Do you have $10,000 to invest? I’d pick the ASX shares I’m going to reveal in this article.
Choosing where to put your hard-earned money can be a difficult task. Particularly with how volatile the share market has been in recent months due to COVID-19.
Here are my picks:
Share 1: PM Capital Global Opportunities Fund Ltd (ASX: PGF) – $2,500
This ASX share is a listed investment company (LIC) which focuses on overseas shares. I think there’s merit in finding LICs which are trading at large discounts to their net tangible assets (NTA) per share but have a relatively large dividend yield.
I think PM Capital Global Opportunities Fund is good value because it’s probably trading at around a 20% discount to the NTA at the end of last week. The weekly NTA update will be released tomorrow. This is a large discount in the LIC sector.
Some of the LIC’s current holdings are: Cairn Homes, Bank of America, Visa, MGM China, KKR & Co, Siemens and Freeport-McMoRan Copper.
The ASX share has been steadily increasing the dividend over the past few years. Since 2017 the annual dividend has grown annually by 0.2 cents per share. In FY20 the annual dividend seems set to increase to 4 cents per share, up from 3.8 cents per share in FY19. At the current PM Capital Global Opportunities Fund share price it has a projected FY20 grossed-up dividend yield of 6.2%.
Share 2: Bubs Australia Ltd (ASX: BUB) – $3,500
Bubs is one of my main ASX growth share ideas at the moment. The goat milk product business is seeing large demand for its infant formula range.
The business has been growing quarterly revenue at a very good rate for a while now. But the quarter to 31 March 2020 was truly impressive. Bubs’ quarterly revenue of $19.7 million was a 67% increase year on year and a 36% increase compared to the previous quarter. Bubs’ infant formula revenue jumped 137% and Chinese revenue rose by 104%.
I really like what Bubs has achieved over the past couple of years, particularly with securing its supply chain and expanding its distribution footprint.
Good news continues to flow from the ASX share. It recently announced its (cow-based) grass fed infant formula will be sold in 482 Coles Group Limited (ASX: COL) supermarkets. In that same announcement it said that Baby Bunting Group Limited (ASX: BBN) would start selling Bubs’ range of products in 52 stores from May 2020.
I think Bubs is definitely one to watch over the next five years. I’d be happy to buy shares at the current Bubs share price.
Share 3: WCM Global Growth Ltd (ASX: WQG) – $4,000
Many of the best shares in the world are not listed on the ASX. Indeed, the ASX only makes up 2% of the global share market. I think it could be a mistake to miss out on the other 98% of the world.
ASX share WCM Global Growth is another LIC which also targets global shares. It looks for shares with an expanding economic moat, measured by a rising return on invested capital (ROIC). Businesses with a large but static (or declining) moat won’t make the cut.
WCM, a Californian based asset management firm, also looks for a good corporate culture that will enable that share’s economic moat to keep growing.
The ASX share’s investment portfolio has been a strong performer. Over the past two years, after management fees and performance fees, WCM’s portfolio has returned an average of 23.1% per annum, outperforming its global benchmark by 13.5% per annum.
Some of its top holdings at the end of May 2020 include Shopify, Stryker Corp, MercadoLibre, Visa and Crown Castle International.
A useful bonus is that the ASX share recently started paying a dividend. At the current WCM Global Growth share price it offers a dividend yield of 3.1%. It’s currently trading at a 10% discount to the NTA at 26 June 2020.
I think all three of these ASX shares could outperform the local market over the short-term and particularly the long-term. I believe Bubs has great growth potential. The two global LICs are invested in good shares and are valued at attractive discounts to their NTAs.
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
Motley Fool contributor Tristan Harrison owns shares of PM Capital Global Opportunities Fund Ltd. The Motley Fool Australia owns shares of and has recommended BUBS AUST FPO. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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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