I think that ASX share Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) is the best long-term idea that you can buy idea on the ASX. For ease, it’s also called Soul Patts.

When I say ‘long-term’, I’m not talking about a year or two. I mean it’s an investment you could hold onto for at least two decades and do well with.

Overview of Soul Patts

It’s an investment conglomerate that has been operating since 1903. It’s actually one of the oldest businesses on the ASX.

The company started off as a pharmacy business after two different families merged their pharmacy businesses together. There are some employees who been working for a long time for Soul Patts.

More than 40 employees have worked for the company for over 50 years. Five generations of the Pattinson family have served the company, as have three generations of the Dixson, Spence, Rowe and Letters families.

Diversification

I think one of the most important reasons to like Soul Patts is its diversification. It may have started off as a pharmacy business, but it’s now a diversified conglomerate. It’s invested in both listed and unlisted businesses which makes it somewhat similar to Warren Buffett’s Berkshire Hathaway.

It’s a large shareholder of telco TPG Telecom Ltd (ASX: TPM), resources business New Hope Corporation Limited (ASX: NHC), diversified property business Brickworks Limited (ASX: BKW), pharmacy company Australian Pharmaceutical Industries Ltd (ASX: API) and listed investment company (LIC) Bki Investment Co Ltd (ASX: BKI).

Some of the unlisted businesses Soul Patts is invested in are: electrical supplier Ampcontrol, resources subsidiary Round Oak, agriculture and swimming schools.

Diversification is a key factor for liking this ASX share. It’s invested across numerous industries, so there’s less risk if one investment does badly.

I think a broad investment mandate is attractive. It means that the management team can look almost anywhere to find the next opportunity.

This ability to change the asset base over time means you may never need to sell your Soul Patts shares. It’s helpful for your wealth if you don’t have to trigger a capital gains tax event and potentially pay over a material portion of the gains over to the ATO.

Solid long-term returns

Management are long-term focused with their investing. Management think many years ahead when making an investment. The fact that Soul Patts is thinking long-term can give us confidence to invest in the ASX share itself for the long-term.

Its strategy has clearly paid off over the decades. Over 20 years to 31 January 2020, the Soul Patts total shareholder return was 13.2% per annum, outperforming the All Ordinaries Accumulation Index by 4.6% per annum.

The new investments that Soul Patts is making could continue this solid performance. It is planning on expanding into regional data centres. I think this could be a very smart move. It could do particularly well if the work-from-home trend is a permanent change for some workers.

Soul Patts dividend

If consistent dividend growth is a priority for you then this ASX share is probably the best in Australia.

It has grown its dividend every year since 2000. I think that’s a really impressive record considering it includes the GFC period and Soul Patts also plans to pay an increased dividend later this year.

The ASX share has actually paid a dividend every year in its existence going back to 1903. This includes the though times of the Spanish Flu and the world wars.

It currently has a grossed-up dividend yield of 4.4%. I think that’s solid in today’s low interest world. 

Foolish takeaway

There are several great reasons to like Soul Patts. It’s the largest position in my portfolio and I plan to hold it in my portfolio forever. I’d be happy to buy more at the current share price.  

More reading

• If I won the lottery I’d buy these 6 ASX shares
• 12 top ASX dividend shares to buy in June 2020
• Have $1,000? You should pick one of these 8 ASX shares
• 3 ASX 200 shares I’d buy for 2020 and beyond
• 2 ASX shares I’d buy in a heartbeat

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. 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 week saw a large number of broker notes hitting the wires once again. Three buy ratings that caught my eye are summarised below.

Here’s why brokers think investors ought to buy them next week:

BWP Trust (ASX: BWP)

According to a note out of Ord Minnett, its analysts have upgraded this real estate investment trust’s shares to a buy rating with an improved price target of $4.40. The broker believes that BWP, which is predominantly a landlord to Bunnings Warehouse, is undervalued. Especially given its long leases. I agree with Ord Minnett on BWP and believe it is a great option for investors. This is particularly the case for income investors due to its attractive yield.

CSL Limited (ASX: CSL)

Analysts at Citi have retained their buy rating and $334.00 price target on this biotherapeutics company’s shares. The broker appears pleased with its decision to exercise its right to acquire Vitaeris and sees potential in its clazakizumab product. Outside this, the broker believes that increasing demand for flu vaccines could offset some of the potential weakness in plasma collections in FY 2021. I agree with Citi and would be a buyer of CSL’s shares.

Qantas Airways Limited (ASX: QAN)

A note out of UBS reveals that its analysts have retained their buy rating and lifted their price target on this airline operator’s shares to $5.50. According to the note, the broker believes there is a lot of pent up demand for travel and expects the domestic travel market to rebound strongly when border restrictions are lifted. This has led to the broker upgrading its earnings forecasts and lifting its price target accordingly. As long as there isn’t a second wave, I think Qantas could prove to be a good investment.

More reading

• You could beat the market in the 2020s with these ASX healthcare shares
• How I would build a balanced portfolio worth $100,000 with 10 ASX shares
• Should you buy CSL shares before it’s too late?
• Is the Qantas share price a buy today?
• 3 quality ASX dividend shares to solve your income needs

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 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 you’ve saved up a bit of cash and want to invest, you might have your eye on some ASX 200 shares trading cheaply.

Here are a couple of my top picks that you can snap up for under $10 per share today.

2 ASX 200 shares to buy for under $10

Harvey Norman Holdings Ltd (ASX: HVN) has been a bit of a surprise packet in 2020.

The Aussie retailer recently announced booming sales during the early stages of coronavirus restrictions. Aussie workers forced to work from home have been stocking up on office supplies and electronics from the Aussie retailer.

This sales boost even saw the ASX 200 retail share announce a 6 cents per share special dividend last week.

That’s good news for shareholders and we could see that trend continue if work from home becomes the ‘new normal’. The Harvey Norman share price is trading at $3.54 per share right now and could be a bargain buy.

Harvey Norman isn’t the only ASX 200 share that could be a steal for under $10. I also like the look of Mirvac Group (ASX: MGR) shares right now.

The Mirvac share price is trading at $2.36 per share after falling 25.8% lower this year.

Mirvac is a diversified real estate company with interests in residential, commercial and industrial assets. The Aussie developer has been hammered by the recent bear market with investors still unsure where the real estate sector is headed.

However, as the great Warren Buffett says, “be greedy when others are fearful“.

There’s no doubt investors are fearful right now with the S&P/ASX 200 Index (ASX: XJO) rocketing despite the bleak economic environment amid the pandemic. If you’re bullish on real estate, Mirvac could be a good ASX 200 share to buy.

The group still has a market capitalisation of $9.4 billion and trades at a price to earnings (P/E) ratio of 9.3.

The big question mark for me is the end of government stimulus measures later this year. These include mortgage holidays and payments to Aussie businesses and workers. That could put some stress on the real estate sector.

However, no one knows the future. We could just as easily see an extension of stimulus measures towards the end of the year.

Foolish takeaway

These are just a couple of ASX 200 shares that could be of good value for under $10 per share.

More reading

• Why we may be in danger of another coronavirus ASX market crash
• These were the best performing shares on the ASX 200 last week
• Why the Nearmap share price and one other are on my buy list
• 3 ASX dividend kings to buy and hold forever
• Got $20,000? These are the ASX shares I’d buy during COVID-19

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.

The post Cheap ASX 200 shares I’d buy for less than $10 appeared first on Motley Fool Australia.

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Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were bearish.

Three sell ratings that caught my eye are summarised below. Here’s why top brokers think investors ought to sell these shares next week:

Domino’s Pizza Enterprises Ltd (ASX: DMP)

According to a note out of Citi, its analysts have retained their sell rating and $47.80 price target on this pizza chain operator’s shares. Although the broker took away a number of positives from its CEO Webcast last week, it wasn’t enough for a change of rating. Citi appears concerned that its new store openings could suffer because of the pandemic. If this leads to lower than expected earnings growth, it fears it could lead to a de-rating to lower multiples. The Domino’s share price ended the week at $62.70.

JB Hi-Fi Limited (ASX: JBH)

Analysts at Credit Suisse have downgraded this retailer’s shares to an underperform rating with an improved price target of $34.52. According to the note, although it is pleased with its performance during the pandemic, the broker believes JB Hi-Fi’s shares have run too hard. It notes that its shares are trading at a significant premium to peers and fears the market may be expecting too much from the company once government support ends. The JB Hi-Fi share price was last trading at $40.00.

Webjet Limited (ASX: WEB)

A note out of Morgan Stanley reveals that its analysts have downgraded this online travel agent’s shares to an underweight rating with an improved price target of $3.30. The broker points out that Webjet’s shares may still be down materially this year, but its market capitalisation was actually trading at pre-pandemic levels. This is because of its highly dilutive capital raising. Whereas the Corporate Travel Management Ltd (ASX: CTD) market capitalisation is notably lower than its pre-pandemic level despite not raising capital. It prefers the corporate travel specialist and has an overweight rating on its shares. Webjet’s shares ended the week at $3.95.

More reading

• 3 five-star ASX shares I would buy today
• Why the Lovisa share price is at risk of falling further over the coming weeks
• The latest ASX shares to be hit by broker downgrades to “sell” today
• ASX 200: improved consumer sentiment to near pre COVID-19 levels
• ASX 200 to sink lower after Wall Street crashes on second wave concerns

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 Domino’s Pizza Enterprises 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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Buying cheap stocks today may not yield high returns for investors in the short run due to the risks faced by the stock market. Coronavirus lockdowns put in place across the world economy may lead to severe declines in global GDP that cause investor sentiment to be highly volatile over the coming months.

However, with economic growth likely to return in the long term, now could be the right time to buy a selection of high-quality businesses while they offer wide margins of safety. This strategy could produce high returns that boost your financial prospects over the next decade.

Long-term recovery

The world economy may experience severe disruption in the short run, but it is likely to return to growth in the coming years. Policymakers have enacted major stimulus programs that are likely to offer a significant amount of support to the global economy. For example, the US has reduced interest rates to zero and enacted an ‘unlimited’ quantitative easing program. These measures could make the process of returning to positive growth much quicker for the world economy.

Furthermore, the track record of global GDP growth suggests that a period of decline is unlikely to last over a sustained time period. Previous recessions have always given way to growth. Although the current economic crisis could be relatively severe, corporate profitability and cheap stocks are very likely to recover over the long run as GDP growth returns to a positive figure.

Holding period

Despite the prospect of an improving long-term economic outlook, investors should not expect to generate high returns on their holdings over the short run. Numerous short-term risks remain in place. They include a possible second wave of coronavirus, inflationary pressure and many other potential challenges that could lead to poor performance from the stock market.

Therefore, it is crucial to provide your portfolio with sufficient time to overcome short-term threats and deliver on its growth potential. Through buying and holding cheap stocks for a period of ten years, you could increase your chances of benefitting from a likely stock market recovery that produces high returns for your portfolio.

Buying cheap stocks

Of course, investors should not only focus on price when purchasing stocks. It is also crucial to consider other factors such as their financial strength, track record during difficult economic periods, and the presence of an economic moat. Assessing a company’s quality may require additional analysis and effort on the part of the investor, but it can help to identify which cheap stocks are the most attractive opportunities over the long run.

Buying a selection of cheap stocks and holding them for the long term has historically been a sound strategy to generate high returns. Although a recovery may not seem likely at the present time, the stock market has always returned to growth after its downturns. Investors who make purchases while valuations are low have often been among those who make the most attractive returns in the subsequent bull markets.

More reading

• Why we may be in danger of another coronavirus ASX market crash
• If I won the lottery I’d buy these 6 ASX shares
• Tax time is approaching – what you need to know
• You could beat the market in the 2020s with these ASX healthcare shares
• How to earn $50,000 in dividends each year with ASX shares

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Could a second ASX market crash be coming to the ASX?

The positive sentiment that has defined the S&P/ASX 200 Index (ASX: XJO) and the broader ASX markets since late March looks in danger. Friday saw a significant market sell-off that took the ASX 200 below 6,000 points and erased a substantial amount of gains made in June so far.

It followed the US markets shedding more than 6% in trading on Thursday night (our time).

So is this it for ASX shares? Can we expect another coronavirus crash to hit our portfolios over the next few weeks?

Why the ASX 200 has been hitting the roof  

Over the past 2 months, the positive sentiment that the ASX has been enjoying has come from 2 sources in my view. The first is the success Australia (and New Zealand to its credit) has had in dealing with the coronavirus. Compared with the United States and the United Kingdom, Australia has managed to keep the coronavirus infection rate extremely low. In turn, this has allowed the easing of economic restrictions and social movement.

This is obviously great news for the economy.

The second has been a spillover of goodwill from the US markets. Despite the country’s more muted success in containing the virus, US markets have been on a tear over the past 2 months, rising by more than the ASX 200. It’s rather unclear exactly why the Dow Jones, Nasdaq and S&P 500 have been on such an enthusiastic run. I suspect it has a lot to do with the US Federal Reserve and its unprecedented injection of cash into US financial markets.

Like it or not, the ASX’s fate is bound to that of the US markets – we ride or die together at the end of the day.

Is another ASX market crash coming?

I think the moves we saw on Friday were induced by the US. The Dow Jones saw a massive ~6% slump on Thursday night after the Federal Reserve chair Jay Powell issued a rather bearish outlook for the US economy for the rest of the year. According to reporting in the Australian Financial Review, this included a prediction from Powell that the US unemployment rate will still be above 10% by the time the US elections come around in early November.

If this turns out to be the case, I think it’s almost certain that the US markets won’t continue their recent run. Markets have (in my opinion) been assuming that the recovery from the coronavirus slump will be swift and painless – a sharp ‘V’ if you will. If anything else eventuates, markets will have to adjust accordingly (which may involve a crash).

I would be a fool (and not the good kind) to say that we are heading for another ASX market crash. But I’m certainly not ruling it out. I think investors should be very cautious and prepared going forward. We might see further highs from here, to be sure. But I think there’s more than an equal chance we might not.

More reading

• These were the best performing shares on the ASX 200 last week
• Why the Nearmap share price and one other are on my buy list
• Got $20,000? These are the ASX shares I’d buy during COVID-19
• 3 ASX shares I’d buy if the market hits 23 March levels again
• Leading fund manager names 4 ASX stocks set to benefit from a faster re-opening of the Australian economy

Motley Fool contributor Sebastian Bowen 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.

The post Why we may be in danger of another coronavirus ASX market crash appeared first on Motley Fool Australia.

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