• Aluminum Makers in Canada Could Duck Trump’s Fresh Tariff

    Aluminum Makers in Canada Could Duck Trump’s Fresh Tariff(Bloomberg) — Donald Trump just went back on the offensive with Canada, reviving a tariff on the country’s aluminum shipments. But thanks to some oddities in the metal market, producers in the Great White North could escape without incurring a full blow from the duty.The freshly reinstated fees only apply to raw metal. That leaves the door open for U.S. companies to import Canada’s finished products made from aluminum — auto parts, jet bodies and machinery — free of duties. The loophole could be especially relevant now that many analysts expect that the economy is past its trough, meaning demand for the value-added parts is only expected to increase in the months ahead.That could be a saving grace for the Canadian industry, which supplies about half the aluminum consumed in America. Not only would it help them skirt the tariff issue, but value-added products also provide better margins. Demand for the finished products had slumped during the pandemic, but could now start to ramp up again as car factories and other businesses come back online.“I’d say Canadian producers — Alcoa and Rio Tinto — will likely shift whatever tons they can to value-added products versus primary ingot to avoid the ‘tax,’” said Andrew Cosgrove, a senior analyst at Bloomberg Intelligence. “But it will be limited by the speed at which downstream demand recovers.”Trump Reimposes Canadian Aluminum Import Tariff to Stem ‘Flood’Trump’s move to reimpose the tariff came just weeks after the president’s landmark North American trade agreement went into effect. The president may be trying to position himself as leader on the economy before the November election, but tariffs will likely drive up costs for end users such as brewers. Meanwhile, a shift by Canadian companies into more value-added products could help to bolster their earnings.Alcoa Corp., the biggest U.S. producer that also has smelters in Canada, said in May that the company shifted its mix of value-added products to 45% of total production, down from 55%, due to the drop in demand from the pandemic.But the company last month said that “high-level” manufacturing data for aluminum end markets was showing signs of improvement in North America and Europe in May and June. A company spokesman said in a telephone interview that imports of commodity grade metal will decrease as the economy improves, indicating that already the Pittsburgh-based producer will boost its value-added product mix as demand warrants.Canada Plans to Impose Countermeasures on U.S. Aluminium TariffsTo be sure, there’s only so much benefit that Canadian producers can gain from sales of value-added products. There’s no guarantee that the recovery will be steady — a spike in virus infections could lead to more shutdowns and sudden drops in demand.There’s also a likely ceiling on how much finished product Canadian producers would be able to ship before facing the possibility of duties on those exports as well. Jorge Vazquez, managing director at researcher Harbor Intelligence, estimates that figure would be about 1 million metric tons, based on trade agreements between the countries that took into account historical averages.Even with that cap, Canadian producers could benefit close to $200 million from the increased sale of value-added products, he estimates.“More than 1 million tons and they’ll jeopardize their exemption, but below that they’re going to benefit close to $200 million, which would be a windfall,” Vazquez said.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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  • Why it’s a good time to buy and hold ASX shares

    Broker recommendations sell shares

    Broker recommendations sell sharesBroker recommendations sell shares

    Investors don’t know whether to buy or sell their ASX shares right now.

    Tech and gold are surging higher but we’re seeing many industries struggle. Hospitality, travel and real estate have been hit hard by the coronavirus pandemic.

    But if you’re a long-term investor, you have to ignore the short-term noise. Here’s why I think it’s a good time to buy and hold ASX shares right now.

    Why you should buy and hold right now

    Many first time investors are trying their hand at investing this year. A sub-section of those investors have started day trading – buying and selling stocks with very short holding periods.

    That’s not investing, that’s just gambling. While the S&P/ASX 200 Index (ASX: XJO) has generally trended up over time, day by day fluctuations are somewhat random.

    History has shown us that a buy and hold strategy can pay long-term dividends. Even experienced investors have been spooked by the recent bear market and looming economic headwinds.

    However, I think now is the time to hold. Of course, the benchmark index is down (6.2%) in 2020 and you might be wary of purchasing ASX shares right now.

    But a worse strategy than buy and hold is market timing. If you try and time the market with your entry and exit then you’re playing a fool’s game. I think you’re more likely to get burned on the way down as you wait for the bottom and on the way back up as you wait for a strong bull run.

    That means a buy and hold strategy is a sensible move right now despite the market volatility.

    Which ASX shares are good to buy and hold?

    Once you’ve decided on your investing strategy, you have to choose your ASX shares to buy.

    As mentioned, both tech and gold have been doing well. I think Nextdc Ltd (ASX: NXT) is one to watch in the data storage space while Newcrest Mining Limited (ASX: NCM) is a top gold producer.

    If you’re after non-cyclical earnings, I like Coles Group Ltd (ASX: COL) as a solid buy with strong supermarket earnings.

    Legendary stock picker names 5 cheap stocks to buy right now

    Motley Fool resident tech stock expert Dr. Anirban Mahanti has stumbled upon five stocks he believes could be some of the greatest discoveries of his investing career.

    These little-known ASX stocks are growing like gangbusters, yet you can buy them today for less than $5 a share. Click here to learn more.

    See these 5 cheap stocks

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    Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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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  • 3 quality ASX shares for a beginner’s share portfolio

    young investor

    young investoryoung investor

    Are  you starting an ASX share portfolio for the first time? If so, I hope you discover, like me, that share investing not only is enjoyable but can also be a great way to supplement your income.

    Or, maybe you are looking for some good share picks to add to your portfolio?

    Either way, here’s why I believe the following 3 ASX shares could be good options for you.

    Woolworths Group Ltd (ASX: WOW)

    It’s not surprising that Woolworths is a very familiar brand name in Australia. The grocery retail giant is now Australia’s second-largest company based on revenue.

    Woolworths has been reasonably successful at winning back customers from its rival Coles Group Ltd (ASX: COL) over recent years, achieving this with a strategy focusing on quality, service and competitive pricing.

    Unlike many other retail companies, Woolworths’ revenue stream has been very resilient throughout the coronavirus pandemic. Supermarket stores have remained open because they provide an essential service. And Woolworths also delivers consumers a competitive online offering.

    Another benefit is that Woolworths pays investors a forward annual dividend yield of 2.6% that is fully franked.

    Macquarie Group Ltd (ASX: MQG)

    Macquarie Group is a global financial services business headquartered in Australia. The company’s strategy focuses on its international investment banking operations.

    I think Macquarie has become a more balanced and diversified business over the past few years. Previously, it was too focused on a small product set and got into trouble during the 2008 global financial crisis. However, in the current crisis triggered by the coronavirus pandemic, I believe Macquarie is now better positioned to weather the storm.

    Macquarie currently pays investors an attractive forward annual dividend yield of 3.5%.

    Vanguard MSCI Index International Shares ETF (ASX: VGS)

    My third recommendation is not an individual company, but what is referred to as an exchange traded fund (ETF). Vanguard invests in a broad basket of shares that are listed in range of overseas markets.

    Vanguard’s 5 biggest listings include tech giants such as Apple Inc, Microsoft and Amazon. There is no doubt that the ASX offers investors lots of great options. However, by investing in this ETF,  you will get exposure to a broad range of quality shares that are not available on the ASX as individual listings.

    Foolish Takeaway

    I believe Woolworths, Macquarie Group and the Vanguard ETF are solid options for anyone starting their ASX share portfolio or building on previous investments.

    Keep in mind, it’s a good strategy to expand your portfolio over time. This safeguard ensures that you have enough market diversification and not too much investment weighted on any individual listing.

    Legendary stock picker names 5 cheap stocks to buy right now

    Motley Fool resident tech stock expert Dr. Anirban Mahanti has stumbled upon five stocks he believes could be some of the greatest discoveries of his investing career.

    These little-known ASX stocks are growing like gangbusters, yet you can buy them today for less than $5 a share. Click here to learn more.

    See these 5 cheap stocks

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    Motley Fool contributor Phil Harpur 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. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF. 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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  • These ASX tech shares could be strong buys right now

    tech growth shares

    tech growth sharestech growth shares

    I believe the tech sector is a fantastic place to look for long term investment ideas. At this side of the market I feel there are a good number of shares that have the potential to generate strong long term returns for investors.

    Two ASX tech shares that I think could be strong buys right now are listed below:

    ELMO Software Ltd (ASX: ELO)

    At the small end of the market you’ll find ELMO. It is a cloud-based human resources and payroll software company. It provides a unified platform to streamline processes including employee administration, recruitment, on-boarding, and payroll. Demand has been growing strongly for its software over the last few years as businesses move to automated platforms. This led to the company reporting annualised recurring revenue (ARR) of $55.1 million and statutory revenue of $50.1 million in FY 2020. This was a 19.7% and 25% increase, respectively, year on year.

    Pleasingly, management expects to grow its ARR organically to between $65 million and $70 million in FY 2021. This represents year on year growth of 18% to 27%. Importantly, this does not include the benefits of potential acquisitions ELMO could make over the next 12 months. The company has a cash balance of $140 million and intends to deploy the majority of these funds in FY 2021.

    Xero Limited (ASX: XRO)

    At the large end of the market there’s Xero. It is a global cloud-based business and accounting software provider from New Zealand. It has been an exceptionally strong performer over the last few years and this continued to be the case in FY 2020. For the 12 months, Xero delivered a 30% increase in operating revenue to NZ$718.2 million and a 29% jump in annualised monthly recurring revenue to NZ$820.6 million. This was driven by an increase in its average revenue per user metric and a jump in total subscribers by 26% or 467,000 to 2.285 million subscribers.

    And while FY 2021 will have challenges because of the pandemic and its impact on small businesses, Xero’s long term outlook remains very positive. This is thanks to its massive global opportunity, strong pricing power, sticky product, and high quality platform. Combined, I expect them to result in strong earnings growth over the 2020s.

    5 stocks under $5

    We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.

    And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

    *Extreme Opportunities returns as of June 5th 2020

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    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 Elmo Software. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia has recommended Elmo Software. 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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  • Stock market crash 2020: 3 reasons why you can still make a million

    bar graph with man jumping over low number

    bar graph with man jumping over low numberbar graph with man jumping over low number

    Many shares have rebounded after the recent stock market crash. This may cause some investors to feel that it is now too late to make a significant profit through buying equities, and that they should invest elsewhere to make a million.

    However, some industries continue to offer wide margins of safety. Furthermore, the long-term recovery potential offered by the world economy, as well as the stock market’s past performance, could mean that now is the right time to buy a diverse range of shares to increase your chances of making a million.

    Low valuations after the market crash

    The stock market crash caused a wide range of shares to decline in value. While some of them have rebounded, a great many businesses continue to face an uncertain future. As such, their market valuations may be significantly lower than their historic averages in some cases.

    This could present a buying opportunity for long-term investors. Certainly, sectors such as energy and retail could face continued challenges in the coming months as a weak economic outlook weighs on their prospects. However, through buying financially-sound businesses when their share prices include a wide margin of safety, you could generate high returns as they recover in the coming years.

    Of course, the threat of a second stock market crash means that diversifying across multiple companies and industries is paramount to limit overall risk. Through building a diverse portfolio, you may also be able to access growth opportunities in a wider range of industries, which may further improve your portfolio’s prospects.

    Economic growth potential

    While the economy’s weak outlook may prompt a second market crash, its past performance suggests that it is likely to deliver a recovery over the long run. Certainly, there have been some major recessions over past decades. However, the world economy has never been in a state of permanently negative growth.

    Therefore, a return to more favourable operating conditions seems likely for the vast majority of businesses. With monetary policy being very accommodative in many of the world’s major economies, and fiscal policy tools being used to stimulate a recovery, now could be the right time to buy stocks while they do not reflect the prospects of improving economic performance in the coming years.

    Stock market track record

    Many share prices may have rebounded from the recent market crash, but history suggests that a rally is set to follow the current period of uncertainty. Previous bear markets have often taken many months, and even years in some cases, to give way to a sustained bull market that can produce new record highs.

    Therefore, with the stock market crash still being a recent event, investors can look ahead to likely growth from share prices. Over time, new record highs are likely to be made by indices such as the S&P 500 and FTSE 100, which could improve your chances of making a million. 

    5 stocks under $5

    We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.

    And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

    *Extreme Opportunities returns as of June 5th 2020

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    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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  • These were the best performing ASX 200 shares last week

    shares record high

    shares record highshares record high

    The S&P/ASX 200 Index (ASX: XJO) bounced back from a disappointing decline a week earlier to record a solid gain last week. The benchmark index pushed 1.3% higher over the five days to finish the period at 6,004.8 points.

    A number of shares on the index climbed more than most last week. Here’s why these were the best performing ASX 200 shares over the period:

    Mesoblast limited (ASX: MSB)

    The Mesoblast share price was the best performer on the ASX 200 last week with a 16.4% gain. This latest gain means the shares of the allogeneic cellular medicines for inflammatory diseases are now up over 111% year to date. While there was no news out of Mesoblast last week, a broker recently highlighted the company as a strong buy. Lodge Partners is bullish on Mesoblast due to the potential of its Ryoncil (remestemcel-L) product candidate.

    Incitec Pivot Ltd (ASX: IPL)

    The Incitec Pivot share price wasn’t far behind with a sizeable gain of 15.5% over the period. This follows the release of a number of broker notes with bullish ratings on the industrial chemicals company’s shares. Morgans, Macquarie, Goldman Sachs, and Citi all have the equivalent of buy ratings on its shares. The former upgraded Incitec Pivot’s shares to an add rating with a $2.35 price target following a better than expected trading update.

    Lynas Corporation Ltd (ASX: LYC)

    The Lynas share price was on form last week and recorded a gain of 12.1%. Investors were buying the rare earths producer’s shares after it provided an update on its Malaysia Permanent Deposit Facility (PDF). According to an announcement, the Atomic Energy Licensing Board has approved the proposed site at Bukit Ketam, Malaysia for the construction of a PDF for Water Leach Purification residue. This remains subject to completion of relevant studies and final approvals by regulatory authorities.

    News Corp (ASX: NWS)

    The News Corp share price was a strong performer over the period and climbed 11.8% higher. A good portion of this gain came on Friday following the release of the media company’s full year results. Although News Corp recorded a net loss of $1.55 billion for FY 2020, this was largely attributable to $1.69 billion in non-cash impairment charges. These relate primarily to its Foxtel and North America Marketing segments.

    5 stocks under $5

    We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.

    And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

    *Extreme Opportunities returns as of June 5th 2020

    More reading

    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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  • Got $3,000? Buy these 3 top ASX shares right now

    stocks

    stocksstocks

    I think it’s a great time to buy ASX shares. In-fact, I think it’s always a great time buy ASX shares – which ASX shares are worth buying can change each week as share prices change.

    There are plenty of quality options on the ASX, you just need to find the rights ones at good prices.

    If I had $3,000 to invest today, these are three ASX shares I’d buy today:

    Share 1: Pushpay Holdings Ltd (ASX: PPH)

    I believe that Pushpay is one of the best ASX shares that people can buy right now. It’s a digital donation business which is making life a lot easier for its large and medium US church clients. It enables people to electronically donate, which is very useful in this COVID-19 era of social distancing. Indeed, the company is seeing elevated growth during this period.

    In FY20 Pushpay grew revenue by around a third. In FY21 the company is expecting to at least double its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF). Businesses displaying this type of growth are the ones that we should aim to own in our portfolios if we’re aiming to beat the market over the longer-term.

    Digital donations are a fairly defensive industry when you think about it – people will continue to want to support their church even during a pandemic-caused recession. Pushpay helps churches stay connected with their congregations with a livestreaming service.

    Over the long-term, Pushpay is aiming to achieve US$1 billion of revenue from the US church sector. But there are plenty of other not-for-profit areas that Pushpay could expand into in the future like different religions, churches in other countries and even different sectors like education.

    At the current Pushpay share price it’s trading at 32x FY22’s estimated earnings.

    Share 2: MFF Capital Investments Ltd (ASX: MFF)

    MFF Capital is a listed investment company (LIC) which invests in overseas shares. It’s run by Magellan Financial Group Ltd (ASX: MFG) co-founder Chris Mackay who actually owns a large amount of MFF Capital shares. He’s aligned with regular shareholders. 

    At the moment two of MFF Capital’s biggest holdings are Visa and Mastercard, which make up around a third of the portfolio. MFF’s largest position at the moment is cash. Net cash was 41.7% of the portfolio at 31 July 2020. Other larger positions (with a weighting of more than 2%) include Home Depot, CVS Health, Berkshire Hathaway and Microsoft.

    MFF Capital has been a very strong performer for shareholders. Over the past decade it has delivered total shareholder returns over 17.9% per annum.

    With a commitment of higher dividends in the future, I think MFF Capital is well placed to deliver long-term shareholder returns. It also comes with lower costs than many other internationally-focused fund managers.

    At the current MFF Capital share price it’s trading at a small discount to its pre-tax net tangible assets (NTA).

    Share 3: Magellan High Conviction Trust (ASX: MHH)

    Many of the best businesses in the world aren’t ASX shares, they’re listed overseas – usually in the US. Magellan High Conviction Trust aims to invest in the best businesses in the world.

    Some of the most exciting businesses in the world are technology businesses. Their operating models allow them to expand quickly and they can deliver higher gross profit margins than many other types of businesses like manufacturers, retailers or commodity businesses.

    At the end of June 2020 its biggest five holdings were Alibaba, Alphabet, Facebook, Microsoft and Tencent. These are some of the highest-quality businesses in the world.

    The ASX share has fairly high management fees, but I think its growth-orientated portfolio could produce strong net returns over the longer-term. Better than the ASX, at least.

    The LIT offers concentrated diversification and it targets a 3% distribution yield. That’s not a bad yield in the current environment.

    At the current Magellan High Conviction Trust share price it’s trading at a 6.5% discount to the net asset value (NAV).

    Foolish takeaway

    I think each of these ASX shares have great growth prospects over the next five years. The international aspect of all of them is an attractive way to diversify away from Australia in my opinion.

    These 3 stocks could be the next big movers in 2020

    When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

    *Returns as of 6/8/2020

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    Tristan Harrison owns shares of Magellan Flagship Fund Ltd and MAGLOBTRST UNITS. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia has recommended PUSHPAY FPO NZX. 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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  • These were the worst performing ASX 200 shares last week

    The S&P/ASX 200 Index (ASX: XJO) returned to form last week and charged notably higher. The benchmark index recorded a 1.3% gain to finish the period at 6,004.8 points.

    Not all shares were able to follow the index higher last week. Here’s why these were the worst performing ASX 200 shares over the period:

    ResMed Inc. (ASX: RMD)

    The ResMed share price was the worst performer on the ASX 200 last week with an 11.4% decline. Investors were selling the sleep treatment focused medical device company’s shares after the release of its fourth quarter and full year update. Although ResMed delivered a very strong year of sales and profit growth, investors appear concerned by softer than expected mask sales during the pandemic. Management’s guidance for FY 2021 was also reasonably cautious.

    NRW Holdings Limited (ASX: NWH)

    The NRW share price was out of form and tumbled 7.9% lower last week. This means the contract services provider’s shares have given back the gains they made a week earlier following a positive announcement. That announcement revealed that the Southwest Connex Alliance has been named as the preferred proponent for the Bunbury Outer Ring Road project. NRW is a 40% partner in the alliance. The project is fully funded for $852 million and is expected to have a duration of three and a half years.

    Credit Corp Group Limited (ASX: CCP)

    The Credit Corp share price was a poor performer and recorded a decline of 6.1% over the five days. This appears to have been driven by profit taking after the debt collector’s shares surged higher a week earlier following its full year results release. Excluding one-off adjustments, Credit Corp’s net profit after tax would have been up 13% to $79.6 million in FY 2020.

    Southern Cross Media Group Ltd (ASX: SXL)

    The Southern Cross Media share price wasn’t far behind with a decline of just under 6.1% last week. This media company’s shares have come under significant selling pressure this year due to the negative impact of the pandemic on its operations and its highly dilutive capital raising. The company’s shares are now down a disappointing 74% since the start of the year.

    5 stocks under $5

    We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.

    And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

    *Extreme Opportunities returns as of June 5th 2020

    More reading

    Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ResMed Inc. 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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  • How I’d find the best bargain shares to buy today

    man in old fashioned suit and hat looking through magnifying glass

    man in old fashioned suit and hat looking through magnifying glassman in old fashioned suit and hat looking through magnifying glass

    The stock market crash means there are a number of bargain shares available for long-term investors to buy. Of course, an uncertain economic outlook may mean that finding them is more challenging now than it was previously.

    However, by focusing on sectors with growth potential that are unpopular among investors, and identifying businesses with sound strategies, you could build a diverse portfolio of stocks that is capable of delivering high returns in the long run.

    Bargain shares in unpopular sectors

    Buying the best shares in unloved industries could be a sound means of obtaining favourable risk/reward opportunities. Clearly, some sectors may be unpopular among investors for good reasons, such as weak growth outlooks. However, in some cases, investor apathy towards the wider stock market means that industries with growth potential are undervalued.

    Clearly, it is difficult at the present time to identify which sectors can recover from the current challenges facing the world economy. However, many trends of recent years look set to continue in the coming years. For example, an increasing use of technology in our everyday lives, a rising demand for healthcare-related products and services, and a switch towards greener forms of energy are likely to persist.

    This strategy may not necessarily lead to portfolio growth in the near term. However, the track record of the stock market shows that buying bargain shares in sectors with growth potential while they are unpopular among investors could increase your chances of generating high returns in the long run.

    Business strength

    The best bargain shares are not necessarily those with the lowest valuations. Certainly, a wide margin of safety helps to make any stock a ‘bargain’, but the quality of its operations also has a large bearing on its prospects from an investment perspective.

    Therefore, buying the strongest businesses in a specific sector could be a sound move. To achieve this goal, it may be necessary to consider factors such as financial strength, growth strategy and the size of a company’s economic moat. They may have changed significantly after the coronavirus pandemic, which could create new opportunities for businesses that previously did not have especially attractive business models.

    Assessing the quality of a range of companies may require time and effort on the part of the investor. However, it could be worth it if it means that you are able to identify the most attractive companies that ultimately produce the highest returns in the long run.

    With a wealth of information available via annual reports, trading updates and forecasts, it is possible for an investor to accurately gauge the quality of a business versus its sector peers. Doing so could make it easier for you to find the best bargain shares available after the market crash to boost your long-term financial prospects.

    Legendary stock picker names 5 cheap stocks to buy right now

    Motley Fool resident tech stock expert Dr. Anirban Mahanti has stumbled upon five stocks he believes could be some of the greatest discoveries of his investing career.

    These little-known ASX stocks are growing like gangbusters, yet you can buy them today for less than $5 a share. Click here to learn more.

    See these 5 cheap stocks

    More reading

    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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  • 3 steps I’d take today to make a million in the next market crash

    man walking up 3 brick pillars to dollar sign

    man walking up 3 brick pillars to dollar signman walking up 3 brick pillars to dollar sign

    It is almost impossible to predict when the next stock market crash will occur. However, the stock market’s track record of ups-and-downs suggests that investors will experience further downturns over the long run.

    Therefore, it makes sense to prepare yourself for the next stock market crash. Through adopting a patient approach that focuses on improving your industry knowledge, as well as readying your finances for investment in undervalued shares, you can increase your chances of making a million when the next stock market decline occurs.

    A patient approach

    It can be difficult to wait for a market crash. As the stock market’s performance has shown over recent months, it can quickly rebound from even the largest and fastest downturns.

    Although there may be stocks worth buying today and holding for the long term, some companies may now be fully valued after their recent rise. As such, it is logical to await more attractive price levels in some cases before deciding to add them to your portfolio.

    As mentioned, a stock market crash is very likely to occur in the coming years. The track record of the stock market shows that it has never made gains in perpetuity, just as it has never experienced a permanent bear market. Through biding your time and awaiting the right opportunities, you can maximise your chances of buying high-quality companies at low prices and selling them at a later date for a higher price.

    Evolving your industry knowledge

    It is too soon to tell how much the recent market crash will affect a number of industries. Some may recover from the coronavirus lockdown measures that have been put in place, while changing consumer trends may impact severely on other sectors.

    However, it makes sense for all investors to improve their sector knowledge in light of the major changes that could take place over the coming months. Some industries, such as online retail and healthcare, could become even more attractive. Meanwhile, others such as oil and gas, may struggle to produce market-beating returns.

    By understanding how different sectors could evolve over the long run, you may be in a better position to know which companies you will buy when a market crash occurs. This may give you an advantage over other investors, since you will have a clear plan of action during temporary market falls.

    Financial preparation ahead of a market crash

    It’s difficult to prepare financially for a market crash, but it could be a worthwhile step. This does not only mean having cash available to invest, it also means that your overall financial position is sound enough so that you are confident in remaining solvent throughout an economic downturn.

    Declines in share prices are often caused by a weak economic outlook that could realistically affect your own employment situation and financial position. Therefore, by having sufficient resources available to cope with the personal effect of an economic downturn, you may be in a better position to capitalise on attractive stock prices without worrying about your own situation. This could increase your capacity to invest in bargain shares, which may boost your chances of making a million.

    Where to invest $1,000 right now

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    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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