The Motley Fool

How I’d invest $10,000 today

We are nearly at the end of reporting season and now we get to reassess what shares would be good to buy.

Some shares have gotten cheaper, making them more attractive. Here are four shares I’d buy with $10,000 if I were buying today:

Challenger Ltd (ASX: CGF) – $3,000

Challenger is Australia’s leading annuity provider, helping retirees turn their capital into a guaranteed source of income.

New shares issued to its Japanese partner dampened the per-share statistics of its FY18 profit. However, the business is still growing at a decent rate and it has a number of growth channels it’s accessing.

A key change recently was an announcement in the budget that all superannuation funds will have to offer members a guaranteed source of income. Challenger is the clear leader in this area, so it should be a major beneficiary.

It’s currently trading at only 16x FY19’s estimated earnings. This is an attractive price for a business growing at 8% to 12% a year.

Paragon Care Ltd (ASX: PGC) – $3,500

Paragon Care is a small cap health equipment and product supplier to places like hospitals and aged care facilities.

Healthcare has a long-term tailwind thanks to Australia’s ageing tailwinds. More elderly should mean higher demand for beds and other Paragon products.

As Paragon acquires more businesses it can offer its clients a wider range of products on its purchasing site.

Paragon is currently trading at 10x FY19’s estimated earnings. This is a very cheap price for a healthcare business with defensive earnings.

WAM Microcap Limited (ASX: WMI) – $1,500

WAM Microcap is the listed investment company (LIC) in the WAM stable that focuses on the smallest shares on the ASX, ones that have market capitalisations under $300 million at the time of acquisition.

It has had an excellent first year of operation and is paying a special dividend with its FY18 result. I think most Australian investors don’t have enough small cap exposure and WAM Microcap could be the best way to get that exposure, along with a growing dividend.

It currently has an ordinary grossed-up dividend yield of 4%.

Propel Funeral Partners Ltd (ASX: PFP) – $2,000

Propel is the second largest funeral operator in Australia and plans to rapidly grow its market share through acquisitions in areas that it doesn’t currently service.

Sadly, death is one of the unavoidable things in life, along with taxes, so Propel can count on a certain number of funerals each year – it has a very defensive profile.

It’s going to grow through not just acquisitions but also the long-term increase of the death rate. Death volumes are expected to grow by 1.4% per annum between 2016 to 2025 and then increase by 2.2% per annum from 2025 to 2050.

It’s currently trading at 21x FY19’s estimated earnings.

Foolish takeaway

All four of these businesses have attractive futures. At the current prices I think Challenger and Paragon both look very interesting and at today’s value I will likely buy shares of at least one of them in the next month or two.

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Motley Fool contributor Tristan Harrison owns shares of Challenger Limited, Paragon Care Limited, Propel Funeral Partners Ltd, and WAM MICRO FPO. The Motley Fool Australia owns shares of and has recommended Challenger Limited. The Motley Fool Australia has recommended Paragon 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.