As we turn to a new chapter where lockdown measures are being eased and the community slowly returns back to life pre-COVID-19, what are the smartest S&P/ASX 200 Index (ASX: XJO) and All Ordinaries (ASX: XAO) shares to buy?
Here are 3 industries that are positioned to benefit from the easing restrictions.
Smaller ASX telecommunications shares such as 5G Networks Ltd (ASX: 5GN) and Uniti Group Ltd (ASX: UWL) are positioned to benefit from increased levels of working from home, online learning and domestic internet consumption that look set to stick around as a lasting result of the pandemic. While they may represent high risk/high reward investments, I believe both companies may be positioned at the right place at the right time.
In Uniti’s March 2020 quarter business update it highlighted that increased levels of working and learning from home has “strengthened underlying demand for the company’s superfast fibre-to-the-premises services provided by its wholesale and infrastructure business unit.”
For investors interested in high growth companies, I would certainly place 5G Networks and Uniti shares on the watchlist.
2. Fintech payments
ASX fintech shares such as Tyro Payments Ltd (ASX: TYR) and EML Payments Ltd (ASX: EML) both depend in large part on physical retail and hospitality consumption, so they will be looking forward to the return to normal trading.
Tyro provides more than 32,000 customers with EFTPOS terminals, a vast majority of which are SMEs in the retail, hospitality and health sectors. The company has been providing the market with weekly updates regarding its transaction values. On Tuesday, it highlighted that its transaction values for the week ended 5 June (date-on-date for FY20 vs. FY19) increased by 11%. This has been the first positive increase since April.
Likewise, EML’s gross debt volume dropped 29% in March on the prior corresponding period, reflecting mall closures across the globe. It expects that the gradual reopening of malls in various countries should see an improvement to its trading conditions.
3. Airlines and travel
ASX airline and travel shares have seen eye watering rallies despite domestic and international borders still being closed. On Tuesday, Air New Zealand Limited (ASX: AIZ) saw its share price soar 20% after announcing its plan to return to revenue and profitability.
Qantas Airways Limited (ASX: QAN) has announced that it plans on doubling its existing domestic schedule to more than 300 return flights per week by the end of June. Flights would continue to increase in July, with capacity to reach approximately 40% by month end.
Increasing domestic flights will be positive for the likes of travel agencies including Webjet Limited (ASX: WEB), Corporate Travel Management Ltd (ASX: CTD) and Flight Centre Travel Group Ltd (ASX: FLT).
I believe investors should pivot their investment decisions to ASX shares in sectors that are expecting to benefit from pent-up consumer demand, post-COVID-19.
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Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Emerchants Limited and Tyro Payments. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Webjet Ltd. The Motley Fool Australia has recommended Emerchants Limited and Flight Centre Travel Group 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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