The coronavirus threat continues to hang over the ASX and the global economy.
The human cost has already been enormous and could keep growing over the rest of the year. But investors are also concerned about how hard the global economy will be hit, regardless of the actions of governments.
No-one can tell how long the coronavirus will be affecting Australia or the major global economies. How are you supposed to invest in this environment?
I think one of the best strategies could be to invest in businesses that were doing well before the outbreak but are seeing an acceleration of growth due to the coronavirus impacts.
Here are three ASX share ideas:
Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)
The healthcare company is involved in fighting the coronavirus. Its respiratory humidifiers and consumables are directly involved in treating patients.
There has been an obvious increase in global demand and that’s why Fisher & Paykel Healthcare has ramped up its manufacturing output. Management said it’s benefiting from stronger sales in the Homecare product group and a weakening of the New Zealand dollar.
Due to the increase in demand, the new guidance is for operating revenue to be approximately NZ$1.2 billion and net profit after tax to be approximately NZ$260 million to NZ$270 million.
Everyone is hoping that the coronavirus is brought under control. But if it takes longer than expected then Fisher & Paykel Healthcare will be one of the key players.
I’d also expect many governments to continue to build up their reserves once the actual crisis is over.
Pushpay Holdings Ltd (ASX: PPH)
Pushpay facilitates electronic donations from givers to charitable and not-for-profit organisations like churches in the US. Pushpay is well placed to service churches with its digital giving capabilities.
Another key benefit for churches in using Pushpay is that it offers livestreaming video for people to ‘virtually’ attend a service. This is extremely useful if some (or all) of the congregation are locked down at home.
The company recently updated the market a few weeks ago to say that its processing volume over the previous weekend was higher than expected prior to COVID-19.
Excluding the acquisition of Church Community Builder, Pushpay is still expecting operating revenue of US$121 million to US$124 million with a gross margin of over 63%. It upgraded its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) expectations to be between US$25 million to US$27 million, again excluding the acquisition.
The shift to digital could bring forward growth for Pushpay, though rising unemployment could create problems for some people’s ability in America to give during this period.
Ansell Limited (ASX: ANN)
Ansell provides many of the products that are being used to limit the spread of the coronavirus.
It sells things like gloves, masks and protective suits. Whilst supply chains are affected it isn’t as easy as you’d expect to get the products to the right places.
However, despite the impacts, the company recently reaffirmed its FY20 guidance for earnings per share (EPS) to be in a range of US$1.12 to US$1.22.
Even before the coronavirus Ansell was predicting solid mid-single digit growth so I think that Ansell is well placed to grow whatever happens next.
All three ASX shares can potentially do well in the short-term and the long-term. At the current prices I’d probably go for Pushpay because it has seen its share price fall since February but it has the biggest growth runway with high profit margins.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended PUSHPAY FPO NZX. The Motley Fool Australia has recommended Ansell 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.