So, you have some spare cash to put into the share market? That’s great!
Maybe this is your first time venturing into share trading, or perhaps you would like to add a few shares to your portfolio. Either way, I believe the following three companies are worthy ASX share picks.
I’ve specifically chosen these shares from different industries to provide some market diversification. Just remember if you’re getting into shares for the first time, it’s good to build up the number of shares in your portfolio to at least 10 to provide sufficient market diversification.
Ramsay Health Care Limited (ASX: RHC)
Ramsay has evolved over the past few decades. Starting as a small Australian operation, the company has become Australia’s largest private healthcare provider with operations in 11 countries.
The health care giant has consistently grown revenues from its existing facilities, as well as through acquisitions and new developments. Ramsay’s considerable size and scale enables the company to spread its operating costs and provides it with a competitive advantage in negotiations with health insurers regarding patient fees.
In FY19, Ramsay recorded overall revenue of $11.4 billion, an impressive 24% increase on the prior corresponding period (pcp).
The healthcare system is highly regulated and changes to government policy with regards to issues such as the healthcare rebate could potentially impact local profits. However, Ramsay’s increasing global diversification should minimise the impact of any such trend.
Ramsay shares are also trading on a fully franked trailing dividend yield of 2%.
A2 Milk Company Ltd (ASX: A2M)
a2 Milk has been growing at a very impressive rate since listing on the ASX and I believe that this strong growth looks set to continue.
I feel a2 Milk is better placed than other infant formula providers such as Bubs Australia Ltd (ASX: BUB) and Nuchev Ltd (ASX: NUC). This is due to a2 Milk’s well-established brand name and entrenched position in the Australian market.
Continued strong growth in the US and China will be key to a2 Milk’s success over the next 5 years. Although the market has factored in ambitious growth targets for a2 Milk, the company appears to be reasonably well-placed to meet future targets. As a result, a2 Milk is a good company to buy and hold for the long-term, in my opinion.
Blackmores Limited (ASX: BKL)
Blackmores develops, sells and markets more than 1,000 healthcare products throughout retailers in Australia, New Zealand and Asia.
The company’s success is underpinned by its very strong brand. Blackmores invests significantly in research, development, marketing and promotional support for retailers in order to maintain and grow its brand image.
I believe that Blackmores is a top quality company with good growth potential in China, despite the current issues in the region.
In my opinion, Blackmores shares have been somewhat over-sold by the market over the past 12 months, with shares down by around 25%. This could present a good buying opportunity for patient long-term investors.
Blackmores shares also currently trade on a fully franked trailing dividend yield of 2.4%.
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Motley Fool contributor Phil Harpur owns shares of A2 Milk and Blackmores Limited. The Motley Fool Australia owns shares of and has recommended Blackmores Limited. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended BUBS AUST FPO and Ramsay Health Care 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.