We’re now into a new year and a new decade, but the investment options are the same ones as they were at the start of the week.
In 2020 I think the opportunities are the businesses that are well run, delivering earnings growth and perhaps internationally-focused.
If I had $5,000 to invest for 2020 and the rest of the decade, these are the shares I’d pick:
Webjet Limited (ASX: WEB) – $1,500
Webjet is one of the leading travel businesses in the world because it provides services to both the general public and for businesses.
Its share price is a lot lower than its all-time high, but its underlying earnings before interest, tax, depreciation and amortisation (EBITDA) is predicted to be higher than ever in FY20 thanks to strong growth of the B2B WebBeds business which is now one of the biggest in the world.
FY20 underlying EBITDA – which excludes one-off revenue & costs and the impact of AASB16 – is expected to grow by 26% to 34% with organic growth of 16% to 23%. There aren’t many shares on the ASX growing earnings at a consistently good rate with growing margins with an attractive price/earnings ratio.
MFF Capital Investments Ltd (ASX: MFF) – $1,000
MFF Capital was the best-performing listed investment company (LIC) in the 2010s and that’s unlikely to change because of how good MFF Capital’s investment picks are.
Its current biggest holdings of Visa and MasterCard, which make up around a third of the overall portfolio, are two of the best businesses in the world. The growth of eCommerce and cashless payments are two huge tailwinds for the payment companies and indirectly for MFF Capital.
MFF Capital has one of the lowest management fees on the ASX, so it could be an excellent long-term pick for high net returns.
Pushpay Holdings Ltd (ASX: PPH) – $2,500
Pushpay is another payment business, its niche is enabling non-for-profit organisations to receive donations electronically within a payment ecosystem. Currently its focus is on large churches in the US which have large congregations.
The business offers a community app and recently acquired a church management business which will improve the offering to its church clients and hopefully lead to higher organic growth.
Profit could rise rapidly as revenue and profit margins both increase at an impressive rate.
It’s hard to pick a favourite because I think 2020 could be a good year for all three of them. If I had to choose one at the current prices I’d go for Pushpay, but Webjet could also do very well – particularly if an official takeover offer comes in.