If you’re looking for strong returns over the next decade, then I think the three ASX shares listed below could be worth considering.

I believe all three ASX shares are well-placed to be market-beaters in the 2020s. Here’s why:

Bubs Australia Ltd (ASX: BUB)

Bubs is an infant formula and baby food company. It has been growing its sales at a rapid rate in recent years thanks to its expanding distribution footprint and increasing demand in Asia. Given how demand continues to grow, particularly in China, I believe there will be more strong sales growth to over the coming years. And with its operations now becoming profitable, I expect its earnings to grow at a rapid rate as it scales.

Freedom Foods Group Ltd (ASX: FNP)

Freedom Foods is a diversified food company with a focus on healthy eating. Its shares have come under significant pressure over the last few trading days after a surprisingly bad trading update. A number of the company’s channels have been struggling during the pandemic and look set to weigh heavily on its full year results. While this is disappointing, I believe the selloff has created a buying opportunity. Especially considering how these headwinds are transient and will soon ease now that restrictions are lifting. In light of this, I feel now could be an opportune time to make a patient buy and hold investment.

Jumbo Interactive (ASX: JIN)

Another share which I believe could grow strongly over the next decade is Jumbo. It is an online lottery ticket seller and the operator of the Oz Lotteries website. This year the company’s financial performance will take a hit because of its investment in growth opportunities. But these investments in its Jumbo software-as-a-service platform certainly appear worthwhile and look set to underpin years of strong growth. Once again, I think this makes Jumbo a great buy and hold option.

More reading

• Why the Bubs share price is up 65% in 2 months
• 2 cheap ASX 200 shares to buy right now
• Is the a2 Milk share price too high to buy?
• Top brokers are urging you to buy these ASX shares today
• Why a2 Milk, Freedom Foods, Scentre, & TPG Telecom are dropping lower

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 Jumbo Interactive Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BUBS AUST FPO. The Motley Fool Australia has recommended BUBS AUST FPO, Freedom Foods Group Limited, and 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.

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Despite its strong form over the last couple of months, the S&P/ASX 200 Index (ASX: XJO) is still trading around 19% lower than its February highs.

While this is disappointing, this isn’t a bad result compared to some shares on the index.

The Flight Centre Travel Group Ltd (ASX: FLT) share price has been a particularly poor performer this year. The travel agent’s shares are down 69% from their 52-week high.

Why is the Flight Centre share price down 69% from its high?

Investors have been selling the travel agent’s shares due to the impact the pandemic has had on the global travel market.

For example, during April the company’s total transaction value (TTV) was tracking at approximately 5% to 10% of normal levels.

The good news, though, is that Flight Centre has been cutting its costs materially to combat this.

Last month management revealed that it was making strong progress towards reducing its global cost base down to its $65 million per month target. This should mean the company has more than enough liquidity to ride out the storm.

Is the Flight Centre share price a bargain buy?

While Flight Centre could prove to be a good long term investment, I wouldn’t be in a rush to invest.

This is because, although I’m optimistic that domestic tourism will start its recovery in the coming months, it will take some time before the local travel market returns to normal.

Furthermore, it will take even longer for international tourism to return to normal levels.

In light of this, I think the company has a tough couple of years ahead of it. As such, I wouldn’t expect its profits to return to previous levels any sooner than FY 2022, but possibly later.

For the same reasons, I’m not in a rush to buy Webjet Limited (ASX: WEB) shares either just yet.

More reading

• Why the price of these ASX travel shares soared over 30% since mid-May
• 3 ASX 200 shares to watch this week
• 5 ASX 200 winners and 3 losers from last week
• The Webjet share price jumped 35% in May: Is it too late to invest?
• ASX retail shares best placed to benefit from wall of industry bankruptcies

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel 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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Want to know where to invest $1,000 into ASX shares?

The ASX has performed strongly since that initial coronavirus share market sell-off. Some share performances have been too strong in my opinion, so I’d leave those ASX shares to one side.

Investing $1,000 of your hard-earned money is an important job. You don’t want to throw it away on the wrong investments. Only go for the best ASX ideas. 

Here is a growth idea and a dividend idea:

ASX growth share: Pushpay Holdings Ltd (ASX: PPH)

I think Pushpay is one of the most promising ASX shares. It’s an electronic donation business that’s currently focused on the large and medium churches in the US. This is such a large sector that Pushpay thinks this is a $1 billion revenue opportunity.

The ongoing coronavirus pandemic is terrible. But Pushpay is helping churches through this. The Pushpay technology enables churches to livestream to their congregations. Electronically donating is obviously also on the rise in a period of social distancing.

Pushpay is expecting that earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) to approximately double over the course of FY21. That would be a very strong result from the ASX share. And that’s just one year. It’s expecting to achieve higher gross margins over time. 

I’m not expecting Pushpay to become a major player in anything other than the US church sector. But if it could grow into other donation areas, that would further increase its growth potential.

ASX dividend share: Brickworks Limited (ASX: BKW)

I think Brickworks is an undervalued ASX dividend share. It owns a large amount of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares which provides reliable earnings and growing dividends

Brickworks also owns a 50% stake in an industrial property trust along with Goodman Group (ASX: GMG). Industrial properties should be in even more demand due to the rapid shift to ecommerce due to the coronavirus.

Most people would know Brickworks as a building products business. It’s certainly tough to be in construction right now. But there is plenty of talk of government support for the sector. And demand for construction will return in the future.

In the meantime Brickworks is making use of the shutdowns to accelerate its plans in the US and it has closed one of its plants.

Brickworks is trading cheaply compared to its asset value. It hasn’t decreased its dividend for over 40 years and currently offers a grossed-up dividend yield of 5.2%.

Foolish takeaway

I think that both of these ASX shares have a strong potential to deliver very good returns over the next few years. Over the next five years I believe that Pushpay could deliver very impressive earnings growth. But Brickworks could provide a very solid dividend as well.

More reading

• ASX 200 rises 0.3%, Zip rockets higher
• Why Amaysim, Bingo, Brickworks, & BlueScope are pushing higher today
• Is Pushpay a millionaire maker share?
• I think these 2 ASX 200 shares will beat the market
• These 5 exciting small cap ASX tech shares rose by up to 70% in May

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, PUSHPAY FPO NZX, and Washington H. Soul Pattinson and Company 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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The Boral Limited (ASX: BLD) share price surged for the second day on rumours that it may be a takeover target.

Shares in the building materials group jumped 6.6% to $3.54 on Tuesday – making it the third best performer on the S&P/ASX 200 Index (Index:^AXJO) after the Perenti Global Ltd (ASX: PRN) and Domain Holdings Australia Ltd (ASX: DHG) share price.

Corporate interest in Boral

The big jump in Boral, which puts its two-day gain to nearly 14%, puzzled many before rumours were published in the Australian Financial Review pointing to a large buyer.

It’s speculated that Kerry Stokes’ Seven Group Holdings Ltd (ASX: SVW) has been a keen buyer of the stock on Friday when 150 million Boral shares changed hands. That’s equivalent to 12% of Boral.

We should know soon if Seven Group is behind the frenzy as it will need to lodge a substantial holder’s notice with the ASX this week – assuming the rumours are true.

Why Seven Group might be interested in Boral

Such a move makes strategic sense. First, Seven Group has a track record of buying businesses, such as construction equipment rental company Coats Hire.

Boral will allow the group to expand vertically into the infrastructure construction sector by providing both materials and equipment.

Seven Group is tipped to win work on the Snowy Hydro 2.0 project, the Western Sydney Airport and WestConnex extensions, according to the AFR.

Wounded animal

Boral is underperforming the market after a series of management missteps that culminated in its chief executive Mike King announcing his exit in August.

Not only is its share price in the doldrums, which makes it an opportunistic target, but its effectively leaderless. All the more enticing for any would be acquirer.

But a full takeover isn’t a sure thing.

Next move may not be a takeover

Boral’s troublesome US business doesn’t quite fit into Seven Group’s portfolio and Boral is facing a class action lawsuit over an accounting scandal involving the group’s US windows business.

Any new owner of Boral would be liable to pay damages if the court rules against the Boral.

So, this means that Seven Group may be buying itself a seat at the table in any carve-up of Boral’s assets.

Boral is under pressure to consider a radical restructure that would involve divesting assets.

Foolish takeaway

I have picked Boral as an ideal tax-loss selling candidate a week ago, before the corporate action was revealed.

This doesn’t change my dim view of Boral as I don’t recommend investors buy shares solely based on takeover hopes.

I rather stick to better quality names in the industry like James Hardie Industries plc (ASX: JHX) and CSR Limited (ASX: CSR).

Further, these stocks are better placed to benefit from the federal government’s new housing grants, which are expected to be announced this week.

More reading

• ASX 200 rises 0.3%, Zip rockets higher
• Why Coles and Woolworths shares were flat in May
• 3 long-term impacts of near-zero interest rates
• 3 things ASX investors need to know about the RBA’s rate decision today
• These ASX shares were among the best performers in May, surpassing the ASX 200

Motley Fool contributor Brendon Lau owns shares of James Hardie Industries plc. Connect with me on Twitter @brenlau.

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.

The post This embattled ASX 200 company could be the next M&A target appeared first on Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) went up by 0.3% today as the ASX continued its steady climb upwards. The ASX 200 finished at 5,835 points.

The protests in the US are grabbing the attention with the coronavirus currently not at the forefront of people’s minds. This year has been very eventful so far.

Zip Co Ltd’s (ASX: Z1P) big acquisition

The Zip share price flew higher today by 38.7%. The company announced that it’s going to buy the rest of US-based QuadPay by issuing up to 119 million shares to QuadPay shareholders. The deal implies an enterprise value of US$269 million for Quadpay.

Zip described Quadpay as one of the leading BNPL providers in the US. Based on the first quarter in 2020, QuadPay has annualised revenue of $70 million and annualised total transaction value (TTV) of $900 million. It also has a net transaction margin of more than 2%.

The combined ASX 200 business will have $3 billion of annualised TTV and annualised revenue of $250 million.

Zip has also entered into an agreement with CVI Investments to raise up to $200 million with convertible notes and warrants.

Brickworks Limited (ASX: BKW) trading update

The ASX 200 building products business gave a trading update today. Over the past few months it has managed to make a profit from its Australian building products business, but the US division saw negative earnings.

Australian building product revenue was only down by 10% in the four months to 31 May 2020 compared to the prior corresponding period. Development approval has been received for the new $125 million brick plant at Horsley Park in NSW.

Progress continues at the Oakdale site.

Australia and New Zealand Banking Group (ASX: ANZ) sale

ANZ has finally managed to sell its UDC Finance business for NZ$762 million to Shinsei Bank, a large Japanese business.

The sale will provide around $439 million of level 2 group CET1 capital once settled for the ASX 200 bank. It’ll also released more than NZ$2 billion of funding provided by ANZ New Zealand.

Shinsei intends to preserve UDC’s operations, retain employees and grow the business.

More reading

• This embattled ASX 200 company could be the next M&A target
• Why Coles and Woolworths shares were flat in May
• 3 long-term impacts of near-zero interest rates
• 3 things ASX investors need to know about the RBA’s rate decision today
• These ASX shares were among the best performers in May, surpassing the ASX 200

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 ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Brickworks. 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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Overall, May was an extraordinary month for ASX shares. The S&P/ASX 200 Index (ASX: XJO) managed to bank an increase of 4.2% for the month, helped in large part by the ASX banks like Commonwealth Bank of Australia (ASX: CBA).

But other some ASX shares weren’t really joining in the party.

Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) are 2 examples.

The Coles share price started May at $15.51 per share but ended the month at $15.36, meaning the company actually went backwards by 0.97% over the month.

Meanwhile, Woolworths shares began the month at $35.75 per share and concluded May at $35.34, again, down 1.15%.

So why have Woolies’ and Coles’ share prices lagged so dramatically over May? And perhaps more importantly, does this mean there might be some buying opportunities right now?

Why Coles and Woolies have been lagging lately

It’s worth remembering that both the Woolworths and Coles share prices were holding up remarkably well during the market crash we saw in March. Between 20 February and 23 March, the ASX 200 lost more than 36% of its value. Over the same period, the Coles share price ‘only’ lost 3.53% and Woolworths was down 16.4%.

It’s this defensiveness that is leading Coles and Woolworths to lag the broader market’s recovery in my view.

If a stock isn’t volatile relative to the ASX 200 during bad times, it typically displays similar inertia during good times.

Are Woolworths or Coles shares a buy today?

It’s worth noting that I think Woolworths shares were getting a little overpriced prior to the March crash, which explains why they performed poorly compared to the Coles share price during the crash.

Thus, I would class both Coles and Woolworths shares as ‘fairly valued’ today, despite their recent market performance.

But ‘fairly valued’ is still a long way from being a ‘bargain buy’.

On current prices, Coles is trading on a price-to-earnings (P/E) ratio of 17.44 and Woolworths on 17.7. Given that the broader ASX 200 P/E is sitting at 18.98 on average, I’m not really too compelled to add these shares to my portfolio today.

But there might be some merit in these 2 ASX giants if you’re a dividend income investor. Unlike many other ASX blue chips, I think both Coles and Woolworths will easily be able to fund their dividend payments in 2020. The grocery business is very defensive and should hold up no matter what happens with the economy for the remainder of the year.

So long story short, I would class both Coles and Woolworths as reasonable ‘buys’ today for dividend income, but not for much else.

More reading

• This embattled ASX 200 company could be the next M&A target
• ASX 200 rises 0.3%, Zip rockets higher
• Smash low interest rates with these ASX dividend shares
• 3 long-term impacts of near-zero interest rates
• 3 things ASX investors need to know about the RBA’s rate decision today

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths 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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The Bubs Australia Ltd (ASX: BUB) share price has been a strong performer over the last few weeks.

Since this time in May, the infant formula and baby food products company’s shares have risen a massive 23%.

And if we go back a further month, then its performance is even more impressive.

The Bubs share price has stormed a remarkable 65% since this time in April.

Why has the Bubs share price surged higher?

There have been a couple of catalysts for this strong share price performance over the last couple of months.

The first was an impressive third quarter update in April, which revealed record quarterly revenue of $19.7 million. This was a 67% jump on the prior corresponding period and a 36% lift on the second quarter.

But perhaps what was most promising with its quarterly update, was news that Bubs is now generating positive operating cashflow. For the quarter, Bubs recorded positive operating cashflow of $2.3 million.

This appears to demonstrate that it has finally reached a scale which means its operations are profitable. Which is a big positive as it has burned through a significant amount of cash in recent years while essentially selling its products at a loss.

Interestingly, this is similar to what A2 Milk Company Ltd (ASX: A2M) experienced back in 2015. Since then it has gone on to become an extremely profitable business.

What else has got investors excited?

Another announcement that got investors excited was a supply agreement with supermarket giant Coles Group Ltd (ASX: COL).

Last month Bubs revealed that its Bubs Organic Grass Fed Infant Formula will be distributed to 482 Coles supermarkets. Initial orders were to be processed in the middle of May, with its products expected on-shelf early this month.

This is in addition to its existing agreement for Bubs Goat Milk Infant Formula (which is ranged in 561 stores) and Bubs Organic Toddler Snacks (which is ranged in up to 804 stores).

Furthermore, within the same announcement the company revealed that fellow supermarket operator Woolworths Group Ltd (ASX: WOW) has increased its supply agreements. This will see Bubs Organic Grass Fed Infant Formula ranged in 800 Woolworths stores and Bubs Goat Milk Infant Formula in 654 Woolworths stores.

Is it too late to invest?

I don’t believe it is too late to invest with a long term view.

Given the progress that Bubs is making with its margins, its increasing footprint, and strong demand in China, it looks well-positioned to deliver strong earnings growth over the next decade.

More reading

• Is the a2 Milk share price too high to buy?
• Top ASX Stock Picks for June 2020
• 10 top ASX growth shares to buy in June for strong returns
• How to make $1,000 a month in dividends
• Where to invest $10,000 into ASX shares immediately

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 BUBS AUST FPO. The Motley Fool Australia owns shares of A2 Milk, COLESGROUP DEF SET, and Woolworths Limited. The Motley Fool Australia has recommended BUBS AUST FPO. 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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