Where I would invest $20,000 in the share market

If I had $20,000 sitting in a savings account I would seriously consider pu t t ing these funds to work in the share market.

After all, interest rates are at record lows and the market has averaged an annual return of 7.1% over the last 10 years according to Canstar.

If it were to achieve the same level of return over the next 10 years, that $20,000 investment would grow to be worth almost $400,000.

With that in mind, here is where I would consider investing that $20,000: Ltd (ASX: KGN)

With Australia’s ecommerce market expected to grow at a strong rate over the coming years as more and more shopping shifts online, this fast-growing ecommerce company looks set to be a big winner. This could make it a good option for investors, especially with its shares changing hands at a reasonable level right now. According to a note out of UBS last week, it expects Kogan to deliver earnings per share of 25 cents in FY 2019. This means its shares are trading at 28x estimated forward earnings, which I think is great value given its current growth profile.


Next week this data centre operator is scheduled to release its full year results. Because of this, it may be prudent to wait for that release before making a move. Not least because expectations are high for NEXTDC thanks to the cloud computing boom and rising demand for data centre services. I’m not expecting anything spectacular in terms of profit from the company this year, though, due to the heightened level of investment it has made in order to build its capacity. But from FY 2019 onwards I expect earnings growth to accelerate to a level that more than justifies the premium its shares trade at today. However, as always, it is worth remembering that if it fails to deliver on expectations its share price could take a hit.

Webjet Limited (ASX: WEB)

One of the best results I have seen during earnings season came from this online travel agent last week. Thanks to solid bookings growth across its entire business Webjet delivered a 54% increase in total transaction value to $3,012 million, a 54% lift in revenue to $291 million, and a 63% increase in net profit after tax (before acquisition amortisation) to $55.7 million. Pleasingly, management continues to target bookings growth rates of more than 3 times the underlying market for the B2C segment and more than 5 times the underlying market for the B2B segment. I believe the company will achieve this due to its top management team and popular brands.

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Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia has recommended ltd and Webjet 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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