The Motley Fool

Top ASX Stock Picks for May 2020

We asked our Foolish writers to pick their favourite ASX stocks to buy in May. 

Here is what the team have come up with…

Nikhil Gangaram: A2 Milk Company Ltd (ASX: A2M)

The a2 Milk share price is trading near all-time highs and I will be watching the stock in May for further upside. The infant formula producer has outperformed prominent stocks in the healthcare sector and emerged as a genuine market leader from the coronavirus pandemic.  

a2 Milk reassured investors of its growth potential last month by announcing higher than anticipated demand for the second half of FY20. The company reported strong revenue growth and demand from consumers across all key regions amid the coronavirus pandemic.

Motley Fool contributor Nikhil Gangaram does not own shares in A2 Milk Company Ltd.  

Matthew Donald: Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)

Fisher & Paykel has stormed 82% higher in the past year (at the time of writing). It is a leading designer and manufacturer of products and systems for use in respiratory care.

Increased demand for respiratory products due to COVID-19 will continue to drive strong revenue and profit growth for the company.

As a provider of essential products, I believe Fisher & Paykel will outperform in the month ahead, supported by increased cash flows and a strong balance sheet to help steer it through the crisis.

Motley Fool contributor Matthew Donald does not own shares in Fisher & Paykel Healthcare Corp Ltd.

Phil Harpur: Appen Ltd (ASX: APX)

Appen is my pick of the WAAAX tech shares this month. This Australian-based tech company leads the world in providing data for use in machine learning and artificial intelligence (AI).

Appen recently updated the market on its progress so far this financial year, and encouragingly revealed that it is on target to achieve its guidance for FY 2020.

Despite the global pandemic, Appen continues to experience strong demand from some of the largest global technology companies including Apple and Google.

I believe that Appen continues to remain well placed to achieve strong growth over the next 5 to 10 years due to the rapidly rising demand for AI products.

Motley Fool contributor Phil Harpur owns shares in Appen Ltd.

Sebastian Bowen: iShares Global Healthcare ETF (ASX: IXJ)

My stock pick for May is this global healthcare fund from BlackRock. I see healthcare as one of the few truly ‘recession-proof’ industries, which is a huge advantage in 2020 for obvious reasons.

Going forward, ageing populations across the advanced economies of the world should provide an evergreen field ripe for decades of growth in healthcare. IXJ gives you exposure to over 100 of the largest global healthcare companies like Roche, United Health and Novartis that will benefit well into the future from these tailwinds, in my opinion. Thus, I think this stock has a place in any ASX portfolio.

Motley Fool contributor Sebastian Bowen does not own shares of iShares Global Healthcare ETF.

Tristan Harrison: Pushpay Holdings Ltd (ASX: PPH)

Pushpay is one of the few businesses to increase its guidance during the coronavirus. It’s an electronic donation payment system which mainly services churches in the US. The company has provided guidance that its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) will be higher than previously expected. The coronavirus appears to have brought forward growth for Pushpay.

There are obviously not as many church services going on right now. But those churches still need donations – Pushpay’s digital donation option is great at this time. It also provides churches the opportunity to livestream to their congregations.

Motley Fool contributor Tristan Harrison does not own shares of Pushpay Holdings Ltd.

Lloyd Prout: Ltd (ASX: KGN)

Kogan shares have just reached a new 52-week high, slightly overtaking the levels we saw in January. This comes as the company recently announced gross sales growth of 30% in the March quarter, including 50% growth in March. Adjusted EBITDA also grew more than 4%.

This shows that the business is thriving in a COVID-19 world, but I believe it can succeed in the post COVID-19 world too. The company has invested in a number of verticals, as well as having a data-driven focus. A 13% rise in active customers during the March quarter will provide more data and email addresses for smart marketing in the future.

Motley Fool contributor Lloyd Prout does not own shares in Ltd and expresses his own opinion.

Michael Tonon: Nearmap Ltd (ASX: NEA)

Nearmap provides aerial imagery to a diverse range of business sectors. It managed to grow its annualised contract value by 23% in 1H20, despite the loss of two large enterprise customers.

Growth in its newer and larger market, the US, far exceeded that in the more mature domestic market. And with the average revenue per subscription in the US more than double that in Australia and New Zealand (ANZ), I can’t see it taking long for its US portfolio to over take the ANZ portfolio.

Pleasingly, Nearmap recently noted that it has not seen a material impact on its current trading conditions with relation to COVID-19. And with its shares significantly lower, I see now as a great buying opportunity.

Motley Fool contributor Michael Tonon owns shares of Nearmap Ltd.

Brendon Lau: National Australia Bank Ltd. (ASX: NAB)

NAB’s results and capital raise were worse than I expected but at least this now gives management some clear air to turn the bank around.

I also believe the risk of more negative surprises is greatly diminished, and that could see the stock outperform in the short term.

For those who already hold NAB shares, here’s why I think you should participate in NAB’s capital raising.

Motley Fool contributor Brendon Lau owns shares in National Australia Bank Ltd.

Ken Hall: Macquarie Group Ltd (ASX: MQG)

Macquarie shares are shaping up to be a top ASX bank share right now. We’ve seen big write-downs from the ‘Big Four’ including NAB and Westpac Banking Corp (ASX: WBC) in recent days.

That could open the door for Macquarie shares to climb higher in 2020. I think Macquarie has more diversified earnings and risk compared to other ASX banks.

Macquarie still boasts a $36 billlion market capitalisation and 5.94% dividend yield. Given the outlook for a weakening residential household market, I think Macquarie could outperform its ASX bank peers in May.

Motley Fool contributor Ken Hall has no financial interest in any of the companies mentioned.

James Mickleboro: SEEK Limited (ASX: SEK)

This job listings company’s shares have fallen hard over the last couple of months and to a level which I believe is very attractive for a long-term investment. There is no denying that SEEK is being impacted greatly by the pandemic. For example, a recent update revealed that ANZ and Asia billings fell very sharply during March.

While this will almost certainly weigh on its near term performance, I’m confident it will bounce back once the crisis passes. Beyond this, I believe SEEK’s long-term outlook is very positive thanks to its leadership position in the ANZ market and its rapidly growing China business.

Motley Fool contributor James Mickleboro owns shares in SEEK Limited.

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Returns as of 7/4/2020

The Motley Fool Australia owns shares of and has recommended ltd, Macquarie Group Limited, Nearmap Ltd., and PUSHPAY FPO NZX. The Motley Fool Australia owns shares of A2 Milk and Appen Ltd. The Motley Fool Australia has recommended SEEK Limited. 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.

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