Last week, the S&P/ASX 200 Index (ASX: XJO) and All Ordinaries (ASX: XAO) both cracked the 6,000 point mark with ease. With markets continuing to defy odds and seemingly ignoring economic woes, here are 3 ASX 200 shares you could consider buying in July.
1. Tyro Payments Ltd (ASX: TYR)
The Tyro Payments share price struggled to make headway in late June. Increasing fears of a second wave of COVID-19, particularly in Victoria, and escalating lockdown measures could be the main drivers of this share price slump. These impact on policy decisions such as expanding restaurant dine-in capacity and allowing stadiums to reopen. This, in turn, could slow the return of normal business activity which is vital for Tyro’s EFTPOS terminal turnover.
The company has committed to providing the market with weekly transaction value updates. By the end of FY20, Tyro delivered a 15% increase in transactions compared to FY19. From 1 July to 3 July, transaction values were up a significant 40% on the prior corresponding period. I believe Tyro’s numbers are reflecting Australia’s pent-up consumer demand and a slow but steady return to normal. As such, I’m confident the combination of recovering economic activity, a move away from cash and Tyro’s competitive pricing makes it a strong ASX 200 stock to consider buying this month.
2. Pointsbet Holdings Ltd (ASX: PBH)
The Pointsbet business has been performing strongly despite the significant disruption of COVID-19 to key sporting leagues such as the NRL, AFL and NBA. The company had previously announced an agreement in Australia to become the exclusive wagering partner for Fox Sports AFL during the 2020 season. Pointbet’s continued strong performance has also been driven by a shift to online gambling, increase in racing turnover and an improvement in the company’s overall product offering leading to a greater share of wallet from existing clients.
The United States market represents a significant opportunity as more states continue to legalise sports betting. I believe Pointsbet is in a strong position to continue growing its market share and presence in a number of US states. The planned recommencement of key sports such as the NBA, MLB and PGA should also help restore confidence in the Pointsbet share price.
3. EML Payments Ltd (ASX: EML)
EML follows a similar narrative to Tyro with improving economic activity and the gradual reopening of shopping malls across various countries. There are many reasons EML could represent a leading ASX 200 recovery stock to buy in July.
EML’s acquisition of Prepaid Financial Services (PFS) has reduced the company’s dependence on gift cards (particularly shopping centre gift cards) for revenue. EML’s general purpose reloadable (GPR) business, which includes products such as salary packaging, digital banking products and gaming, now represents more than 50% of its revenues. This is the first time in the company’s history that it is deriving the majority of its revenue from GPR programs. The renegotiated acquisition terms of PFS now places EML in a better capital position with $125m in cash as at 30 April 2020. I believe an improvement in economic activity and the company’s strong balance sheet make it a strong buy case at today’s prices.
Where to invest $1,000 right now
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Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Pointsbet Holdings Ltd and Tyro Payments. The Motley Fool Australia owns shares of and has recommended Emerchants Limited. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. 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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