ASX shares are the best way to grow your wealth over the long-term in my opinion.
Businesses can deliver good compound growth and pleasing dividends over many years. It’s also a lot easier switching an investment to another ASX share than it is to sell a property (and then buy another).
Here are three ASX shares that I’d buy with $6,000:
Share 1: Bubs Australia Ltd (ASX: BUB)
Bubs is one of my main growth ASX share ideas at the moment. I really like the trajectory that the business is on.
It specialises in goat milk products and it’s seeing enormous growth with its infant formula division. In the three months to 31 March 2020, Bubs saw a 137% increase of infant formula revenue which represented 58% of gross sales. If the company can continue to grow internationally at a strong rate then it could become a sizeable business.
I like that Bubs is in control of its own supply chain after the Deloraine acquisition. I also like that it isn’t too heavily dependent on China revenue. Its ‘other markets’ revenue grew by around 20 times in the quarter to 31 March 2020 – this division represented 12% of gross sales.
The fact that it’s now cashflow positive is very encouraging. Over the next five years I think the Bubs share price could be one of best performers on the ASX.
Share 2: MFF Capital Investments Ltd (ASX: MFF)
MFF Capital is one of the best listed investment companies (LICs) on the ASX in my opinion. It’s run by Magellan Financial Group Ltd (ASX: MFG) co-founder Chris Mackay. The job of a LIC is to invest in shares on behalf of shareholders. MFF Capital typically targets quality international shares.
Prior to COVID-19, it had been one of the best-performing LICs. The ASX share has since moved to a high cash position. At the end of June 2020 it had a net cash position of 44%. This can be used for protection against another market selloff and also to buy any beaten up opportunities that appear.
The LIC is looking for longer term opportunities rather than short term trading opportunities. The LIC is looking for businesses with sustainable advantages it can hold large positions in. However, it still owns significant positions in shares like Visa, MasterCard and Home Depot.
I have a lot of confidence in Mr Mackay’s ability to create market-beating returns. It’s trading at a 5% discount to the pre-tax net tangible assets (NTA) at 3 July 2020.
Share 3: Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
As long-term readers would know, Soul Patts is one of my preferred long-term ASX share ideas.
It is a very old investment conglomerate that invests in a broad range of businesses, both listed and unlisted. Two of its largest listed holdings are TPG Telecom Ltd (ASX: TPG) and Brickworks Limited (ASX: BKW). Some of its unlisted investments are swimming schools, agriculture and resources.
I’m quite excited by the new venture that Soul Patts may invest into. Regional data centres could be a very promising industry, particularly as more aspects of life move online.
The investment house invests in other businesses for the long-term, which makes it much easier to invest in Soul Patts itself for the long-term.
Soul Patts has survived through recessions, world wars and even the Spanish Flu. Whatever happens next, I think the company (and its diversified portfolio) is well placed to continue growing its in value.
As a bonus, the ASX share has grown its dividend every year since 2000 and it retains some of its cashflow profit each year to reinvest into more opportunities. At the current share price, Soul Patts is trading with a grossed-up dividend yield of 4.3%.
I’d happily invest $2,000 into each of these ASX shares. I think Bubs has the best chance of creating excellent returns over the next five years. But I also believe MFF Capital and Soul Patts can comfortably outperform the broader ASX over the next few years as well.
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 has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Brickworks, BUBS AUST FPO, and Washington H. Soul Pattinson and Company 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.