The Motley Fool

3 very cheap shares that could make huge returns in 12 months

The coronavirus has caused a large share market sell-off almost across the board. The S&P/ASX 200 Index (ASX: XJO) has fallen by 28% since the start of the falls.

Some shares have been sold off more than others. Banks like Australia and New Zealand Banking Group (ASX: ANZ) have seen their share prices sold off heavily.

There are some shares that have dropped off even harder. For the brave investor, these three ASX shares could make huge returns in 12 or so months:

Webjet Limited (ASX: WEB) 

The travel business has been utterly smashed during this period. I don’t think many people could confidently predict that what’s happened was going to happen.

It’s far too early to say when travel will start getting back to normal. Some areas of the world are still going into stricter lockdowns.

The capital raising that it has done is incredibly cheap. Institutional investors and existing retail investors are getting a great deal. But even at around $3 I think new investors may be able to make very good returns over 12 months and even more likely over a 3-year time period – but the next few months could still be rough.

Costa Group Holdings Ltd (ASX: CGC) 

Food is in high demand during this period with people buying up everything they can get their hands on. Healthy food like oranges in-particular are seeing price increases with people trying to eat healthy and avoid getting sick.

The drought has been brutal for Costa, but now there’s a bit of rain and good movements for food prices which should benefit Costa over the next 12 months.

Food business returns don’t necessarily match the returns of the general share market, so it could do fairly well over the coming year.

Nick Scali Limited (ASX: NCK) 

The furniture business has been one of the ones that have been heavily hit. Since 21 February 2020 the Nick Scali share price has dropped by 56%.

It’s a well-run business with good management. Obviously the coronavirus is going to cause a hit to earnings in FY20 and probably FY21. But I don’t think its ­long-term prospects have been hurt as much as 56%.

I don’t think the next 12 months will be easy, but there could be good coronavirus news later this year. But by Christmas 2022 I think Nick Scali could have produced very solid returns from the current low.

Foolish takeaway

Don’t forget that interest rates are now at record lows. This makes the current share prices even more attractive in the current environment. Of the three I think Costa would be the easiest bet to make money on over the next year or two. But I think Webjet could be a high-risk, but rewarding, play in the next few years as life starts getting back to normal.

NEW. The Motley Fool AU Releases Five Cheap and Good Stocks to Buy for 2020 and beyond!….

Our experts here at The Motley Fool Australia have just released a fantastic report, detailing 5 dirt cheap shares that you can buy in 2020.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading over 40% off it's high, all while offering a fully franked dividend yield over 3%...

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click here or the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.


Motley Fool contributor Tristan Harrison owns shares of COSTA GRP FPO. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO 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.