The great thing about the share market is that it is full of institutional investors and regular investors who believe different businesses are worth different prices.
That’s why share prices change so much every day. It completely depends what the buyers and sellers of the day are happy to trade shares for. This gives us opportunities every day.
For every buyer there’s a seller. It’s for you to decide who you agree with.
WAM Microcap Limited (ASX: WMI) – $3,000
WAM Microcap is one of the best listed investment companies (LICs) in my opinion. The recent share market fall, the payment of the dividend and the announced retirement of chief investment officer (CIO) Chris Stott has seen the share price fall 13% since the October high.
The WAM investment team are experts at choosing small caps that beat the market, as shown by the WAM Microcap investment returns since inception. Its targets are businesses with market caps below $300 million at the time of acquisition.
Over the next 10 years I think this LIC could generate some of the biggest returns out of its peers on the ASX.
I’ll gladly acquire more shares at NTA or at a discount when possible over time.
Challenger Ltd (ASX: CGF) – $3,000
I believe Challenger could be one of the best ways to benefit from the growing retiree population as many will look for a guaranteed source of income from their capital.
Its share price has fallen over 15% during the past two months due to rising bond rates, a falling share market and the announced retirement of the CEO.
I believe this combination of shorter-term issues helps us buy this steady profit grower at an attractive price of under 15x FY19’s estimated earnings.
Paragon Care Ltd (ASX: PGC) – $2,500
Paragon is a fast-growing healthcare business that distributes medical devices and equipment to clients like hospitals and aged care. I think this is a good area to be in because the growing elderly population should mean higher demand for healthcare products, even if they’re not in an hospital.
It has a single purchasing platform for clients – kind of like a healthcare version of Amazon. It continues to make acquisitions that expand its offering to clients, which should improve its economies of scale and profit margins. However, all the acquisition and capital raising activity has meant the market is a little unsure about paying a lot for its shares.
It’s currently trading at 10x FY19’s estimated earnings.
BetaShares Asia Technology Tigers ETF (ASX: ASIA) – $2,500
When I think of what industry is likely to improve/change people’s lives the most over the next 10 years I think it’s probably going to be technology businesses.
Whilst the story behind the FAANG shares is well known, I think the Asian tech giants are likely to develop their own growth runway in Asia.
The Asian population is much bigger than the western world and the Asian economies are growing at a much faster pace. Businesses like Tencent, Alibaba, Baidu and many others could be worth substantially more over the coming years thanks to their dominance in e-commerce and other internet activities.
The current trade war problems could make this period of time a particularly attractive time to buy into this ETF.
I believe that all four shares will beat the ASX Index’s returns over the short and long-term. I hope they will beat the market because I’m a shareholder in all of them.