• Where to invest $5,000 in an irrational market

    Where to invest

    It can be very hard to decide where to invest in today’s market. When there is good news, it rises, it ignores bad news, and almost anything you put money into increases your investment. Personally, I think this is a recipe for disaster. Markets like this can attract people without investing experience who “bet” on whatever the hot tip is and get burned when reality kicks in.

    This irrational market could go on for a long time, or it could end with a thud tomorrow. Here are 3 ASX shares I would buy in today’s market with $5,000.

    Where to invest for value

    The secret to all of my investing over the years has been to find a good company, buy it at a low price, and hold onto it for years.

    I think Aristocrat Leisure Limited (ASX: ALL) is one of the best value opportunities on the ASX today. Aristocrat has a great financial track record, which underlines its strong management. In particular, the company has delivered a return on equity of 28% over 10 years. This is pretty high in relation to most large cap companies on the ASX. 

    Aristocrat Leisure operates in games of chance. This includes casino machines, gambling platforms, casino management systems and many other areas. It has a market presence in Asia, Australia and the USA.

    I would invest at least $2,000 in Aristocrat as a medium-term investment, as I believe it is currently selling at a discount.

    Where to invest for growth

    Jumbo Interactive Ltd (ASX: JIN) is one of the great shares on the S&P/ASX 200 Index (ASX: XJO). It has returned 25 times the initial investment since 2010. Despite this, it had a greater leap in sales last year than in any previous years. In addition, it was forecasting another increase this financial year before the coronavirus

    I would happily place at least $2,000 into Jumbo Interactive shares as an investment over the medium term. Although it currently has a relatively high price-to-earnings ratio of 25.5, I believe it still has a lot of growth left in it.

    Where to invest for security

    Vicinity Centres (ASX: VCX) is one of the largest Australian real estate investment trusts on the ASX. It specialises in ownership and management of Australian shopping centres. The company recently executed a share placement to raise capital, which added significant strength to its balance sheet. It recently reported that foot traffic was at 70% of the same period last year.

    I would invest $1,000 in Vicinity Centres today. Its road back to a healthily rising share price is slightly longer. However, I believe it is still a good company, with a 12-month trailing dividend yield of 9.85% at the time of writing.

    Foolish takeaway

    In heated markets like today, it can be hard to work out where to invest. Moreover, it is always very tempting to “bet” on the hot share of the day. In my view, these 3 ASX shares are undervalued and are all great opportunities for stable growth over the medium term.

    For some more ASX shares you might want to buy today, take a look at the free report below!

    5 ASX stocks under $5

    One trick to potentially generating life-changing wealth from the stock market is to buy early-stage growth companies when their share prices still look dirt cheap.

    Motley Fool’s resident tech stock expert Dr. Anirban Mahanti has identified 5 stocks he thinks 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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    Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended 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.

    The post Where to invest $5,000 in an irrational market appeared first on Motley Fool Australia.

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  • Will Xero shares and these 2 other ASX companies be portfolio staples by 2030?

    watering can watering money trees which are growing in size

    Xero Limited (ASX: XRO) shares have been performing strongly in recent years and it looks like the cloud-based accounting software company is one of the hottest ASX growth shares right now.

    Personally, I think the Aussie company has strong growth potential in the next decade. Xero is still signing up large clients and I think accounting software is as in-demand as ever in the current COVID-19 climate.

    However, Xero isn’t the only company that I could see becoming a cornerstone of Aussie share portfolios by the year 2030.

    Below I’ll share which ASX stars I have my eye on as potential large-caps of the future.

    Why Xero shares could be a cornerstone investment

    There seems to be a lot of talk on whether ASX growth shares are overvalued, particularly in the tech space. In saying this, I still believe it’s worth thinking about what will be the leading companies in the future. For today, that could mean strong dividend shares like Telstra Corporation Ltd (ASX: TLS) and BHP Group Ltd (ASX: BHP).

    In reality, growth shares often become dividend shares as they mature. High return on equity can’t continue forever, which means eventually these companies start returning capital to shareholders.

    I think Xero shares are just one potential staple of the future. I also think NextDC Limited (ASX: NXT) could be a growth turned dividend share.

    The NextDC share price has already rocketed 330.3% in the last 5 years. NextDC is an Australian data centre operator and I think it’s well-placed to capitalise on a growing market.

    This ASX tech group is continuing to expand and operates data centres across the country. That diversity and economic moat around the business could be the secret to sustaining momentum over the next decade.

    Of course, nothing is guaranteed with ASX growth shares like Xero or NextDC. However, the best we can do as investors is to pick high-quality companies with long-term potential.

    I’d also consider putting a growing healthcare share like Polynovo Ltd (ASX: PNV) in the mix. 

    Polynovo has seen strong success. Strong sales networks and extensive research and development bode well for the company’s future growth trajectory.

    Given the solid technical environment, I would put Polynovo in the same basket as Xero shares in terms of long-term growth potential.

    Foolish takeaway

    These are just a few ASX growth shares that I think have strong growth potential.

    I like the look of Polynovo, NextDC and Xero shares because all have had proven success with their business models.

    Investing in high-quality ASX shares for the future is the best strategy that I can think of to build long-term wealth.

    Below we’ve released a report with other (cheap!) shares to consider for your growth portfolio.

    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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    Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia owns shares of and has recommended Telstra 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 Will Xero shares and these 2 other ASX companies be portfolio staples by 2030? appeared first on Motley Fool Australia.

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  • Why Zip Co and these All Ords shares have doubled in 12 months

    beat the share market

    The All Ordinaries (ASX: XAO) may still be down 9% over the last 12 months, but not all shares have recorded declines over the period.

    In fact, some have been such strong performers they have more than doubled in value since then.

    Here are three shares which are up more than 100% since this time last year:

    Kogan.com Ltd (ASX: KGN)

    The Kogan share price has rocketed 184% higher over the last 12 months. A good portion of these gains have come in the last few months thanks to its impressive sales and gross profit growth. This has been driven by the pandemic accelerating the shift to online shopping. In addition to this, Kogan has announced a small bolt on acquisition and raised funds to make more acquisitions in the near future.

    Mesoblast limited (ASX: MSB)

    The Mesoblast share price has surged 190% higher since the time in 2019. Once again, the majority of this gain was made this year during the pandemic. Investors have been buying the biotech company’s shares due to the release of promising trial results from its allogeneic mesenchymal stem cell product candidate remestemcel-L. These trials were testing the product in ventilator-dependent COVID-19 patients. Also giving its shares a boost was its recent inclusion in the ASX 200 index at the June quarterly rebalance.

    Zip Co Ltd (ASX: Z1P)

    The Zip Co share price is up a massive 108% over the last 12 months. Yet again, the vast majority of this gain has come in 2020. It has been driven by a combination of strong sales and customer growth during the pandemic and the announcement of its expansion into the U.S. market. The buy now pay later provider is entering the $5 trillion retail market via the acquisition of QuadPay. Investors appear confident this is a good strategy and a low risk way of entering the lucrative market.

    Missed these massive gains? Then don’t miss these shares which could be next in line to shoot higher…

    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 ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Kogan.com 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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  • Next phase of bull market could see ANZ Bank outperform Afterpay

    outperform

    Don’t let today’s weakness on the S&P/ASX 200 Index (Index:^AXJO) fool you. The new bull market is here to stay although the next phase of the rally could see investors rotate to value stocks from growth.

    It’s growth stocks, including tech darlings like the Afterpay Ltd (ASX: APT) share price, that’s stolen the lime light since our market hit its bear market bottom in March.

    But we may soon see the ASX value shares outperform as conditions seem ripe for these laggards to outperform.

    Why value can outperform growth

    The recent steepening of the yield curve and expectations of a V-shape recovery favour these underachievers, according to Morgan Stanley.

    While there’s great debate over the shape of the ongoing economic recovery due to the COVID-19 crisis, the broker is more convinced than ever of a quicker rebound.

    “Our global team’s increased conviction in a sharper and shorter economic downturn has projected a V-shaped recovery in global markets,” said the broker.

    “Coupled with ongoing stimulus roll-out across regions and within country, [these are] providing the support for improving Value signalling and performance over the near and long term.”

    What are value stocks?

    Value stocks are those that tend to trade at a discount to the market or to their historical valuations. Growth stocks are those that trade at a premium as investors are willing to pay up for companies best placed to increase their earnings coming out of the recession.

    “Expensive valuations and better growth should push bond yields higher and the curve steeper – a ‘normal’ early cycle pattern, with the global rates team forecasting steeper yield curves into year-end for both the US and Australia,” added Morgan Stanley.

    Top stock picks for new year

    The broker highlights 11 ASX value stocks that it believes are the best of the bunch. Financial stocks on its list include Australia and New Zealand Banking GrpLtd (ASX: ANZ), Bendigo and Adelaide Bank Ltd (ASX: BEN) and Link Administration Holdings Ltd (ASX: LNK).

    In the industrials space, its top picks include cement supplier Adbri Ltd (ASX: ABC), building materials group Boral Limited (ASX: BLD), casino operator Crown Resorts Ltd (ASX: CWN), alcoholic drinks maker Treasury Wine Estates Ltd (ASX: TWE) and national carrier Qantas Airways Limited (ASX: QAN).

    There’re also one stock from property and materials each that Morgan Stanley favours. These are DEXUS Property Group (ASX: DXS), retailer Harvey Norman Holdings Limited (ASX: HVN) and BlueScope Steel Limited (ASX: BSL).

    Looking for more buy ideas for FY21? The experts at the Motely Fool have picked their best ASX stocks to buy now.

    Click on the link below to find out for free what these stocks are.

    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

    Brendon Lau owns shares of Australia & New Zealand Banking Group Limited and BlueScope Steel Limited. Connect with me on Twitter @brenlau.

    The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Link Administration Holdings Ltd. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Crown Resorts Limited and Link Administration Holdings 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.

    BrenLau owns shares of Australia & New Zealand Banking Group Limited and BlueScope Steel Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Link Administration Holdings Ltd. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Crown Resorts Limited and Link Administration Holdings 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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  • Is the NAB share price a strong buy?

    NAB Shares

    Is the National Australia Bank Ltd (ASX: NAB) share price a strong buy?

    The NAB share price remains down more than 30% from its pre-coronavirus level. When a blue chip drops that hard I think it’s worth considering whether it could be an contrarian opportunity to buy it.

    NAB and the other big four ASX banks of Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group (ASX: ANZ) were smashed during the selloff. The worst point was 23 March 2020.

    Thankfully the NAB share price has actually gone up 37% from its low in March.

    The COVID-19 picture looks much better now for Australia than it did in March. But the economic pain could still take some time to cure. The OECD has warned that Australian GDP could fall by 5% in 2020. If there is another outbreak and a return of lockdowns then Australian GDP could fall by 6.3% in 2020.

    What will the fallout be for NAB?

    NAB revealed some of the expected pain in its recent FY20 half-year result. NAB said credit impairment charges increased 158.6% to $1.16 billion. As a percentage of gross loans and acceptances, credit impairment charges rose 23 basis points to 38 basis points.

    FY20 first half charges included $828 million of additional collective provision forward looking adjustments, of which $807 million was a top-up to the economic adjustment to reflect potential COVID-19 impacts. In other words, NAB has provisioned $807 million for the COVID-19 pain. Higher bad debts result in a lower net profit and therefore a lower NAB share price is likely.

    The market was already expecting the sort of economic pain reported in this year’s interim report, that’s why the NAB share price had fallen so much before the result was released.

    Worryingly, NAB’s loan arrears had been rising even before COVID-19. The ratio of loans that are more than 90 days past due increased by 18 basis points to 0.97% in the FY20 half-year result. At the end of FY19 this arrears ratio was 0.93%. The FY19 half-year result the arrears ratio was 0.79%. At the end of FY18 the loan arrears ratio was 0.71%. It has been steadily climbing.

    Australia’s success at flattening the curve is good news for the broader economy. But there are still specific sections of the economy which could struggle. International tourism may not return during 2020. Australia hasn’t even managed to open the travel bubble with New Zealand yet.

    However, if the NAB profit pain is less than expected by the market then the NAB share price could prove cheap today.

    There were fears that the big ASX banks may not have provisioned enough money for how much COVID-19 will hurt the overall economy. Hopefully the current provisions are enough. There are signs it could be enough with the initial jobkeeper estimate being $60 billion higher than the expected real number.

    What about the NAB dividend?

    The NAB board decided to reduce the NAB interim dividend by 64% to 30 cents per share. This was obviously a large income hit to shareholders. But NAB acknowledged that the economic pain needed to shared across the bank, customers and shareholders. It could take a few years for the half-yearly dividend to return to something like $0.80 cents per share if the bank remains prudent with capital. 

    The decision to reduce the dividend was equivalent to $1.6 billion of CET1 ratio capital, or 37 basis points in percentage terms. The bank also did a large capital raising to increase its CET1 ratio, raising $3 billion from institutional investors alone.

    Is it time to buy NAB at this share price?

    The NAB share price is still a lot lower than it was before the COVID-19 hit. But interest rates are now a lot lower too, which means it could be harder for NAB to maintain profitability if the net interest margin (NIM) sinks.

    I don’t think NAB is a strong buy right now. Jobkeeper is expected to come to an end in September and that could cause more economic uncertainty. At this NAB share price I think I’d want to wait at least until November or December before buying.  

    3 “Double Down” Stocks To Ride The Bull Market

    Motley Fool resident tech stock expert Dr. Anirban Mahanti has stumbled upon three under-the-radar stock picks he believes could be some of the greatest discoveries of his investing career.

    He’s so confident in their future prospects that he has issued “double down” buy alerts on each of these three stocks to members of his Motley Fool Extreme Opportunities stock picking service.

    *Extreme Opportunities returns as of June 5th 2020

    More reading

    Motley Fool contributor Tristan Harrison 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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  • Are these beaten down ASX shares in the buy zone?

    beaten down shares

    Due to the market crash in March, a number of shares are trading significantly lower than their 52-week highs.

    While not all shares are necessarily bargain buys, a few which I think could be great value are listed below. Here’s why I like them at these levels:

    The Aristocrat Leisure Limited (ASX: ALL) share price is down 29% from its 52-week high. This has left the gaming technology company’s shares trading at 21x estimated FY 2021 earnings. I think this makes them great value based on its long term growth prospects. Aristocrat Leisure appears well-positioned to deliver strong earnings growth over the next decade thanks to its leading pokie machine business and fast-growing digital business. The latter is generating significant recurring revenues from its millions of daily active users.

    The Clover Corporation Limited (ASX: CLV) share price has lost a third of its value since peaking at $3.31. This has brought the shares of the infant formula ingredients producer down to an estimated 27x FY 2021 earnings. While this is still a notable premium to the market average, I believe it is a good price to pay for a company with such strong growth potential. Clover’s business looks well-placed to benefit from increasing demand for infant formula and favourable changes to ingredient requirements in a number of key markets.

    The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price is trading 33% below its 52-week high. Investors have been selling the airport operator’s shares after the coronavirus pandemic made its terminals a ghost town. And while it will take time for passenger numbers to recover fully, it will inevitably come in time. I think this makes it well worth taking advantage of this share price weakness by making a patient long-term investment.

    And here are more top shares to consider buying. All five recommendations below look like future market beaters…

    5 ASX stocks under $5

    One trick to potentially generating life-changing wealth from the stock market is to buy early-stage growth companies when their share prices still look dirt cheap.

    Motley Fool’s resident tech stock expert Dr. Anirban Mahanti has identified 5 stocks he thinks 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

    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 Clover Limited. 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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  • Hertz suspends plan to offer $500M in shares

    Hertz suspends plan to offer $500M in sharesHertz suspended its plan to sell up to $500 million in shares amid scrutiny from regulators. Yahoo Finance’s Jared Blikre joins The Final Round panel to break down the latest news.

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  • Is the Macquarie share price a solid buy today?

    Piggy bank wrapped in bubble wrap

    The Macquarie Group Ltd (ASX: MQG) share price climbed 0.55% higher yesterday to close at $121.00 per share.

    On a day when the S&P/ASX 200 Index (ASX: XJO) surged 0.83% higher, Macquarie was doing some of the heavy lifting.

    Investors have been bullish on ASX bank shares in recent months but is Macquarie a solid buy in the current market?

    Why the Macquarie share price has surged higher

    Macquarie was not immune to the bear market we saw in February and March. In fact, the Macquarie share price fell 52.4% from 21 February to 23 March.

    However, it’s been a different story since then with Macquarie’s market capitalisation rocketing to $43.5 billion.

    That’s good news for current shareholders, but where does it leave prospective investors?

    There are quite a few headwinds facing ASX bank shares like Macquarie right now. The effects of the 2018 Royal Commission are still lingering while the coronavirus pandemic and subsequent lockdown have presented some unique challenges for the sector.

    Macquarie is somewhat different from its other major bank peers. It is more of an investment bank compared to the retail and business banks like Commonwealth Bank of Australia (ASX: CBA) and National Australia Bank Ltd. (ASX: NAB).

    This creates some opportunities for the Macquarie share price to chart a different path through the current market conditions.

    For instance, Macquarie’s full-year earnings provided some hope for investors.

    Full year earnings

    The ASX bank posted an 8% decline in net profit to $2,731 million for the 12 months ended 31 March. Macquarie was certainly not immune from the impacts of COVID-19 and announced $1,040 million worth of impairments.

    But it wasn’t all bad news with Macquarie’s assets under management swelling 10% to $606.9 billion by year-end.

    The Aussie bank also declared a final dividend while some of its cohorts like Westpac Banking Corp (ASX: WBC) pulled back on their dividend payments.

    Importantly, the bank’s investment arms showed signs of strong performance. This included a 16% increase in net profit contribution from Macquarie Asset Management (MAM) to $2,177 million.

    Of course, there were downsides to the result including an inability to provide meaningful guidance for FY21. 

    However, I believe there are positive signs that Macquarie’s various business units can combine to stabilise earnings, despite the tough operating environment.

    How does Macquarie compare to other ASX bank shares?

    The Macquarie share price has now climbed 68% higher since 23 March.

    It’s been a similar story for many ASX 200 shares with investors sending the index climbing by 36% since its March low.

    However, I still think there are plenty of risks facing Macquarie and the other big banks right now. If you’re a long-term investor, I think it’s worth waiting until further results come out in October or November before jumping in.

    This will provide the best picture of Macquarie’s financial position and how its various investment arms have performed in 2020.

    I’ll be taking the same approach for both National Australia Bank and CommBank shares. National Australia Bank’s share price is up 36.6% since 23 March which could mean investors are a bit more skeptical about the big four compared to Macquarie.

    Foolish takeaway

    All the ASX banks have seen their values soar since the February/March crash but I’m not bullish enough to buy Macquarie at its current price.

    Instead of Macquarie, check out the following report for some cheap shares we Fools think have long-term growth potential.

    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 Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group 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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  • Stock market news live updates: Stock futures edge lower, extending declines

    Stock market news live updates: Stock futures edge lower, extending declinesStock futures ticked down Wednesday evening, adding to losses from the regular session.

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  • 2 ASX shares to buy for increased Australian travel

    kangaroo standing on white sandy beach

    I think the concept of Australian travel is going to be a pretty big deal over the foreseeable future. I don’t know about you, but right now I can’t imagine travelling anywhere else in the world, except for maybe New Zealand. Not Asia, Europe, the United States or the United Kingdom. 

    In fact, even achieving the reopening of our own state borders is proving to be a thorny issue in Queensland. Not so much in my home state of WA however; we see things a little differently.

    So in a world where travel is likely to be largely limited to within our own shores, which shares are likely to benefit?

    Transport for Australian travel

    Alliance Aviation Services Ltd (ASX: AQZ) has been one of the real workhorses of the coronavirus pandemic and looks set to emerge on the other side a better positioned company. Alliance saw increased demand for its charter flights during the lockdown period. In addition, the company recorded increases in its fly-in-fly-out flight volumes, something it has nurtured as a core service offering.

    Yet, it is Alliance’s recent award of flights to the Whitsundays by the Queensland Government that really tells the tale.  Alliance Airlines is structured as a nimble organisation with a low cost base. If we do have to live only with domestic tourism for a while, I believe the company will prosper. Conversely, a company like Qantas Airways Limited (ASX: QAN) is just too big to survive on local flights alone.

    Furthermore, the company has recently completed a successful $91.9 million share placement which will see it well positioned to take advantage of growth opportunities whilst maintaining a strong balance sheet.  

    Car parts and accessories

    Bapcor Ltd (ASX: BAP) is the Asia Pacific’s leading provider of vehicle parts, accessories, equipment, and services. Some of its well known brands include Autobarn and Midas. It stands to reason that if travel within Australia becomes an increasing trend, many of us will choose to get where we’re going by car. 

    Bapcor has grown its sales by an average of 14.9% every year for 6 years. In addition, the company’s share price has grown by an average of ~24% each year over the same period. If the Bapcor share price continues to rise at this rate, it would take just over 3 years to double an initial investment in the company. 

    Foolish takeaway

    I believe the increase in domestic tourism will provide an opportunity for particular companies to shine. The big international tourism operators like Webjet Limited (ASX: WEB) and Crown Resorts Ltd (ASX: CWN) are likely to see some benefit. But I feel it will mostly be those companies that facilitate regional travel which will really enjoy the spoils of a surge in domestic tourism.

    Download our expert report on 5 cheap shares that are also set to be big winners after Covid-19.

    5 ASX stocks under $5

    One trick to potentially generating life-changing wealth from the stock market is to buy early-stage growth companies when their share prices still look dirt cheap.

    Motley Fool’s resident tech stock expert Dr. Anirban Mahanti has identified 5 stocks he thinks 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 Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bapcor and Webjet Ltd. The Motley Fool Australia has recommended Crown Resorts 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 2 ASX shares to buy for increased Australian travel appeared first on Motley Fool Australia.

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