The share market is suffering during this period of volatility because of the coronavirus. If you’re lucky enough to have $5,000 to invest right now then it could be an opportune time to put some money to work.
There are some shares that have been heavily punished that I’m not sure how long or deep the pain will be, like banks such as Australia and New Zealand Banking Group (ASX: ANZ) and travel shares like Virgin Australia Holdings Ltd (ASX: VAH).
Here are shares I’d invest $5,000 into right now:
Magellan High Conviction Trust (ASX: MHH) – $2,500
The best businesses in the world are the ones that are most likely to get through this. This listed investment trust (LIT) is invested in the global businesses that the investment team have high conviction in. Usually the portfolio has around 10 names in it.
Some of its largest positions are: Alibaba, Alphabet, Microsoft, Facebook and Visa.
Whilst each of the above businesses are likely to see a bit of an earnings hit compared to what life would have been like without COVID-19, I think most (or all) of the trust’s holdings will still generate solid profits in 2020.
Once this is over I think the LIT’s portfolio could be a strong performer.
Altium Limited (ASX: ALU) – $1,500
In terms of businesses on the ASX, I think that Altium is one of the best ideas because it has no debt and a good cash balance to get through this.
The electronic PCB software business has seen its share price fall 20% (at the time of writing) since 21 February 2020 and 36% since 17 February 2020.
With its cloud offering of Altium 365, the company can continue servicing its clients if the engineers keep working at home.
Once this outbreak is over the world will continue its inevitable march towards greater technological change.
We have to look to FY22 for a normal economic year. It’s currently trading at 30x FY22’s estimated earnings.
Australian Ethical Investment Limited (ASX: AEF) – $1,000
The ethical fund manager has seen its share price sold off heavily after the coronavirus outbreak, it’s down 33% since 21 February 2020.
It’s true that its funds under management (FUM) and management fees will be hurt in the short-term. Contributions are also likely to be low in the short-term.
But I think by the end of 2020 the super contributions will be heading towards normality again.
The company had a decent cash balance and no debt at December 2019, and it has fairly low expenses, so it’s quite well placed to get through this.
I like the quality diversification that the Magellan LIT offers and it’s trading at a nice discount to its underlying assets. Both Altium and Australian Ethical are quality businesses and are trading at much cheaper prices. I’d be happy to buy them all.
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Tristan Harrison owns shares of Altium and Australian Ethical Investment Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Australian Ethical Investment Ltd. The Motley Fool Australia owns shares of Altium. The Motley Fool Australia has recommended Australian Ethical Investment 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.