There are some shares in the S&P/ASX 200 Index (ASX: XJO) that are now trading at crazy cheap prices.
I think they could be worth buying as investor concern grows because of the coronavirus.
Here are those three ASX 200 shares:
Costa Group Holdings Ltd (ASX: CGC)
Costa is Australia’s horticultural business. It predominately grows avocados, tomatoes, mushrooms, berries and citrus fruit.
It has seen its share price fall 42% over the past year, largely due to the drought. However, Costa could be one of the best-placed ASX 200 shares to get through this period. Food prices are higher and there’s significantly higher demand for citrus food in the hopes of combating the coronavirus with good health.
Costa has been through a rough time but there has been a bit of rain in regional Australia which should help. It has ongoing international growth plans which will hopefully lead to solid returns in the future.
It’s trading at 17x FY21’s estimated earnings.
Challenger Ltd (ASX: CGF)
Challenger is Australia’s largest annuity business. It has already survived through the GFC and I think its balance sheet is actually now quite well set up to handle this economic crisis with recent investment moves to a high weighting of investment grade fixed income.
The share price of Challenger has fallen by 52% since 21 February 2020, making it one of the hardest hit of ASX 200 shares.
The financial business said that it’s on track to achieve a net profit before tax of $500 million to $550 million. The statutory profit will be hurt in FY20, but I think there’s a very good chance Challenger can maintain its dividend for shareholders.
If the Challenger dividend is maintained it would give the company a grossed-up dividend yield of 10.3%. That alone would provide solid long-term returns, and it will hopefully grow thanks to the ageing population and long-term growth of retirement assets.
Brickworks Limited (ASX: BKW)
Brickworks is the largest brickmaker in Australia. The company offers a number of other building products for customers including masonry, stone, roofing, precast and cement. It is also a large brickmaker in the US after it made a few acquisitions.
It has seen its share price decline 33% since 13 February 2020. The construction industry is certainly going to take a hit in 2020, but it’s not a permanent change.
But what makes me particularly interested in Brickworks at this price is that it has non-building product assets that back up its entire market capitalisation today. Its ‘investments’ segment and the 50% stake of the industrial property trust (owned along with Goodman Group (ASX: GMG) are providing reliable earnings and cashflow.
It currently offers a solid grossed-up dividend yield of 6.1%.
All three of these ASX 200 shares are great companies in my opinion. They’re all a lot cheaper and have good long-term prospects. Challenger could be the one to generate the largest returns over the next two or so years, but I’d prefer to buy Brickworks for the long-term due to its diversified assets and discounted assets.
Where to invest $1,000 right now
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