Monday, August 10, 2020

Where I’d invest $9,000 in ASX shares

australian flag superimposed over share market chart

ASX share prices change every day. Share prices can move a lot over a week or a month. 

We have to decide if the price being presented is good value or not. We can decide to buy shares at the price the market is offering. Perhaps we may take the price the market is willing to buy our shares for. Or we can just do nothing.

I don’t think there are many shares that are trading at great value at the moment due to uncertainty caused by COVID-19 (and the related impacts) as well as the strength of the share market’s recovery since March 2020.

But there are still some ASX shares I’d be happy to buy for my portfolio today:

Bubs Australia Ltd (ASX: BUB) – $3,500

Bubs is a business which is still fairly early on in its growth journey. It’s an infant formula business with a specialisation in goat milk products.

With a smaller business I think it’s important to think about the long-term. Don’t think about how much an ASX share may grow in six months. Think about where the business will be in three years or five years from now.

Bubs is doing an excellent job of growing its international revenue. In the quarter ending 31 March 2020 it more than doubled its Chinese revenue. Its ‘other markets’ revenue increased by about 20 times in that same quarter. I think the company has great global growth potential. There is a huge addressable market in Asia alone.

The Bubs share price looks good value to me. Due to the essential nature of the business’ products, I think Bubs has defensive revenue with a great growth trajectory.

WCM Global Growth Ltd (ASX: WQG) – $2,500

This is a listed investment company (LIC) that targets global businesses. It looks for international businesses that have an expanding economic moat. One of the main factors that WCM looks for is a rising return on invested capital. It also looks for businesses with a corporate culture that supports that goal of an improving economic moat.

Some of the ASX share’s current largest positions include Shopify, Tencent, Visa and MercadoLibre. These businesses are leaders in their respective markets.

The LIC’s returns have been strong over the past three years, yet the WCM Global Growth share price is still trading at a double digit discount to the pre-tax to the latest net tangible asset (NTA) disclosed in the weekly update.

City Chic Collective Ltd (ASX: CCX) – $1,000

City Chic is one of the most promising ASX retail shares in my opinion. The ASX share is a fashion leader in Australia for plus-size clothing for women.

City Chic was growing nicely before COVID-19 came along. Whilst store closures were tough, the company saw online sales growth of 57% during the shut store period. That’s impressive considering the company said two thirds of global sales are online.

I’m excited by City Chic’s aim of becoming a world leader in plus size women’s clothing. It’s making smart acquisitions to try to make this happen.

At 21x FY22’s estimated earnings I think the City Chic share price looks like a good long-term buy.

Vitalharvest Freehold Trust (ASX: VTH) – $2,000

There is a lot of uncertainty in the share market and economy at the moment. A cheap agricultural real estate investment trust (REIT) could be a good way to play this situation.

Farming returns can be quite different to the overall share market. Vitalharvest owns some of the largest berry and citrus farms in Australia. Those farms are leased to Costa Group Holdings Ltd (ASX: CGC). Hopefully the next 12 months will be better for Costa’s earnings because Vitalharvest has a profit share agreement with the horticultural giant.

I’m excited that Vitalharvest has a new manager which will be looking across the whole farming supply chain for investment opportunities. Things like food storage and food processing properties will be among the considerations for the ASX share’s portfolio.

At the current Vitalharvest share price it’s trading at an approximate 20% discount to the net asset value (NAV) at 31 December 2019. I think that’s a big discount that can close up with better earnings and distributions from the REIT.

Foolish takeaway

I think each of these ASX shares could beat the market over the next three to five years. Vitalharvest looks great value and I believe Bubs has a very good growth journey ahead of it, assuming China doesn’t cause any problems with exports.

More reading

Motley Fool contributor Tristan Harrison owns shares of WCM Global Growth Limited. The Motley Fool Australia owns shares of and has recommended BUBS AUST FPO and COSTA GRP 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.

The post Where I’d invest $9,000 in ASX shares appeared first on Motley Fool Australia.

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