ASX shares took a bit of a tumble today. The S&P/ASX 200 Index (ASX: XJO) dropped by around 3%. I've got my eyes on some high quality ASX shares if the COVID-19 selloff gets worse.
Only time will tell whether this is the start of another extended decline for the ASX or whether it was just a temporary blip during the recovery.
If today's drop does lead to another painful decline then I've got my eyes on these top ideas:
Share 1: Pro Medicus Ltd (ASX: PME)
On a day that the ASX dropped 3%, the Pro Medicus share price went up 2.7%. That's an impressive performance.
I think Pro Medicus is one of the best ASX shares. But it's also one of the most expensive.
It's very rare to find a business on the ASX with an earnings before interest and tax (EBIT) margin of above 50%. In the FY20 half-year result it reported an EBIT margin of 50.2%. This means that a lot of new revenue can flow straight to the bottom line. This strong economic performance means Pro Medicus' cash reserves and dividend can increase at a fast rate. It also doesn't have any debt.
The ASX share continues to win large international contracts. Each new client it wins gives it a stronger reputation to win over the next client in the pipeline.
I think it speaks volumes that Pro Medicus initiated a share buyback whilst other ASX shares were doing dilutive capital raisings during the COVID-19 share market crash.
However, I personally wouldn't want to consider buying Pro Medicus shares unless it dropped under $22.50 again.
Share 2: Australian Ethical Investment Limited (ASX: AEF)
Australian Ethical's share price fell 7.2% today. The ethical fund manager has been very volatile over the past nine months due to the bushfires and the recent coronavirus crash.
I think Australian Ethical is a very promising ASX business. Before COVID-19 it was rapidly growing funds under management (FUM).
Fund managers are very scalable because it doesn't really cost much more to manage $2.1 billion compared to $2 billion. The early superannuation withdrawal and the decline of the share market won't have helped the ASX share's FUM. But that will hopefully just be a temporary setback for Australian Ethical.
If it can keep attracting more clients and benefit from rising superannuation contributions then this ASX share could be one to watch. I like that it doesn't have any debt and it continues to grow its cash balance.
However, I'm waiting for a share price under $4 to buy shares.
Foolish takeaway
I may be waiting a long time to buy Pro Medicus and Australian Ethical shares. They're two of the most promising ASX shares out there. I just want to buy them for a price that's quite a bit cheaper.
