I think this year is a good time to invest $1,000 into ASX shares. It’s good to invest during times of uncertainty because share prices are usually lower.
The most important thing to help investment returns, apart from picking a good choice, is the price you pay when you invest.
Here are three ASX shares that I’d invest $1,000 into right now:
Share 1: Bubs Australia Ltd (ASX: BUB)
Bubs could be a future star of the ASX in my opinion. It’s an infant formula business that specialises in goat milk products, but it has also recently launched a (cow) grass-fed organic range of infant formula which could also prove popular. The company continues to increase its distribution footprint.
In the quarter to 31 March 2020, infant formula revenue rose 137% compared to the prior corresponding period and represented 58% of that quarter’s gross sales. I’m not expecting revenue to keep doubling every single quarter for many years, but I think Bubs has a long growth runway considering it’s starting from a small base.
One of the key features I look for in exciting ASX shares is the desire to expand internationally. Australia is a great country, but Asia (and beyond) offers a much larger total addressable market. That is exactly where Bubs is targeting. Chinese revenue rose by 104% in the three months to 31 March 2020 and ‘other market’ revenue rose almost 20 times compared to the prior corresponding period and represented 12% of gross sales in the quarter.
Unless something goes quite wrong, like a collapse in relations with China, I think the Bubs share price has a lot of growth potential over the next five years. The fact the company is generating positive operating cashflow is a helpful step.
Share 2: Brickworks Limited (ASX: BKW)
Brickworks looks like one of the best value ASX 200 shares in my opinion.
It owns a large chunk of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares and it also owns 50% of a growing industrial property trust. These two assets alone provide the valuation backing for the Brickworks market capitalisation. Brickworks recently announced that a huge Amazon distribution facility will be built at its Oakdale West site which will help boost the trust’s net asset value further.
Building product divisions make up the rest of the company. In the US it’s focused on producing and selling bricks, whilst in Australia it has a strong position in bricks, paving, masonry, roofing, precast and so on. Construction has suffered a COVID-19 hit, but the bottom of the cycle is a good time to buy a business exposed to cyclical factors. Brickworks is seeing a recovery in both Australia and the US.
At the current Brickworks share price it offers a grossed-up dividend yield of 5.3%.
Share 3: City Chic Collective Ltd (ASX: CCX)
City Chic is another of the most promising small cap ASX shares in my view.
It’s a fashion retailer of plus-size clothing and accessories. Before COVID-19 it already sold a good amount of products through online channels, but it has really excelled over the past few months. The City Chic share price has risen 312% since 23 March 2020.
Near the end of May the company said it achieved 57% online sales growth during the period where its stores were closed. It has agreed rent cuts with a large majority of landlords and the company is eligible for wage support in Australia and New Zealand. This is all helpful for City Chic’s FY20 and FY21 earnings.
The company seems determined to take advantage of the difficult circumstances to boost its market position in the plus-size fashion space. It’s currently looking for other acquisition opportunities which could improve the company’s position.
At the current City Chic share price it’s trading at 34x FY21’s estimated earnings.
I like all three ASX shares at the current prices. For the long term I think Bubs could make the best returns over the next few years with the speed of its current growth.