ASX financials are the worst performing sector on the market this morning as big bank stocks lead the decline.

The Westpac Banking Corp (ASX: WBC) share price tumbled 3.1%, while the National Australia Bank Ltd. (ASX: NAB) share price and Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price shed more than 2.5% each.

The Commonwealth Bank of Australia (ASX: CBA) share price is faring a little better with its 1.7% drop. But that’s still worse than the 1.3% decline in the S&P/ASX 200 Index (Index:^AXJO) at the time of writing.

Borrowers still under pressure

The market is worried that the sector has rallied too far ahead of fundamentals during the recent post COVID-19 re-rating.

This fear was brought home by comments from NAB’s chief executive Ross McEwan comments to ABC Radio National this morning. He said that as many as 90% of borrowers who are on loan deferrals can’t re-start payments.

The bank reached out to business and mortgagees who have been granted temporary repayment reprieve due to financial hardship caused by the coronavirus pandemic.

V-shape recovery a dream

Only 10% to 15% of this group are in a position to resume loan repayments now, which is the half-way mark on the grace period which is expected to expire in September.

“I am optimistic but I’m also very cautious about the underlying signs that are there,” reported the Australian Financial Review when quoting McEwan’s ABC interview.

“You are still seeing an underlying unemployment rate that is greater than Australia has seen in a long time.”

He further cautioned that the recovery could be slower than what many believe and he doesn’t think our economy will fully recover from the COVID-19 crisis until 2022.

I reckon the “V” in the V-shape recovery stands for “vulnerable”.

ASX bank stock re-rating over for now

If you take his comments on face value, there are three key takeaways for ASX investors, in my view.

First is that the sharp rebound in ASX bank shares is likely over for now and that their share prices will need to consolidate before pushing higher.

Investors won’t need to chase these shares higher, although I don’t think we will see a big sell-off in equities unless we get a second wave or a Black Swan event.

More government support

Second, the Morrison government’s steadfast insistence that JobKeeper and JobSeeker support packages will end in September shouldn’t be taken at face value.

If many bank customers continue to struggle to service their loans at that point, the government will have little choice but to keep wage supplements in place. Otherwise, the banking system will come under pressure and that will put the brakes on any economic recovery.

Impact on house prices

Finally, NAB’s comments will further dim the outlook for house prices if we assume the other big banks are getting the same feedback from borrowers.

Forecasts of a less than 5% drop in home values by some experts look too optimistic if the majority of borrowers on loan deferrals still can’t climb back on their horses come September.

More reading

• ASX 200 drops 2%: Big four banks sink lower, JB Hi-Fi to deliver strong profit growth
• 3 ASX 200 shares I’d buy for 2020 and beyond
• What is the ASX impact of a fall in house prices?
• 3 great shares to buy now if you’re an ASX 200 investor in your 20s
• Why do I own this ASX 200 share?

Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, National Australia Bank Limited, and Westpac Banking. 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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In these uncertain economic conditions, it’s fascinating to see which companies have flourished and which have failed. The tourism sector has understandably suffered after governments across the world implemented strict travel bans. Shares of companies like Flight Centre Travel Group Ltd (ASX: FLT) and Webjet Limited (ASX: WEB) are still trading at a fraction of their pre-pandemic levels. 

But the COVID-19 crisis has also produced some unlikely market darlings. The share prices of companies like Australian online retailer Kogan.com Ltd (ASX: KGN) and meal kit delivery service Marley Spoon AG (ASX: MMM) have skyrocketed after demand for their offerings surged during lockdown.

Another niche sector of the economy that has held up strongly throughout the pandemic has been infant formula. Two companies operating in this sector that have seen spikes in demand are A2 Milk Company Ltd (ASX: A2M) and Bubs Australia Ltd (ASX: BUB). The solid performance of these companies throughout the coronavirus crisis have resulted in the A2 Milk and Bubs share prices showing remarkable resilience during this volatile period.

The A2 Milk Company share price

Surprisingly, the A2 Milk Company share price has taken the whole coronavirus crisis firmly in its stride. Despite exhibiting increased volatility throughout February and March, the share price has marched steadily upwards. It eventually peaked with a 52-week high of $19.23 on 20 April. And while it has edged lower in recent weeks, the A2 share price is currently trading at $17.83, as at the time of writing. This still puts it well within striking distance of that high.

In a market update released in late April, A2 Milk stated that revenue for the March quarter had exceeded expectations. This was driven by changes in consumer purchasing behaviour in response to the developing coronavirus crisis. Panic buying saw large numbers of consumers stocking their pantry with basic staples like long-life dairy products and infant formula.

While acknowledging that the future remained incredibly uncertain, New Zealand-based A2 Milk upgraded its guidance for FY20 EBITDA growth to be in the range of 31% to 32%. It expected full year revenue to be between NZD$1.7 billion and NZD$1.75 billion. This represents an increase of between 30% and 34% over the previous year.

The Bubs Australia share price

While the share price of ASX organic infant formula company Bubs hasn’t performed quite as well as that of A2 Milk, it has still managed to keep long-term shareholders happy throughout the health crisis. After falling to a low of just 40 cents in mid-March, the Bubs share price has rebounded strongly, climbing all the way back  up to $1.04 at the time of writing.

Revenues for the March quarter were the highest on record at $19.7 million. This is an increase of 36% over the previous quarter. Growth was driven by a surge in demand for its infant formula, which made up 58% of gross sales for the quarter. Sales volumes were up across all regions, particularly in China and Vietnam.

The company has been resilient throughout the pandemic in part due to its vertically integrated supply chain. In December 2017, Bubs acquired goat milk powder producer NuLac Foods, which operates a farm in Victoria’s Gippsland region. NuLac also operates a processing plant in the Melbourne suburb of Keysborough. This means Bubs has exclusive supply of the key ingredient in its goat milk infant formula. It also means the company is insured against supply-side disruptions caused by COVID-19 lockdowns and travel restrictions.

Should you invest?

The key issue for companies like Bubs, A2 Milk and even Marley Spoon, is whether this increase in short-term demand will persist over the longer term. Panic buying and lockdown restrictions have been unprecedented but are now starting to ease. This means there is the potential for sales to slump in subsequent quarters as things gradually return to ‘normal’.

A2 Milk has long been a market darling. But what I believe the crisis has really revealed is the strength of Bubs’ vertically integrated supply chain. Bubs has remained robust throughout the crisis and has ensured that its production can meet demand. Plus, the company also recently announced a new local supply agreement with Coles supermarkets. This means it could potentially emerge from this crisis in an even stronger position. I would definitely be putting the Bubs share price on my watch list heading into results season.

More reading

• Why Aventus, Kogan, Newcrest, & Northern Star are pushing higher
• 2 ASX shares I’d buy if the ASX crashes again
• ASX growth companies including Zip Co cash in on the rise of e-commerce
• Why the Kogan share price jumped 11% to a record high today
• Afterpay share price up 7%, ASX 200 edges higher

Motley Fool contributor Rhys Brock owns shares of BUBS AUST FPO and Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended BUBS AUST FPO, Kogan.com ltd, and Webjet Ltd. The Motley Fool Australia owns shares of A2 Milk. 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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At lunch on Thursday the S&P/ASX 200 Index (ASX: XJO) is out of form and sinking notably lower. The benchmark index is currently down 2% to 6,024.8 points.

Here’s what is happening on the market today:

JB Hi-Fi guidance.

The JB Hi-Fi Limited (ASX: JBH) share price is trading lower despite the release of a very positive update this morning. The retailer revealed that it has experienced very strong sales growth in Australia during the second half. In light of this, it has reinstated and upgraded its guidance for FY 2020. It expects net profit after tax in the range of $300 million to $305 million. This will be a 20% to 22% increase year on year.

Gold miners jump.

It has been a very positive day of trade for ASX 200 gold miners such as Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST). They are both up significantly today after the gold price jumped higher overnight. The price of the precious metal rose after the U.S. Federal Reserve revealed that it plans to keep interest rates at zero until 2022. The S&P/ASX All Ordinaries Gold index is up 4.5% at lunch.

Big four banks tumble.

The big four banks have come under pressure on Thursday and are acting as a drag on the ASX 200. All four banks have followed the lead of U.S. banks and are in the red at lunch. The worst performer in the group has been the Westpac Banking Corp (ASX: WBC) share price with a 4.5% decline.

Best and worst performing ASX 200 shares.

The best performer on the ASX 200 at lunch is the IPH Ltd (ASX: IPH) share price with a gain of over 6%. This morning analysts at Morgans upgraded the intellectual property company’s shares to an add rating with an $8.69 price target. The worst performer on the index has been the Computershare Limited (ASX: CPU) share price with a 6% decline. This is after Citi downgraded its shares to a sell rating this morning.

More reading

• ASX bank share prices tumble as they aren’t out of the COVID-19 woods yet
• Why Aventus, Kogan, Newcrest, & Northern Star are pushing higher
• 3 ASX 200 shares I’d buy for 2020 and beyond
• 3 great shares to buy now if you’re an ASX 200 investor in your 20s
• JB Hi-Fi share price higher after upgrading profit guidance for FY 2020

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. 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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There are some ASX dividend shares out there paying out huge amounts of cash.

You need to be careful with high dividend yields. Sometimes those shares can actually be yield traps. The dividend may be unsustainably high. It could include a one-off special dividend. The market may actually be expecting an earnings fall and therefore a dividend cut.

But if you can find great high yield ASX dividend shares, you can receive large amounts of cash dividends (and franking credits) every year for a bit less risk. Just don’t expect a lot of capital growth.

Here are some ideas to think about:

Share 1: Challenger Ltd (ASX: CGF)

Challenger is the annuity king of Australia with a dominant market share. The Challenger share price has dropped almost 50% from the share price at 21 February 2020. This has pushed the trailing dividend yield to a very high level. It currently has a grossed-up dividend yield of 9.25%. That’s a great yield for an ASX dividend share.

The company has reaffirmed its profit guidance for FY20, which leads me to believe the dividend can be maintained. Challenger didn’t cut its dividend during the GFC. I don’t think it will cut during this period either.

Over the longer-term Challenger can benefit from the ageing demographics in Australia. However, the ultra-low interest rates won’t help Challenger fund the annuities if the rate stays lower for longer than expected.

Share 2: WAM Research Limited (ASX: WAX)

WAM Research is a listed investment company (LIC). The job of a LIC is to invest in shares on your behalf. One of the main benefits is that it generates profit from capital gains and investment income received. It can then pay out a smoothed dividend to shareholders.

The ASX dividend share has an annualised grossed-up dividend yield of 9.6%. That seems really good in today’s low interest world.

It’s invested in shares like Infomedia Limited (ASX: IFM) and Citadel Group Ltd (ASX: CGL) which look compelling at the current prices. WAM Research is trying to find these undervalued smaller growth shares.

WAM Research has grown its dividend every year since the GFC. It likes to keep a solid amount of cash on hand for protection and opportunities. However, it’s likely trading at an expensive premium to the underlying net asset value.

Share 3: Naos Emerging Opportunities Company Ltd (ASX: NCC)

This is another LIC. It counts as an ASX dividend share because it has a grossed-up dividend yield of 11.8%.

Naos does things differently to most other LICs. It only looks at shares with market capitalisations under $250 million. That certainly classifies as the small cap end of the ASX.

I admire the fact that Naos only has around 10 names in the portfolio. That means it has a high conviction in what it invests in.

Small caps are much more volatile than larger shares. I believe that means we have the infrequent opportunity to buy the ASX dividend share when it’s beaten up. The coronavirus has caused the share price to drop heavily, pushing the yield higher. I think the Naos LIC is a good dividend opportunity, particularly because it hasn’t cut its dividend in its relatively young history.

Foolish takeaway

Each of these ASX dividend shares have great yields. At the current prices I think Challenger could produce the biggest total returns over the next few years. However, for pure income I’d go for the Naos LIC because it’s not trading at an expensive premium to its net assets like WAM Research is.

More reading

• Why do I own this ASX 200 share?
• 3 ASX 200 shares to protect your portfolio from recession
• How to replace your entire wage with dividends
• 3 ASX dividend shares with big yields above 9%
• How to make $1,000 a month in dividends

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Infomedia. The Motley Fool Australia owns shares of and has recommended Challenger Limited. The Motley Fool Australia has recommended Citadel 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 5G Networks Ltd (ASX: 5GN) share price is storming higher today after the company completed an oversubscribed institutional placement.

5G Networks is a licensed communications carrier that operates throughout Australia. It currently owns and operates its own high-speed data network with points of presence in all of the major Australian capital cities.

The company also offers cloud solutions through its data centre and cloud capabilities, along with managed services to optimise customers’ IT and network environment.

What did 5G Networks announce?

5G Network shares have resumed trading on the ASX today after being halted while the company undertook a capital raising.

This morning, 5G Networks announced it has successfully completed the institutional component of the raising, comprising $18.2 million of funds. The institutional placement was completed at an offer price of $1.23 per share, representing an 8.9% discount to the company’s last closing price of $1.35.

The 5G Network share price has been on a tear recently and at yesterday’s close, shares were sitting on a year-to-date gain of 80%.

Notably, 5G Networks stated that the placement was strongly oversubscribed, with demand derived from a range of new and existing institutional investors.

The company will now have a pro forma net cash position of $16.4 million as at 31 March 2020. Proceeds from the capital raising will be used to accelerate organic growth initiatives and fund acquisition opportunities.

These growth initiatives include the expansion of its fibre network in Sydney and Melbourne, and new builds in Brisbane and Adelaide focused on CBD demand. Additionally, the company will continue to invest in increasing utilisation and cross-sell opportunities.

On the whole, 5G Networks believes it is well-positioned for continued growth in the COVID-19 environment. This is due to the essential technology and network services it offers, as well as the increased demand for digital infrastructure due to mass remote-based working.

FY20 guidance

In its capital raising investor presentation yesterday, 5G Networks also provided a trading and guidance update. Accordingly, FY20 earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to be in the range of $6 million to $6.3 million at an EBITDA margin greater than 12%. This is above the previously guided EBITDA range of 8% to 12%.

The company attributed the anticipated improvement in EBITDA margin to the conversion of customers to high-quality, higher-margin recurring revenue services; cost synergy realisation; and an increase in operating leverage.

However, FY20 revenue is expected to land between $50 million and $52 million. This is down from the guidance range of $55 million to $65 million provided in mid-February. 5G Networks attributed this to a shift from one-off hardware sales to recurring revenue services.

At the time of writing, the 5G Networks share price has surged by 7.04% to $1.445 after rallying by as much as 12.59% in early trade.

More reading

• The smartest ASX shares to invest $10,000 in right now

Motley Fool contributor Cathryn Goh 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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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to end its positive run. At the time of writing the benchmark index is down 1.5% to 6,055.1 points.

Four shares that have not let that hold them back today are listed below. Here’s why they are pushing higher:     

The Aventus Group (ASX: AVN) share price is up 1% to $2.22. This morning analysts at Macquarie upgraded the shares of the retail park operator to an outperform rating with a $2.57 price target. It believes Aventus is well-placed to benefit from the reopening of Australia. It also estimates that its shares offer a very generous distribution yield of over 8% at the current level.

The Kogan.com Ltd (ASX: KGN) share price has returned from its trading halt and jumped 10% to $13.62. Investors have been buying Kogan’s shares after it completed its $100 million placement. These funds will be used by the ecommerce company to make value accretive acquisitions. Kogan intends to raise up to a further $15 million via share purchase plan.

The Newcrest Mining Limited (ASX: NCM) share price has stormed 5% higher to $29.89. This appears to have been driven by the combination of a rise in the gold price and an exploration update. In respect to the latter, the gold miner revealed positive drilling results at Havieron and Red Chris. Management notes that Havieron returned its best drill result to date and sees real potential to further expand this orebody.

The Northern Star Resources Ltd (ASX: NST) share price is up almost 6% to $13.77. This follows a decent rise in the gold price overnight after the U.S. Federal Reserve revealed that it plans to keep interest rates at zero until at least 2022. It isn’t just Northern Star (or Newcrest) charging notably higher today. The S&P/ASX All Ordinaries Gold index is up a sizeable 4.8% at the time of writing.

More reading

• ASX growth companies including Zip Co cash in on the rise of e-commerce
• Why the Kogan share price jumped 11% to a record high today
• My share investing journey during the pandemic
• 5 things to watch on the ASX 200 on Thursday
• Afterpay share price up 7%, ASX 200 edges higher

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia has recommended AVENTUS RE UNIT. 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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There are at least two ASX shares I’d buy if the ASX crashes again.

I’m not expecting that the ASX will crash again. But I think it’s a good idea to have your investment targets lined up so you know what you’d do if the opportunity presented itself.

Some of the smaller-to-medium sized shares on the ASX have performed very well since the coronavirus low in March. If the share market pulls back, I know I’d love to jump on these two long-term winners:

Share 1: Altium Limited (ASX: ALU)

Altium is a leading electronic software business which is aiming for global market leadership by 2025. The ASX share is aiming to achieve this with 100,000 Altium designer subscribers.

The Altium share price has been a strong performer since the initial crash started in February 2020. It has risen by 38% since 23 March 2020. It was up even more before the Aussie dollar strengthened compared to the US dollar. Altium reports in US dollars, so its earnings are worth less in Australian dollar terms as the US dollar weakens.

I’d like to buy more Altium shares because I think it’s one of the best ASX growth shares around.

The company has attractive and growing profit margins as it scales. It has excellent management with a long-term focus. The ASX share has a good amount of cash on the balance sheet with no debt. It even has a growing dividend.

There is a lot to like about Altium. But with the company warning of tougher conditions in the short-term, I’d prefer to buy more shares at a lower price than today. However, at a share price of $34 I think investors could still do quite well over the next five years.

Share2: A2 Milk Company Ltd (ASX: A2M)

A2 Milk is another ASX share that has done very well since its March low. The A2 Milk share price is up 25.8% since 16 March 2020.

I have been very impressed with A2 Milk’s performance since it listed on the ASX five years ago. It has already generated big returns for long-term investors.

It’s one of the few ASX shares that is seeing even faster growth during this unfortunate period. People are looking to stock up on quality products to ensure their family’s needs are met.

A2 Milk is one of those quality businesses that is able to invest for growth, keep building its cash balance and maintain an attractive earnings before interest, tax, depreciation and amortisation (EBITDA) margin. It can be hard to balance those things.

I think it would be a costly mistake to assume A2 Milk has already achieved most of its growth. I’m not expecting returns of over 1,000% over the next five years. But A2 Milk still has a long growth runway. It has barely begun growing in the US and it’s planning to start generating earnings in Canada.

There are plenty of other countries for A2 Milk to keep growing its market share.

Foolish takeaway

I think both of these ASX shares are among the best quality businesses we can buy. Sadly, the market is pricing them highly. I wouldn’t mind buying a small parcel of each today. But it would be even better to buy them if their prices were at least 15% lower. Who knows if that will happen though?

More reading

• 5 things to watch on the ASX 200 on Thursday
• 3 top ASX shares to buy now to get rich later
• 3 companies with great intangible asset moats
• How to become a millionaire before your parents with ASX shares
• Will ASX 200 shares hit a record high in June?

Tristan Harrison owns shares of Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Altium. 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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A strong side effect of the social restrictions imposed to fight the spread of the coronavirus has been the rise of e-commerce. With many confined to their homes, completing everyday shopping online has become the ‘norm’. This has seen the likes of ASX growth companies, Afterpay Ltd (ASX: APT), Zip Co Ltd (ASX: Z1P) and digital retailer, Kogan.com Ltd (ASX: KGN) benefit from the surge in online shopping.

And even as restrictions ease, it could be a long time before brick and mortar foot traffic reaches pre-coronavirus levels. In fact, the crisis could have brought about a permanent change in the way people shop. 

Let’s look into how this digital retailer and the buy now, pay later companies are benefitting from the shift.  

Kogan.com

The coronavirus crisis has turned promising e-commerce player Kogan.com into a bona fide market darling. Its share price raced to an all-time high of $13 last week, on the back of a string of positive business updates throughout the crisis.

With many traditional brick and mortar retailers closed and people confined to their homes during lockdowns, rates of online shopping increased dramatically. With one month still to go in the FY20 fourth quarter, Kogan has already recorded gross sales growth of 100%, and gross profit growth of 130%.  

The company is hoping to use this unique opportunity to pursue further growth. Kogan shares were placed into a trading halt on Wednesday, 10 June after the company announced a $100 million capital raising. Kogan hopes to use the cash injection to take advantage of any ‘value accretive opportunities’. This could mean company acquisitions are on the horizon.

Afterpay

Since falling to a 52-week low of just $8.01 at the height of the market selloff in late March, shares in Afterpay have soared an astonishing 580% to a new all-time high of $54.69.

Investors initially flocked to Afterpay after the company announced it had continued to perform strongly throughout the March quarter. Underlying sales were $2.6 billion for the quarter, a 97% increase over the FY19 third quarter. Unsurprisingly, March notched up the company’s third-highest monthly underlying sales total on record.

Afterpay has since reached another milestone: 5 million active users in the US. This is a significant achievement as it gives Afterpay a foothold in a lucrative new market. This comes just two years after launching in the region. It is even more interesting now in light of the Quadpay acquisition by Afterpay’s key competitor, Zip. It will be fascinating to watch as the two major Australian players battle it out in the US market.

Zip Co

The share price of ASX buy now, pay later company, Zip skyrocketed recently after it announced plans to acquire New York-based fintech Quadpay Inc. Quadpay is one of the leading buy now, pay later platforms in the US. It has total transaction volumes for the most recent quarter of $225.1 million and revenues of $17.8 million.

Zip claims that once the acquisition is complete, it will be one of the leading global players in the buy now, pay later space with close to $250 million in annualised revenues. The company’s share price soared to an all-time high price of $6.79 on the back of the news.

More reading

• Why Aventus, Kogan, Newcrest, & Northern Star are pushing higher
• A $10,000 investment in the Zip Co IPO would be worth $350,000 today
• Why the Kogan share price jumped 11% to a record high today
• My share investing journey during the pandemic
• 3 ASX shares to buy now with $10,000

Rhys Brock owns shares of AFTERPAY T FPO, Kogan.com ltd, and ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Kogan.com 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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S&P/ASX 200 Index (ASX: XJO) shares are great place to look for long-term investment opportunities.

Plenty of ASX 200 shares are market leaders in their industry. Owning the largest, best business in an industry can help generate stronger returns for our portfolios.

The best way to generate long-term returns is to invest for the long-term. So, here are three shares I think are opportunities for this year and beyond:

Share 1: REA Group Limited (ASX: REA)

REA Group is the owner of Australia’s most popular real estate portal. The REA Group share price is still down 7% from where it was on 21 February 2020. That’s despite the lower interest rate. 

The ASX 200 share has a strong market position as the clear property leader in Australia. Potential property buyers will go to the site with the most properties for sale. Potential sellers will want to list on the site with the biggest buying audience. It’s a very beneficial loop for REA Group.

There wasn’t much volume of property listings during the worst period of the coronavirus lockdowns. But now there’s more activity. Once jobkeeper ends in September there could be forced sellers, so more properties could come onto the market.

Over the long-term I’m excited by REA Group’s stakes in overseas property sites in regions where the population is much higher than Australia. One property site services the US. 

Share 2: Service Stream Limited (ASX: SSM)

Service Stream is an ASX 200 share that specialises in network infrastructure. It’s involved in the designing, construction, maintenance and operation of networks like telecommunications, electricity, gas, water and ‘new energy’.

The company had been consistently growing its earnings over the past few years before COVID-19. It’s expecting to report another solid result in FY20. Federal, state governments and businesses plan to continue spending on infrastructure over the coming years which should be good for Service Stream. The construction of the new 5G networks should be helpful for earnings too.

Service Stream has also been steadily growing its dividend. The ASX 200 share offers a grossed-up dividend yield of 6.8%. That looks pretty good to me. The Service Stream share price is down 27% since 5 February 2020.

Share 3: Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Patts is my favourite ASX 200 share, so I had to include it. It’s an investment conglomerate that takes long-term stakes in a variety of businesses like Brickworks Limited (ASX: BKW), TPG Telecom Ltd (ASX: TPM) and Bki Investment Co Ltd (ASX: BKI). It’s also invested in unlisted businesses like swimming schools and agriculture.

The investment house itself makes long-term investment decisions, so I think it’s easy to be a long-term investor in Soul Patts.

I like that it’s a conservative investor, and contrarian when there are unloved opportunities. Investing in agriculture during one of Australia’s worst droughts is the sort of brave investing that Soul Patts has done.

I believe Soul Patts has a great chance of outperforming the ASX 200 over the longer-term. The TPG merger is compelling. Brickwork’s expansion into the US is exciting. Soul Patts is about to start investing in regional data centres in Australia.

Foolish takeaway

I think each of these ASX 200 shares have a great future. Service Stream could be the strongest performer over the next 18 months if Australia’s economy keeps rebounding. But Soul Patts would be the share I’d buy today if I wanted a share to hold for many, many years.

More reading

• What is the ASX impact of a fall in house prices?
• 3 great shares to buy now if you’re an ASX 200 investor in your 20s
• Why do I own this ASX 200 share?
• 3 ASX 200 shares to add to your watchlist in 2020
• 5 things to watch on the ASX 200 on Thursday

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 has recommended REA Group Limited and Service Stream 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 3 ASX 200 shares I’d buy for 2020 and beyond appeared first on Motley Fool Australia.

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Recently I’ve been looking at how investments in the IPOs of a number of ASX shares have fared.

Today, I thought I would turn my attention to one of the most popular shares on the market at present – Zip Co Ltd (ASX: Z1P).

Zip Co is a fast-growing payments company which competes with Afterpay Ltd (ASX: APT) in the buy now pay later market.

The Zip Co IPO.

It has been almost five years since Zip Co listed on the Australian share market.

Its shares hit the ASX boards in September 2015 after raising $5 million through the issue of 20 million shares at 20 cents per share.

This means that if you had invested $10,000 into its IPO, you have would have received 50,000 shares.

Since then the company has gone from strength to strength thanks to the increasing popularity of buy now pay later with both consumers and retailers globally.

Consumers, particularly those in the millennial and Gen Z demographic, are turning to platforms like Afterpay and Zip Co instead of credit cards. This has led to Zip Co delivering stellar underlying sales growth over the last few years.

This has continued during the pandemic. After smashing expectations in the third quarter, Zip Co’s explosive growth continued in April when it delivered monthly transaction volume of $181.6 million. This was an 86% increase on the prior corresponding period.

The good news is that this is still only scratching at the surface of its overall market opportunity. Especially now it is expanding into the $5 trillion U.S. retail market via the acquisition of QuadPay.

It is largely because of this strong form and acquisition that the Zip Co share price hit a record high of $6.97 this morning.

When its shares hit that level, the 50,000 shares you would have received by investing in its IPO would have been worth a massive $348,500. That certainly is an impressive return in less than five years, right?

More reading

• ASX growth companies including Zip Co cash in on the rise of e-commerce
• My share investing journey during the pandemic
• 3 ASX shares to buy now with $10,000
• Afterpay share price up 7%, ASX 200 edges higher
• Afterpay share price overbought says analyst

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 AFTERPAY T FPO and ZIPCOLTD 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.

The post A $10,000 investment in the Zip Co IPO would be worth $350,000 today appeared first on Motley Fool Australia.

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