Tag: Motley Fool

October is going to be an interesting month on the ASX. Anyone wondering which shares to buy now will need to consider a few things.

First, the Government is starting to wind back wage subsidies, insolvency laws, and tenancy protections. Second, laws are changing in relation to helping companies trade out of bankruptcy, and reducing responsible lending constraints. Third, Victoria is starting to emerge from lockdown and state borders are slowly reopening. 

Personally, I think the best shares to buy now is a mix of under priced value shares, as well as a number of high opportunity growth shares. 

Values shares to buy now

My preference in volatile markets is to try to find good companies, selling at a bargain price, and then hold them as the price increases. This reduces the risk of losing money. I would spend $7,500 in equal parts on the three ASX shares below. 

Stockland Corporation Ltd (ASX: SGP) has been oversold during the year due to impacts from the coronavirus lockdown. I think it is cheap right now and also has a trailing 12-month (TTM) dividend yield of 6.24%. Stockland has a development pipeline of 76,000 lots of residential real estate. It estimates this has an end market value of $21.4 billion.

Resimac Group Ltd (ASX: RMC) is a small cap non-bank lender worth around $600 million. While this lender definitely has medium term growth potential, I think it will be consistent and conservative. The company saw its share price rise by an average of 10.3% per year from 2010 to 2020. At this rate you will double your original investment within 7 years.  Resimac will be a beneficiary of any loosening of lending criteria.

Boral Limited (ASX: BLD) saw its share price leap up by 5.83% on Monday. The company has been performing very badly over the past several years. However, under new management there are strong signs of a turnaround, making this a great share to buy now. Boral is selling at a high price to earnings (P/E) ratio due entirely to impacts from the pandemic lockdown. 

The company has a new CEO and is working through a review of all elements of the business. It also counts Kerry Stokes’ company, Seven Group Holdings Ltd (ASX: SVW) as a substantial shareholder, recently taking two board seats at Boral.

Growth shares

There is an art to selecting which growth shares to buy now. First, they need to be solid companies with a proven business model. Second, there needs to be a large and growing addressable market. Third, and most importantly, the company needs to have solid barriers to entry, or a moat as Warren Buffet calls it. My preferred moat is intellectual property.

A company that meets all of these criteria, in my view, is DroneShield Ltd (ASX: DRO). The company manufactures non-ballistic weapons for detecting and disabling drones. It has clients in the defence forces and airports globally. Major customers include the Australian Defence Forces and the US Department of Defence. In addition, the company has announced a string of new contracts. Most of which will lead to additional work. 

The DroneShield share price has risen by 50% in the past month. I think this is a good share to buy now before it gets much more expensive. I would invest $2,500 directly into shares of this growth company.

More reading

• 3 profitable October ASX 200 trends
• ASX 200 shares to buy for housing boom
• 2 ASX shares to buy today for house price rise
• Macquarie says ASX value shares will outperform growth stocks from here
• Forget Afterpay (ASX:APT) shares, buy these 3 growth shares

Motley Fool contributor Daryl Mather owns shares of DroneShield 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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High yield ASX dividend shares may be quite attractive to investors at the moment.

Interest rates are now incredibly low and that makes the dividends offered by ASX shares seem very appealing.

But just because something pays a dividend, even with a high yield, doesn’t mean that it’s a good pick automatically.

Below are three high yield ASX dividend shares, are they worth buying?

Telstra Corporation Ltd (ASX: TLS)

Telstra has been a popular high yield ASX dividend share for many years. However, today the Telstra share price is almost as low as it has ever been. It has fallen over the past year, five years and it’s down from when it listed. 

A share price will generally reflect the earnings trajectory. Telstra’s earnings have been dropping for the past few years because of the shift to the NBN. In FY20 Telstra’s total income fell 5.9% to $26.2 billion and net profit after tax (NPAT) dropped 14.4% to $1.8 billion.

The falling profit is the main reason why the Telstra dividend has almost halved since 2017. The dividend could actually be cut again if profit doesn’t stabilise. So far, 5G doesn’t seem like the profit saver it’s expected to be for Telstra.

The high yield ASX dividend share offers a grossed-up dividend yield of 8%. I’m not a buyer today because there’s a fair chance the earnings and dividend could decline more.

WAM Research Limited (ASX: WAX)

WAM Research is listed investment company (LIC) which is run by the high-performing team at Wilson Asset Management.

During the 2010s, WAM Research was one of the best-performing LICs. That strong performance allows it to keep increasing the dividend each year. The high yield ASX dividend share has increased its income payment every year since the GFC.

The fact that it’s a LIC also means that it offers diversification because it has dozens of holdings. Some names that it holds (or held recently) include: Adairs Ltd (ASX: ADH), Bapcor Ltd (ASX: BAP), Brickworks Limited (ASX: BKW) and BWX Ltd (ASX: BWX).

At the current WAM Research share price, it is still a high yield ASX dividend share after strong growth, it offers a grossed-up yield of 9.2%.

However, even after a strong portfolio performance in August, the WAM Research share price is trading at a 39.4% premium to the August 2020 pre-tax net tangible assets (NTA). Unless the LIC has had an incredible September, this premium seems very expensive and the dividend yield may prove to be unsustainably high over the long-term (when compared to the NTA). If WAM Research was trading near its NTA I’d be much more interested.

Whilst they have lower yields, I’d prefer other WAM LICs like WAM Leaders Ltd (ASX: WLE) or WAM Microcap Limited (ASX: WMI) which look better value to me.

Fortescue Metals Group Limited (ASX: FMG)

Fortescue is one of the most impressive miners on the ASX. It has done very well, growing to become one of the latest businesses in Australia.

However, whilst Fortescue has done very well, some of this heightened economic strength may not be around forever consistently. Commodities like iron ore usually move in cycles.

The high yield ASX dividend share has benefited from the strong demand from China as well as the production disruption in Brazil due to COVID-19 impacts.

I believe it’s better to buy commodity businesses near the bottom of the cycle, rather than the top. Who knows when that will happen? I’m just not sure buying now is wise, even if the dividend looks very tempting. At some point production in Brazil will return to normal. 

At the current Fortescue Metals Group share price it offers a trailing grossed-up dividend yield of 15.8%. If the future grossed-up dividends can remain above 10% over the long-term then it could still be worth holding purely for income investors.

More reading

• Is the run over for ASX lithium shares after Tesla’s battery day? 
• 3 ASX shares with dividend yields above 10%
• ASX 200 Weekly Wrap: Bank shares push ASX 200 higher
• Are these blue chip ASX 200 shares worth buying?
• 2 high yield ASX blue chip dividend shares to buy next week

Motley Fool contributor Tristan Harrison owns shares of WAM MICRO FPO. The Motley Fool Australia owns shares of and has recommended Bapcor, Brickworks, BWX Limited, and Telstra 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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Warren Buffett – chair and CEO of Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B) – is regarded as one of the best investors of all time and someone most of us could learn a thing or two from in my view. Not only does Buffett have an incredible track record of investing over multiple decades, but he is also a highly effective teacher and quote artist. Our Fool colleagues over in the US have put together a comprehensive list of Buffett’s best quotes, but here are 3 I think every investor should keep in mind this week…

3 top Buffett-isms for this week

“Buy a stock the way you would buy a house. Understand and like it such that you’d be content to own it in the absence of any market”

This is a great one to start off with. Too often, we investors get bogged down with the simplicity of trading shares. It’s easy to forget that those ticker symbols on your screen represent shares of real ownership of real businesses, not trinkets to trade and get lucky on. If all investors picked shares with the same care and dedication as their family home, I’m sure there would be a lot many more happy investors out there. So have a think about whether you’d be happy with your current portfolio of businesses if the ASX closed tomorrow for 5 years.

“Do not take yearly results too seriously. Instead, focus on four or five-year averages“

I think this quote is especially pertinent in this year of the coronavirus pandemic. Many ASX shares have been sold off throughout the year because of the effects from the pandemic and associated lockdowns . And yet for many of these businesses, there’s a decent chance of a full recovery in the years ahead that might make a decent value play today (I discussed one such example yesterday). I believe one of the factors that makes Buffett such a good investor is how he always focuses on the long-term. And putting the pandemic aside, you can almost always get a better gage of a business by looking at its numbers over multiple years anyway.

“Predicting rain doesn’t count, building the ark does”

A Biblical quote to end on, I especially like the simplicity and durability of this Buffett quote. The investing media landscape is perpetually filled with ‘experts’ predicting the next share market crash for a variety of reasons. Yes, one of them will eventually be right. But that doesn’t mean we should always listen. Share market crashes are scary, but they are also inevitable, so one of the best things to do (in my view) is accept this fact. I try and build my own ASX portfolio assuming a crash is just around the corner. That way I’m always holding ASX shares which I think will be just fine in a crash, as well as some extra cash for the opportunities a crash can bring. So don’t be worried about when the next crash will be, just make sure your portoflio can float!

More reading

• Should ASX investors follow Buffett and bet on oil shares?
• Understand this quote, and you’ll understand the ASX share market
• Warren Buffett’s 3 best-performing stocks so far this year: Are they buys now?
• Aussies trading this US share 5700% more than Uber
• The Snowflake (NYSE:SNOW) share price is up 90% in two days

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Berkshire Hathaway (B shares) and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares) and short January 2021 $200 puts on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares). 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 have $1,000 sitting in a savings account and no near-term plans for it, I would recommend you consider investing it into the share market.

This is because the potential returns on offer from the share market are vastly superior to the interest rates you’ll receive from the big four banks.

But where should you invest these funds? Two top ASX shares that I think could generate very strong returns for investors over the next decade are listed below. Here’s why I would invest $1,000 into them:

a2 Milk Company Ltd (ASX: A2M)

Given the sharp pullback in the a2 Milk share price this week, I think now could be an opportune time to invest with a long term view. Just as I warned could be the case here recently, a2 Milk has been struggling during the early stages of FY 2021 due to a combination of factors. In light of this, it expects its first half sales to be lower year on year.

While this is disappointing, management appears confident that it is a temporary headwind caused by the pandemic. In light of this, I think investors should be looking beyond this short term weakness and focus instead on its very positive long term outlook. This is thanks to its relatively small market share in China, differentiated brand, and opportunities to accelerate its growth through acquisitions.

IDP Education Ltd (ASX: IEL)

Another option to consider investing $1,000 into is IDP Education. It is a leading provider of international student placement services and English language testing services. As you might have expected, IDP Education has been impacted by the pandemic. But perhaps not as much as you might expect.

It was still able to deliver strong profit growth in FY 2020 despite the crisis. And while trading conditions will be tough in FY 2021 and are likely to remain subdued until the crisis passes, I think it is worth looking to the future. Thanks to its robust balance sheet and strengthening market position, I expect IDP Education to come out the pandemic a stronger business. This could make it a great buy and hold option for investors.

More reading

• Should you buy the dip in the a2 Milk (ASX:A2M) share price?
• ASX 200 finishes flat, A2 Milk shares drop 10%
• I think it’s time to jump on the A2 Milk (ASX:A2M) share price
• 2 ASX shares I think are cheap today
• ASX 200 up 0.1%: a2 Milk crashes lower, Flight Centre and Webjet surge higher

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 Idp Education Pty Ltd. The Motley Fool Australia owns shares of A2 Milk. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Resolute Mining Limited (ASX: RSG) shares surged 5.0% higher in yesterday’s trade and now boast a market capitalisation over $1 billion.

Shares in the Aussie gold miner jumped higher thanks to further uncertainty in global and domestic share markets. But despite the strong gains in recent days, is the ASX gold share a strong buy right now?

What does the Aussie miner do?

Resolute is a leading ASX-listed gold miner with operations across Africa. The group generates strong production numbers from its assets in Mali, Senegal and Ghana.

However, unlike many of its listed rivals, the Resolute Mining share price has been under pressure in 2020. In fact, the ASX gold share has slumped 23.0% lower this year to underperform the S&P/ASX 200 Index (ASX: XJO).

Why Resolute Mining shares could be in the buy zone

Yesterday’s strong gains came on the back of an update on its Syama mine and updated guidance.

Resolute said negotiations with the Mali labour union representing its workers have resulted in the cancellation of further planned strike action.

That’s good news for Resolute’s operational certainty and potential production levels. The Aussie gold miner upgraded guidance based on the higher degree of certainty and resolved industrial relations dispute.

Resolute is now forecasting total 2020 production between 400,00 and 430,000 ounces of gold at an all-in sustaining cost (AISC) of US$980 to US$1,080 per ounce.

That saw the Resolute Mining share price shoot higher but it still remains down for the year.

With soaring gold prices and strong production levels on the horizon, I think the ASX gold share could be worth a look at its current valuation.

Of course, there is still some operational risk involved and I’d argue that another miner like Saracen Mineral Holdings Limited (ASX: SAR) is a safer bet.

However, Resolute could offer potential capital gains on top of its 1.5% dividend yield.

More reading

• 3 profitable October ASX 200 trends
• Is the Mesoblast (ASX: MSB) share price still good value?
• Are ASX travel shares like Webjet (ASX:WEB) set to soar?
• Here are the 10 most popular ETFs on the ASX
• ASX 200 finishes flat, A2 Milk shares drop 10%

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The overwhelming trend of October trading will be defined by access to credit. Since March, the Federal Government has intervened many times in the economy. This has included loan payment deferrals, wage subsidies, rent deferrals, and bankruptcy protection. The S&P/ASX 200 Index (ASX: XJO) is likely to be rocked as the Government looks to reduce dependence on government funding. 

For example, Federal Treasurer Josh Frydenberg has made two dramatic changes in the past few weeks. First, bankruptcy laws have changed to help companies trade out of insolvency. The changes to responsible lending are, of course, the second. Consequently, I expect to see higher levels of credit and spending. Furthermore, and likely to be the biggest impact, is the reduction to wage subsidies and JobSeeker payments. 

Wage subsidies

Reductions in government payments will have many impacts. For example, revenue for ASX 200 discretionary retail companies like Premier Investments Limited (ASX: PMV) is likely to be lower. Nevertheless, buy now, pay later transactions through companies like Zip Co Ltd (ASX: Z1P) will increase as people use BNPL companies to extend their purchasing power.

One of the companies that I believe will see higher activity is Credit Corp Group Limited (ASX: CCP). On one side, the company is likely to see higher loan volumes through its series of payday lending companies. On the other hand, it will see a further rise in companies looking to sell bad debts. 

Easier credit

The big ASX 200 winners here will be those directly involved in the mortgage or car sales markets. Starting in October with ASX 200 shares like Westpac Banking Corp (ASX: WBC) potentially seeing a rise in share price. Moreover, companies like Carsales.Com Ltd (ASX: CAR), and REA Group Limited (ASX: REA) should also see increased sales volumes. Lastly, building materials firms like Boral Limited (ASX: BLD) or James Hardie Industries plc (ASX: JHX) will see sales start to ramp up as housing starts to turn.

ASX 200 bankruptcy protection

Treasurer Frydenberg has flagged a change in bankruptcy laws. This provides companies with debts less than $1 million 20 days to restructure debts, followed by 15 days for approval. During this period, the business owner would also have protection from unsecured and some secured creditors. This is likely to impact ASX 200 shopping mall operators such as Scentre Group (ASX: SCG) and Vicinity Centres (ASX: VCX).

It means a second opportunity for many of their tenants, thus saving money on re-tenanting, shop repairs, as well as keeping vacancies low.

More reading

• Are Resolute Mining (ASX: RSG) shares as good as gold?
• Is the Mesoblast (ASX: MSB) share price still good value?
• Are ASX travel shares like Webjet (ASX:WEB) set to soar?
• Here are the 10 most popular ETFs on the ASX
• ASX 200 finishes flat, A2 Milk shares drop 10%

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 ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool Australia has recommended carsales.com Limited and REA 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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The A2 Milk Company Ltd (ASX: A2M) share price was hammered on Monday, but I think there could be a chance to buy.

Why was the a2 Milk share price hammered?

Shares in the Kiwi dairy group fell 11.4% lower to $15.20 per share by Monday’s close. That came on the back of an earnings update which flagged a weaker outlook for FY21.

a2 said that disruption to its lucrative ‘daigou’ channel is starting to hit the company’s earnings figures. That’s especially the case with the ongoing coronavirus restrictions in Victoria at the moment.

Daigou is the term used to describe individuals or groups that purchase items outside of China to send back to Chinese customers. Infant formula is one of the major items in the daigou trade which contributes approximately a third of a2 Milk’s revenue.

a2 is forecasting half-year revenue down 3.9% to 10.1% to between NZ$725 million to NZ$775 million. Full year revenue is expected to increase by 4.0% to 9.8% in a range of NZ$1.8 billion to NZ$1.9 billion.

Investors were bearish on the latest update and sent the a2 Milk share price plummeting lower in Monday’s trade.

Is the Kiwi dairy share in the buy zone?

The other concern that I have is the heavy insider selling we’ve seen in recent times.

According to an article in the Australian Financial Review, some heavy-hitters have been selling down. That includes big sales from a2’s CEO and chair when the a2 Milk share price was at a record high in late August.

However, the big dip could see investors tempted to buy back in. Today’s update said that China sales remained otherwise strong and growth was tracking well.

That could be good news for future growth beyond yesterday’s share price slump. A 11.4% dip suggests it could have been oversold and is a buy right now. 

That’s especially the case if we see further insider buying in the coming days.

More reading

• Where to invest $1,000 into ASX shares today
• ASX 200 finishes flat, A2 Milk shares drop 10%
• I think it’s time to jump on the A2 Milk (ASX:A2M) share price
• 2 ASX shares I think are cheap today
• ASX 200 up 0.1%: a2 Milk crashes lower, Flight Centre and Webjet surge higher

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Mesoblast limited (ASX: MSB) share price rocketed 12.0% higher to lead the S&P/ASX 200 Index (ASX: XJO) winners in yesterday’s trade.

Shares in the Aussie biotech company were in high demand and trading at a new 52-week high despite no new announcements on the ASX. So, what’s driving the Mesoblast share price higher right now and should we all be jumping on board?

Why the Mesoblast share price is on the move

Once again it’s anticipation surrounding a big announcement that is pushing the Aussie biotech’s value higher.

Mesoblast’s value surged last month after meetings with the US Oncologic Drugs Advisory Committee (ODAC) as well the US Food and Drug Administration (FDA).

The FDA is set to review the use of Mesoblast’s remestemcel-L treatment, known as RYONCIL, for acute graft versus host disease on Wednesday.

Investors are clearly banking on that being a positive result after ODAC’s recommendation last month.

Following yesterday’s move, the Mesoblast share price has now rocketed 169.3% this year to $5.50 per share.

Is it still good value at $5.50 per share?

I think the value-add is a little more questionable at the current Mesoblast share price.

It’s easy to get caught up in the hype and momentum behind a top ASX share. That’s especially the case in the biotech space in the current environment.

I think the investment proposition at this point is really about the growth story rather than the fundamentals. The FDA approval would be a huge boost for the company’s sales prospects in the United States.

Strong earnings could help underpin the Mesoblast share price valuation at $3.2 billion. That’s a very high multiple given the biotech company recently reported a full-year US$77.9 million loss.

Mesoblast could still be a participant in the coronavirus race. The company is looking at the possibility of treating COVID-19-induced acute respiratory distress syndrome. 

If you’re big on the healthcare and biotech sectors in early 2021 then Mesoblast could still be a good buy.

Foolish takeaway

The Mesoblast share price has been surging in 2020 but I think it’s bit too hot for my liking.

The FDA meeting has big implications for its potential sales but I don’t think I’ll be betting on the outcome of that decision by buying any time soon.

More reading

• Are Resolute Mining (ASX: RSG) shares as good as gold?
• 3 profitable October ASX 200 trends
• Are ASX travel shares like Webjet (ASX:WEB) set to soar?
• Here are the 10 most popular ETFs on the ASX
• ASX 200 finishes flat, A2 Milk shares drop 10%

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX travel shares like Webjet Limited (ASX: WEB) are bouncing back strongly. The Webjet share price jumped 6.6% higher to close at $3.90 per share.

That’s good news for existing shareholders but is the Aussie travel company back in the buy zone?

Why the Webjet share price is surging

There are a couple of factors that I think are causing investors to buy into ASX travel shares right now.

The Webjet share price jumped as reports emerged of a potential Australia-New Zealand travel bubble by the end of the year. That’s good news for booking numbers if we see borders open across the Tasman.

Easing coronavirus restrictions across the state are also good news for domestic travel which could help boost Webjet earnings.

The Webjet share price is now up 58.9% for the year while the S&P/ASX 200 Index (ASX: XJO) has fallen 11.0% lower.

Is now the time to buy ASX travel shares?

I still think there are strong prospects for Aussie travel companies in 2020. The Webjet share price has jumped higher but it’s not the only one that I’ve got my eye on.

I think the fundamentals are there for the Corporate Travel Management Ltd (ASX: CTD) share price. Corporate Travel focuses on the business sector which could be more reliable than the leisure market in the short-term.

However, Corporate Travel does get a majority of its earnings from offshore which is a bit of a question mark.

I also think the Flight Centre Travel Group Ltd (ASX: FLT) share price could be one to benefit from an uptick in the leisure travel segment. 

Foolish takeaway

There’s still plenty of uncertainty ahead for ASX travel shares. However, I think those who wait until that uncertainty clears could miss out on gains.

There are some big risks with traffic numbers still near rock-bottom but that could offer rewards for value-minded investors.

More reading

• Are Resolute Mining (ASX: RSG) shares as good as gold?
• 3 profitable October ASX 200 trends
• Is the Mesoblast (ASX: MSB) share price still good value?
• Here are the 10 most popular ETFs on the ASX
• ASX 200 finishes flat, A2 Milk shares drop 10%

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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I think that some ASX shares could make great investments and could change your life.

It’s unlikely that a single investment can make you a millionaire. But an investment that turns out very well can lead to an attractive increase in net worth.

The growth in your wealth will depend on how much you invest and how much your investments grow.

I think a decently-sized investment into one (or more) of these ASX shares could change your life:

Pushpay Holdings Ltd (ASX: PPH)

Pushpay is a leading ASX growth share. It is aiming to hit US$1 billion of annual revenue in the coming years by servicing the large and medium US church sector. The sector reflects a very large opportunity.

In FY20 it processed US$5 billion of donations through its system, which was 39% higher than the previous year. This helped revenue grow by 32% in just one year to US$129.8 million. During the year it also acquired Church Community Builder, which should help organic revenue growth.

I think Pushpay could be an impressive market-beater from here because of its economies of scale. In FY20 the company grew its gross profit margin by five percentage points to 65% (up from 60%) and improved the earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) margin by five percentage points to 22% (up from 17%).

Ultimately, an ASX share should be judged by its profit growth. Its profit can grow even faster than its revenue if its margins keep rising.

In FY21 Pushpay is looking to at least double its FY21 EBITDAF to US$50 million. The Pushpay share price is currently trading at 38x FY21’s estimated earnings.

WAM Microcap Limited (ASX: WMI)

I think WAM Microcap could be one of the best listed investment companies (LICs) to own.

The investment team at Wilson Asset Management (WAM) target ASX share small caps with market capitalisations under $300 million. WAM Microcap has been very good at this since it listed in June 2017.

Since inception in June 2017, WAM Microcap’s portfolio has returned an average of 21.7% per annum before expenses, fees and taxes. That’s a strong return in my opinion.  

One of the benefits of LICs is that they can turn investment gains into dividends for shareholders. It has steadily increased its dividend since it started paying one a few years ago. It has also been paying special dividends.

With the strong portfolio returns, I think WAM Microcap is a good ASX share for steady capital growth and high levels of dividend income if the special dividends keep flowing with strong investment outperformance.

At the current WAM Microcap share price it offers a grossed-up ordinary dividend yield of 5.4%.

Redbubble Ltd (ASX: RBL)

Redbubble is one of the world’s leading online artist marketplace businesses.

The company has benefited from the shift to online shopping during this difficult period. The FY20 result saw Redbubble’s marketplace revenue increase by 36% with operating earnings before interest, tax, depreciation and amortisation (EBITDA) rising by 141%.

It started to allow artists to sell masks during the second half of FY20 which help drive revenue higher even faster. FY20 fourth quarter revenue increased by 73% and July 2020 revenue for the ASX share soared 132% with similar revenue levels in the first two weeks of August.

I believe Redbubble is going to do well again in FY21 and adding new product categories could improve its network effects even more.

Over time the company is targeting $1 billion of annual revenue, which gives it plenty of room to grow. There is also plenty of potential for the profit margins to keep improving.

At the current Redbubble share price it’s trading at 32x FY20’s free cashflow.

More reading

• 10 fantastic ASX shares to buy in October
• Top brokers name 3 ASX shares to buy next week
• How to be the next Warren Buffett with ASX shares
• $3,000 invested in these 3 ASX shares could make you a fortune over the next 10 years
• How to create a yearly income of $65,000 in dividends

Tristan Harrison owns shares of WAM MICRO FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. 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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