The Motley Fool

Top ASX Stock Picks for July 2020

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

Here is what the team have come up with…

Nikhil Gangaram: CSL Limited (ASX: CSL)

With fears of a second wave of coronavirus infections dominating headlines, I think investors could flock back into biotech giant CSL in July. The CSL share price has been sold-off recently however, if volatility increases, investors could opt to rotate their portfolios by taking profits out of riskier investments and buying stable, blue-chip stocks like CSL.

CSL has long been a preferred option in the health sector and recently reinforced its resilience by acquiring a gene therapy candidate from uniQure for US$450 million. 

Motley Fool contributor Nikhil Gangaram does not own shares in CSL Limited.   

Sebastian Bowen: Telstra Corporation Ltd (ASX: TLS)

My top stock pick for the depths of winter is this ASX telco giant. Telstra shares have been steadily trending lower over the past month or so and are currently far closer to their 52-week low than high.

I think this is a great time to buy Telstra shares, particularly if you’re interested in a strong dividend. I consider the 16 cents per share dividend (which includes a ‘special’ NBN payout) that Telstra has been paying annually for a couple of years now to be well-covered by the company’s cash flows. On recent prices, Telstra shares would provide new investors with roughly a 5% yield.

Motley Fool contributor Sebastian Bowen owns shares of Telstra Corporation Ltd

Michael Tonon: Volpara Health Technologies Ltd (ASX: VHT)

Volpara Health is a software as a service (SaaS) company using artificial intelligence to improve the early detection of breast cancer. It has a strong, first-mover advantage with customers spanning 38 countries.

Within its latest investor update, Volpara noted a 172% increase in annual recurring revenue. It also reported increasing gross margins and a growing average revenue per user (ARPU). The company’s current ARPU is $1.04, however, it is targeting an ARPU of around $10. Volpara believes this growth is achievable through its growing product suite as well as the continued wider uptake of the SaaS model. 

Volpara is also in a strong financial position after recently completing a capital raise. This gives the company the opportunity to pursue acquisitions which should help to boost its ARPU and/or its US market share.

Motley Fool contributor Michael Tonon owns shares of Volpara Health Technologies Ltd

Toby Thomas: Kogan.com Ltd (ASX: KGN)

Kogan.com has been absolutely killing it of late. I also expect the online retailer to have a stellar July as consumers look to take advantage of the company’s huge EOFY campaign.

Earlier this month, Kogan announced it had added 126,000 new customers in the month of May, growing its total active customers to over 2 million. This saw sales soar by over 103% in April and May 2020, compared to 2019 levels.

If Aussie consumers love one thing, it’s a tax-deductible bargain. I fully expect customers to gobble up the widespread FY20 discounts offered across Kogan’s website and, as such, for the company’s share price to continue surging accordingly throughout July.

Motley Fool contributor Toby Thomas does not own shares in Kogan.com

Phil Harpur: NEXTDC Ltd (ASX: NXT)

When NEXTDC first hit the market nearly 10 years ago, the local data centre scene was dominated by a few large, global providers. Most of these were US-based companies such as Equinix and Global Switch. However, NEXTDC has successfully grown in size and scale to now rival these global giants in the local market. The company is now home to one of Australia’s largest cloud centre partner ecosystems.

The data centre game is highly capital intensive however, once the infrastructure is in place, operators are well positioned to reap future rewards. I believe that the rising demand for cloud computing services will drive considerable growth for NEXTDC well into the next decade.

Motley Fool contributor Phil Harpur doesn’t own shares of NEXTDC Ltd

Chris Chitty: Ansell Limited (ASX: ANN)

As a significant producer of the personal protective equipment (PPE) that’s been in high demand due to COVID-19, Ansell has gone from strength to strength over the last few months. Ansell distributes its PPE products worldwide and expects global demand for these items to remain high over the near to medium term.

Given we are now seeing many signs of a second wave of coronavirus, and therefore the need for PPE will remain high for some time, Ansell is likely to continue growing its earnings. The company’s share price has increased by nearly 35% since this time last year and, at the time of writing, trades on a trailing dividend yield of 2% unfranked.

Motley Fool contributor Chris Chitty does not own shares of Ansell Limited.

Tristan Harrison: Bubs Australia Ltd (ASX: BUB)

Having selected Bubs for my monthly stock pick in June, I’m nominating it again for July. In my opinion, this business still has very exciting prospects, yet the Bubs share price is heading lower, making it great value.

Only a small number of shares are able to deliver strong outperformance over time and I think Bubs is one to watch, particularly for its international growth prospects. Last quarter, Bubs grew its Chinese revenue by 104%. The company also grew its total revenue across other markets, outside of Australia and China, by 20 times when compared with the prior corresponding period.

Bubs is now cashflow positive and, I believe, has significant potential to continue building overseas revenue over the long term. Vietnam alone could represent a highly attractive market for the goat milk infant formula business.

Motley Fool contributor Tristan Harrison does not own shares of Bubs Australia Ltd.

Ken Hall: Transurban Group (ASX: TCL)

The Transurban share price is right at the top of my stock picks for July 2020.

Shares in the Aussie toll road operator have edged lower in 2020 but I think there could be a strong rebound later this year. While many workers are now returning to their normal places of work, public transport numbers are still low. A continued focus on reducing the spread of coronavirus could mean more people driving to work across major cities and, therefore, a boost in revenue for Transurban in 2020 and 2021.

Despite the tough outlook for many ASX dividend shares, I believe Transurban could be a surprise performer this year.

Motley Fool contributor Ken Hall does not own shares in Transurban Group.

Matthew Donald: Austal Limited (ASX: ASB)

Austal is a defence company specialising in the design, construction and support of defence and commercial vessels. I believe it could be a great ASX stock to buy in July for the following reasons…

On 29 May 2020, Austal increased its FY2020 earnings guidance stating that COVID-19 had not impacted its business to the extent initially anticipated. In addition, favourable exchange rates, US R&D tax credits, a new vessel construction contract and stronger business performance all contributed to stronger than expected earnings.

Furthermore, as announced on 22 June, the US government is investing US$50 million in Austal USA to allow it to protect, maintain and expand its steel ship building capabilities over the next two years.   

Motley Fool Contributor Matthew Donald does not own any shares in Austal Limited.

James Mickleboro: Telstra Corporation Ltd (ASX: TLS)

I think Telstra would be a great ASX stock for investors to consider buying in July.

I’m a big fan of the telco giant due to its improving outlook and its defensive qualities (which have been on display for all to see in FY 2020). In respect to the former, I believe a return to growth for Telstra could definitely be possible in the coming years with reduction of the company’s costs and an easing of the NBN headwind.

In the meantime, I expect its free cash flows to be sufficient to maintain a 16 cents per share dividend for the foreseeable future. This represents an attractive yield in this low interest rate environment.

Motley Fool contributor James Mickleboro does not own shares in Telstra Corporation Ltd.

Lloyd Prout: Nanosonics Ltd. (ASX: NAN)

Nanosonics’ ‘trophon’ system is a disinfection technology, setting the standard for ultrasound probe reprocessing. Nanonsics shares are currently trading nearly 13% below their 14 February all-time high. I think this provides a decent entry point for long-term investors in this quality business. 

The company operates one of my favourite business models – the ‘razor and blades’ model. This means it sells certain equipment at relatively low prices in order to generate future sales of complementary consumables. Nanosonics is continuing to grow its installed base at a decent clip, meaning more sales of high-margin consumables into the future. Increased sales for Nanosonics are also likely to come from new product releases, significantly increasing the company’s total addressable market.

Motley Fool contributor Lloyd Prout owns shares in Nanosonics Limited and expresses his own opinion.

Daryl Mather: Boral Limited (ASX: BLD)

Boral is currently repositioning itself for a resurgence over the next financial year. A new CEO has been named and will be starting on 1 July 2020. Zlatko Todorcevski recently resigned his position as an Adbri Ltd (ASX: ABC) board member to take up the Boral role.

At the same time, Seven Group Holdings Ltd (ASX: SVW) has purchased a 10% stake and will also be a force for increased productivity, with the company undertaking an enterprise-wide review. At its current share price, which is down by 14.5% year to date, Boral has a trailing, 12-month dividend yield of 6.3%. 

Motley Fool contributor Daryl Mather does not own shares in Boral Ltd. 

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of June 30th

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Austal Limited, BUBS AUST FPO, CSL Ltd., Kogan.com ltd, and Nanosonics Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited and VOLPARA FPO NZ. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool Australia has recommended Ansell Ltd., BUBS AUST FPO, Kogan.com ltd, and Nanosonics 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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