It’s a good idea to always know where you’d invest $1,000 so that you don’t have to wait to put the money to work.
Quite a lot of money has been ‘lost’ by investors hesitating about whether to invest and missing out on the gains.
If I had $1,000 to invest I know which growth pick or defensive pick I’d go for:
Growth pick – Webjet Limited (ASX: WEB)
The Webjet share price remains more than 10% lower than where it was three weeks after worries about the coronavirus.
In the short-term it’s expecting a strong result. In the FY20 half-year result the company is expecting underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of at least $80 million, which excludes one-off revenues & costs and the impact of AASB16. This would be growth of more than 37%.
As bad as effects of the coronavirus already is and may become, at some point this year the spread of the coronavirus will stop and it will fade into history like the other infections like SARS.
If it’s all sorted before the start of FY21, the next financial year could show strong growth for Webjet. It’s currently trading at 14x FY21’s estimated earnings and has a good growth outlook with WebBeds.
Defensive pick – Washington H. Soul Pattinson and Co Ltd (ASX: SOL)
Soul Patts’ future looks even brighter today after the Federal Court reversed the ACCC’s original decision to block the merger between TPG Telecom Ltd (ASX: TPM) and Vodafone Australia. This should see a special dividend come Soul Patts way as well as higher ordinary dividends.
The investment conglomerate has been a strong long-term performer, outperforming the ASX index over various longer-term time periods. Some of its largest holdings still have attractive prospects including Brickworks Limited (ASX: BKW) and Clover Corporation Limited (ASX: CLV).
I’ve been impressed by the recent investment moves into new areas like agriculture and luxury retirement living which provide further uncorrelated returns and good diversification.
Some of its smaller holdings are also generating good returns right now including technology investor Bailador Technology Investments Ltd (ASX: BTI).
At the current prices I think both Soul Patts and Webjet have good chances to beat the market over the next two years. For the next few weeks I think it would be safer to go for Soul Patts to see that the coronavirus doesn’t keep growing internationally and affect global travel.
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Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Clover Limited. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Brickworks 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.