Do you have $20,000? There are some ASX shares that I'd love to buy for my portfolio to take advantage of the market selloff.
The ASX has fell quite hard over Thursday and Friday. Yesterday the S&P/ASX 200 Index (ASX: XJO) dropped by 1.9%. In morning trading it was down over 3%. Ouch.
This second selloff seems to have been caused by the comments made by US Federal Reserve boss Jerome Powell. He suggested that the US economy is going to take a while to recover. Some people may not be able to find jobs as quickly as they'd like to.
I think that the market declining is throwing up another opportunity to buy ASX shares at cheaper prices again. If I had $20,000 to invest, I'd go for these ASX shares:
Magellan Global Trust (ASX: MGG) – $6,000
I think Magellan Global Trust is one of the best listed investment businesses on the ASX. It aims for companies it thinks are the highest-quality in the world. These are businesses with excellent economic moats, coronavirus-resistant business models and strong balance sheets. It's rare to find ASX shares that are as large and powerful as the businesses this listed investment trust (LIT) goes for.
Some of the shares that it owns are: Alibaba, Alphabet, Microsoft, Tencent, Facebook, Visa, Mastercard, Reckitt Benckiser and Novartis. Many of these names offer digital services which can still be used even during lockdowns. A business like Reckitt Benckiser is a great idea today because it owns cleaning product brands like Dettol and Lysol.
The Aussie dollar is quite strong right now, making it cheaper to buy international shares. Magellan Global Trust is currently priced at a 5% discount to its net asset value (NAV).
Pushpay Holdings Ltd (ASX: PPH) – $4,000
Pushpay is one of my favourite small cap ASX shares. It's an electronic donation business. Digital giving is in higher demand these days, particularly because of COVID-19 social distancing. We can see this change in demand from the growth that Pushpay is reporting. The fact that Pushpay offers a livestreaming option is very useful for its US church client base.
In the recent FY20 result Pushpay reported that its operating revenue increased by 28% to US$123.1 million, which excludes the Church Community Builder acquisition.
One of the most attractive things to me about this ASX share is that it continues to see improvement with its gross margin. FY20 saw an increase of five percentage points from 60% to 65% for the gross margin. This means that more of the revenue turns into profit for Pushpay.
In FY21 the company is expecting to approximately double its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) to between US$48 million to US$52 million.
Over the long-term Pushpay is targeting a market share of over 50% of the medium and large US church segments, which the company thinks is an annual revenue opportunity of more than US$1 billion. I think this ASX share has a long growth runway.
Future Generation Global Invstmnt Co Ltd (ASX: FGG) – $6,000
Future Generation Global is one of my favourite listed investment companies (LIC). It doesn't charge any management fees or performance fees.
It invests in the funds of Australian fund managers who invest in overseas shares. These fund managers work for free. Why? So that the LIC can donate 1% of its net assets to youth mental health charities each year.
The LIC's gross investment performance has beaten its MSCI AC World Index (AUD) benchmark over the past year, three years and since inception in September 2015. Some of the fund managers delivering this performance include Magellan Financial Group Ltd (ASX: MFG), Cooper Investing and Marsico Capital Management.
At the moment we can buy this ASX share at a 22% discount to the net tangible assets (NTA) at 31 May 2020.
Bubs Australia Ltd (ASX: BUB) – $4,000
Bubs is another exciting small cap ASX share in my opinion.
It has a range of goat milk products which are proving popular with consumers. Woolworths Group Ltd (ASX: WOW), Coles Group Limited (ASX: COL) and Baby Bunting Group Ltd (ASX: BBN) have all recently expanded their distribution footprint of Bubs products.
In the third quarter of FY20 Bubs achieved revenue of $19.7 million. This was 36% higher than the December 2019 quarter and 67% better than the March 2019 quarter.
The ASX share achieved a positive operating cashflow of $2.3 million last quarter and ended with a solid cash balance of $36.4 million. Positive operating cashflow makes Bubs a safer choice in my opinion.
I think Bubs is definitely one to watch for its international growth. The last quarter showed Chinese revenue rose by 104%. It's also growing strongly in Vietnam.
Foolish takeaway
I believe all four of these ASX shares can beat the ASX 200 over the next three to five years. I like the diversification that Magellan Global Trust and Future Generation Global bring. But I also think that Pushpay and Bubs are two of the brightest prospects on the ASX today.
