The recent share market crash has caused significant losses for many investors. A wide range of shares have not yet recovered from one of the most severe and fast-paced market declines in living memory. Many would be forgiven for thinking now is not a time to look at buying bargain shares.

While further challenges could be ahead for investors, the recent market crash could present a superb opportunity for investors. Although short-term risks remain, the recovery potential of the share market suggests that purchasing a selection of diverse companies today could lead to strong capital returns in the long run.

A rare occurrence

As mentioned, the recent market crash has been one of the fastest and most significant declines in recent decades. Although there have been other bear markets such as the global financial crisis (GFC), they have occurred relatively infrequently. In fact, bear markets are rare occurrences which usually don’t last for a long time before a recovery comes into force.

Therefore there is unlikely to be a substantial number of opportunities for an investor to buy into companies when trading at a bargain share price. Certainly, there are always opportunities to buy attractive shares in all market conditions. But the valuations that are currently on offer across many industries have not been seen since the GFC over a decade ago – if at all. And they are unlikely to present themselves again for many more years.

Buying in a market crash

Although the prospect of buying undervalued shares after a market crash may not feel natural to many investors, it can be a highly profitable exercise. After all, the share market has always recovered from its declines. And this time around is unlikely to be any different in the long run.

As such, it could be a good idea to adopt a long-term view of your holdings and to ignore market noise. Many investors have negative views on the share market. Others are seeking to second-guess the movement of share prices in the short run. Instead, by buying high-quality businesses at low prices you could capitalise on the bargain valuations that are currently present for some shares.

This strategy may require a large amount of self-discipline, as well as an acceptance that paper losses could be ahead in the short run. But it has been a successful strategy for many investors in periods where a market crash has occurred.

Diversification

As well as buying shares after a market crash, it is important to manage risk through diversifying your portfolio. It is very difficult to know which sectors will return to strong growth in the coming years. This is as the full impact of the coronavirus on consumer behaviour remains a known unknown.

Therefore, diversifying your exposure across companies and sectors could minimise your level of portfolio risk. It may also enable you to generate higher returns in the coming years as the share market gradually recovers.

More reading

• 4 top ASX dividend shares you should never sell
• Safe ASX 200 dividend shares to buy today
• 3 top ASX shares to buy for growth investors in July
• Wesfarmers and one more ASX share I’d buy in another market crash
• How I’d build a $100,000 portfolio for ASX dividend 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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We’re nearly at the end of FY20. I think there are some great ASX shares that would be good buys for growth investors in July.

There is a bit of market uncertainty again with rising COVID-19 numbers in some countries that previously seemed to have things under control.  

I’m not sure about investing in some ASX shares that have run hard. Some shares are being priced as though there won’t be any other COVID-19 disruptions. That may be a bit premature in my opinion.

But I think these ASX growth shares could be good buys:

Share 1: Bubs Australia Ltd (ASX: BUB)

Bubs is an Australian based infant formula producer. It specialises in goat products and it has access to the largest goat herd in Australia. I also like that Bubs recently acquired a production facility which is certified to make products for Chinese consumption.

The ASX share is reporting impressive growth. I believe it will keep delivering solid double digit revenue growth for the rest of 2020.

In the FY20 third quarter to 31 March 2020, Bubs delivered revenue of $19.7 million. This was a 67% increase compared to the prior corresponding period, it was also a 36% increase on the previous quarter. It delivered 137% growth of its infant formula revenue. Chinese revenue jumped 104%.

This large increase in revenue, plus keeping control on costs, helped Bubs deliver a positive operating cashflow of $2.3 million. Positive cashflow is an important milestone for small growth shares. 

Share 2: Bapcor Ltd (ASX: BAP)

Bapcor is Australia’s leading auto parts business.

Bapcor announced this week that it has seen a large amount of sales growth for two of its main divisions.

Management said its retail segment experienced strong demand in May and June with Autobarn same store sales increasing over 45% from the prior year. On a full year basis to the end of June 2020, Bapcor estimated that Autobarn same store sales will increase by approximately 8%.

Burson Trade has also experienced strong demand in May and June with same store sales growth up approximately 10%. On a full year basis, Burson same store sales growth is expected to be around 5%.

Bapcor’s segments that suffered most heavily due to COVID-19 were New Zealand, specialist wholesale and Thailand. These segments are also recovering according to Bapcor.

Management is now experiencing net profit after tax (before significant items) for FY20 to be in the range of $84 million to $88 million.

I’m excited by the ASX share’s overseas potential because it’s only just getting started there.

The lifting of COVID-19 restrictions should be beneficial to Bapcor in the shorter-term, particularly as more cars go on the road. Also, new car sales are dropping, which should mean more people need parts to make their current car last longer.

Share 3: REA Group Limited (ASX: REA)

REA Group is one of many ASX shares that have faced difficulties due to COVID-19 restrictions. Property listings fell heavily during April, with national listings down 33% according to REA Group. Sydney listings were down 18% and Melbourne listings were down 27%.

Volume is obviously an important factor for REA Group. For the three months to 31 March 2020, REA Group experienced a 20% decline in free cash flow.

However, the ASX share said it has a strong balance sheet with low debt levels and a cash balance of $135 million.

Australia is in a pretty good position with COVID-19, apart from the small outbreak in Melbourne. I think that property listing numbers will continue to rise across the country to a more normal level as the country recovers.

Once jobkeeper ends there could be a number of households that are forced to sell because their income has fallen. This would be a painful time for people, but it may boost REA Group’s revenue.

Foolish takeaway

I think each of these ASX growth shares have very compelling futures in the short-term and over the next five years. At moment I think I’d prefer to go for Bubs because it’s a lot smaller with more growth potential. I’m attracted to the amount of growth it could achieve in Asia.

More reading

• REA Group share price has charged 60% since the market bottomed
• ASX 200 drops 2.5%, ASX travel shares dumped
• Bapcor share price falls despite positive update
• Australian businesses are running out of cash
• Bapcor and 1 other quality ASX share to add to your portfolio

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bapcor and BUBS AUST FPO. The Motley Fool Australia has recommended REA 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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Despite ASX shares being marginally down for the week overall, the S&P/ASX 200 Index (ASX: XJO) closed 1.49% higher during Friday’s trade.

That’s a positive step and is sure to give investors some much-needed confidence in their investments. But the recent volatility has got me thinking about which ASX shares I’d like to buy if we see another bear market.

Here are a couple of top picks that I’d like to pounce on if we see more share price declines in 2020.

2 ASX shares on my buy list for the next bear market

Wesfarmers Ltd (ASX: WES) is one ASX share at the top of my buy list if we see another market crash this year.

One reason I particularly like Wesfarmers right now is due to its strong balance sheet. Wesfarmers already had a strong cash position before bolstering its liquidity even further by selling another of its stakes in Coles Group Ltd (ASX: COL) for $1.1 billion in March.

Wesfarmers is a conglomerate, which means it’s a company that invests in a lot of different industries. Right now, it’s a particularly retail-heavy conglomerate but that may be changing.

If CEO, Rob Scott, and his team are on the hunt for buying opportunities, I’ll be keeping Wesfarmers on my watchlist for the next bear market. Many ASX share investors don’t like to buy conglomerates, preferring to diversify their investments themselves.

However, I think Wesfarmers has the possibility of picking up some strategic investments for good prices in the current market which would boost its value in 2020.

Other than Wesfarmers, I also like the look of National Storage REIT (ASX: NSR).

National Storage REIT specialises in self-storage unit investments and I think this is a good sector to be in right now.

If we see more Aussies changing houses as a result of the coronavirus pandemic, this could be good news for National Storage’s earnings. More housing changes could mean more demand for self-storage services in 2020 and 2021. I feel this makes the ASX REIT share worth a look at given its current value of $1.89 per share. 

Foolish takeaway

These are just a couple of the ASX shares I’d like to buy if we see another bear market which results in similar share price falls to those we witnessed in February and March. 

More reading

• How I’d build a $100,000 portfolio for ASX dividend shares
• ASX 200 rebounds 1.5%, Qantas drops on capital raising
• The latest ASX shares to be upgraded by top brokers to “buy”
• Add the WOW factor to your investment portfolio. Why I think the Woolworths share price is a buy
• Why Qantas and this other ASX 200 stock were just downgraded by top brokers

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

The post Wesfarmers and one more ASX share I’d buy in another market crash appeared first on Motley Fool Australia.

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Investing for dividends is a strategy that many investors religiously follow — and for good reason. The ASX is an exchange with a long-appreciated focus on dividend income.

In fact, If we take a look at an S&P/ASX 200 Index (INDEXASX: XJO) fund like the SPDR S&P/ASX 200 ETF (ASX: STW), we can see that since 2001 the fund has returned an average of 7.14% per annum. Of this 7.14%, 4.62% came from dividend income, with only 2.52% coming from capital growth. So in my view, it makes complete sense to focus on the income side of investing.

With that in mind, here is how I would construct a $100,000 ASX share portfolio with franked dividend income as a goal.

Telstra Corporation Ltd (ASX: TLS) – $30,000

Our first cab off the rank is Telstra. I like Telstra as a dividend play because it is a very defensive company. The services it provides (mainly fixed-line internet and mobile networking) are extremely inelastic these days. This means customers are highly unlikely to switch off their internet no matter how tight money might be. This plays well for a dividend share, as it indicates that Telstra’s payouts are relatively safe in all economic environments. On current prices, Telstra shares are offering a trailing yield of 5.1% (including the special nbn dividends) — or 7.29% grossed-up with full franking.

Brickworks Ltd (ASX: BKW) – $30,000

Brickworks is one of the oldest ASX dividend shares and also one of the most reliable. It has either maintained or grown its dividend every year since 1976. Brickworks is a diversified construction manufacturing company. It’s building materials business is healthy and has been expanding into North America in recent years. But brickworks also has some property interests as well as a large stake in Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). These ‘side-hustles’ lend the company a great deal of earnings diversification which greatly helps Brickworks ride out the volatility of the construction sector. On current prices, brickworks shares are offering a trailing yield of 3.8% — or 5.43% grossed-up.

Rio Tinto Limited (ASX: RIO) – $20,000

This ming giant makes the cut for our dividend portfolio as well. Rio is a massive global resources company that makes most of its earnings from iron ore mining. In recent months, the iron ore price has shot through the roof due to some supply issues in the sizeable Brazilian mining industry, which has been a boon to low-cost producers like Rio. But Rio isn’t a one-trick pony, it also has significant operations in gold, copper and diamond minging as well. On the back of strong commodity prices over the year so far, I am expecting equally strong dividend payments from Rio Tinto in 2020. On current prices, Rio shares are offering a trailing yield of 5.83% — or 8.33% grossed-up with full franking.

Magellan Financial Group Ltd (ASX: MFG) – $20,000

Magellan is our final pick for the $100,000 dividend portfolio. Thi company is an ASX financial that I think is offering a far more compelling case for dividend income than the ASX banks right now. Magellan is in the business of funds management, of which it is the largest in Australia. It’s run by the reputable Hamish Douglass, who has made a name for himself in recent years by his funds’ consistent outperformance and global exposure. Magellan’s flagship managed fund (the Magellan Global Fund) has returned an average of 15.55% over the past 10 years. Magellan currently offers a trialling yield of 3.58%, which comes partially franked.

More reading

• Wesfarmers and one more ASX share I’d buy in another market crash
• ASX 200 rebounds 1.5%, Qantas drops on capital raising
• The latest ASX shares to be upgraded by top brokers to “buy”
• Add the WOW factor to your investment portfolio. Why I think the Woolworths share price is a buy
• 3 of the best ASX dividend shares for income

Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, Telstra Limited, 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.

The post How I’d build a $100,000 portfolio for ASX dividend shares appeared first on Motley Fool Australia.

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