The COVID-19 pandemic has wreaked havoc on financial markets over the past month. Despite the doom and gloom, the market turmoil has also created some of the best buying opportunities seen in a decade.
Like most investors, I lost a motza in the turmoil. However, instead of wallowing in despair, I think it’s time to capitalise on some of the investment opportunities the market is offering.
Here are 3 ASX 200 shares I have on my Easter shopping list.
ResMed Inc (ASX: RMD)
ResMed is a global leader in respiratory medical devices, particularly targeted towards the treatment of sleep apnoea. The company recently received an order from the Australian Government for 1,000 invasive ventilators and was included in the Defence Production Act to build ventilators for the US.
The ResMed share price has been in a steady uptrend over the long-term and at the time of writing remains around 8% below its all-time highs. The company has experienced a surge in demand for respiratory products, which will benefit its bottom line in both the short and long term.
A2 Milk Company Ltd (ASX: A2M)
The a2 Milk share price has been immune to the coronavirus pandemic, surging more than 19% for the year (at the time of writing). Panic buying of essential items such as infant formula has buoyed the company’s share price, forcing producers to increase their scale of operations.
Despite its sales exposure to China, a2 Milk forecasts that demand from Chinese consumers will remain high as they look to stockpile products. As a result, a2 Milk forecasted its earnings before interest, tax, depreciation and amortisation margin to remain in the 29–30% range for the full-year.
Recently, a2 Milk highlighted its resilience by announcing that the company will expand into the Canadian market and increased its shareholding in Synlait Milk Ltd (ASX: SM1).
Xero Limited (ASX: XRO)
Xero is an online accounting business that has low debt, a sustainable revenue stream and is exposed to excellent growth prospects. Last year, the company reported 2 million users had subscribed to its accounting software.
The Xero share price has posted a strong recovery after getting smashed in the market turmoil and at the time of writing is down more than 13% from its all-time highs.
Most small businesses regard their accounts as a necessity and must meet a range of regulatory requirements. As a result, Xero offers a sustainable and defensive revenue stream with excellent growth prospects overseas.
When looking for stocks that I potentially want to buy, there are a couple of criteria that each company needs to meet. Firstly, the company has to benefit from current market trends and momentum. In addition, there needs to be long-term growth potential for the stock in question. Lastly, the stock has to be trading at a level that I regard as decent value to make the investment worthwhile.
In my opinion, the 3 ASX 200 shares that I have listed above all meet these requirements. I think it would be prudent for investors to get into the habit of establishing their own criteria and create watchlists before making an investment decision.
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Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk and Xero. The Motley Fool Australia has recommended ResMed Inc. 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.