We’re getting closer to the end of reporting season, and there have been plenty of interesting reports.
If I were lucky enough to be given $10,000 to invest into ASX shares, this is how I’d do it:
Webjet Limited (ASX: WEB) – $3,000
Investors have sent the Webjet share price down over 10% today in reaction to its FY19 result. But I actually think there’s plenty to be positive about with rising profit margins, new products and services, strong synergies and a growing dividend.
If WebBeds can deliver the 50% earnings before interest, tax, depreciation and amortisation (EBITDA) margin that management are targeting then Webjet could deliver compelling profit growth from this share price.
The steadily growing dividend is a juicy bonus for the globally growing travel business. Well priced growth is hard to find at the moment.
Duxton Water Ltd (ASX: D2O) – $3,000
The Duxton Water share price continues to drift lower. There has been a bit more rainfall recently and investors may be a little more wary of agriculture risks, but Duxton Water seems to be a more compelling idea to me now at this lower price.
It owns water entitlements and leases them out to agricultural businesses. It’s working on leasing out more of its entitlements with multi-year leases, which will provide more stable cashflow.
Just taking the post-tax net asset value (NAV) of $1.56, Duxton Water shares are trading at a 17% discount to this value. The pre-tax NAV was $1.72 at 31 July 2019.
Duxton Water has a forward grossed-up dividend yield of 6%.
MFF Capital Investments Ltd (ASX: MFF) – $3,000
MFF Capital may be the best listed investment company (LIC) on the ASX with a very low management fee cost, a global investment mandate and an ASX-beating track record.
In all of the excitement of markets being volatile over the past week, I noticed that portfolio manager Chris Mackay bought 77,100 MFF Capital shares at just under $3 per share. He and his family have almost $200 million invested in MFF Capital shares, he’s very aligned with us as regular investors.
He has also been one of the best-performing managers in Australia over the past five years, so I think it’s worthwhile investing in MFF Capital shares at a similar price to when Mr Mackay does.
The top US-listed shares like Visa and MasterCard could continue to perform well for the MFF Capital portfolio over the long-term.
Rural Funds Group (ASX: RFF) – $1,000
Be greedy when others are fearful, as the investment advice goes from Warren Buffett.
Investors are cautious about the farmland real estate investment trust (REIT) after a recent short attack, with the share price still materially lower than it was before the negative report was released.
With interest rates so low, I think the current Rural Funds share price offers a compelling yield of around 5.5%, as long as the EY report backs up Rural Funds on all of the contentious points.
I think each of the above shares has the ability to outperform the ASX index over the longer-term. I think Webjet has the potential to deliver the biggest returns over the next year or two, but at this stage I’d rather personally go for a defensive option like Duxton Water.
These top ASX shares would be candidates for my portfolio if I had a bit more to invest.
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Motley Fool contributor Tristan Harrison owns shares of DUXTON FPO, Magellan Flagship Fund Ltd, and RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. The Motley Fool Australia has recommended DUXTON FPO 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.