If I had $10,000 burning a hole in my pocket I'd want to invest it into ASX shares. But I'd only put my money into the best investment ideas.
The coronavirus has caused share prices to fall almost across the board. I think the falls are completely justified with some businesses – I'm not any more inclined to buy those just because they're priced lower.
But with some ASX shares I think the business growth or share price fall represents very compelling value.
Pushpay Holdings Ltd (ASX: PPH) – $3,000
Pushpay is one of the few ASX shares that's seeing its growth accelerate due to the ongoing crisis. It's an electronic donation business which mainly services US churches. Its technology also allows videostreaming – very useful if people can't attend their church.
Its FY20 result was impressive with earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) rising by 1,506% to US$25.1 million.
FY21 is expected to be another bumper year with EBITDAF guidance of US$48 million to US$52 million. This comes with higher profit margins and a good control on costs. It's targeting over US$1 billion of annual revenue over the longer term.
WAM Microcap Limited (ASX: WMI) – $2,500
WAM Microcap is one of the best listed investment companies (LICs) in my opinion, it targets ASX shares with market capitalisations under $300 million at the time of purchase.
It was performing very strongly in normal times and once the falls stop I think the investment team will be able to pick up some opportunities.
The large dividend payments over time will be an attractive way to be rewarded as shareholders. If WAM Microcap can maintain its dividend through this period it offers a very attractive grossed-up dividend yield of 7.6%.
Brickworks Limited (ASX: BKW) – $2,500
ASX share investors sometimes have a habit of pricing something that's temporary as permanent. The construction industry is probably going to have a bit of a tough time over the next six months. Not many projects are going to get started due to the ongoing impacts of the coronavirus.
But it's not going to be like that forever in Australia and the US. Properties in cities and towns have continually been built for hundreds of years. A relatively short period of a year (or two) shouldn't alter the long-term prospects of Brickworks.
It has a diverse building products portfolio that will be one of the first to get back into the swing of things because of Brickworks' efficiency and low costs.
In the meantime, I'd invest in Brickworks for its reliable assets that continue to generate earnings and cashflow for Brickworks. The investments division and industrial property trust are very defensive for this environment.
For an ASX share, it has a very, very reliable dividend. It currently has a grossed-up dividend yield of 6.5%. It hasn't cut the dividend for over 40 years.
Bubs Australia Ltd (ASX: BUB) – $2,000
Bubs is another high growth ASX share which has a very promising future. Its distribution agreements continue to improve, brand recognition is rising and it's achieving higher profit margins.
The infant formula business is achieving very impressive revenue growth, particularly in China. It achieved a positive operating cashflow in the March 2020 quarter thanks to the growth of sales and control on costs. If it can continue to remain cashflow positive from here it has a less risky yet very promising future.
Whilst I'm not trying to think too far ahead, there are plenty of countries that Bubs can expand to.
Which ASX shares should you buy?
I like the long-term prospects of all of these ASX shares. Pushpay and Bubs have exciting growth stories, whereas Brickworks and WAM Microcap have diversified growing assets and they come with large dividend yields. I'd be happy to buy them all today.
