I think the best time to buy shares is when they’re temporarily unloved by they still have attractive long-term futures.
So, that’s why I’d buy the below three ASX shares which are currently facing shorter-term issues:
Webjet Limited (ASX: WEB)
The online travel business revealed the impact of Thomas Cook entering compulsory liquidation yesterday, sending the Webjet share price down 3.5% with it already being lower significantly since the 2019 share price high.
I think the best time to buy shares is when they’re down temporarily, which could be now. Losing unpaid money to Webjet is unfortunate, but the company said WebBeds continues to be the fastest growing B2B provider in the world and in the first 10 weeks of FY20, excluding Thomas Cook, WebBeds total transaction value (TTV) is up 50% over the prior year.
People will continue to travel even if Thomas Cook is gone. Webjet is trading at 12x FY21’s estimated earnings. If that projection is a little optimistic, even 15x FY21’s estimated earnings would be cheap in this investment world.
Rural Funds Group (ASX: RFF)
Another foreign negative report has brought the Rural Funds share price to a low level. Management defended well against the first report and I think they’re doing a pretty good job of defending against this one too.
Farm values can be questioned, but it seems undeniable that Rural Funds generates a solid level of net rental each year, which is growing on a per-unit basis.
“Be greedy when others are fearful” could be a good phrase to think about in times like this.
Rural Funds offers a 6.4% FY20 distribution yield. As long as the net cash rental profit is sound then this could make the yield too good to ignore.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
A bit of a discount to Soul Patts’ pre-tax value is starting to open up, particularly due to the growing Brickworks’ share price and underlying value.
What I liked most about the recent FY19 result from Soul Patts was that the investment conglomerate spoke more of the opportunities in other sectors that it’s looking into such as aged living, agriculture and financial services.
The value focused, contrarian investor could be the best way to invest in ‘Australia’ without having too much exposure to banks or resource businesses like many ASX index exchange-traded funds (ETFs) give you.
Soul Patts is trading at 15x FY20’s estimated earnings with a grossed-up dividend yield of 3.8%.
Webjet may be able to make the biggest returns over the next three years, but I’m more drawn to Rural Funds and Soul Patts because of their defensive nature and their steady rise in cash profit over time. I intend to buy at least one of these shares within the next couple of weeks.
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Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended 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.