The recent stock market crash may have caused paper losses for many investors. After all, it was the largest fall in stock prices since the global financial crisis occurred over a decade ago.

However, it may also present an opportunity to buy high-quality businesses while they trade on low valuations. Over time, they have the capacity to deliver sound share price recoveries in many cases.

This could make them significantly more appealing relative to other mainstream assets. As such, now could be the right time to build a diverse portfolio of stocks to benefit from their improving total returns in the coming years.

Low valuations after a stock market crash

Although some share prices have recovered after the stock market crash, a large number of high-quality businesses continue to trade on low valuations. This suggests that they offer wide margins of safety, which could translate into impressive capital returns over the coming years.

A strategy of buying companies when they trade at a discount to their intrinsic value has generally been a sound means of generating market-beating returns in the past. It enables investors to use the stock market’s fluctuations to their advantage, in terms of buying at low prices and potentially selling at higher prices in future.

With the stock market crash causing extremely challenging trading conditions for many industries, some businesses with solid balance sheets and strong track records of profit growth currently trade at low prices. This could make today the ideal time to buy them, as they commence the process of rebuilding after the present economic difficulties they face.

Recovery potential

Of course, low share prices after the stock market crash are unlikely to remain present in perpetuity. The stock market has an excellent track record of recovering from even its very worst declines to post new record highs.

While a recovery may seem unlikely for some businesses that face difficult operating conditions, over time fiscal and monetary policy stimulus is likely to lead to world economy back to stronger levels of growth.

For example, the last stock market crash in 2008/09 caused many investors to become bearish about the prospects for the economy and stock market. However, within a few years, stock prices had generally recovered and investors who bought equities ahead of their turnaround generated high returns in many cases.

Relative appeal

The stock market crash may have dissuaded some investors from buying equities. It may even have convinced them to seek less risky assets such as bonds and cash. However, with low interest rates likely to persist over the medium term, the returns on cash and bonds may prove to be very disappointing.

Similarly, property investments may fail to keep pace with stocks when it comes to total returns. High house prices in many parts of the world could mean that now is the right time to buy undervalued stocks ahead of a likely recovery. They could make a bigger impact on your financial prospects over the long run.

More reading

• Sydney Airport share price lower after completing $2 billion equity raising
• ASX investors given a $1.7bn injection of COVID-19 hope
• 2 ASX shares I’d buy with $750 right now
• Why I would buy Appen and these ASX tech shares after the selloff
• A practical guide on how to invest in ASX shares

Motley Fool contributor Peter Stephens has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (Index:^AXJO) is building on yesterday’s gain as positive leads from overnight markets and optimism for a free COVID-19 vaccine lifts animal spirits.

The top 200 benchmark jumped 0.8% in early trade after notching up a 0.3% gain on Monday.

The upbeat mood is helped by the federal government’s $1.7 billion commitment to provide two potential vaccines for all Australians.

Ready to use COVID-19 vaccine by January?

One of these vaccines could be ready for use in as little as five months, according to a report on Business Insider.

The Morrison government signed contracts with pharmaceutical companies to secure 85 million doses of two vaccines.

One of the deals is with AstraZeneca for their production of the University of Oxford vaccine. The other is for another vaccine being developed by the University of Queensland.

CSL in the frontline of COVID fight

If these treatments are proven to be safe and effective in clinical trials, they will be made in Melbourne at CSL Limited’s (ASX: CSL) facilities.

This puts our largest ASX stock on the frontline of the pandemic. But don’t get too excited. While CSL’s topline will benefit from the contract to produce the vaccines, it won’t be making much profit in this situation.

However, what it will gain in terms of reputation could be a worth more over the longer-term. CSL is already a household name, but it will become a national icon if it’s linked to a successful COVID-19 treatment.

Australian could be first to be vaccinated

Our Prime Minister believes we could be among the first in the world to get vaccinated against the dreaded coronavirus, which infected close to 30 million people worldwide and claimed nearly 900,000 lives.

“Australians will gain free access to a COVID-19 vaccine in 2021 if trials prove successful,” said Prime Minister Scott Morrison said in a statement released yesterday.

“There are no guarantees that these vaccines will prove successful, however the agreement puts Australia at the top of the queue, if our medical experts give the vaccines the green light.”

$1.7 billion is a “cheap” gamble

There is a big “if” in the statement. Most drugs don’t make it past Phase 3 trials, although there are promising signs for both these candidates.

The bottom line is that $1.7 billion is a cheap price to pay given that the cost of COVID-19 to the Australian economy is 100 times that and counting.

When will a COVID-19 vaccine be ready?

The University of Oxford vaccine is already in Phase 3 trials (final human trials) and is the most advanced candidate in the world – if you ignored Russia’s claims.

This vaccine will be the first to be available if all the stars align, and so far, it’s producing a strong immune response without any major safety concerns.

The University of Queensland’s drug isn’t far behind, and it too is showing good promise. This candidate is currently in Phase 1 trials and should be available from mid-2021 onwards if everything goes to plan.

Sadly, things seldom do in the world of drug development, or investing for that matter.

Fingers crossed fellow Fools!

More reading

• A practical guide on how to invest in ASX shares
• Polynovo and one more ASX growth share to buy in 2021
• Is the Mesoblast share price a bargain yet?
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 rises 0.3%, CSL reveals COVID-19 vaccine manufacturing deals

Brendon Lau owns shares of CSL Ltd. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. 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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If I were investing with $750 today there are at least two ASX shares that I would buy.

You don’t need $10,000 to start investing. The great thing about investing in shares is that you can invest relatively small amounts. If you were investing in property you normally need a deposit of at least 10% of the property value.

I think these two ASX shares would make really good buys:

Bubs Australia Ltd (ASX: BUB)

Bubs is an infant formula business which specialises in goat milk products.

I think it has done a good job of growing the business from a small operator into a company which could deliver big growth. It has its own manufacturing facility in Australia and sells a variety of products.

Infant formula is the main engine for growth though. Bubs’ infant formula has a gross profit margin of around 40%, which is much higher than the overall business gross margin 24%. As infant formula becomes a larger part of the business, Bubs will become more profitable for its revenue.

In FY20 the ASX share’s infant formula revenue grew by 69%, so that segment is now 55% of the business, up from 30% in FY19. Total revenue grew by 32% to $62 million over the year.

Whilst I’m excited by the Chinese revenue growth potential, I think the ‘other markets’ is particularly exciting which now represents 10% of revenue. Vietnam is a key growth market right now. Asia is a very big market, even if you exclude China. 

Bubs recently decided to pursue in-market manufacturing in China. So Bubs is going to acquire a stake in the Beingmate manufacturing facility in China. It’s also looking to launch its China label products into the general trade channel.

The launch of Bubs vitamins and minerals could also be a good move if it gains traction with customers, particularly in Asia.

There are a lot of things going on with Bubs. But I think it only has to be reasonably successful with its overseas growth to deliver solid shareholder returns from the current Bubs share price of under $0.90.

WAM Microcap Limited (ASX: WMI)

I think ASX small cap shares are a great way to deliver good returns. However, you need to be even more picky with small caps than large caps. Smaller businesses have a lot more growth potential, but there’s also a lot more risk.

It’s a lot easier to grow a company’s revenue from $100 million to $200 million than it is to grow revenue from $10 billion to $20 billion.

WAM Microcap is a listed investment company (LIC) which invests in small caps with market capitalisations under $300 million at the time of acquisition. Its portfolio has performed very well since inception, its gross returns per annum has been 17.8% since June 2017.

Some of its current ASX share investments are names like Citadel Group Ltd (ASX: CGL), Redbubble Ltd (ASX: RBL), City Chic Collective Ltd (ASX: CCX), Reject Shop Ltd (ASX: TRS), People Infrastructure Ltd (ASX: PPE) and Temple & Webster Group Ltd (ASX: TPW).

WAM Microcap offers diversification as it’s invested in dozens of names in its portfolio. But it also offers protection with a relatively large cash position. At 31 July 2020, it had a 15.9% cash position weighting. That provides some downside protection and also means it has ammunition if share prices fall.

The LIC is able to pay out a growing dividend from its investment profits. At the current WAM Microcap share price it has an ordinary grossed-up dividend yield of 5.9%. It has also paid a special dividend in each financial year since it listed.

Foolish takeaway

I think WAM Microcap is a nice option for total returns with a mix of dividend and capital growth. Meanwhile, Bubs is an exciting option for long-term growth if it can capture a bit of market share in Asia.

More reading

• Bubs share price trading at a 5-month low. Is this a buying opportunity?
• Here’s how to make a $1 million portfolio by investing $1,000 a month
• I love volatile ASX share market days like today
• ASX 200 rises 0.8%, investors bet on SkyCity
• Why I just bought this ASX share for the long-term

Tristan Harrison owns shares of WAM MICRO FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BUBS AUST FPO and Temple & Webster Group Ltd. The Motley Fool Australia has recommended BUBS AUST FPO, Citadel Group Ltd, People Infrastructure Ltd, and Temple & Webster Group 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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The tech sector has come under a spot of pressure this month due to a profit taking selloff on Wall Street.

I believe this has pulled a number of ASX tech shares down to very attractive levels.

So if you’ve been sitting patiently and waiting for an opportunity to invest in the sector, I think now could be your time.

Here’s why I think these ASX tech shares are in the buy zone:

Appen Ltd (ASX: APX)

The first share to consider buying is this artificial intelligence services company. I believe the global leader in the development of high-quality, human annotated datasets for machine learning and artificial intelligence (AI) has the potential to grow its earnings at a very strong rate over the 2020s. This is thanks to the growing importance of machine learning and AI for businesses and governments. And with the Appen share price down over 25% from its 52-week high, now could be an opportune time to invest.

Nearmap Ltd (ASX: NEA)

Although the Nearmap share price is only down 10% from its 52-week high, I still think it is worth considering. It is a leading aerial imagery technology and location data company that gives businesses instant access to high resolution aerial imagery, city-scale 3D datasets, and integrated geospatial tools. Due to the quality of its platform, new product launches, and its sizeable market opportunity, I believe Nearmap can grow at a strong rate over the 2020s.

Whispir (ASX: WSP)

The Whispir share price is down 21% from its 52-week high. I think this could make it well worth considering an investment in the software-as-a-service communications workflow platform provider. I believe Whispir has a very bright future ahead of it thanks to its industry-leading software platform. This platform allows governments and businesses to deliver actionable two-way interactions at scale using automated multi-channel communication workflows. Management estimates that the Workflow Communications platform as a Service market could be worth US$8 billion per year by 2024.

More reading

• Top ASX growth shares to buy in September 2020
• Broker picks best ASX small cap stocks to buy from the reporting season
• Where to invest $500 into ASX shares right now
• Buy these exciting ASX shares after the tech selloff
• 4 exciting small cap ASX tech shares to watch

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 Whispir Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended Nearmap Ltd. and Whispir 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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Industry commentators often make it sound much harder than it is to invest in the share market. However, retail investors like you have a number of practical advantages over these perceived experts. You can invest in the share market for longer. You have relatively little cash to invest, so you can buy what you want. And you don’t have to provide quarterly, half-year or full-year performance updates.

So given that you have all of these advantages, here is a practical guide on how to invest in ASX shares. 

Get a broker

No, not a guy in an expensive pinstripe suit who’s going to charge you $100 to buy or sell what you’re telling him to. Online discount brokers provide a low cost and easy way to buy and sell shares. A number of them even provide some research, charting, watchlists and other tools.

A simple google search or use of a comparison site can be used to find the right broker for you. A quick search shows that you can currently get brokerage for as low as $9.50 per trade.

Formulate a strategy

The so-called experts will say that the hardest thing is to know what to buy. I think they’re nearly right. I personally think that the hardest part of investing is managing your emotions and biases. But stock selection still makes the podium tough.

The key to picking which ASX shares to invest in is to understand yourself and formulate a strategy accordingly. Have decades to invest? Have a huge emergency fund? Risk taker at heart? Then a growth-oriented portfolio will suit you best.

Naturally conservative? Needing the cash in 5 years? Wanting some income to live off of? Then a more defensive dividend portfolio might be for you.

Take the time to write down your goals, financial position and reflect on your psychology. It will serve you well and help you sleep at night.

Research, research, research

For first time investors in ASX shares, this relates to both your general share market and investing knowledge, as well as specific stocks.

Building your fundamental investing knowledge will make you faster at researching businesses, as well as more confident and faster in your decision making. Nowadays there are plenty of free or low cost resources out there. From YouTube, to blogs, to books, find out as much as you can about investing.

At a share-specific level, start to understand some businesses within your ‘circle of competence’. This could be the industry you work in, or products you use everyday. The Motley Fool provides great coverage of a lot of ASX shares on the website and even more detailed and in-depth research in the stock picking services.

Buy and hold, then buy some more

Buy and hold a diversified portfolio for the long term. Personally, I would recommend that new investors start buying broad-based exchange traded funds (ETFs) and then build a diversified portfolio of at least 15–20 shares. This number of investments boosts your chances of beating the market, whilst also reducing the chances of you losing your money over the long term.

An often overlooked key to this is your investing time horizon. Over 20 years, an investment in the S&P/ASX 200 Index (ASX: XJO) or S&P 500 has very little chance of losing you money. Each year less than that will increase your chances of losing money exponentially.

If you’re looking for ideas, my favourite ASX shares to buy now are Nanosonics Ltd (ASX: NAN), Xero Limited (ASX: XRO) and Resmed Inc. (ASX: RMD). Here’s a write up on Xero and some other favourites.

More reading

• Polynovo and one more ASX growth share to buy in 2021
• Is the Mesoblast share price a bargain yet?
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 rises 0.3%, CSL reveals COVID-19 vaccine manufacturing deals
• Invest like Warren Buffett and buy and hold these ASX shares

Lloyd Prout owns shares of Nanosonics Limited, Xero Limited and ResMed Inc and expresses his own opinions. 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 Nanosonics Limited. 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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The AMP Limited (ASX: AMP) share price could face pressure this morning after it suffered a credit rating downgrade.

The embattled wealth manager announced after the market closed yesterday that Standard and Poor’s (S&P) cut its rating on the listed entity, AMP Group Holdings Limited and AMP Bank by one notch each.

The setback threatens to derail the bounce in the share price as AMP tries to recover from its cultural and governance scandal. Should investors be worried?

AMP share price pressured by governance concerns

The downgrade was made worse by comments from S&P on the reasons behind the downgrade. The agency said that recent developments made it think that AMP’s governance was not “as strong as we previously considered“, reported the Australian Financial Review.

The trigger for S&P was the string of quick exits by senior managers and last week’s strategic review of group assets. AMP’s newly installed chair Debra Hazelton overrode the group’s also relatively new chief executive Francesco De Ferrari’s turnaround strategy.

Talk about a tense work environment! This isn’t something that would inspire confidence at a time when AMP badly needs to get back on its feet.

Credit vs. equity risks

But this latest development has not derailed my “buy” thesis on the stock. There are a few reasons for this.

Firstly, S&P is a credit agency. They advise debt investors on how safe it is to lend money to a company and they way they analyse a corporation is different from the way equities analysts would.

Credit analysts are particularly focused on default risks and downside scenarios. They don’t care as much about how much profit growth is achievable or sum-of-parts valuations. They want to be assured that the company can pay their debts as opposed to how much money it can make.

What this means is that a ratings downgrade by S&P or other credit agencies is less correlated to share price performance than a downgrade coming from a broker, for instance.

Downgrade doesn’t reflect AMP valuation

I am not saying credit and equity aren’t linked, but credit ratings aren’t driven by how much potential upside or downside there is in a share price.

This takes me to the second point. The reason why I think the risk-reward is looking attractive for AMP is because I think there’s intrinsic value in the business.

Risk-reward still looking attractive

No one will argue there is significant execution risk in the business. Management will need to learn to sing from the same song sheet at a time when the future of 170-year plus institution is at stake.

But what brings me some comfort is the belief that if AMP was carved up and sold off in pieces, the sales will fetch a higher price than where the stock is currently trading.

This is good news for equity investors, but could be a real headache for credit investors.

More reading

• ASX 200 Weekly Wrap: Friday crash pulls ASX back below 6,000 points
• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 next week
• These were the best performing ASX 200 shares last week
• Are IOOF shares in the buy zone today after the MLC acquisition?

Motley Fool contributor Brendon Lau owns shares of AMP Limited. 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.

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With the COVID-19 pandemic pushing many students to online learning, now may be time to invest in ASX education shares.

An ABC News article recently shed light on the surging demand for academic tutors. In addition, the article touched on the inadequacy of some academic school curriculums.

Some ASX education shares could be poised to benefit from the surging demand for academic tutors and support services.  

What’s fuelling the demand for tutors?

According to the ABC article, the COVID-19 pandemic has revealed glaring holes in Australia’s educational system.

With lessons moved online during the height of the pandemic, some parents were confronted by how far behind their children were with schoolwork.

In order to compensate, many parents have turned to tutoring services for additional educational resources. Some tutoring services have doubled the number of children on their books since the pandemic began.

The pandemic has also prompted a review of school curriculums.

The Australian Curriculum Assessment and Reporting Authority announced a review of the national prep to year 10 curriculum in June. The aim of the review is to streamline student workloads and lessons.

Given the weaknesses exposed in the education system, there are some companies listed on the ASX that could potentially help fill in the gaps.

Which ASX education shares could benefit?

3P Learning Ltd (ASX: 3PL) is an online education platform that offers a range of resources covering core subjects such as mathematics, spelling, literacy and science. 3P Learning’s platform currently boasts more than 5 million students from more than 17,000 schools around the world.

The company released its FY20 report last month and also revealed a takeover bid from United States-based IXL Learning. For FY20, 3P Learning recorded an 18% decline in underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of $14.6 million. 

3P Learning cited an increase in sales and marketing expenditure in the Americas region for the lacklustre performance. Despite a weak financial performance, 3P Learning reported promising customer retention in the Asia Pacific, Europe, the Middle East and Africa markets.

Kip McGrath Education Centres Limited (ASX: KME) is another company that could benefit. Kip McGrath provides tutoring to primary and secondary students for a wide range of core subjects. The company operates on a franchise business model with operations in Australia, the UK, South Africa and New Zealand.

Prior to the COVID-19 outbreak,  Kip McGrath provided 36,000 face to face lessons and 550 online lessons on a weekly basis. As a result of global lock-downs and social distancing measures, the company has expanded its online operations. In May, the company recorded a milestone of 20,000 online lessons while face-to-face tutoring dropped to 2,400 per week.

Kip McGrath has identified online tuition as a key market and growth opportunity that offers higher margins than traditional tutoring. As a result, the company completed a $5.9 million capital raise in June to accelerate the growth of its online platforms.

Foolish takeaway

The services provided by 3P Learning and Kip McGrath will not replace traditional teaching formats. However, they could become more popular as an auxiliary service. 

The convenience and high margins of online tutoring could also gain traction as they appeal to both customers and companies alike. The potential in this space has been reflected in the takeover offer for 3P Learning, with IXL’s slapping an enterprise value of $166.7 million on the company. 

In my opinion, auxiliary education providers like 3P Learning and Kip McrGath are poised to boom in 2020 and beyond. 

More reading

• 3P Learning share price explodes 22% on takeover bid

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The world is getting older and quickly. The global population aged 65 and over is growing faster than all other age groups.

According to the WHO, by 2050, one in six people in the world will be over age 65 (16%), up from one in 11 in 2019 (9%).  

The stats are even higher in Europe and North America, where the WHO estimates that one in four people could be over 65 in 2050.

This is expected to lead to growing demand for healthcare services over the next three decades, which I feel bodes well for a number of companies in the sector.

In light of this, I think investing in the healthcare sector with a long term view could be a smart move.

But where should you invest your money? Here are two ASX healthcare shares that I think would be great long term options for investors:

iShares Global Healthcare ETF (ASX: IXJ)

If you’d like to invest in a wide range of healthcare shares then you might want to consider putting money into the iShares Global Healthcare fund. As its name implies, this exchange traded fund (ETF) gives investors exposure to many of the biggest healthcare companies across the globe. This includes the likes of  AstraZeneca, CSL Ltd (ASX: CSL), Johnson & Johnson, Merck & Co, Sanofi, and United Health. Given the aforementioned ageing population tailwind, I believe these healthcare shares are collectively well-positioned for growth over the next decade. This could mean the iShares Global Healthcare ETF generates strong returns for investors.

Ramsay Health Care Limited (ASX: RHC)

Another healthcare share that I think would be a fantastic long term option is Ramsay Health Care. As the global population ages, I expect demand for its sprawling global network of private hospitals to increase substantially. I believe this will put the company in a position to deliver solid earnings growth over the long term. Another positive is the company’s history of supporting its growth with acquisitions. I suspect this will remain the case over the next decade or two.

More reading

• 2 high quality ETFs for ASX investors to buy today
• Where to invest $10,000 into ASX shares
• ASX 200 Weekly Wrap: Earnings drag ASX back to reality
• Ramsay Health Care share price pushes higher following FY 2020 results
• ETF provider VanEck to launch 4 new ASX ETFs

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ramsay Health Care 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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It’s been a strong year for many ASX growth shares. Healthcare, gold and tech shares have performed strongly despite the S&P/ASX 200 Index (ASX: XJO) slumping lower.

However, it’s hard to know what to buy in the current market. Looking ahead to 2021, here are a couple of top ASX growth shares I’d like to buy for my portfolio.

Polynovo and one more ASX growth share to buy

Let’s start with what I think the macro environment will look like early next year. I think we’ll see record low interest rates persist and government stimulus measures start to ease.

I expect the coronavirus pandemic will continue to weigh on markets in the first quarter of next year. Further market volatility will persist but I think the economy will still be in a holding pattern of sorts.

That leads me to my first ASX growth share to buy: Polynovo Ltd (ASX: PNV). Polynovo is a leading Aussie biotech company specialising in skin treatments through its synthetic polymer.

While tech shares are dominating right now, I think we could see biotech and healthcare surge higher next year.

Demand for services is high and patient numbers are slowly returning after falling away in early 2020. With Polynovo targeting more lucrative markets for its NovoSorb BTM product, I think next year’s earnings could be big.

That’s not to say that tech shares will underperform. I think the current mania has blown some valuations out of proportion to what these ASX growth shares are worth.

However, I think Aussie data centre operator Nextdc Ltd (ASX: NXT) is still a buy. The NextDC share price is trading at $11.28 per share and is near the top of its 52-week trading range.

But changing work dynamics and a move towards more work from home could be a good thing. That means demand for off-site secure data storage and security could surge.

Add to that the growing focus on cybersecurity threats to governments and corporations and I think the ASX growth share could be a buy.

Foolish takeaway

These are just a couple of the top ASX growth shares that I think could be in the buy zone in early 2021.

More reading

• A practical guide on how to invest in ASX shares
• Is the Mesoblast share price a bargain yet?
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 rises 0.3%, CSL reveals COVID-19 vaccine manufacturing deals
• Broker picks best ASX small cap stocks to buy from the reporting season

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 POLYNOVO FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Restaurant Brands New Zealand Limited (ASX: RBD) share price is one to watch today, after the Kiwi restaurant group reported a 42.9% slump in net profit.

What does Restaurant Brands do?

Restaurant Brands NZ operates the New Zealand outlets of KFC, Pizza Hut and Carl’s Junior. It also operates KFC in Australia and Taco Bell in Hawaii, Guam and Saipan.

The Kiwi company has a market capitalisation of $1.1 billion but has limited liquidity given its tight shareholding.

Why is the Restaurant Brands share price on watch?

The Kiwi restaurant group reported half-year sales down NZ$59.2 million or 13.4% to NZ$383.4 million. Net profit after tax (NPAT) for the 6 months to 30 June 2020 (1H20) fell 42.9% lower to NZ$11.4 million.

That was largely thanks to the coronavirus pandemic restrictions in New Zealand, which forced the closure of many stores.

However, the US business performed well with earnings before interest, tax, depreciation and amortisation (EBITDA) climbing $2.2 million. That was thanks to strong Pizza Hut performance despite ongoing challenges.

Positively, the group reported second-quarter sales in the New Zealand market had largely returned to pre-COVID levels.

KFC and Carl’s Jr were touted as key performers in the New Zealand market while Taco Bell continues to track above expectations.

The group’s Pizza Hut sub-franchising process is continuing despite limited activity during the year.

The Restaurant Brands share price is one to watch after this morning’s result, which saw Australian store EBITDA fall 23.6% to A$11.3 million.

That softer earnings result reflected a lack of dine-in restaurants being open as well as the initial setup costs of operating Taco Bell. The group is looking to open more than 60 stores in Australia and New Zealand over the next 5 years.

In the US, Restaurant Brands saw strong results from its Hawaiian operations including growth in revenue, in-store EBITDA and EBIT in New Zealand dollar terms.

Dividend

The Restaurant Brands share price will be worth watching today after the board decided to not pay an interim dividend. That comes as the company looks to reinvest cash into the business for its extensive Taco Bell rollout.

Acquisitions

Restaurant Brands entered into a conditional agreement to acquire 70 stores in Southern California, USA for US$73 million in December 2019. That deal saw the company acquire 59 KFC stores and 11 combined KFC Taco Bell stores.

The group settled that transaction on 2 September 2020 in New Zealand with the US$80.7 million purchase price fully funded through debt drawdown on existing facilities.

FY21 outlook

The Restaurant Brands share price will be on watch this morning as investors digest the company’s results release.

The company reported sales have bounced back strongly with new store rollouts continuing to process in Australia and New Zealand.

However, Restaurant Brands was unable to provide specific FY21 guidance given the current uncertainty due to COVID-19.

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Motley Fool contributor Ken Hall 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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