I’m not afraid to invest in shares during this recession.

After the Australian Bureau of Statistics (ABS) confirmed that Australia’s economy contracted by 0.3% in the March 2020 quarter, it seems clear that the country will enter a recession when the June 2020 quarter number is revealed. Indeed, Treasurer Josh Frydenberg has said that Australia is in recession today.

Recessions signal that times are tough for many areas of the country. But you wouldn’t know it from looking at the S&P/ASX 200 Index (ASX: XJO). It’s up another 1.5% today, adding to the previous gains of over the past several weeks.

The country is in the middle of a pandemic-caused recession, but some investors are already looking ahead to the other side. And I think that’s what most investors should do too.

What happens in a 12-month period shouldn’t necessarily change your long-term thoughts about shares unless it permanently alters their prospects for the foreseeable future. Shares like Nextdc Ltd (ASX: NXT) and Pushpay Holdings Ltd (ASX: PPH) have actually seen their prospects strengthen because of the unfortunate events.  

When you look at shares like Wesfarmers Ltd (ASX: WES) you can see the share price is still lower than it was before the coronavirus even with interest rates lower and reliable trading for Bunnings and Officeworks.

Shares I’m looking to invest in

I have been investing throughout the market selloff and I’ll be continuing to invest in shares during this recession. I bought shares of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) when it was lower. I also bought shares of WAM Microcap Limited (ASX: WMI) and Magellan Global Trust (ASX: MGG) when they were lower.

I’d really like to invest in shares like Altium Limited (ASX: ALU) and MFF Capital Investments Ltd (ASX: MFF) if they were to fall back in value again. The strength of the Australian dollar makes me want to buy shares which generate earnings from America.

But for now I’ve got my eyes on mostly Australian shares because of how much of a better position the country is in terms of the coronavirus as well as things like a strong iron ore price and less people on jobkeeper.

More reading

• Here’s why long term investing can outperform shorter holding periods
• Top brokers name 3 ASX 200 shares to buy right now
• The smartest ASX 200 shares to buy with $2,500 today
• ASX 200 up 1%: Big four banks jump, Afterpay hits record high
• Are our ASX big miners on an earnings upgrade cycle?

Motley Fool contributor Tristan Harrison owns shares of Altium, Magellan Flagship Fund Ltd, MAGLOBTRST UNITS, WAM MICRO FPO, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended PUSHPAY FPO NZX and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of Altium and 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.

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The Afterpay Ltd (ASX: APT) share price has been sparkling again on Wednesday.

This morning the payments company’s shares climbed 5.5% to reach a new record high of $52.29.

When Afterpay’s shares hit that level, it meant they were up an incredible 550% from their March low.

Why is the Afterpay share price at a record high?

Investors have been buying the buy now pay later provider’s shares after rival Zip Co Ltd (ASX: Z1P) announced its expansion into the U.S. market.

While ordinarily you might be concerned about increasing competition in the lucrative retail market, judging by Afterpay’s share price, investors don’t see things this way.

This is because both Afterpay and Zip Co have successfully co-existed in the Australian market for some time now without stifling each other’s growth. 

In fact, you could argue that they have been good for each other and helped accelerate the adoption of the payment method across the country. Investors may be hopeful the same happens in America.

And given that the U.S. retail market is estimated to be worth $5 billion per year, there’s certainly room for both companies.

Why else is the Afterpay share price at a record high?

In addition to this, Afterpay’s shares have been on fire over the last couple of months thanks to a number of factors.

These include WeChat owner Tencent Holdings becoming a substantial shareholder, its strong trading update (which showed that it has continued to perform strongly during the pandemic), and a stellar U.S. update. The latter revealed that Afterpay now has 5 million active customers in the country.

All in all, things are looking very rosy for Afterpay right now.

Is it too late to invest?

If you’re planning to make a long term investment, then I would still be a buyer of Afterpay’s shares today.

There may be better entry points down the line, but this is far from guaranteed with a rapidly growing company like Afterpay.

Though, given that it is a reasonably high risk investment, I would suggest investors limit the size of their investment to just a small part of their portfolio.

More reading

• Sezzle Inc shares and 2 other small cap ASX techs surge higher today
• Why Afterpay, Infigen, Qantas, & Zip Co shares are charging higher
• ASX 200 up 1%: Big four banks jump, Afterpay hits record high
• The Zip Co share price just zoomed to a record high: Is it too late to invest?
• Afterpay and these top ASX tech shares are on fire in 2020

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 ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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 many different approaches employed by investors attempting to generate solid returns from the ASX. However, for your average investor, I believe by far the best is to take a long-term investing approach.

A long-term investing strategy has a number of benefits. For instance, trading costs will be considerably lower and, as I will demonstrate, this can have a significant impact on portfolio returns. Especially as compounding takes hold. Additionally, holding shares for longer than 12 months means you are eligible for a capital gains tax (CGT) discount. So, instead of paying your marginal tax rate on 100% of your capital gains, if you hold the shares for more than 12 months, you’ll only pay tax on 50% of the gain.

Lastly, the CGT is paid upon each sale of a company. This means the amount you can reinvest is lower due to the tax that has been paid, which hurts your portfolio’s compounding ability.

These few advantages may not appear to be overly significant, however let’s look at a couple of scenarios to show just how much of a difference long-term investing can make.

Long-term investing versus short-term investing

For this exercise, we will compare 2 portfolios, both containing a starting investment of $30,000 evenly spread across 15 shares. In addition, we’ll assume an annual return of 10% and brokerage fee of $15 per trade. Lastly we’ll apply a marginal tax rate of 32.5% to calculate the CGT. This rate is applicable for a taxable income between $37,001 – $90,000.

Portfolio 1 – short-term investing

For our short-term investing portfolio, we will assume an average holding period of 6 months. This means that the whole portfolio will be turned over every 6 months.

The drawbacks of this frequent trading are paying CGT on 100% of the returns and the large brokerage costs of $900 per year.

Frequent trading often occurs as a result of emotional trading. That is, trading in and out of positions frequently based on company news and market sentiment. Instead, I believe looking beyond market sentiment and sticking with companies through volatile periods can be a great way to reduce costs and, therefore, boost returns.

Portfolio 2 – long-term investing

For our long-term investing portfolio, we will assume that only 1 out of the 15 companies is sold and replaced each year.

This strategy benefits from lower CGT, only $30 in brokerage fees annually and that tax free compounding effect we get from a low turnover.

This chart shows the above 2 portfolios’ growth over a 20 year period, and the effects can be sobering. The long-term investing portfolio has delivered a return 167% greater than that of the short-term. This is despite both portfolios achieving the same, 10% average annual return. See how significant the effects of all the additional trading and CGT can be on your returns?

Chart by author

Foolish takeaway

Here at Motley Fool, we are long-term investors through and through. We believe the compounding effect and overall benefits of long-term investing make it the single greatest way to build wealth over time. A few ASX shares I’m holding for the long term are ResMed Inc (ASX: RMD), Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) and Cleanaway Waste Management Ltd (ASX: CWY). I believe all 3 of these companies have exciting futures and, as such, I plan to hold them for the next decade.

More reading

• Why I’m not afraid to invest in shares during this recession
• How to become a millionaire by investing in ASX shares
• 3 high quality ASX blue chip shares to buy in June
• 3 founder-led ASX shares to buy for strong long-term returns
• ASX 200 investor in your 40s? 3 shares to buy now

Motley Fool contributor Michael Tonon owns shares of Cleanaway Waste Management Ltd, ResMed Inc., and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Clime Investment Management Limited (ASX: CIW) share price has jumped as much as 41.18% today on the back of a material acquisition.

Clime is an integrated wealth management business. Founded in 1996, its operations encompass private wealth advice, investment management, self-managed super fund administration, and share research and valuation. The company also offers a number of unlisted funds, along with the Clime Capital Ltd (ASX: CAM) listed investment company.

Before we dig into the announcement, it’s important to note that Clime Investment Management sits at the smaller end of the ASX. At the time of writing, Clime has a market capitalisation of $31 million, with shares changing hands at 55.5 cents per share – up 30.59% for the day.

What did Clime Investment Management announce?

This morning, Clime released an announcement and associated investor presentation regarding recent trading conditions, a completed institutional placement and an acquisition.

With this, the company announced it has successfully completed a $4.5 million placement at an issue price of 46 cents per share. This issue price represents an 8.2% premium to Clime’s last closing price of 42.5 cents.

The placement was undertaken to fund the acquisition of a series of businesses from SC Australian Holdings. Clime has agreed to acquire all of the issued share capital of each of Madison Financial Group, AdviceNet, WealthPortal and Proactive Portfolios – together, the MFG Entities – for $4.4 million.

The MFG Entities provide licensing, compliance, technology and support to around 100 financial advisory firms. The entities have around $3 billion in funds under advice and total gross annual revenue of approximately $34 million.

Clime expects to complete the acquisition in mid to late June.

Trading update

Along with the acquisition and associated placement, Clime also shed some light on its recent business performance.

The company stated that all segments were performing well prior to COVID-19. While the evaluation of the impact of the pandemic is in progress, the effects have been cushioned through the lowering of variable expenses and government support.

Quantifying these effects, Clime revealed gross funds under management (FUM) declined from $1,097 million on 14 February 2020 to a low of $874 million. Gross FUM as at 29 May 2020 was $969 million.

The company noted that its ordinary operating result (revenue less expenses) and net group result are positive. However, both results are below budget due to COVID-19. Net group result takes into account the ordinary operating result plus the impact of balance sheet investments and performance fees generated.

Clime expects these results to improve with the inclusion of JobKeeper and ATO benefits. Additionally, it has seen improving return on mark-to-market balance sheet investments to 29 May. 

As at 29 May 2020, the company had $4 million cash and $6 million in liquid investments on its balance sheet.

More reading

• Why JB Hi-Fi shares and 1 other are a buy for long-term growth
• Top brokers name 3 ASX 200 shares to buy right now
• Scentre, Vicinity and Mirvac shares are this week’s most traded ASX blue chips
• Why Austal, Evolution, Newcrest, & Pro Medicus are tumbling lower
• The smartest ASX 200 shares to buy with $2,500 today

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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Looking for 2 ASX shares that have strong long-term growth potential? Australia’s economy may be starting to pick up after the coronavirus. Now could be a good time to top up on your ASX portfolio with Transurban Group (ASX: TCL) and JB Hi-Fi Limited (ASX: JBH) shares.

Why JB Hi-Fi?

Bricks and mortar retailers such as Myer Holdings Ltd (ASX: MYR) and Reject Shop Ltd (ASX: TRS) have seen recent struggle.

However, JB Hi-Fi continued to see strong momentum through the quarter containing March. Its Australia division experienced sales growth of 11.6%. Growing stronger was its Good Guys division at 13.9%.  This strong momentum continued into April and early May.

JB Hi-Fi’s Australia stores remained open during the coronavirus crisis.

The demand for a range of goods including technology products for remote working, learning and communication remains strong. Essential home appliances for food storage and preparation saw high demand, too.

In particular, the company’s online channel strategy is well developed, assisted by a handy click and collect facility.

JB Hi-Fi’s share price has rallied strongly from its 12 month low in late March. Despite it becoming a bit pricey, I still believe it offers reasonably good value as a long-term buy.

It also offers an attractive forward annual dividend yield of 3.9%, that is fully franked.

Why Transurban?

Transurban is one of the world’s largest toll-road operators. It’s the largest operator of private toll-roads in Australia, owning a virtual monopoly of Sydney and Melbourne tolls with a number also in Brisbane. In addition, Transurban also manages and develops toll-roads in North America.

Unsurprisingly, Transurban’s traffic volumes were significantly impacted in the early phases of the coronavirus pandemic. However, Transurban revealed in its most recent update in early May that traffic numbers are now starting to pick-up again.

Also, some commuters may be choosing to drive instead of taking crowded trains and buses through public transport.

I believe that Transurban is still well-positioned for long term growth. This is likely to lead to above-average shareholder returns.

A key driver of this will be the increasing use of toll roads. Congestion on our main roads is growing as our major cities continue to expand. Thus, vehicle volumes will inevitably continue to increase.

Both Transurban and JB Hi-Fi shares, I believe, offer strong long-term growth potential and are worth a look by investors.

More reading

• Can ASX 200 retail shares outperform this year?
• 2 cheap ASX 200 shares to buy right now
• Is the AFIC share price a buy right now?
• ASX 200 Weekly Wrap: Surging bank shares push ASX toward 6,000
• These are the 10 most shorted ASX shares

Motley Fool contributor Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group. 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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Many of Australia’s top brokers have been busy adjusting their financial models again, leading to the release of a large number of broker notes this week.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX 200 shares are in the buy zone:

CSL Limited (ASX: CSL)

According to a note out of UBS, its analysts have retained their buy rating and $342.00 price target on this biotherapeutics company’s shares. The broker believes that CSL’s Seqirus business is well-positioned to benefit from increasing demand for influenza vaccines in the future because of the current pandemic. It suspects that this could offset any weakness in the core CSL Behring business caused by potential plasma collection disruptions. I agree with UBS and feel CSL would be a great option for investors.

Nearmap Ltd (ASX: NEA)

A note out of the Macquarie equities desk reveals that its analysts have retained their outperform rating and lifted the price target on this aerial imagery technology company’s shares to $2.47. Although Nearmap is being impacted by the pandemic, it notes that its sales have remained resilient and usage among existing customers appears strong. I think Macquarie is spot on and believe Nearmap could be a great long term option.

Rio Tinto Limited (ASX: RIO)

Analysts at Goldman Sachs have retained their buy rating and lifted the price target on this mining giant’s shares to $101.10. The broker made the move after upgrading its iron ore price forecasts to account for strong Chinese steel production and weaker supply out of Brazil. It expects the stronger iron ore prices to lead to a better than expected profit from Rio Tinto in FY 2020. Goldman also estimates that its free cash flow will support a fully franked dividend yield of 5%. I would have to agree with this recommendation as well. I think Rio Tinto is a top option for investors wanting exposure to the resources sector.

More reading

• The smartest ASX 200 shares to buy with $2,500 today
• ASX 200 up 1%: Big four banks jump, Afterpay hits record high
• Are our ASX big miners on an earnings upgrade cycle?
• Can ASX 200 retail shares outperform this year?
• 1 ASX 200 tech share to buy and hold for a 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 CSL Ltd. The Motley Fool Australia owns shares of and has recommended Nearmap 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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Among the most traded blue chips, the real estate sector is head and shoulders above the rest. It sold off heavily during Monday’s trading, with many investors looking to buy the dip on Tuesdays. 

The real estate sector is faced with continuing uncertainty due to the COVID-19 pandemic. In some cities, residential housing prices are starting to show signs of deterioration. Moreover, shopping centres are still working through issues of rent during the crisis. The full impact on smaller retailers is yet to be clearly determined. 

Most traded blue chip real estate shares

Vicinity Centres (ASX: VCX) led the week announcing a $1.2 billion capital raising through share placement. At the same time, it announced there would be no distribution for the 6 months ending 30 June. Vicinity was down by 1.5% from Friday’s closing price to Tuesday’s closing price. On Tuesday, 65 million shares changed hands.

The move will shore up the company’s balance sheet in light of increased uncertainty due to COVID-19. The placement has allowed it to reduce its level of gearing from 34.9% to 26.6%. In addition, the company now sits with cash and undrawn debt facilities of $2.6 billion. Vicinity invests in shopping centres across Australia.

The Mirvac Group (ASX: MGR) share price has fallen by 2.1% from Friday’s closing price to Tuesday. Over 44 million shares have changed hands since the opening of the ASX this week. Over 60% of its assets are in office real estate. Mirvac removed its FY20 guidance and distributions on 18 March. It disclosed a 5.6% reduction in monthly comparable sales in its retail assets.

Scentre Group (ASX: SCG) saw its share price rise by 2.65% by close of trading on Tuesday. This was after a sharp sell-off on Monday. As one of the week’s most traded blue chips, Scentre saw 79 million shares change hands in the first two days of this week. Scentre holds the domestic shopping centre assets formerly owned by Westfield Corporation. It withdrew guidance on 20 March. Like the other most-traded blue chips, Scentre saw a sharp fall on Monday followed by investors clawing back value on Tuesday.

Foolish takeaway

All three of these real estate investment trusts (REIT’s) are selling at a price to earnings ratio (P/E) of 10 or under. Historically this is a good P/E for this sector and is generally lower than it has been since 2015. The worst news is yet to be announced as April and May have been our worst months as a country during the pandemic. They are all well-managed companies with strong balance sheets. If you are patient then these companies are selling at good entry points over a medium-term of, say, 1–2 years. 

More reading

• Leading brokers name 3 ASX shares to sell today
• Why Evolution, Iress, Pro Medicus, & Vicinity shares are dropping lower
• ASX 200 down 0.1%: Big four banks drag ASX lower ahead of RBA meeting
• The latest ASX 200 stocks to be upgraded by top brokers
• Why a2 Milk, Freedom Foods, Scentre, & TPG Telecom are dropping lower

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Scentre Group. 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 early afternoon trade the S&P/ASX 200 Index (ASX: XJO) is on course to record a strong gain. At the time of writing the benchmark index is up 0.95% to 5,890.8 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are tumbling lower:

The Austal Limited (ASX: ASB) share price is down 2.5% to $3.44. Investors have been selling the shipbuilder’s shares after it announced the retirement of its CEO. The company’s Chief Operating Officer, Patrick Gregg, will take over from the retiring David Singleton on 1 January 2021. Mr Singleton will continue to work closely with Mr Gregg for the next six months to ensure an efficient handover.

The Evolution Mining Ltd (ASX: EVN) share price has fallen 6.5% to $5.83. This morning analysts at UBS downgraded the gold miner’s shares to a neutral rating from buy. The broker made the move on valuation grounds after its shares surged past its price target of $5.50. Weakness in the gold price is also weighing on its shares.

The Newcrest Mining Limited (ASX: NCM) share price is down 3% to $29.87. Investors have been selling Newcrest and other gold miners after the price of the precious metal weakened overnight. Investors were moving out of safe haven assets and into risk assets amid optimism over the reopening of the U.S. economy. The S&P/ASX All Ordinaries Gold index is down 4.8% at the time of writing.

The Pro Medicus Limited (ASX: PME) share price has dropped 4% to $27.25. The healthcare imaging software provider’s shares have come under pressure since the release of a broker note out of UBS on Tuesday. It downgraded its shares to a neutral rating with a $29.65 price target. While the broker likes Pro Medicus and was pleased with its latest contract win, it isn’t a fan of its current valuation.

More reading

• ASX 200 up 1%: Big four banks jump, Afterpay hits record high
• 5 things to watch on the ASX 200 on Wednesday
• Why Evolution, Iress, Pro Medicus, & Vicinity shares are dropping lower
• Is the Newcrest Mining share price a buy?
• Here are all the ASX 200 companies that announced capital raisings in May

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 Austal Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended 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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It’s hard to know which ASX 200 shares to buy right now with so much uncertainty still in the air. The coronavirus pandemic and oil price war have smashed valuations but we’ve seen a strong recovery during April and May.

If you’ve saved up some spare cash but don’t know where to invest, here are a couple shares I’ve got my eye on in June.

The smartest ASX 200 shares to buy with $2,500 today

I think healthcare is one sector to watch right now. I’ve got my eye on the largest ASX 200 healthcare share on the market: CSL Limited (ASX: CSL).

It’s been a rollercoaster of a ride for CSL shareholders in 2020. The Aussie biotech’s shares climbed to a new record high of $342.75 in late February before the S&P/ASX 200 Index (ASX: XJO) crashed lower.

CSL is currently trading at $282.90 per share and could be in the buy zone. The group is strong in influenza vaccinations and blood plasma treatments which I think aren’t going anywhere, given the current climate.

The ASX 200 healthcare share reaffirmed its guidance in April and could be one to watch in 2020.

I also like the look of NextDC Ltd (ASX: NXT) as a speculative tech play. The Aussie tech share has rocketed 40% in 2020 thanks to its strong expansion and beefed up balance sheet.

NextDC specialises in data security and storage. The group owns and operates a number of data centres across the country with more planned in the near future.

If we see a permanent move towards work from home arrangements, that could be good news for the ASX 200 tech share. More remote working means more data storage and security demand which could deliver higher earnings for NextDC.

Some might question the current $9.23 per share valuation. However, I think NextDC has the potential to be an ASX 50 share within a decade. If that proves to be the case, the current $4.2 billion market capitalisation could be set to surge in the coming years.

Foolish takeaway

These are just a couple of the ASX 200 shares that are on my radar right now.

More reading

• ASX 200 up 1%: Big four banks jump, Afterpay hits record high
• Are our ASX big miners on an earnings upgrade cycle?
• Can ASX 200 retail shares outperform this year?
• 1 ASX 200 tech share to buy and hold for a decade
• JobMaker is coming. These 3 ASX 200 shares could benefit

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of 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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