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Top ASX stock picks for May

ASX shares to buy in May

We asked our Foolish writers to pick some of their favourite ASX shares to buy this May. Here is what they came up with…

Tom Richardson: CSL Limited (ASX: CSL)

I must admit I’m struggling to find any investment grade businesses on reasonable valuations on the local share market this month so will revert to an old favourite that I still think will provide healthy total returns from today’s price of $198.57. CSL is a healthcare leader that is forecasting another year of strong profit growth while reinvesting heavily back into the business to commercialise new products. For me its competitive position and pricing power mean it ticks the boxes for strong long-term returns.

Tristan Harrison: NAOS Small Cap Opportunities Company Ltd (ASX: NSC)

One of the easiest ways to find value is to look at the net tangible assets (NTA) of a business on its balance sheet compared to the market capitalisation. If you can find a business that’s at a sizeable discount to its NTA then it could be a good value buy.

My idea is a listed investment company (LIC) that invests in ASX small caps. Its share price is an 18.7% discount to the NTA at March 2019 and one of its large holdings (MNF Group Ltd (ASX: MNF)) has gone up 10% since the start of April.

Motley Fool contributor Tristan Harrison owns shares of NAOS Small Cap Opportunities Company Ltd.

Lloyd Prout: Costa Group Holdings Ltd (ASX: CGC)

The Costa Group share price is still trading at a reduced valuation of 22x forward earnings, after issuing a devastating profit expectations downgrade in January. The downgrade saw shares fall nearly 40% in one day!

I see the reduced multiple as a long-term buying opportunity for a quality company in a growing market segment. The brokers agree with Goldman Sachs, Credit Suisse, and Citi all issuing positive notes on the company in the last month or so.

Costa Group expects 2019 NPAT-SL growth of at least 30%, with an update to be provided at the AGM on 30 May.

Motley Fool contributor Lloyd Prout does not own shares in Costa Group Holdings Ltd and expresses his own opinion.

Brendon Lau: Boral Limited (ASX: BLD)

The building materials supplier has underperformed over the past year due to weakness in the US and Australian housing construction markets but there are signs that the worst could be over with US activity picking up and the slump in Australia bottoming.

If the RBA cuts rates as some economists are predicting, it could turnaround the residential construction market here, and that will bode well for Boral.

Brendon Lau owns shares in Boral Limited.

Elton Wang: Paradigm Biopharmaceuticals Ltd (ASX: PAR)

After impressive secondary endpoint results for its phase 2b osteoarthritis trial, Paradigm has strengthened the odds for a successful phase 3. Additionally, share price catalysts such as the approval for the sale of iPPS in Australia and the results from the treatment of alphavirus induced arthralgia, could potentially be released in May.

With Paradigm’s current tailwinds, it retains its position as my top ASX stock pick for May.

Motley Fool contributor Elton Wang owns shares in Paradigm Biopharmaceuticals.

Nikhil Gangaram: Bellamy’s Australia Limited (ASX: BAL)

In a previous article, I recommended waiting for Bellamy’s to be granted SAMR accreditation before buying shares in the company. In late April, Bellamy’s received SAMR clearance for formula produced at its ViPlus Dairy plant in Victoria. Although the clearance does not cover all products it is an important step that allows Bellamy’s to recommence direct sales into the high-growth Chinese market.

Bellamy’s is also one of the most shorted stocks on the ASX, with a short interest of 11.7%. Given further positive news and strong momentum in the sector, short-sellers may be forced to unwind their positions which could propel the Bellamy’s share price higher.

Motley Fool contributor Nikhil Gangaram does not own shares in Bellamy’s Australia Limited.  

Sebastian Bowen: Macquarie Group Ltd (ASX: MQG)

I think that investors who are interested in the financial sector should look outside the ‘Big Four’ for more diversity. Macquarie is a bank less exposed to the retail banking sector (mortgages and credit cards) and is famous for having its fingers in many pies. With a large portfolio of infrastructure assets and a successful wealth management arm, Macquarie is a great addition if you are looking for a non-conventional bank.

Although its dividend is not in the same league as other banks, I see this as a strength in the current market. Macquarie is still yielding around 4% (partially-franked) on current prices and is a great growth and income stock in my opinion.

Motley Fool contributor Sebastian Bowen does not own shares in Macquarie Group Ltd.

Lachlan Hall: Alumina Limited (ASX: AWC)

I think Alumina is a great value play and looks relatively cheap at a P/E ratio of just 7.1x earnings.

The alumina producer is down 12% in the last 6 months on concerns over global alumina prices and has slid sharply in April on speculation the global supply could pick up and push prices lower in 2H 2018.

I personally think Alumina remains a strong income option with a 10.55% per annum dividend yield for investors provided the supply story remains intact.

Motley Fool contributor Lachlan Hall does not own shares in Alumina Limited.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of February 15th 2021

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of MNF Group Limited. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO. The Motley Fool Australia has recommended Bellamy's Australia, Macquarie Group Limited, and MNF Group 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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