Tag: Motley Fool Australia

Deciding which ASX shares to buy in the current climate is difficult. During the bull markets you wonder if you have missed the boat. When the bear markets set in, and they will, you wonder if you should cut your losses. 

I believe the 4 shares below represent good value investments in today’s market. They should be solid investments over the medium term regardless of what happens tomorrow. In particular, I think one of them has the real possibility of becoming a 10 bagger share over the next decade. That is, a company likely to return 10 times the initial investment.

High blue chip value

I think that Commonwealth Bank of Australia (ASX: CBA) is probably the best certified blue chip share at the moment. Having put aside $1.5 billion for costs related to COVID-19, CommBank has been moving fast to position the bank for future growth. Although, as the nation’s largest mortgage provider, it is likely to see larger impacts from COVID-19 than its competitors.

At the time of writing, CommBank has a 12-month trailing dividend yield of ~6%, although banks have currently deferred dividends, and is selling at a price to earnings ratio (P/E) of ~13.

Overlooked ASX value share to buy now

I believe Aristocrat Leisure Limited (ASX: ALL) is probably the most overlooked ASX large cap share on the market. It has a fantastic track record of year on year sales growth, maintains very tight margins, and has a 10-year average return on equity (ROE) of 28.6%.

Despite the company’s exposure to digital gaming and social media platforms, its casino revenue streams have been hit hard by COVID-19 restrictions. As restrictions ease, I think Aristocrat will see its share price rise relatively quickly. 

The Aristocrat share price is currently trading at a P/E of just 10.8. That is way below its 10 year average P/E of 23.

One great ASX growth share

Over the past fortnight Sezzle Inc (ASX: SZL) caught my eye. So much so that I have taken a small position in the company. This is a small buy now, pay later company competing head on with the giant Afterpay Ltd (ASX: APT).  The company has a market cap of just $275 million, yet it has already secured a network of 1.3 million users and 14.9 thousand merchants. 

While much larger rivals Afterpay and Zip Co Ltd (ASX: Z1P) are actively working to enter the $5 trillion US retail market, Sezzle is already there targeting Gen Z and Millennials. While Sezzle is unlikely to suddenly become the market leader, I believe the potential for share price growth is high and the possibility of it becoming a 10-bagger over the next decade very real.

Foolish takeaway

I think these are among the best value ASX shares to buy now. Personally, I would split 40% of $10,000 into each of the large cap shares, and the remaining 20% into the higher risk growth share. I believe all of these companies have a very strong value proposition right now. But the market is moving fast.

More reading

• My share investing journey during the pandemic
• Afterpay share price up 7%, ASX 200 edges higher
• Why the Afterpay share price just hit a record high and could still go higher
• CBA share price lower on Slater & Gordon class action news
• Leading brokers name 3 ASX 200 shares to sell today

Daryl Mather owns shares of Sezzle Inc. 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 recommended 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The stock market once again told a tale of two exchanges on Wednesday. The Nasdaq Composite (NASDAQINDEX: ^IXIC) had another great day, rising almost 1% and closing above 10,000 for the first time in its history. The Nasdaq 100 index did even better, gaining almost 1.5% and also climbing over the 10,000 hurdle. Yet elsewhere, market measures like the Dow and S&P 500 finished lower on the day, held back by fears about the Federal Reserve’s need to provide further monetary stimulus to try to shore up the broader economy.

Leading the Nasdaq higher on its historic day was Tesla (NASDAQ: TSLA), which celebrated a share-price milestone of its own. However, not every stock on the Nasdaq gained ground, and Starbucks (NASDAQ: SBUX) in particular revealed some challenges that could hold back the coffee stock for a while.

Tesla gets into high gear

Tesla stock finished higher by 9%, soaring above $1,000 per share for the first time ever. The electric vehicle maker has high hopes that it’s only scratched the surface of its addressable market, and future products could dramatically expand its opportunities for further growth.

CEO Elon Musk helped fan excitement about Tesla by talking about the prospects for its Semi electric commercial truck. Even though the semi tractor-trailer truck concept has been part of Tesla’s plans since late 2017, the company has prioritized other efforts first, most notably the Model 3 mass-market sedan. However, Musk reportedly reset those priorities recently, signaling that he wants to move forward more aggressively in bringing the Semi to market faster.

It’s probably not a coincidence that the move comes just after newly public electric truck specialist Nikola (NASDAQ: NKLA) has promoted its own ambitions in serving the commercial truck market. With Nikola’s Badger electric pickup likely to go up against Tesla’s Cybertruck, investors are likely to see plenty of clashes between the two EV automakers. At least today, Tesla won the share-price battle, and investors have high expectations that Musk will lead his team to greater innovations in the future.

Starbucks slows down, faces big losses

Elsewhere, shares of Starbucks dropped 4%. The coffee giant revealed in a filing with the U.S. Securities and Exchange Commission just how much the coronavirus pandemic has affected its business, and it showed some of the strategies it’s looking to follow to get back on track.

Starbucks expects to report a fiscal third-quarter adjusted loss of $0.55 to $0.70 per share, with the pandemic costing the company between $3 billion and $3.2 billion in revenue. Comparable store sales in the U.S. were down 28% in May from year-ago levels.

The coffee giant is also modifying its expansion plans. In China, the company expects to add at least 500 new stores for fiscal 2020, even with pandemic-related setbacks. However, Starbucks now sees itself opening just 100 new stores in the second half of the fiscal year, and it will close as many as 400 company-owned locations in the next 18 months in order to replace them with new store formats in different places. The idea is to offer ways to meet changing customer expectations, with new retail-oriented stores that won’t necessarily offer the typical Starbucks “third place” ambiance.

Investors can look forward to better results later in the year, with Starbucks projecting a fiscal fourth-quarter adjusted profit of $0.15 to $0.40 per share. Nevertheless, the full-year projection of just $0.55 to $0.95 in adjusted earnings per share threw a cup of cold coffee in investors’ faces, and shareholders have to hope that Starbucks’ strategic efforts bear fruit quickly.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• Where to invest $500 into ASX shares right now
• My share investing journey during the pandemic
• 3 ASX shares to buy now with $10,000
• 3 top ASX dividend shares to buy to beat low interest rates
• Is the NAB share price a buy right now?

Dan Caplinger owns shares of Starbucks. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla and Starbucks. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Overnight the U.S. Federal Reserve held its monetary policy meeting for June. The central bank kept interest rates on hold at zero and revealed plans for rates to remain at these levels for the next couple of years.

I expect this to be the case in Australia as well and feel it will be many years until interest rates return to “normal” levels again.

In light of this, I continue to believe that ASX dividend shares will be the best way to earn a passive income for the foreseeable future.

But which dividend shares should you buy? Here are three top ASX dividend shares I would buy:

Coles Group Ltd (ASX: COL)

I think that this supermarket operator would be a great dividend share to own. This is due to its defensive qualities and positive long term outlook. I believe this has positioned Coles to deliver solid earnings and dividend growth over the next decade whatever the economy throws at it. At present, I estimate that its shares offer a forward fully franked 3.7% dividend yield.

Dicker Data Ltd (ASX: DDR)

Dicker Data is a wholesale distributor of computer hardware and software. It has consistently grown its earnings and dividends at a solid rate for many years thanks to an increasing number of vendor agreements and solid demand. In FY 2020 the company intends to increase its dividend by 31% to 35.5 cents per share. This represents a 4.5% fully franked dividend yield.

Telstra Corporation Ltd (ASX: TLS)

A final dividend share to consider buying is Telstra. After several tough years, I believe the telco giant’s outlook is the best it has been in a long time. This is because the NBN headwind will soon start to ease and a return to growth should then be possible. Especially given the positive progress it is making with its T22 strategy. In the meantime, I’m confident that its free cash flow can sustain its 16 cents per share fully franked dividend. This represents a very attractive 4.9% dividend yield.

More reading

• The TPG share price is on the up. A good long-term buy today?
• 2 quality ASX dividend shares to buy today
• Why the CSL share price continues to trail the ASX 200
• Not keen on Westpac? Then buy these top ASX dividend shares instead
• ASX 200 Weekly Wrap: ASX bulls crash through 6,000 points

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited and Telstra Limited. The Motley Fool Australia owns shares of 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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Is the National Australia Bank Ltd (ASX: NAB) share price a buy right now?

The major ASX bank has seen its share price go up 31.4% since 22 May 2020. That’s an astonishing return in a short amount of time for such a big business.

Investors are getting more confident that the Australian economy won’t be harmed by the coronavirus as much as first feared. The overestimation of the cost of jobkeeper is a great example of things looking better than previously expected.

There is still a lot of economic pain out there. NAB included an $807 million provision for potential COVID-19 impacts in its FY20 half-year result. There’s a reason why investors sent the NAB share price lower. Only time will tell whether that provision was too much or too little.

NAB has been showing a rising level of loan arrears in recent reports. The 90+ day past due arrears of total loans was 0.71% at the end of FY18, 0.79% in the first half of FY19, 0.93% at the end of FY19 and 0.97% in the recent FY20 half-year result. That’s not a good trend.

Could the NAB share price still be an opportunity?

Several weeks ago I thought the NAB share price was cheap if the economy recovered quicker than expected.

However, the strength of the NAB share price changes the value.

Low interest rates seem like they’re here to stay. This could cause the NAB net interest margin (NIM) to come under even more pressure. The NAB share price will follow earnings over time.

I like that NAB is investing in lifting skill levels, according to the Australian Financial Review. I also like the new NAB leadership team.

Who knows what’s going to happen with the NAB dividend this year? At the moment it has an annualised grossed-up dividend yield of 4.25%. However, if the economy is better than expected then perhaps the final dividend will be larger. I wouldn’t count on big dividends this year though.

Ultimately, I don’t see much compelling value at the current NAB share price. There are still risks to be wary of.

More reading

• Are Aussies still withdrawing cash like crazy?
• The ASX bank dividend recovery may be better than what the market thinks
• The ANZ share price has soared 37% in 2 weeks. Here’s why.
• ASX 200 Weekly Wrap: ASX bulls crash through 6,000 points
• ‘Westpac share price undervalued’, says analyst

Motley Fool contributor Tristan Harrison 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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On Wednesday the S&P/ASX 200 Index (ASX: XJO) fought back from a heavy decline at the open to record a small gain. The benchmark index rose slightly to 6,148.4 points.

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

ASX 200 expected to drop lower.

The ASX 200 looks set to end its winning streak on Thursday. According to the latest SPI futures, the benchmark index is expected to drop 73 points or 1.2% at the open. This follows another mixed night of trade on Wall Street overnight. The Dow Jones dropped 1.05%, the S&P 500 fell 0.5%, and the Nasdaq defied the selling once again with a 0.7% gain.

Tech shares could rise.

Although the market is expected to sink lower today, Australian tech shares such as Altium Limited (ASX: ALU) and Appen Ltd (ASX: APX) could defy this and push higher. The local tech sector has a habit of following the lead of the Nasdaq index, which stormed higher and closed above 10,000 points for the first time.  

Oil prices edge higher.

Energy producers such as Oil Search Limited (ASX: OSH) and Woodside Petroleum Limited (ASX: WPL) could be on the rise today after oil prices edged higher. According to Bloomberg, the WTI crude oil price is up 0.3% to US$39.06 a barrel and the Brent crude oil price edged 0.1% to US$41.23 a barrel.

U.S. Federal Reserve meeting.

The U.S. Federal Reserve met overnight and kept rates on hold at zero. The central bank also suggested that interest rates will stay at this level until 2022. However, the U.S. Fed is not done with supporting the economy through the pandemic. Fed Chairman Jerome Powell commented: “What we’re thinking about is providing support for the economy. We think this is going to take some time.”

Gold price jumps.

Gold miners including Evolution Mining Ltd (ASX: EVN) and Newcrest Mining Limited (ASX: NCM) could be pushing higher today after the gold price jumped. According to CNBC, the spot gold price rose 1.4% to US$1,746.30 an ounce after dovish comments by the U.S. Federal Reserve.

More reading

• Afterpay share price up 7%, ASX 200 edges higher
• Latest 3 ASX buy ideas from leading brokers
• How Australian super funds are letting the team down on ethics
• Here are another 2 insanely cheap ASX 200 shares to buy right now
• 2 crazy cheap ASX 200 shares you could still buy

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 Altium. The Motley Fool Australia owns shares of Appen 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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Finding good-quality ASX dividend shares for income in 2020 has become something of a sport. This year, the normal ASX dividend paradigm has been turned on its head.

The ASX banks which were the kings of the ASX divided hill are now its paupers. Dividend aristocrat, Ramsay Health Care Limited (ASX: RHC) has suspended its dividends – ending a 20-year streak of dividend growth. Shares like Transurban Group (ASX: TCL) and Sydney Airport Holdings Pty Ltd (ASX: SYD) which used to be regarded as the safest income providers on the ASX are now struggling to tell investors how much to expect this year.

Considering all of these factors, I think we need to look outside the box for income in 2020. So here are 2 ASX dividend shares that I would consider if I were seeking top-quality income this year.

SPDR S&P Global Dividend Fund (ASX: WDIV)

This exchange-traded fund (ETF) invests in a basket of global shares that are screened for dividend reliability. In order to make the cut, WDIV’s holdings need to have either grown, or at least maintained their dividend payments over the past 10 years. As such, I think this is a great option for a diversified income investment in 2020.

Some of this ETF’s top holdings include Freenet AG, Enagas, Japan Tobacco and our own AGL Energy Limited (ASX: AGL). It’s also fairly well balanced across many different countries (19 in total). WDIV currently offers a trailing dividend yield of 6.13%.

Rio Tinto Limited (ASX: RIO)

I think the ASX resources sector is one of the best avenues to explore for ASX dividend shares in 2020. Most commodity prices have held up remarkably well across the board during the coronavirus pandemic – especially iron ore. And that’s primarily what mining giant Rio Tinto is in the business of extracting. Rio has iron ore mines all over the world, as well as several other smaller operations for diamonds, copper and gold.

With iron ore prices now comfortably sitting at multi-year highs above US$100 per tonne, Rio looks set to be able to fund generous dividend payments to its shareholders this year. On current prices, Rio shares are offering a trailing dividend yield of 5.66%, or 8.09% grossed-up. I wouldn’t be too surprised if Rio tops this trailing yield in 2020. Especially if iron ore continues to stay near its current levels.

More reading

• 2 quality ASX dividend shares to buy today
• 3 safe and strong ASX 50 shares to buy right now
• Are the Rio Tinto, Fortescue and BHP share prices a buy right now?
• Where to invest $20,000 into ASX shares immediately
• ASX 200 Weekly Wrap: ASX bulls crash through 6,000 points

Motley Fool contributor Sebastian Bowen owns shares of Ramsay Health Care Limited and SPDR S&P Global Dividend Fund. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool Australia has recommended Ramsay Health Care 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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ASX shares continue to rise with investor confidence seemingly growing every week.

Australia is getting close to the point of no new COVID-19 cases across the nation. Some ASX shares are soaring in reaction to how much better the outlook seems.

But there are still many places in the world where the number of infections is still rising.

With the current state of play domestically and abroad in mind, here are two ASX shares that I’d buy in a heartbeat:

Pushpay Holdings Ltd (ASX: PPH)

Pushpay is one of the businesses that is seeing an acceleration of growth due to the unfortunate circumstances. It’s an electronic donation business that enables people to digitally give to not-for-profit organisations.

A key part of US churches is the congregations. COVID-19 and social distancing makes church gatherings more difficult at the moment. That also means that getting cash donations can become problematic for those churches.

Pushpay’s system is perfect for this environment. The ASX share’s technology also allows churches to livestream to their congregations.

The large and medium church sector is a $1 billion revenue opportunity according to Pushpay’s management.

The ASX share is aiming to approximately double its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) in FY21. Pushpay’s profit margins could keep rising as it gets bigger over time.

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

There are few ASX shares that have stood the test of time like Soul Patts. It has been operating since the early 1900s. So it has already survived through the Spanish Flu, two world wars, the recessions and so on.

Soul Patts is invested in businesses that should be able to remain robust this year. Some large positions include TPG Telecom Ltd (ASX: TPM), Brickworks Limited (ASX: BKW) and Clover Corporation Limited (ASX: CLV).

The ASX share conglomerate continues to invest in new opportunities. It is reportedly about to start investing in regional data centres.

I think Soul Patts is one of those shares that you could invest in and potentially hold forever. Its ability to change its investments and invest in anything is very attractive.

A very nice bonus with this ASX share is that it has grown its dividend every year since 2000.

Foolish takeaway

I’d buy both of these ASX shares for the long-term in a heartbeat. Pushpay has a lot of exciting growth potential over the coming years. But Soul Patts could be a solid idea for long-term steady growth.

More reading

• Here are another 2 insanely cheap ASX 200 shares to buy right now
• 3 top ASX shares to buy now to get rich later
• 3 ASX shares to buy for the big shift to contactless payments
• How to become a millionaire before your parents with ASX shares
• Where to invest $20,000 into ASX shares immediately

Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended PUSHPAY FPO NZX. 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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I think that Wesfarmers Ltd (ASX: WES) is the best ASX blue chip share right now.

Wesfarmers doesn’t exactly have a ton of competition for the title of best ASX blue chip. ASX banks like Westpac Banking Corp (ASX: WBC) and miners like BHP Group Ltd (ASX: BHP) have been patchy over the decades.

The (mostly) retail conglomerate seems like a reliable pick in most aspects. Here are some of the reasons why I think it’s a good pick:

Strong performing businesses

The crown jewel of Wesfarmers is Bunnings. The hardware business is now the key profit centre after the divestment of Coles Group Limited (ASX: COL). In good economic times Bunnings is a solid performer with a healthy construction industry.

During these COVID-19 times we saw that a lot of people went to Bunnings to do some home improvements during the lockdown.

Wesfarmers revealed in its retail trading update that in the second half of FY20 to May 2020, Bunnings sales were up 19.2%. We also heard that Officeworks’ sales were up 27.8% and Catch’s gross transaction value sales were up 68.7%.

I like businesses that can keep performing in all economic conditions.

Investment flexibility

One of the main things I like about Wesfarmers is its ability to regularly change what operating businesses it owns. It used to own Coles Group Limited (ASX: COL) and Kmart Tyre and Auto. Management was comfortable divesting those businesses.

In recent times Wesfarmers has acquired Catch (an online retailer) and Kidman Resources (a lithium miner).

Having the ability to evolve over time is important. The better growth opportunities may be in different industries in the coming years. Wesfarmers can pivot the overall business towards that growth will help it continue its solid earnings performance.

Wesfarmers is focused on shareholder returns

Ultimately, shareholder returns is what management should be focused on. As long as it doesn’t come at the expense of the long-term health of the company.

I like how Wesfarmers is willing to try new things, such as the attempt to take Bunnings to the UK. But management are also willing to end initiatives when appropriate. The closure of many Target stores is one recent example.

It’s a solid dividend share on the ASX and continues to reward shareholders.

Foolish takeaway

Wesfarmers certainly isn’t cheap at a share price of $44. But the ongoing strength of Bunnings, Officeworks and Catch justifies this price in my opinion. I’d be happy to buy a parcel of Wesfarmers at today’s price, but I’d only buy more if the ASX share market falls again.

More reading

• Leading brokers name 3 ASX 200 shares to sell today
• ASX 200 jumps 2.4%, unloved shares keep rising
• Not keen on Westpac? Then buy these top ASX dividend shares instead
• Can the Wesfarmers share price continue to rise after its market update today?
• ASX 200 Weekly Wrap: ASX bulls crash through 6,000 points

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET 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 S&P/ASX 200 Index (ASX: XJO) managed to slightly rise by 0.06% today to 6,418 points.

Australia continues to do well with the coronavirus, though it’s not eliminated from every state yet.

Afterpay Ltd (ASX: APT) share price continues to soar, helping the ASX 200 rise

The buy now, pay later sector continues to perform strongly.

The ASX 200 instalment payment company saw its share price rise another 7.5% to $54.50. The market is becoming even more confident on the company’s future despite the ongoing wider coronavirus issues.

Afterpay wasn’t the only one to rise in the sector. The Zip Co Ltd (ASX: Z1P) share price went up 3.4% and the Sezzle Inc (ASX: SZL) share price went up 7.5%.

Christmas in June for shareholders of Harvey Norman Holdings Limited (ASX: HVN) investors

The Harvey Norman share price rose by 7.3% today after the company made two announcements.

Firstly, the ASX 200 retailer revealed a retail trading update. Australian franchisee total sales are up 17.5% in the FY20 second half to 31 May 2020.

Looking at the company-operated stores overseas sales in this half-year to date in Australian dollar terms, Northern Ireland and Singapore suffered sales declines of 38.2% and 21.7% respectively. New Zealand sales were down 7.3% and Slovenia and Croatia sales were down by 5.5%. Malaysia sales were up 1.3% and Ireland sales were up 25.4%.

In the other announcement, Harvey Norman announced a special fully franked dividend of 6 cents per share to be paid on 29 June 2020.  

Kogan.com Ltd (ASX: KGN) capital raising

The ASX 200 ecommerce business has gone into a trading halt to do a capital raising.

Kogan is looking to raise $100 million from institutional investors and another $15 million from regular investors.

The money will be used to fund potential acquisitions that the company may make where Kogan can utilise its efficiencies and digital model. Two recent acquisitions have been Dick Smith and Matt Blatt.

The raising will be done at a share price of $11.45 per share.

More reading

• Why the Afterpay share price just hit a record high and could still go higher
• Latest 3 ASX buy ideas from leading brokers
• How Australian super funds are letting the team down on ethics
• Here are another 2 insanely cheap ASX 200 shares to buy right now
• 2 crazy cheap ASX 200 shares you could still buy

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 AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia has recommended 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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One investment theme that I think could be well worth gaining exposure to is cloud computing.

Cloud computing is the on-demand availability of computer system resources such as data storage and computing power without direct active management by the user.

It is because of the cloud that you can watch Netflix on demand wherever you are, do your accounting on the go, and have Zoom meetings with colleagues.

And as you might have noticed, particularly during the pandemic, more and more software and services are going to the cloud.

This shift to the cloud is expected to accelerate in the coming years. So much so, research by Statista shows that the size of the public cloud computing services market is expected to grow from US$227.8 billion in 2019 to US$354.6 billion by 2022. This is an increase of almost 56% in just three years and is unlikely to stop there.

The good news for Australian investors is that there are a couple of quality shares which have direct exposure to the cloud.

I believe this bodes well for their future growth and could make them great long term investments. Here’s why I like them:

Megaport Ltd (ASX: MP1)

The first ASX share you can buy to gain exposure to the cloud computing boom is Megaport. It offers scalable bandwidth for public and private cloud connections, metro ethernet, and data centre backhaul. As of the end of March, Megaport was serving 1,777 customers out of 329 data centres globally. Both its footprint and customer numbers have been growing at a rapid rate over the last couple of years and look likely to continue thanks to the growing cloud usage.

NEXTDC Ltd (ASX: NXT)

Another way to gain exposure to cloud computing is through NEXTDC. It is one of the world’s most innovative data centre operators with a total of 9 centres across 5 capital cities. Its customers are supported by more than 550 partners that form its highly skilled and network-rich partner ecosystem. The company believes this makes it Australia’s only truly channel centric data centre solutions provider, offering complete service neutrality. Demand for capacity within its centres has been growing at a rapid rate over the last few years. I expect this trend to continue and drive strong earnings growth as it scales.

More reading

• Could these sensational ASX shares help you beat the market?
• Are Megaport shares the ones to buy and hold beyond 2030?
• Why I’m not afraid to invest in shares during this recession
• The smartest ASX 200 shares to buy with $2,500 today
• 1 ASX 200 tech share to buy and hold for a decade

James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT 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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