding results over the long-term. I wouldn’t call it a strong buy though.

ANZ

The ANZ share price is still down 30% from its pre-COVID-19 price in February 2020. Sadly, ANZ hasn’t performed like the CSL share price has in 2020 or over the longer-term.

The big ASX bank is facing a looming date in a few months where a lot of government support like the jobkeeper package is likely to end, or at least heavily reduced.

COVID-19 is expected to hurt ANZ’s earnings this year. That’s why ANZ included a credit provision of around $1 billion for impacts that ANZ expects to face from the pandemic.

I think it was a wise decision by the board to defer the dividend decision. ANZ’s leadership didn’t know how bad things would be, or that things wouldn’t turn out as badly as feared. 

There is still a lot of uncertainty. COVID-19 is spreading in Victoria and there is a danger that it could return to other states. I don’t think the ANZ share price is an obvious buy right now.  

APA

The current APA share price is almost exactly the same level as the pre-COVID-19 price. Just looking at the speed of the recovery, APA has gotten back faster than the CSL share price.

With its huge gas pipeline network around Australia, APA is well positioned to keep generating reliable cashflow whether COVID-19 spreads across the country again or not.

The infrastructure giant also has other energy assets which provide diversified earnings for shareholders.

APA is actually one of the best dividend shares on the ASX in my opinion. At least in terms of its consistent growth. The distribution has increased every year for a decade and a half. I don’t think APA is a strong buy for total returns today, but I think it’s a strong buy if you want reliable annual income.

The current FY20 distribution yield is 4.4% based on the 50 cents per unit payout.

Foolish takeaway

The CSL share price has produced strong returns in the past. I don’t think it’s a fantastic buy today, but it would be my choice of the three for long-term capital growth. APA is the one that attracts me the most for income.

More reading

• How to turn $20,000 into over $200,000 in 10 years with ASX shares
• Looking to start a share portfolio? Here are 3 quality ASX shares to begin with
• Is the CSL share price fairly valued?
• Fund managers have been snapping up Sonic and these ASX 200 stocks
• Why I would buy CSL and these ASX blue chip shares in FY 2021

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of APA 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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We’re now into FY21. I think it’s a good time to be thinking about what ASX shares will generate the best returns over the next 12 months. Broker Bell Potter from parent company Bell Financial Group Ltd (ASX: BFG) has released a list of shares that it thinks will do well this financial year.

I’ve already written about 10 of those ideas here. In this article I’m going to cover the other 10 that caught my eye:

Retail 

Share 1: Temple & Webster Group Ltd (ASX: TPW)

Why it’s a pick: As Australia’s largest online-only furniture and homewares retailer, it could be one of the biggest beneficiaries from the shift to online shopping due to COVID-19. Bell Potter likes the capital light nature of the business as well as the growth initiatives the company is making.

My view: The Temple & Webster share price has been a very strong performer since March 2020. But I think the ASX share still has an exciting future ahead with lower costs and growing brand awareness among potential customers. I’d be a happy long-term holder if I owned shares. 

Share 2: City Chic Collective Ltd (ASX: CCX)

Why it’s a pick: City Chic sells around two thirds of its plus-size women’s products online. It was, and is, well positioned to handle the current COVID-19 retail environment. With minimal debt, low costs and solid trading, City Chic is one of Bell Potter’s top picks.

My view: I think City Chic is one of the most promising small caps on the ASX. I really like the growing diversification of earnings. City Chic is steadily turning into a sizeable international player in the plus-size space. However, it has been a strong performer in recent months, I’d only start with a small parcel at the current City Chic share price.

Industrials 

Share 3: Corporate Travel Management Ltd (ASX: CTD)

Why it’s a pick: Bell Potter still likes Corporate Travel Management despite the COVID-19 problems. The broker thinks the ASX share can increase its market share and generate profit even from a low volume. 

My view: I think travel will make a comeback over the next couple of years, but I’m not sure personally about a full recovery for the corporate travel space. Online video conference calling may be a permanent shift for many. So, I’m not sure if the Corporate Travel Management share price is a buy, when there are other travel shares when may be better buys.

Share 4: Emeco Holdings Limited (ASX: EHL)

Why it’s a pick: The broker likes this ASX share which is a leading provider of rental earthmoving equipment and maintenance services. Mining has remained resilient in the face of COVID-19, which is reflected in the company’s guidance. Bell Potter estimated Emeco is trading at under 9x FY21’s earnings.

My view: Mining related businesses are not my strong point. It does seem cheap if the FY21 estimate is close to reality, it’s even cheaper with the Emeco share price falling on Friday. But mining can be unpredictable. 

Share 5: Johns Lyng Group Ltd (ASX: JLG)

Why it’s a pick: This ASX share is an integrated building services group. Bell Potter expects a strong FY20 result with insurance panel wins, increased volumes and acquisitions. It should have a solid FY21 because it provides essential services (which are unaffected by COVID-19 restrictions) and it has a full order book.

My view: I don’t know enough the company or the industry to know how much (longer-term) growth potential the company has. But this company does seem to have a good combination of defensive earnings and growth.

Resources

Share 6: Nickel Mines Ltd (ASX: NIC)

Why it’s a pick: The nickel miner has a strong balance sheet, it’s cheap compared to its peers and the broker likes the ASX share for its pure nickel exposure as that’s one of Bell Potter’s preferred base metals.

My view: I’m not a big fan of investing in commodity shares because they don’t have much control over the commodity price, which also means there isn’t a lot of control of profit year to year. The Nickel Mines share price has recovered back to the level where it was at 21 February 2020, so it’s not a beaten-up opportunity any more. 

Share 7: Regis Resources Limited (ASX: RRL)

Why it’s a pick: Regis Resources is a gold miner with an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 50% – this is at least as good as its peers, if not better. Bell Potter also likes the dividend paid by the gold miner.

My view: I don’t think you can look at gold miners as consistent compound growers because of how volatile the gold price is. The Regis Resources share price is close to its 2020 high, so I wouldn’t be too eager to load up on shares right now unless the gold price keeps rising.

Healthcare

Share 8: Volpara Health Technologies Ltd (ASX: VHT)

Why it’s a pick: This ASX share is helping detect breast cancer with its screening technology. Bell Potter likes the software as a service (SaaS) model. The broker also likes that the company now has a suite of products to improve the offering to clients.

My view: Volpara is one of the promising small cap healthcare ASX shares. I like that it’s rapidly growing revenue and market share. There’s a good chance it can increase its revenue per user with its growing product base.

Emerging companies

Share 9: Pointsbet Holdings Ltd (ASX: PBH)

Why it’s a pick: The resumption of the NRL and AFL should be beneficial for the gambling business. There’s also the prospect of US sports like the NBA, MLB and NHL coming back this month too.

My view: The Pointsbet share price has been a strong performer since the March 2020 low of the COVID-19 selloff. Just on Friday the company announced a deal with a US MLB team, the first of its kind. I think it could be one to watch if it keeps winning deals with in the US sport betting sector.

Professional services

Share 10: IPH Ltd (ASX: IPH)

Why it’s a pick: The intellectual property (IP) ASX share is a pick because it has proven to be resilient through previous economic downturns, it makes good cashflow, it has growing exposure to the high growth Asian IP market, there are benefits to the recent acquisitions and it’s expanding into other IP markets.

My view: There are plenty of positives to IPH. It seems like the type of business that could keep performing well through FY21 whether the market improves or worsens from here. It’s also a decent dividend share. At the IPH current price it offers a grossed-up dividend yield of 4.9%.

More reading

• ASX 200 closes 0.4% higher, Cochlear share price up 6%
• Why Lovisa, PointsBet, Transurban, & WiseTech shares are racing higher
• PointsBet share price zooms 5% higher on Detroit Tigers deal
• Why Afterpay and this ASX share just hit record highs
• Temple & Webster share price at an all-time high after capital raise

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Pointsbet Holdings Ltd, Temple & Webster Group Ltd, and VOLPARA FPO NZ. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. The Motley Fool Australia has recommended Pointsbet Holdings Ltd, Temple & Webster Group Ltd, and VOLPARA FPO NZ. 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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So, you’ve decided to start an ASX share portfolio. Well done on taking the plunge! I hope that you find share investing as interesting and rewarding as I do.

In this article, I’ll take you through 3 of my top share picks to get you started. Each of these companies operates in different sectors, providing you with market diversification.

Keep in mind, it’s always a good idea to expand your portfolio over time to ensure you have sufficient market diversification and not too much portfolio weighting in any one share. Try to build up your portfolio to have at least 10 shares over time.

CSL Limited (ASX: CSL)

CSL has had a great run on the Australian ASX over the past 2 decades. It is now the second-largest company on the ASX, with a market capitalisation of over $130 billion.

This ASX share has become a global market leader in blood plasma research and disease treatment. It has a strong global product reach spanning more than 60 countries. CSL is also playing a vital role during the coronavirus pandemic.  This includes entering into a new agreement to accelerate the development of a COVID-19 vaccine candidate.

I am confident that CSL is well-positioned to continue to grow its revenue base strongly over the next decade. A strong new product development pipeline will drive this growth. 

Macquarie Group Ltd (ASX: MQG)  

Macquarie is a global financial services business with a focus on international investment banking. It is a true Australian success story, with a strong track record of profitability over the last few decades.

Macquarie has become a more balanced and diversified business rather than one heavily focused on a small core group of operations, over the past few years. This diversification is what really appeals to me over Australia’s big 4 banks – Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd. (ASX: NAB) and Australia and New Zealand Banking GrpLtd (ASX: ANZ).

I believe this ASX share is a great choice for both growth and income. It currently pays a forward dividend yield of 3.7%, partially franked.

Transurban Group (ASX: TCL)

My third ASX share pick to get you started in Transurban. It is one of the world’s largest toll-road operators. It is also the largest operator of private toll-roads in Australia.

In fact, Transurban has a virtual monopoly on the toll roads of Australia’s 2 largest cities; Sydney and Melbourne. In addition, it also has a number of toll roads in Brisbane and in North America.

Transurban has typically been viewed as a strong defensive share from the perspective that it is unlikely to be impacted by economic downturns. The coronavirus pandemic has, of course, been a once-in-century exception to this… Although hit hard during the early phase of the pandemic, Transurban reported a progressive recent recovery in traffic on its toll networks across Australia.

I believe that Transurban remains well-placed to capitalise on a growing population in both Australia and the USA over the next decade.

More reading

• 2 ASX dividend shares with yields over 6%
• Here are the 10 shares that move global markets
• The latest ASX stocks to be downgraded by top brokers today
• Westpac share price lower after admitting to underpaying staff
• ASX 200 up 0.55%: Cochlear jumps on FDA approval, Adbri crushed on contract loss

Phil Harpur owns shares of CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia owns shares of Transurban 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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The stock market crash caused many shares to become undervalued across a wide range of sectors. While some of them have recovered to a large extent, there are still opportunities for long-term investors to generate high returns.

With monetary policy stimulus likely to lead to an improving economic outlook, and the stock market having a solid track record of recovery, now could be an opportune moment to buy high-quality businesses. Over the long run, it could even lead to you obtaining a seven-figure portfolio.

Cheap stocks after a market crash

The prospects for a number of industries continue to be uncertain after the market crash. For example, changing consumer trends could impact on the retail sector, while weaker demand for resources may cause challenging financial prospects for many oil and gas companies.

Therefore, there are still a number of stocks that appear to offer wide margins of safety. Certainly, many of them are not as cheap as they were a number of weeks ago during what was one of the fastest declines in the stock market’s history. But investors who are looking to use the stock market’s cyclicality to their advantage, in terms of buying at low prices and selling at higher prices, appear to have a number of opportunities available.

Economic recovery

The market crash suggested that many investors are downbeat about the economy’s near-term outlook. While this may prove to be correct, in the long run the world economy has a solid track record of delivering positive growth following its recessions.

For example, it recovered to post strong growth following the global financial crisis. There were times during that downturn when it felt as though economic growth would never return. The same prospects may be felt by some investors in the coming months, but with major fiscal and monetary policy stimulus a successful economic recovery seems highly likely.

Economic growth is likely to produce increasingly favourable operating conditions for most sectors. This could boost their earnings growth rates and lead to higher stock prices in the coming years.

Relative appeal

The market crash may have dissuaded some investors from buying equities in the near term. They may currently favour less risky assets, such as bonds and cash, in order to preserve the value of their portfolios.

However, over the long run investor sentiment towards stocks is likely to improve. The return prospects available from other mainstream assets could prove to be highly disappointing due to low interest rates that may now be present for a number of years.

This lack of relative appeal may lead to rising stock prices over the coming years that lifts the value of your portfolio. Through buying shares today while they are undervalued, you could generate high returns that increase your chances of making a million.

More reading

• 10 more top broker ASX share picks for FY21
• Looking to start a share portfolio? Here are 3 quality ASX shares to begin with
• How I’d invest after the worst stock market crash in 10 years
• The 3 reasons why I’d build a dividend share portfolio right now
• Stock market crash round 2: why more buying opportunities could be ahead

Motley Fool contributor Peter Stephens 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 recent market crash brought to an end a global bull market that had lasted in excess of ten years. While it is likely to have caused significant paper losses for many investors, it presents a buying opportunity for those individuals who have a long time horizon.

Through purchasing a diverse range of businesses with solid fundamentals, you can capitalise on the stock market’s future growth potential. It recovered from its previous crash in 2008/09 to produce new record highs, and is likely to do likewise over the coming years.

Recovering from a market crash

The recent market crash caught almost all investors by surprise. However, it is not without precedent, since the global stock market has experienced several sudden downturns in its history.

A common theme among them is that the stock market has always produced a rally that leads to new record highs. Certainly, that may seem unlikely in the recent aftermath of the 2020 market crash. However, the same could have been said during the global financial crisis and during any other previous downturn.

Investors who have the self-discipline to buy undervalued stocks after a market crash can generate high returns in the long run. In fact, market downturns often offer the best value opportunities due to weak investor sentiment.

A diverse range of sectors

After the recent market crash, it is unclear which sectors will produce strong growth in the coming years. Sectors such as retail, travel and leisure, mining, energy and many others face trading conditions that are exceptionally difficult to accurately predict at the present time. They may experience a fast return to pre-coronavirus operating conditions, but may equally have limited opportunities for growth.

Therefore, investing across a broad range of sectors could be an effective means of benefitting from the stock market’s recovery while limiting overall risk. Due to weak investor sentiment, many industries that offer long-term growth potential contain companies with wide margins of safety. Through holding a variety of them, you can reduce your reliance on a small number of businesses for your returns in what may prove to be an unpredictable investing environment.

Solid finances

Buying companies with solid finances after a market crash may also prove to be a sound move. They may be better able to cope with a period of economic weakness than their peers, and could even expand their market position at the expense of rivals that have less robust finances.

Through identifying businesses with large cash balances, access to banking facilities and debt levels that are serviceable even with reduced revenue in the short run, you can build a stronger portfolio that has less overall risk. It may also produce higher returns as you invest in companies that could have a higher chance of prospering in what may prove to be a period of weaker global economic growth.

More reading

• The 3 reasons why I’d build a dividend share portfolio right now
• Stock market crash round 2: why more buying opportunities could be ahead
• 2 ASX dividend shares with yields over 6%
• 2 dirt-cheap ASX shares to buy next week
• ASX 200 closes 0.4% higher, Cochlear share price up 6%

Motley Fool contributor Peter Stephens 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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