The coronavirus selloff is no longer a selloff. The S&P/ASX 200 Index (ASX: XJO) has gone up 20% since the low in March. But I've got my eyes on some shares I'd buy if the selloff gets worse again.
The initial panic about the spread of the infection is subsiding. Global case numbers continue to rise at a fast pace and the number of deaths keeps going up. Yet the share market continues to go up too. It would be quite surprising for the only fall in the share market during this to be within the first month of the ASX 200 hitting the all-time high.
There is a fair chance that the share market will go through another selloff. If it gets worse again I'm buying these three shares:
Altium Limited (ASX: ALU)
I came extremely close to buying more Altium shares a few weeks ago when it was just under $25. It has since risen 27%, which is a strong recovery. Today it's better value than it was before the declines happened, but it would obviously be even more attractive at $25 again.
Throughout this crisis I have said that Altium is one of the highest-quality shares that you could buy. It has no debt and a good cash balance which has continued to grow despite the economic worries.
I think the cloud offering of Altium 365 is very appealing in this environment. In my opinion, the Altium management team is one of the best on the ASX. The company has growing profit margins and a goal of being the clear market leader in the industry by 2025.
It's a wonderful business, but it's not a buy at any price. It's not that expensive, but I think during a pandemic is a good time to be a bit more picky about the price we pay.
Altium is trading at 36x FY22's estimated earnings.
Magellan Global Trust (ASX: MGG)
This listed investment trust (LIT) is one of the shares that I've bought during the declines. It invests in the best shares that it can identify in the world. Ones with strong economic moats, great growth prospects and good balance sheets.
Some of the biggest positions that it owns are: Alibaba, Alphabet, Atmos Energy, Microsoft, Facebook, Visa, Mastercard and Reckitt Benckiser.
According to Magellan Global Trust, after fees and expenses at 31 March 2020 it has outperformed its benchmark – the MSCI World Net Total Return Index (AUD) – by 2.36% over the past year and 2.4% per annum since inception in October 2017.
I'm happy to buy more shares when the share price discount to the net asset value (NAV) is 5% or more.
I think Magellan Global Trust could be one of the highest-performing listed investment businesses over the next decade.
WAM Microcap Limited (ASX: WMI)
WAM Microcap is another business that I have invested more in during this period. Since 23 March 2020 the share price has gained 34% – a rapid return.
It's during rough economic periods that small cap share prices can be smashed the most. As a listed investment company (LIC) which invests in small caps with market caps under $300 million, it's obvious that WAM Microcap would be affected more heavily than most.
However, before the crisis, WAM Microcap was one of the best-performing LICs that focuses on ASX shares. I think the strong performance could continue in the coming years as the investment team find the under-priced gems. There may be some really cheap ones right now.
Foolish takeaway
These three shares are three of my favourite long-term ideas and they are among my biggest portfolio positions. I hope the market doesn't fall heavily again, but if it does I have my investment targets prepared.
