Tag: Motley Fool Australia

Over the past few days, it’s dawned on me that the situation regarding coronavirus is unlikely to change anytime soon. Like many others, I thought that by now we would find ourselves opening up our own borders. Then opening up to New Zealand, and then slowly to the rest of the world.

However, the recent surge of coronavirus infections in Victoria has forced us to temper our expectations on how quickly we can open up the economy and our borders. If we’re going to continue managing this pandemic successfully, then potentially we may need to be taking two steps forward and one step back for some time.

While none of us can do anything about this, we can definitely shape our investment portfolios to reflect our circumstances. So on that note, here are some of my thoughts.

Sectors to consider for your investment portfolio

Local travel

I believe that Alliance Aviation Services Ltd (ASX: AQZ) is likely to be the only airline to deliver anywhere near decent earnings over the short term. This company recently forecast a year-end profit before tax of $40 million. The core business of Alliance Airlines is providing charter flights and servicing fly-in fly-out workers. Demand for these services increased during lockdown restrictions as travellers were forced to comply with social distancing requirements.  

Alliance Airlines’ recent award of flights to the Whitsundays by the Queensland Government further reinforces my optimism surrounding this Aussie airline. Alliance is structured as a nimble organisation with a low cost base. If we do have to live only with domestic tourism for a while, I believe the company will prosper. Conversely, an organisation like Qantas Airways Limited (ASX: QAN) is just too big to survive on local flights alone.

Another potential beneficiary of an increased concentration of local travel could be Bapcor Ltd (ASX: BAP), a distributor of car parts and services. If, for the time being, most travel will be local, it stands to reason much of it will be by car. This definitely appears to be increasing demand for Bapcor’s automotive parts, accessories, equipment, and services. Back in March, when the lockdown commenced, Bapcor still managed to deliver an 11.5% growth in revenue against the previous corresponding period.

Discretionary items

I think ongoing work-from-home requirements will mean continued solid sales volumes for retailers like Bunnings and Officeworks; businesses owned by Wesfarmers Ltd (ASX: WES). Wesfarmers also owns Catch, an online marketplace it recently purchased. Catch has increased its sales turnover by 68.7% in H2 FY20 so far against the previous corresponding period. This is in line with other online sales businesses like Kogan.com Ltd (ASX: KGN).

Another interesting internet sales story has been City Chic Collective Ltd (ASX: CCX). On 25 May, the company declared that two-thirds of its sales came from online channels. Moreover, it announced a 57% increase in online sales during the company’s store closures versus the same period last year.

Payment processing

Depending on your investment horizon, it may still be too soon to invest in shares like Commonwealth Bank of Australia (ASX: CBA). In fact, I would be cautious of any shares with exposure to the long-term credit commitments of the general public. With higher unemployment and uncertain economic conditions, I believe fewer people will be seeking long-term credit arrangements.

In addition, as the nation’s largest bank, CommBank is also potentially facing the biggest impact of defaults on housing and business loans. Moreover, there is an underlying trend away from credit cards, particularly among millennials. 

Nonetheless, I think short term credit organisations like Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) are likely to continue to do well. Particularly those that are light on credit checks. 

Payment processing companies like Tyro Payments Ltd (ASX: TYR) are also destined to continue performing well, in my opinion. Tyro has a network across many small and medium enterprise companies, many of which have already re-opened. Furthermore, the company has increased YTD earnings by 16% against last year during April and May, despite lockdowns restrictions.

In just a few years, Tyro has catapulted itself to be the largest EFTPOS provider of all authorised deposit-taking institutions (ADI) outside of the big four banks.

Foolish takeaway

The resurgence of coronavirus cases in Victoria this week suggests the recovery is not going to play out the way we might have hoped. Nonetheless, the market continually provides us with opportunities.

I recommend pivoting an investment portfolio towards companies with strong online sales capabilities, or those which have thrived during the lockdown. In addition, look for companies that do not require a full re-opening of the Australian or international economies in order to thrive, such as the buy now, pay later providers.

More reading

• Best growth shares to buy with $4,000
• Forget term deposits! These ASX dividend shares are better
• 5 things to watch on the ASX 200 on Wednesday
• Afterpay share price on watch after reaching 1 million UK customers
• Where to invest $500 into ASX shares right now

Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Tyro Payments and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Bapcor. 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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On Tuesday the Coles Group Ltd (ASX: COL) share price climbed 0.5% higher to $16.67.

This latest gain means the supermarket giant’s shares have now risen a sizeable 11% since the start of the year.

This means Coles’ shares are vastly outperforming the S&P/ASX 200 Index (ASX: XJO), which is down 11% over the same period.

Is it too late to buy Coles’ shares?

I don’t believe it is too late to invest in Coles. Although its shares have been strong performers this year, I believe they are still good value. Especially in comparison to its arch rival Woolworths Group Ltd (ASX: WOW).

At present, I estimate that the Coles share price is trading at a little over 21x FY 2021 earnings, whereas Woolies is trading closer to 26x FY 2021 earnings.

Another reason to be positive on Coles is its dividend. I expect Coles to provide investors with a fully franked 3.9% dividend yield next year. For Woolworths, I’m expecting a fully franked 2.9% dividend yield in FY 2021.

I’m not the only one that is positive on Coles. After looking through recent updates by Woolworths and Metcash Limited (ASX: MTS), this morning analysts at Goldman Sachs reiterated their conviction buy rating and $18.60 price target on its shares.

This price target implies potential upside of 11.6% for its shares over the next 12 months or 15.5% including dividends.

What did Goldman Sachs say?

Goldman appears confident that Coles will finish FY 2020 strongly and has revised its sales forecasts higher. And while it does have concerns over margin pressures, it feels Coles is better positioned to limit the damage.

The broker commented: “While the sales trends remain strong across the industry, margins have underwhelmed but the outlook for margins over the remainder of CY20 look supportive. We revise 4Q20 LFL growth for the Food division to +8.5% and for the Liquor division to +8%, reflecting the stronger than expected industry growth trends.”

“Over 2H20, we anticipate COL’s cost out program and earlier timing of EBA implementation will limit the downside to margins compared to that anticipated by WOW’s update. We have revised 2H20 Food EBIT margins from 4.2% to 4.0% (+10bps on pcp). Overall, FY20 Food EBIT has been reduced by -1.6% and Group EBIT by -1.5%. We revise pre-AASB16 FY20 EPS to A$0.71, -1.5%,” it concluded.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• ASX supermarket shares on the radar
• ASX 200 Weekly Wrap: ASX back in the green
• 3 high quality ASX dividend shares for income investors to buy
• These 3 ASX ETFs are yet to recover from the market crash

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths 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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Volatility is a funny word. When we hear it we don’t think of our portfolio dropping by, say, 40%. Yet if you can withstand swings like this then there are some great investment opportunities available to you. I believe these are the best shares to buy for growth in today’s market.

Although $4,000 sounds like a lot when you are starting out, it is about the limit that I would dedicate to higher-risk activities like investing in growth shares. I would invest $4,000 evenly among the 5 shares below. 

The roaring fintechs

Australia has a fantastic fintech economy. In fact, Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO) are 2 world-class fintechs. Within this sector, I think the following 2 companies are the best shares to buy.

Sezzle Inc (ASX: SZL) is a great share with a fantastic sales track record. In addition, this buy now pay later company has a great strategy to target millenials and Gen Z, customers.  It is also a native of the USA, the world’s largest potential buy now pay later retail market at US$5 trillion. I would place $1,000 into Sezzle.

Pushpay Holdings Ltd (ASX: PPH) runs donor management systems for faith-based, non-profit and education organisations. They are already across Australia, Canada and the USA. As with Sezzle, if you are going to build donor management systems for faith-based communities, then the US is the market to be in. I would invest $1,000 in Pushpay.

Best shares to buy in tech

If you are investing purely for growth then these 2 shares are ones I would look at very seriously.

Electro Optic Systems Hldg Ltd (ASX: EOS) is a technology company based in the defence and space industries. It is quite an amazing company and I had no idea that we had anything like this. Its primary focus is in sensor technology. It’s developing the technology to help with over 500,000 pieces of space debris travelling at around 30,000 km per hour. The company also develops weapons systems. 

Altium Limited (ASX: ALU) is the PCB design software manufacturer that is domiciled in the USA. It is a proven market player and has been able to grow sales, on average, around 16% every single year for the past 10 years. I believe that it is still growing into the market space and the share price is likely to continue to see decent growth.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Afterpay share price on watch after reaching 1 million UK customers
• Invest like Warren Buffett by buying and holding these ASX 200 shares
• Where to invest $500 into ASX shares right now
• Afterpay share price up 550% since February. Is it too late to buy?

Daryl Mather owns shares of Electro Optic Systems Holdings Limited and Sezzle Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Altium, Electro Optic Systems Holdings Limited, and Xero. The Motley Fool Australia owns shares of and has recommended PUSHPAY FPO NZX. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Electro Optic Systems Holdings Limited and Sezzle 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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Trading in Cromwell Property Group (ASX: CMW) was temporarily paused Tuesday morning pending an announcement. The announcement, released at 10:06 am, related to an off-market proportional takeover bid from ARA Asset Management Limited (ARA). By close of trade Tuesday, the Cromwell share price had jumped 8.05% to 94 cents.

Why did the Cromwell share price jump?

Cromwell shares rallied following news that ARA intends to acquire 29% of all Cromwell stapled securities in which it does not already hold an interest. If successful, this would take ARA’s stake in Cromwell to 52.6%. The offer price of 90 cents per share was slightly higher than Monday’s closing price of 87 cents. According to Cromwell, ARA proposed it would execute the partial takeover by acquiring 29 out of every 100 Cromwell shares it doesn’t already own. 

Cromwell Property Group announced the following in relation to the proportional takeover offer:

“Cromwell securityholders are advised to take no action in relation to the proportional offer. Cromwell notes the unsolicited and opportunistic nature of the proportional offer and that the proportional offer is not an offer to acquire all securities held by securityholders in Cromwell. Cromwell will provide a further announcement in due course when it has evaluated and assessed the terms of the proportional offer.”

The announcement went on to state “In the interim, Cromwell will continue to operate and execute its business strategy in the ordinary course as previously flagged to the market on 4 June 2020”.

What did ARA say?

In its letter to Cromwell, ARA boasted that “the offer price is a premium to Cromwell’s recent trading prices despite ongoing market volatility”. The offer represented a 9.8% premium to the company’s 30-day volume weighted average price of 82 cents.

ARA already has an existing interest in Cromwell securities of 24%. The asset manager wrote “Given Cromwell’s elevated gearing levels in conjunction with the uncertainty surrounding rental collections and asset values as a result of COVID-19, ARA is concerned that Cromwell will seek to undertake a material equity raising at a discount to the offer price”.

It also suggested that the likelihood of a competing offer was reduced due to ARA’s existing 24% stake in Cromwell.

What’s next for the Cromwell share price?

The Cromwell share price is up 38.2% from its 52-week low of 68 cents. It’s also down 25% since this time last year and nearly 30% below its 52-week high of $1.35 reached in November 2019. 

The proportional takeover bid could play out in a number of ways. Overall, however, it should be positive for shareholders. At the current bid, it seems unlikely that shareholders will accept given the Cromwell share price is now already above 90 cents. However, a new higher bid may be accepted by shareholders enabling ARA to take its holding to above 50%. 

If ARA is successful in obtaining a holding greater than 50%, it will have the ability to appoint board members. This would then enable the asset manager to execute its own strategies for Cromwell Property. As suggested yesterday, this would likely include blocking any potential capital raisings. 

Previously on 2 March, Cromwell released an announcement suggesting that ARA was attempting a ‘takeover by stealth’. Cromwell’s management also clashed with the asset manager over its attempt to elect an appointed nominee to the board three months after his appointment had been struck down at the AGM. At this time Cromwell also stated that shareholders should take no action in response to approaches by ARA.

Stay tuned…

More reading

• ASX 200 finishes higher, Woolworths gives update

Motley Fool contributor Chris Chitty 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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If you’re interested in small cap shares, then you might want to take a look at the one talked about below.

It is a firm favourite of the Ellerston Australian Micro Cap Fund and it certainly can pay to listen to what this fund manager says.

Over the last 12 months the fund has provided investors with a 15.3% return after fees, which compares to a 2.9% decline by the benchmark S&P/ASX Small Ordinaries Accumulation Index.

This outperformance doesn’t appear to be a fluke either, with the fund returning an average of 16.5% per annum over the last three years. As a comparison, the benchmark index has provided a 7.5% per annum return over the same period.

Which shares does the Ellerston Australian Micro Cap Fund like?

In a recent update, portfolio managers David Keelan and Alexandra Clarke revealed that its portfolio remains skewed towards high-quality shares which they believe can endure a challenging macro environment.

This includes the technology sector and particularly companies with sustainable competitive advantages and structural tailwinds.

One of those is wagering service business Betmakers Technology Group Ltd (ASX: BET). It uses its proprietary technology to provide risk management systems, odds management, and content across a number of sports.

The portfolio managers commented: “The company boasts an exclusive 10- year agreement to manage fixed odds horse racing in New Jersey, and this was recently expanded to include a 5-year agreement to manage fixed odds terminals and kiosks at Monmouth Park racetrack.”

And although the Betmakers share price is up over 200% in 2020, the fund managers still see meaningful upside in the future.

“Fixed odds racing should benefit from a structural migration away from tote betting, a similar narrative to that which has already played out in Australia, and BET is well placed to capitalise on this. The company is on the verge of EBITDA profitability, has an extensive pipeline of opportunities, and we see meaningful upside to the current price,” they concluded.

More reading

• Best growth shares to buy with $4,000
• Why the Cromwell share price soared higher yesterday
• Is the Macquarie share price a buy?
• Forget term deposits! These ASX dividend shares are better
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor James Mickleboro 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 one top fund manager sees meaningful upside for the Betmakers Technology share price appeared first on Motley Fool Australia.

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Is the Macquarie Group Ltd (ASX: MQG) share price a buy?

Macquarie shares have been on a rollercoaster since the COVID-19 share market selloff began. Between 21 February 2020 and 23 March 2020, the global investment bank’s share price dropped 52.5%. But since that low on 23 March 2020 it has risen 68.8%.

Despite that strong recovery the Macquarie share price is still down 20% from the pre-coronavirus high.

What’s going on for Macquarie?

As a global investment bank, Macquarie is obviously quite dependent on a decent global economy to maintain good performance.

In its FY20 result Macquarie was impacted by higher credit charges and impairments relating to the potential economic impacts of the coronavirus pandemic. In the second half of FY20 it recognised credit and impairment charges of $901 million, up from $139 million in the first half of FY20 and up from $476 million in the second half of FY19.

The COVID-19 provisions were a large reason why the second half profit of FY20 came in at $1.275 billion, down 13% from the first half of FY20 and down 24% on the second half of FY19.

However, Macquarie remains in a strong financial position. At 31 March 2020 it had record surplus capital of $7.1 billion, up from $6.1 billion at 31 March 2019. Its common equity tier 1 (CET1) capital ratio was 12.2% at 31 March 2020, up from 11.4% at 31 March 2019.

Macquarie deliberately strengthened the balance sheet during FY2020. It raised $1.7 billion in a capital raising from institutional investors and retail investors. It also increased its proportion of term funding and deposits. Total customer deposits increased 20% to $67.1 billion at 31 March 2020.

Macquarie outlook?

I think that Macquarie still has a very promising future. Each Macquarie has a different outlook in the current circumstances. Combined, the results of the below four divisions will impact where the Macquarie share price will go. 

Macquarie Asset Management (MAM) is one of the biggest infrastructure asset managers in the world. Thankfully, base management fees are expected to be ‘broadly’ in line with last year. However, MAM’s other operating income is expected to be significantly down due to expected delays in the timing of asset sales.

Macquarie’s banking and financial services is expecting to keep growing deposit and loan volumes, but there is a lot of competition in the sector which could hurt margins.

The commodities and global markets (CGM) division is anticipating lower customer activity, particularly in commodities – however volatility could create opportunities. The product and client sector diversity is expected to provide some support through the uncertain economic conditions in the first half of FY21.

Macquarie Capital expects the challenging market conditions to reduce the number of successful transactions and increase the time to completion. Investment-related income is expected to be lower from lower asset realisations, but it should benefit with the market recovery.

Time to buy Macquarie shares at this price?

It’s very difficult to estimate what FY21 will be like for Macquarie. It’s hard to say where the Macquarie share price will go in the short-term. There is so much uncertainty for the global economy. Macquarie earns around two thirds of its profit overseas, which is where most of the COVID-19 damage is currently taking place.

Macquarie itself wasn’t able to provide FY21 profit guidance.

I think Macquarie is one of the best blue chips on the ASX. It ended up cutting its final FY20 dividend, partially due to APRA guidance, but I believe it will be a solid dividend share for the long-term.

Macquarie has high-quality management and a long-term focus. I like that the business can allocate money to any part of the business across the world where the growth potential might be. I’d prefer to invest in Macquarie compared to an ASX bank like Westpac Banking Corp (ASX: WBC). I do think it’s a long-term opportunity, but there may also be more volatility later this year, particularly around the US election. There are plenty of ASX shares I’d rather buy over Macquarie at this share price. 

More reading

• Macquarie and 2 other ASX shares you’re missing out on
• ASX 200 Weekly Wrap: ASX back in the green
• What is the price/earnings (p/e) ratio?
• Consider these blue chip ASX shares for strong dividend yields
• Brokers just upgraded these ASX 200 stocks to “buy” today

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie 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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Instead of putting your money into term deposits which provide only paltry interest rates, I would suggest you look at some of the quality dividend shares the ASX has to offer.

Three which I think would be great alternatives to term deposits are listed below. Here’s why I like them:

Commonwealth Bank of Australia (ASX: CBA)

I think this banking giant is a top dividend share to consider buying. Although Commonwealth Bank will almost certainly cut its dividend materially in FY 2021, I believe it will still offer an above-average yield. At present I believe a fully franked dividend of $3.70 per share is possible next year, which equates to an attractive fully franked 5.35% yield. This estimate could prove to be conservative if the economic damage from the pandemic isn’t as bad as first feared.

Rio Tinto Limited (ASX: RIO)

If you’re not averse to buying mining shares, then Rio Tinto could be a top option for income investors. This is because the high prices that iron ore is commanding at present, thanks to strong demand and supply constraints, means the mining giant is well-placed to deliver strong profits in FY 2020 and FY 2021. And given the strength of its balance sheet, I suspect the company will return the majority of its free cash flow to investors through dividends. In light of this, I estimate that its shares offer a forward fully franked dividend yield of at least 5%.

Transurban Group (ASX: TCL)

Another dividend share to look at buying is Transurban. I think the toll road operator could be a great option for income investors due to the quality of its portfolio and its positive long term outlook. In a recent update, Transurban revealed that its traffic volumes are improving greatly. I believe this bodes well for FY 2021 and could mean a distribution close to normal levels again. At present I estimate a dividend of 49 cents per unit next year, which equates to a 3.3% distribution yield.

More reading

• Should you buy ANZ, CBA, NAB, or Westpac? Here’s what this broker thinks
• Is the Afterpay share price a boom or a bubble?
• ASIC hits Commonwealth Bank with civil proceedings
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 finishes flat, ASX travel shares drop

Motley Fool contributor James Mickleboro 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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On Tuesday the S&P/ASX 200 Index (ASX: XJO) fought hard to carve out a solid gain. The benchmark index climbed 0.2% to 5,954.4 points.

Will the market be able to build on this on Wednesday? Here are five things to watch

ASX 200 poised to rise.

The ASX 200 looks set to push higher on Wednesday after a positive night of trade for U.S. stocks. According to the latest SPI futures, the benchmark index is expected to rise 4 points or 0.1% at the open. Overnight on Wall Street the Dow Jones rose 0.5%, the S&P 500 pushed 0.4% higher, and the Nasdaq index climbed 0.7%. U.S. stocks lifted amid optimism that a trade deal with China isn’t over.

Oil prices tumble.

Concerns over weakening demand for oil weighed on prices and could weigh on the likes of Oil Search Ltd (ASX: OSH) and Santos Ltd (ASX: STO) on Wednesday. According to Bloomberg, the WTI crude oil price is down 1.3% to US$40.21 a barrel and the Brent crude oil price is 1.3% lower to US$42.54 a barrel.

Gold price jumps again.

Gold miners such as Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could be on the rise today after the gold price jumped higher. According to CNBC, the spot gold price is up 1.1% to US$1,785.50 an ounce after the U.S. dollar weakened. The precious metal is now trading at its highest level since October 2012.

Afterpay UK update.

The Afterpay Ltd (ASX: APT) share price will be on watch on Wednesday after a late announcement by the payments company. Afterpay revealed that its UK-based Clearpay business now has over 1 million active customers on its platform after a year in the country. Another positive is that management notes that consumers are using its platform more frequently than they were in the U.S. at the same stage.

Coles given buy rating.

The Coles Group Ltd (ASX: COL) share price could be heading a lot higher from here according to analysts at Goldman Sachs. After looking through updates from two of its rivals this week, the broker has lifted its fourth quarter forecasts to reflect stronger than expected industry growth trends. Goldman has a conviction buy rating and $18.60 price target on its shares.

More reading

• Afterpay share price on watch after reaching 1 million UK customers
• ASX 200 finishes higher, Woolworths gives update
• Invest like Warren Buffett by buying and holding these ASX 200 shares
• Why James Hardie is a favourite buy among leading brokers
• Why top brokers are urging you to buy SEEK and these other ASX stocks today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and COLESGROUP DEF SET. 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 shares that I’d invest $1,000 into every single month.

I think it’s important to realise that some shares can be very volatile and in some weeks it might not be such a good idea to pay that higher price.

For example, over the past month the Afterpay Ltd (ASX: APT) share price has traded above $58 and below $46. I wouldn’t commit to a consistent investment strategy into a single business like Afterpay when it’s so volatile.

But there are some ASX shares that it could make sense to invest $1,000 into every month, particularly in these coronavirus times. Here are three of those monthly ideas:

Share 1: Vanguard MSCI Index International Shares ETF (ASX: VGS)

I think it’s the easiest to commit to a monthly investment strategy with exchange-traded funds (ETFs). ETFs will always trade at their net asset value (NAV), they’re normally diversified and usually come with low costs.

ASX shares offer good potential investments, but the ASX only represents 2% of the total global share market. We can invest in many of the world’s biggest and best businesses with Vanguard MSCI Index International Shares ETF.

It is invested in over 1,500 businesses across major developed countries such as the US, Japan, the UK and France. Its top holdings are shares like Apple, Microsoft, Amazon, Alphabet, Facebook, Johnson & Johnson, Visa and Nestle.

Despite COVID-19, the ETF has generated returns of 10.3% per annum over the last three years. It has an annual management fee of 0.18% per annum. 

Share 2: Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Patts is an interesting business. It’s an investment conglomerate that has been going for over a century. I think it will be around for many decades to come with how it’s set up.

It is invested in a variety of businesses like TPG Telecom Ltd (ASX: TPM), Brickworks Limited (ASX: BKW), Clover Corporation Limited (ASX: CLV), Milton Corporation Limited (ASX: MLT), Bki Investment Co Ltd (ASX: BKI) and Magellan Financial Group Ltd (ASX: MFG).

Soul Patts also owns stakes in a variety of unlisted businesses like swimming schools and agriculture.

The ASX share is steadily increasing its diversification and the share price generally tracks its underlying portfolio value. It’s not an ETF, but I think it’s another great option to diversify a portfolio.

Soul Patts has a great dividend record. It has paid a dividend every year in its existence since 1903 and it has grown its dividend each year since 2000.

I’d be happy to invest $1,000 every month into Soul Patts shares every month because it nearly always looks good value to me, has good diversification and offers something very different to a typical ASX share ETF.

Share 3: Future Generation Global Invstmnt Co Ltd (ASX: FGG)

Future Generation Global is one of my preferred listed investment companies (LICs).

I like it for three reasons.

The first is that it has good philanthropic credentials. It donates 1% of its net assets each year to youth mental health charities. But there are no management fees or performance fees involved with this LIC. Indeed, there aren’t many costs at all as many services are provided to Future Generation Global for free.

The second reason is Future Generation Global is diversified. It’s an ASX share itself, but it invests in the funds of fund managers who target overseas shares. It’s invested with high-quality fund managers like Magellan Financial Group Ltd (ASX: MFG). Each fund represents a whole portfolio of shares, so Future Generation Global could be invested in many dozens of different non-ASX shares.

The third reason is that it looks great value. At the moment the share price is trading at a 21% discount to the May 2020 pre-tax net tangible assets (NTA). That’s despite Future Generation Global’s portfolio outperforming the MSCI AC World Index (AUD) over the past month, six months, year, three years and since inception in September 2015.

Foolish takeaway

I’d be very happy to invest $1,000 a month into each of these ASX shares. Future Generation Global definitely looks like the best value with the big NTA discount. But Soul Patts could be the most reliable over the long-term.

More reading

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• 3 long-term ASX 200 shares I’d buy right now
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• What are the best ASX shares for dividends?

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The Afterpay Ltd (ASX: APT) share price will be one to watch on Wednesday following a late announcement by the payment company.

What did Afterpay announce?

After the market close on Tuesday, Afterpay provided investors with an update on the progress it has been making in the UK market.

According to the release, the company’s UK-based Clearpay business now has over 1 million active customers using its platform after one year in the country.

In addition to this, management revealed that its customer purchasing frequency in the UK is outpacing the United States, when compared to the same stage of lifecycle. At the end of the first year, its UK customers are transacting more than 8 times per year. This compares to six times at the same stage in the United States.

This makes Clearpay one of the fastest growing ecommerce payment companies in the European market.

In addition to this, there are more than 1,100 brands and retailers offering, or in the process of offering Clearpay to their customers. Recent additions include Elemis, Bare Minerals, and ISAWITFIRST. They join the likes of ASOS, Marks & Spencers, JD Sports, Urban Outfitters, and Boohoo on its platform.

Strong growth.

As with its ANZ and US business, Clearpay has been a particularly strong performer during the COVID-19 crisis.

Management notes that during the COVID-19 period, it has experienced a strong customer adoption rate in the UK.

In May 2020, Clearpay had more than 3 million app and site visits, and its Shop Directory contributed over 1.5 million lead referrals to its retail partners. This represents a 40% to 50% increase in the weekly run rate from January and February.

Afterpay co-founder, Nick Molnar, appeared to be pleased with the progress the company is making in the UK.

He commented: “The world and the industry are changing at a rapid pace, and during this challenging time consumers are looking for ways to pay using their own money – instead of turning to expensive loans with interest, fees or revolving debt.”

“We applaud our U.K. merchants who support the payment needs of British shoppers – especially as we head into a ‘new normal’ for retail,” he added.

More reading

• Afterpay share price up 550% since February. Is it too late to buy?
• Is the Afterpay share price a boom or a bubble?
• How to try and beat the market with ASX shares
• Afterpay and 2 more ASX 200 shares to watch this week
• These 5 ASX shares were last week’s top performers

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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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