The local share market is getting hammered today on the back of a weak session for US equities on Friday night that is being attributed by the media to an inversion of the US yield curve that represents returns on short to long-dated US treasuries.
Also triggering the sell off is old-fashioned profit taking as short-term focused traders attempt to time the market after US stock indices surged 15%-20% from lows hit back in December 2018.
It's impossible to know what way equities will move in the weeks ahead, so as an investor you should stick to the basics of only buying high-quality companies on reasonable valuations.
As such today's mini sell-off could be an opportunity to pick up some discounted stocks. Here's where I'd look to invest $50,000 on the ASX today.
CSL Limited (ASX: CSL) is the healthcare giant I still rate as a buy today thanks to its moat, management, competitive advantages and pricing power. It has a superb track record and still reinvests heavy amount of cashflow into commercialising the products of tomorrow. I'd put $15,000 in today.
Sydney Airport Holdings Ltd (ASX: SYD) is another business with a lot of pricing power thanks to its monopoly-like status that also provides it with defensive revenue and profit streams. The stock is selling for $7.15 today, which is the most I'd be prepared to pay for a business likely to distribute 39 cents per share in dividends over fiscal 2019. I'd put $15,000 in today.
Flight Centre Travel Group Ltd (ASX: FLT) shares are near a 52-week low of $41.19 today on the back of concerns over global growth and more specifically Brexit given Flight Centre has significant consumer-facing operations in the UK. However, Flight Centre is a good quality founder-led business with a rock-solid balance sheet and impressive track record of growth. I'd happily buy shares today. I'd put $12,500 in today.
a2 Milk Company Ltd (ASX: A2M) is a growth business that is higher up the risk curve than the others, but probably boasts more growth potential. Its a2-only-protein supermarket milk and baby formula products are selling well all around the world, with its baby formula especially popular in China. However, milk sales are also performing well in the U.S. and its product may also provide it some pricing power. I'd put my last $7,500 in today.
These four companies also all offer investors overseas exposure to different extents and have strong long-term track records of profit or dividend growth.
Generally, I'd also suggest self-directed investors look to the best US companies when building investment portfolios. For example you can buy high-quality companies like Google on valuations much cheaper than the local tech darlings in Australia. In fact if you're after long-term capital growth you'd be crazy to exclude yourself from the leading U.S. tech giants in my opinion.
