I’m a big advocate of buying and holding shares and believe it is the best strategy for generating wealth over the long term.

Legendary investor Warren Buffett is someone that uses this strategy and given the vast fortune he has amassed over the last six decades, it’s hard to argue against it.

But which shares would be good buy and hold options? Listed below are three ASX shares which I think have the potential to provide investors with strong returns over the long term:

Domino’s Pizza Enterprises Ltd (ASX: DMP)

I think this pizza chain operator would be a great buy and hold option. This is due to the popularity of Domino’s pizzas with consumers, its strong market position, and its expansion plans. Management advised that it is aiming to grow its store network to 5,500 stores by 2033. This will be more than double the 2,668 stores it had at the end of FY 2020. In addition to this, the company has a long track record of same store sales growth. If it continues this trend and delivers on its expansion plans, it should lead to strong earnings growth over the next decade.

Kogan.com Ltd (ASX: KGN)

Another top ASX share to consider as a buy and hold investment is Kogan. Although the ecommerce company’s shares have been on fire this year, I believe they still have long way to run over the next decade. Especially given the shift to online shopping which has accelerated during the pandemic. This trend bodes well for its increasingly popular website and should underpin strong sales growth in the coming years. In addition, Kogan also has a hefty cash balance which it plans to use on earnings accretive acquisitions.

ResMed Inc. (ASX: RMD)

A final share to buy and hold is ResMed. I think the medical device company can be a market beater over the 2020s. This is thanks to its world class products, intuitive software solutions, and rapidly growing ecosystem. In respect to the latter, at the end of FY 2020, ResMed’s digital health ecosystem had grown to over 12 million cloud connectable medical devices. This provides it with strong recurring revenues and a large amount of high quality data. Another positive is its massive market opportunity. Management estimates that there are 936 million people with sleep apnoea globally. I feel this gives ResMed a significant runway for growth over the next decade.

More reading

• Broker picks best ASX small cap stocks to buy from the reporting season
• 5 ASX shares I will never sell
• New to investing? ASX growth shares to buy now
• 5 things to watch on the ASX 200 next week
• 3 unstoppable ASX shares to hold for the next decade

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 Kogan.com ltd. The Motley Fool Australia has recommended Domino’s Pizza Enterprises Limited, Kogan.com ltd, and 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.

The post Invest like Warren Buffett and buy and hold these ASX shares appeared first on Motley Fool Australia.

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The Viva Energy Group Ltd (ASX: VEA) share price dropped only slightly today after the company reported on the ongoing impacts of COVID-19 on its Victorian business.

The Viva share price hit a low during the first 10 minutes of opening this morning, but recovered to close just 0.62% down at $1.59.

What does Viva do?

Viva is one of Australia’s largest energy companies, making and delivering fuels and lubricants for engines, chemicals for industries and bitumen for roads.

The company owns and operates the Geelong Refinery, one of only four in Australia. This supplies more than 10% of Australia’s fuel and 50% of all fuel used in Victoria.

In addition, Viva is the exclusive supplier of Shell fuels and lubricants in Australia, and services more than 1,250 petrol stations across the country.

Trading update

Viva advised the market that its retail business in other states and territories had offset the losses incurred from its Victorian business. Sales volumes in the alliance network were holding at 50 million litres per week and the retail margin environment remained supportive. The company expects a similar sales recovery in Victoria.

The commercial business – excluding aviation in Victoria – has not been largely affected by the pandemic. However, Viva has started cutting its capital expenditure and operating costs to cater for the overall lower sales across its retail and commercial portfolio.

Despite longer stage 4 restrictions in Victoria, Viva is confident that it is well-positioned to weather the pandemic.

However, the energy provider’s refining segment continues to be hit hard by the global and local response to COVID-19. The refinery is operating at reduced production levels due to Victorian Government restrictions on passenger movements. Viva is closely monitoring the situation, with a full shutdown possible  given the weak outlook for oil-product demand.

Viva is working with the Australian Government on the viability of the sector and expects to update the market in October.

What did management say?

CEO Scott Wyatt said:

At the conclusion of this year’s major maintenance event, we will have invested more than $600 million at the Geelong Refinery since we acquired the business in late 2014. We have shown strong commitment to manufacturing in Victoria and have extended this by continuing to operate our refinery throughout these challenging times while undertaking the major maintenance of our key processing units.

Unfortunately, the impacts of COVID-19 and the restrictions on mobility and the economy are putting extreme pressures on the refining business that we have not experienced before and are not sustainable over the longer term. We are closely monitoring the evolving situation and will continue to keep our employees, investors and stakeholders updated.

About the Viva share price

The Viva share price has recovered almost 40% since plummeting to a 52-week low of $1.13 in April. While now trading almost 18% lower than the $1.92 reached in July, the Viva share price has fallen 17% in year-to-date trading.

More reading

• The latest 3 ASX stocks to be hit by a broker downgrade today
• Viva Energy share price lifts despite half-year profits slumping 32%

Motley Fool contributor Aaron Teboneras 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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Depending on which stage you are at in your investment journey, you are likely to have a focus on a particular type of share.

There are investors that have a focus on dividends, others are looking for growth, and some investors are searching for shares which they feel are undervalued.

Whichever type of investor you are, I feel one of the shares listed below will appeal to you. Here’s why I think they are worth considering:

Altium Limited (ASX: ALU)

I think growth investors ought to consider buying Altium. It is an electronic design software provider which has really caught the eye in recent years after delivering very strong sales and earnings growth. And while the pandemic has slowed its growth, its long term outlook remains as positive as ever. This is due to its exposure to the growing Internet of Things and Artificial Intelligence markets, which are underpinning the explosion of electronic devices globally. This is driving increasingly strong demand for its Altium Designer software and is expected to continue doing so over the 2020s.

Dicker Data Ltd (ASX: DDR)

I think the wholesale distributor of computer hardware and software would be a top option for income investors. Dicker Data has been growing its earnings and dividends at a solid rate consistently over the last five years and looks well-placed to continue this trend over the next five. This is thanks to its strong market position, favourable industry tailwinds, and its new distribution centre. Another positive is its generous dividend yield and its quarterly payments to shareholders. Based on the current Dicker Data share price, it offers investors a fully franked 4.5% dividend yield.

Telstra Corporation Ltd (ASX: TLS)

If you’re a value investor I think Telstra would be worth considering. At present the telco giant’s shares are changing hands at under 19x estimated FY 2021 earnings. I think this is good value due to its medium term outlook, defensive qualities, and generous dividend yield. In respect to its outlook, I believe a long-awaited return to growth isn’t too far away thanks to the easing NBN headwind, the arrival of 5G, and its T22 strategy. This strategy is stripping out costs and simplifying the Telstra business.

More reading

• 4 of the best ASX shares to buy before 2021
• New to investing? More ASX growth shares to buy now
• ASX 200 Weekly Wrap: Friday crash pulls ASX back below 6,000 points
• Why I would buy these quality ASX shares for a retirement portfolio
• Why I would buy Telstra and this high yield ASX dividend share

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 Altium. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited and 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.

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At the current level, I think the Commonwealth Bank of Australia (ASX: CBA) share price is in the buy zone for income investors.

However, not everyone is comfortable investing in the banking sector at present due to the possible impacts of the pandemic on bad debts.

For those investors, I have picked out two ASX dividend shares which I think would be great alternatives. They are as follows:

Aventus Group (ASX: AVN)

I think Aventus is an ASX dividend share to buy right now. This retail property company owns and operates 20 large format retail parks across Australia. These centres have a high weighting towards everyday needs, with major retailers such as ALDI, Bunnings, Officeworks, and The Good Guys among its 593 tenancies.

This has proven to be a very positive mix during the pandemic. While many other retail property companies are struggling to collect rent, Aventus was able to collect the vast majority of its rent as normal in FY 2020. This led to the company reporting a 4.2% increase in funds from operations (FFO) to $100 million. This allowed its board to declare an 11.9 cents per security full year distribution. Based on the current Aventus share price, this equates to a generous 5% yield.

Bravura Solutions Ltd (ASX: BVS)

Bravura Solutions isn’t a company I would normally go to for dividends. However, a sizeable pullback in the Bravura share price means it now offers an attractive yield to investors. In FY 2020 the provider of software products and services to the wealth management and funds administration industries declared an 11 cents per share dividend. This currently equates to a 3% yield.

I think this makes it well worth considering, especially given its positive long term growth potential. This is thanks to the quality of its software and the significant market opportunity it has globally. Particularly given recent acquisitions which have opened the company up to new and lucrative markets.

More reading

• Will ASX bank shares be dragged down by mortgage pain?
• Share price opportunities to buy this week
• ASX 200 Weekly Wrap: Friday crash pulls ASX back below 6,000 points
• Why I would buy Telstra and this high yield ASX dividend share
• ASX 200 plunges 3.1%, Afterpay suffers

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 Bravura Solutions Ltd. The Motley Fool Australia has recommended AVENTUS RE UNIT and Bravura Solutions 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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It’s no secret that ASX bank shares like Commonwealth Bank of Australia (ASX: CBA) have had a tough year in 2020. Between dividend cuts, share price slumps and ongoing pains on the Australian economy, bank shares have born much of the brunt of the coronavirus pandemic that has crippled economies around the world.

Banks are highly leveraged in the economy, as individuals and businesses tend to only utilise debt and credit when the economy is in good shape. It isn’t too hard to see why the share prices of the big four ASX banks have been struggling ever since the pandemic arrived on our shores.

The share prices of Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking GrpLtd (ASX: ANZ) all remain approximately half of what they were worth at the beginning of February. While CBA has performed a little better. It is still sitting at $67.12 at the time of writing, a long way from the company’s 52-week high of $91.05.

So where to from here? Some investors might think the worst is behind the ASX banks. By extension, they might even view the historically-low share prices we see today as a buying opportunity.

Are the ASX banks out of the woods?

Well, reporting from Business Insider may make those investors think twice today. In this reporting, Business Insider quotes figures released from the Australian Banking Association (ABA) today. Those figures reveal that 450,000 banking customers are set to receive a call in the next few weeks regarding deferred loan payments. The figures tell us that around 900,000 Australians currently have debts under ice right now, worth $274 billion. That equates to 1 in 9 mortgages and 1 in 6 small business loans across the country.

Much of this $274 billion pile of debt is scheduled to be un-frozen at the end of this month. And that could be a problem for the ASX banks.

There are a number of options for these borrowers available, including transitioning to interest-only loans or deferring until January 2021. Even so, it doesn’t mask the fact that lenders are facing a real precipice over the next few months. The reporting tells us that by the end of July, Australians had only recommenced repayments of around 13% of the $274 billion of frozen debt. And that’s after economic reopening across much of the country, and continued government stimulus.

Over the next few months, national unemployment is forecasted to rise over the remainder of the year. Meanwhile, government assistance payments like JobKeeper and the coronavirus supplement are scheduled to taper off over the next 6 months or so.

Foolish takeaway

If borrowers are forced to eventually default on their loan obligations, it is bad news for the ASX banks. And we might see this come to a head over the next 6-12 months. Myself? I wouldn’t want to be buying ASX bank shares going into that headwind, even if they do look historically cheap today. Uncertainty is not a companion you want on your investing journey, in my view.

More reading

• 2 ASX dividend shares to buy instead of CBA
• Leading brokers name 3 ASX shares to buy today
• ASX 200 up 0.5%: CSL signs COVID-19 vaccine agreements, big four banks charge higher
• Share price opportunities to buy this week
• ASX 200 Weekly Wrap: Friday crash pulls ASX back below 6,000 points

Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank 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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The best performer on the S&P/ASX 200 Index (ASX: XJO) over the last 30 days has been the Corporate Travel Management Ltd (ASX: CTD) share price by some distance.

Since this time last month, the corporate travel specialist’s shares have jumped over 65% higher.

Why is the Corporate Travel Management share price on fire right now?

Investors have been fighting to get hold of the company’s shares in recent weeks following the release of a better than expected full year result for FY 2020.

For the 12 months ended 30 June 2020, Corporate Travel Management reported underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $65 million.

While this was a sharp decline on a year earlier, it was far better than what many of its travel peers reported. Webjet Limited (ASX: WEB), for example, posted an EBITDA loss of $91.3 million for FY 2020.

Corporate Travel Management’s second half was supported by cost cutting measures and the provision of travel solutions for essential workers during the pandemic.

Balance sheet strength.

Another positive was the company’s balance sheet. Despite not undertaking a capital raising like Webjet and Flight Centre Travel Group Ltd (ASX: FLT), Corporate Travel Management still finished the year with a very strong balance sheet. It reported a net cash balance of $55 million and no debt on its book. It also has $180 million available to it from a committed undrawn facility.

Given that its cost base is currently $13.5 million (or $16 million without government support), the company clearly has more than enough liquidity to ride out the storm. Not that it looks likely to burn through much more cash given the improving trends. 

Improving trends.

As alluded to above, I think the improving trends the company is experiencing are what got investors most excited.

Although it was unable to provide guidance, management made a few comments on current trading conditions.

It said: “July activity continued higher month on month versus June suggesting a broad-based recovery in corporate activity is underway in the northern hemisphere, with corporates back at work late August.”

And despite July traditionally being its quietest month of the year, the company only recorded an underlying EBITDA loss of $2.2 million.

Should you invest?

Overall, I think things look very promising for Corporate Travel Management.

And while I’m not personally in a rush to invest just yet, I do feel it could prove to be a great long term investment option for patient investors.

More reading

• These are the 10 most shorted ASX shares
• The one type of ASX company that outperforms all others
• Why Afterpay, Flight Centre, Helloworld, & QBE shares are tumbling lower
• These were the best performing ASX 200 shares in August
• Leading brokers name 3 ASX shares to buy today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and 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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I think that there are some S&P/ASX 200 Index (ASX: XJO) shares that could be really good value.

There are some shares that may look cheap like Australia and New Zealand Banking Group (ASX: ANZ), but I’m not sure how much growth potential they have.

Whereas I think there are some businesses that look really good value but also have good long-term growth potential:

Brickworks Limited (ASX: BKW)

Brickworks is a leading building products business in Australia. It’s the market leader for bricks in the country. It sells a variety of other products including masonry, paving, roofing, precast and so on.

Things are currently difficult with construction due to COVID-19 impacts. However, I don’t think the tough conditions will last forever. I believe the best time to buy a cyclical business is near the bottom of the cycle. This could actually make it a good time to buy with regards to its construction earnings.

The ASX share also recently made some acquisitions in the US which made it into the market leader in the north east of the US. The company plans to bring its Australian efficiencies to the American subsidiary. This should improve its profit margins over the coming years.

What I particularly like about Brickworks is its defensive investments. It owns around 40% of investment house Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). The ASX share has been around for over a century and its owns a broad portfolio of different industries including telecommunications, resources and listed investment companies (LICs).

Brickworks also owns a 50% stake of an industrial property trust along with partners Goodman Group (ASX: GMG). This property trust leases to quality tenants and it’s exposed to the growth trends of ecommerce and logistics.

The value of the Soul Patts shares and the stake of the property trust alone supported the value of Brickworks’ market capitalisation. We get the rest of the business for free.

At the current Brickworks share price it offers a grossed-up dividend yield of 4.7%. It hasn’t cut its dividend in four decades.

A2 Milk Company Ltd (ASX: A2M)

I think that A2 Milk is a great ASX 200 growth share. It sells a variety of dairy products, though the high margin infant formula is the key for the business.

It sells an enormous amount of infant formula overseas. In FY20 the company grew its China label infant nutrition by over 100% to NZ$337.7 million. In the USA it grew its revenue by 91.2% to NZ$66.1 million.

The A2 Milk growth runway is really long in my opinion. The ASX share is steadily growing its market share overseas. It’s investing for that growth, but I think it’s worth it. Scale does help with a consumer business.

In Canada the company has recently entered into an exclusive licensing agreement with Agrifoods to produce, distribute, sell and advertise A2 Milk branded liquid milk in the Canadian market. The product has recently been launched to customers in Western Canada.

Since listing on the ASX, this share has done incredibly well. FY21 is expected to show continued strong revenue growth. However, the earnings before interest, tax, depreciation and amortisation (EBITDA) margin is expected to be lower in FY21 due to higher raw and packaging costs, more marketing and pantry-stocking not likely to be replicated. The share price has dropped back since reporting season – I think it’s a good time to buy. 

At the current A2 Milk share price it’s trading at 27x FY22’s estimated earnings.

Foolish takeaway

I think both of these ASX shares are really good value right now. Using Brickworks’ book value, it looks like a good time to buy. A2 Milk is a great ASX growth share and it’s trading much cheaper than many of its growth stock peers. If you don’t need income then I think A2 Milk could be the best pick in the ASX 200.

More reading

• New to investing? Here are 5 ASX dividend shares to buy now
• New to investing? More ASX growth shares to buy now
• 3 ASX shares every retiree should own
• Here’s how to make a $1 million portfolio by investing $1,000 a month
• I love volatile ASX share market days like today

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 and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of A2 Milk. 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 5G Networks Ltd (ASX: 5GN) share price has started the week deep in the red after returning from a trading halt.

In afternoon trade the data networks company’s shares are down 8% to $1.96.

Why is the 5G Networks share price sinking lower?

The 5G Networks share price has come under pressure on Monday after it announced the successful completion of its institutional placement.

According to the release, the company raised $27.5 million through the issue of 15.28 million new shares at $1.80 per share. This represents a 15.5% discount to the last close price.

The company advised that the placement was completed with a broad range of new and existing institutional investors.

In addition to this, the company’s founder, Joe Demase, has sold 2.78 million shares for the same price. While this represents 14.5% of his shareholding, he will remain 5G Networks’ largest shareholder with a relevant interest in approximately 16.2 million shares. This is the equivalent to approximately 15.3% of the ordinary shares on issue post the placement.

The company advised that Mr Demase sold the shares in part to satisfy a personal tax obligation and to fund the exercise of performance rights which may be exercised in the future.

Why is 5G Networks raising funds?

5G Networks launched the institutional placement to provide it with the funds to make an acquisition proposal for Webcentral Group Ltd (ASX: WCG).

According to the release, the company has tabled a non-binding indicative proposal to acquire the small business digital services provider for 17.7 cents per share or $21.6 million.

This is significantly more than the 10 cents per share that has been offered by Web.com for Webcentral.

Why does 5G Networks want to acquire Webcentral?

Management believes the combination of the two businesses can generate synergies of over $7 million per annum on a run rate basis.

It also believes the proposed acquisition would be transformational for its earnings. Its earnings per share is expected to more than double on a pre-synergies basis and further increase on a post-synergies basis.

This news has no doubt gone down well Webcentral shareholders. The shares of the company formerly known as Melbourne IT are up 50% this afternoon.

More reading

• 5G Networks launches capital raising for Webcentral acquisition
• 3 small cap ASX shares I’d buy with $1,000
• Top ASX Stock Picks for September 2020
• Analysts think 5G Networks shares could be a post-COVID-19 winner
• My top 5G ASX share to buy right now

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends 5G NETWORK 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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Last month’s reporting season turned out to be less frightful than many were expecting. But I think the ASX small caps delivered better results than those in the S&P/ASX 200 Index (Index:^AXJO).

ASX stocks at the smaller end of the market tend to be more sensitive to the domestic economy, and while things have been tough during the COVID-19 shutdown, Australia is holding up better than many comparable economies.

It’s not the FY20 profits that matter

But the issue isn’t the FY20 profit numbers. It’s what happens next as earnings from the last financial year were propped up by temporary government stimulus that will expire over the coming months.

On that front, the picture isn’t quite as rosy for small caps. UBS found that 61% of emerging companies under its coverage saw FY22 consensus earnings per share (EPS) downgrades of more than 5% in the last two months.

This compares to only 20% that enjoyed upgrades of a similar magnitude for the next financial year.

Biggest ASX small cap downgrades

There’s a long list of stocks that suffered a downgrade, including those from the popular tech sector. These include the Appen Ltd (ASX: APX) share price, Audinate Group Ltd (ASX: AD8) share price and Megaport Ltd (ASX: MP1) share price.

Stocks in other sectors also featured prominently. Some examples include the Nanosonics Ltd. (ASX: NAN) share price, Bingo Industries Ltd (ASX: BIN) share price and Pro Medicus Limited (ASX: PME) share price, just to name a few.

Best ASX small cap consensus upgrades

On the flipside, several of the ASX small cap profit season winners came from the retail sector. These include the Premier Investments Limited (ASX: PMV) share price, the record high Kogan.com Ltd (ASX: KGN) share price and Adairs Ltd (ASX: ADH) share price.  

While this group of profit heroes outperformed the S&P/ASX SMALL ORDINARIES (Index: ^AXSO) by around 22% since the start of August, not all are expected to keep beating the market over the next 12-months.

Best ASX small cap stocks to buy and sell

UBS attempted to pick the best from the winners’ circle by applying five filters. The first is valuation by looking at several metrics, such as EV/EBITDA, P/E, P/B, and dividend yield.

It also used growth (two-year EBITDA and EPS), consensus EBITDA and EPS estimate revisions for FY22, balance sheet leverage and return on capital employed.

The small cap stocks that screened the best are the G8 Education Ltd (ASX: GEM) share price, the Infomedia Limited (ASX: IFM) share price and Kogan share price.

Meanwhile, the stocks that got the lowest score are the Japara Healthcare Ltd (ASX: JHC) share price, Regis Healthcare Ltd (ASX: REG) share price and Nextdc Ltd (ASX: NXT) share price.

More reading

• Stay invested in 2020? This wealth manager says yes
• Why the Ramelius share price is leading the gold sector higher today
• ASX 200 up 0.5%: CSL signs COVID-19 vaccine agreements, big four banks charge higher
• 4 of the best ASX shares to buy before 2021
• 5 ASX shares I will never sell

Brendon Lau owns shares of AUDINATEGL FPO. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends MEGAPORT FPO and Pro Medicus Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AUDINATEGL FPO, Infomedia, and Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended Nanosonics Limited and Premier Investments Limited. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended AUDINATEGL FPO, Kogan.com ltd, MEGAPORT FPO, and Pro Medicus 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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With so many shares to choose from on the ASX, it can be hard to decide which ones to buy.

The good news is that brokers across the country are doing a lot of the hard work for you.

Three top shares that leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

Austal Limited (ASX: ASB)

According to a note out of Goldman Sachs, its analysts have retained their conviction buy rating and $4.35 price target on this shipbuilder’s shares. The broker believes that Austal is well-positioned to benefit from the U.S. Navy’s plan to increase its vessel count over the long term. Combined with the U.S. Navy’s funding for Austal’s steel capacity expansion, it believes the company will be able to deliver stable earnings for the foreseeable future. So, with the Austal share price changing hands at just 13x forward earnings, it believes they are great value. I think Goldman makes some good points and Austal could be worth considering.

Fortescue Metals Group Limited (ASX: FMG)

A note out of the Macquarie equities desk reveals that its analysts have retained their outperform rating and $20.00 price target on this iron ore producer’s shares. This follows the announcement of an increase to its port export capacity last week. In addition to this, Macquarie believes Fortescue could deliver strong earnings growth in FY 2021 due to high iron ore prices. It expects this to lead to a bumper payout for shareholders and is forecasting a ~$2.35 per share dividend. I agree with Macquarie and feel Fortescue would be a great option for income investors.

Westpac Banking Corp (ASX: WBC)

Analysts at Citi have retained their buy rating and $23.50 price target on this banking giant’s shares. According to the note, the broker notes that the big four banks have been offloading their wealth businesses. It believes Westpac’s BT business is the best of the lot due to its scale and could demand a premium if it divested. It estimates that a sale could add upwards of 120 basis points to its CET1 ratio. I think Citi is spot on and Westpac could be a great investment option right now.

More reading

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James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Austal 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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