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Why I’m avoiding these ASX shares

As an optimist I tend to spend a lot of my time writing about the shares I like. But successful investing isn’t just picking winners, it is also about avoiding losers that destroy wealth.

With that in mind, here’s why I’m not buying these ASX shares:

Amaysim Australia Ltd (ASX: AYS)

This junior telco company has seen its share price almost halve in value over the last 12 months. Investors were hitting the sell button in a hurry earlier this year after a disappointing first-half result which was driven largely by a surprise 15% reduction in the average revenue per user from its mobile segment. Unfortunately, with TPG Telecom Ltd (ASX: TPM) now entering the mobile market, I suspect that trading conditions could become even harder over the next 12 months and weigh heavily on its performance and share price.

Flight Centre Travel Group Ltd (ASX: FLT)

Whilst I think this travel agent is a quality company, I’m not a fan of its current valuation after an impressive 51% gain over the last 12 months. This share price gain means that Flight Centre’s shares are now changing hands at just over 20x estimated FY 2019 earnings. I think this is a touch expensive for its current growth profile and feel there are better options in the industry elsewhere. I expect some investors may take profit and move into its rivals if Flight Centre doesn’t outperform expectations in August.

Ramsay Health Care Limited (ASX: RHC)

While this private hospital operator’s shares have fallen almost 30% from their 52-week high, I wouldn’t be in a rush to invest just yet. All of Ramsay’s operations are going through tough trading conditions right now and I don’t expect things to improve in a hurry. Especially at home in Australia where the company generates the majority of its revenue. With private hospital insurance participation rates on the decline due to affordability issues, I feel Ramsay will struggle for growth in the short to medium term.

But which shares am I buying?

These top four shares are certainly a great start and on my buy list. I expect all of them to produce market-beating returns over the next 12 months.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Flight Centre Travel Group Limited and TPG Telecom Limited. 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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