The Motley Fool

Top ASX stock picks for January 2020

Happy New Year, Fools!

It’s a new decade, and to celebrate, we asked our Foolish writers to pick their favourite ASX shares to buy in January 2020.

Here is what they came up with…

Brendon Lau: Worley Ltd (ASX: WOR)

The Worley Ltd share price continues to trade at a discount to its peers and its historical valuation even as the stock recovered recently. Investors are probably marking Worley down on worries about the oil and gas engineering group’s ability to bed down the massive Jacobs’ ECR business.

But I don’t think things are as difficult as some investors believe and the stock could re-rate during the February reporting season.

Motley Fool contributor Brendon Lau owns shares of Worley Ltd.

James Mickleboro: Telstra Corporation Ltd (ASX: TLS)

The Telstra share price was a disappointing performer in the 2010s due to the significant disruption to its core business caused by the NBN.

However, with the NBN rollout gathering pace and “peak NBN pain” expected in FY 2021, I’m optimistic that the telco giant’s performance in the 2020s will be much stronger. Especially given the arrival of 5G internet, the return of rational competition in the telco market, and its T22 strategy. The latter is stripping out billions of dollars in costs and positioning Telstra for a return to growth in the near future.

Motley Fool contributor James Mickleboro has no financial interest in Telstra Corporation Ltd.

Nikhil Gangaram: AP Eagers Ltd (ASX: APE)

I think AP Eagers could see some upside in January.

The AP Eagers’ share price has been sold down recently after AP the company warned the market that external conditions could impact earnings. However, the challenging automotive sector could be bottoming and experience a revival in the new year.

AP Eagers is well poised to take advantage of improved trading conditions after the company acquired market leader Automotive Holdings Group (AHG) earlier this year. The acquisition of Automotive Holdings provides AP Eagers with exposure to a further 27 car brands and 10 truck/bus brands.

Motley Fool contributor Nikhil Gangaram has no financial interest in AP Eagers Ltd.

Sebastian Bowen: MFF Capital Investments Ltd (ASX: MFF)

My first pick for 2020 is MFF Capital Investments.

MFF is a LIC that invests in quality US stocks such as Alphabet (Google), Mastercard, Visa and Coca-Cola. I hold it in my own portfolio for some easy but much-needed exposure to the US markets – home to some of the best companies in the world.

MFF performed exceptionally well in 2019 (delivering a return north of 40%) and also pays a small but growing dividend. I’ll be looking to add some more to my MFF position this year and am confident it’s a stock I’ll be holding for the entirety of the new decade.

Motley Fool contributor Sebastian Bowen owns shares of MFF Capital Investments Ltd.

Tristan Harrison: Pushpay Holdings Ltd (ASX: PPH)

Pushpay is a donation payment business that enables people to electronically give money to not-for-profit organisations.

The company’s main clients at the moment are churches in the US, which sees an attractive level of donations given every year – giving useful, essentially annual, revenue to Pushpay.

Pushpay announced an acquisition last month, a church management system. It diversifies Pushpay’s earnings and but more importantly, it means the combined business can offer a stronger offering to customers.

I think the organic growth plus the acquisition could lead to good revenue growth for Pushpay, particularly with an increase of revenue per client.

Motley Fool contributor Tristan Harrison has no financial interest in Pushpay Holdings Ltd.

Michael Tonon: Nearmap Ltd (ASX: NEA)

After the recent fireworks of New Year’s Eve, I think the Nearmap share price also has the potential to rocket higher in January 2020.

It’s pleasing to see the growth profile of Nearmap’s expansion into the far larger North American market accelerating beyond what it achieved in its profitable Australian business when compared over the same base year.

This growth trajectory and management’s determination for further global expansion give Nearmap a bright future in my eyes. Coupled with Nearmap’s share price being down meaningfully from its high of $4.29, I think January could be an optimal time to buy.

Motley Fool contributor Michael Tonon owns shares of Nearmap Ltd.

Phil Harpur: Appen Ltd (ASX: APX)

This hi-tech company is, in my opinion, the pick of the WAAAX bunch. Appen Ltd provides data for use in machine learning and artificial intelligence throughout the globe.

Appen continues to experience incredibly strong demand from many of the largest global technology firms. This has translated into very high revenue growth, assisted by recent acquisitions. In particular, its recently acquired Figure Eight business continues performing well.

I believe Appen is very well placed to see continued strong growth during 2020 and through to 2030, due to the rapidly rising demand for Artificial Intelligence (AI) products and machine learning markets.

Motley Fool contributor Phil Harpur owns shares in Appen Ltd.

Giacomo Graziano: Collection House Limited (ASX: CLH)

Collection House’s operations focus on the management of receivables, credit, and collection services in Australia, New Zealand, and the Philippines. In times of widespread economic difficulties, this is a good line of work to be in.

However, what stands out most about Collection House is its valuation. With a P/E of 5.5, the market is pricing its shares as if it is about to go out of business. Further, Collection sports a generous fully franked 7.8% dividend yield, which is well-covered by earnings and set to grow by 8.8% for the next 2 years.

Giacomo Graziano has no financial interest in Collection House Limited.

Kenneth Hall: Macquarie Group Ltd (ASX: MQG)

The Macquarie share price has been soaring higher in 2019 and is my top pick in the ASX banking sector.

Macquarie shares are up 30.15% this year and are still yielding 4.39% per annum.

Given the struggles for the Big Four retail banks, Macquarie has been a beacon of stability this year.

I think Macquarie Group offers a strong dividend with diversified earnings potential for 2020.

Motley Fool contributor Kenneth Hall has no financial interest in Macquarie Group Ltd. 

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The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited, Nearmap Ltd., and Telstra Limited. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended PUSHPAY FPO NZX. 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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