
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.
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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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