I think ASX shares are a great way to grow your wealth over the long-term. You just need to choose the right ideas which have long-term growth potential.
What about ASX blue chips?
If you’re thinking about investing in shares like Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd (ASX: BHP) then I think you may as well go for an ultra-low-cost exchange-traded fund (ETF) like BetaShares Australia 200 ETF (ASX: A200) which has an annual management fee of just 0.07% per annum.
But I think these four ASX shares could beat the market over the shorter-term and longer-term:
Share 1: MFF Capital Investments Ltd (ASX: MFF)
MFF Capital is a leading listed investment company (LIC). MFF Capital aims to invest in overseas shares rather than ASX shares.
There are few Australian investors with the investment track record of Chris Mackay. He manages MFF Capital and has achieved very strong returns over the past five years with top share picks like Visa and Mastercard. These two businesses still make up more than a third of the portfolio. There is a long-term shift away from cash payments and towards contactless payments and eCommerce.
The LIC currently has a large pile of cash that it wants to deploy when the right investing opportunities come along. At the end of June 2020 it had 44% of its assets as net cash. I think that provides a solid base for downside protection this year as well as optionality to buy shares at beaten down prices.
At the current MFF Capital share price it’s trading at a 4% discount to the pre-tax net tangible assets (NTA) per share.
Share 2: Bubs Australia Ltd (ASX: BUB)
Bubs is an infant formula company. It specialises in goat milk products, but it also sells grass-fed organic cow milk infant formula too. It sells baby food too.
The company is on a very good course at the moment, it’s delivering strong growth. In the FY20 half-year result it reported revenue growth of 37% to $28.8 million. In the FY20 third quarter, infant formula revenue and China revenue both increased by more than 100%.
The ASX share’s gross margin continues to improve as well. I think Bubs can become a much larger business over the next few years, investors just need to be patient as it delivers on its growth potential.
At the current Bubs share price, I’d be happy to buy some shares for the long-term.
Share 3: Vitalharvest Freehold Trust (ASX: VTH)
Vitalharvest is an agricultural real estate investment trust (REIT) which owns some of the largest citrus and berry properties in Australia which are leased to Costa Group Holdings Ltd (ASX: CGC).
In the FY20 interim result the REIT reported it had a net asset value (NAV) of $0.95 per unit. At the current Vitalharvest share price it’s trading at a 16% discount to that NAV, assuming the NAV hasn’t changed since December 2019.
I’m also excited for two other reasons. First, the ASX share has a new manager that will expand the REIT’s acquisition hunting ground to include other areas of the food supply chain with properties related to the processing, storage and logistics of food.
The other reason why I’m excited is due to a potential return to good results for Costa. Vitalharvest has a profit-share agreement with Costa. A return to normal profits for Costa could give Vitalharvest a boost.
At the current Vitalharvest it’s trading with a distribution yield of 5.9%.
Share 4: Brickworks Limited (ASX: BKW)
Brickworks is one of Australia’s largest building product businesses. It sells a variety of products like bricks, precast and roofing. COVID-19 could cause a material hit to the construction industry over the next 12 months. But that’s why the Brickworks share price is down by 18% over the past six months. A downturn is a good time to buy a cyclical business like a building product ASX share in my opinion.
However, I’m particularly excited by the recent Amazon news. Brickworks owns 50% of an industrial property trust along with Goodman Group (ASX: GMG). Brickworks recently announced that the property trust had succeeded in getting Amazon to commit to building a massive distribution warehouse at its Oakdale site in Sydney. That is in addition to the big distribution warehouse that Coles Group Limited (ASX: COL) is planning to build.
I think Brickworks could actually be a fairly defensive investment. At the current share price, Brickworks offers a grossed-up dividend yield of 5%.
I think each of these ASX shares are good value and could deliver market-beating returns over the next 12 months and the long-term. I think Bubs and MFF Capital could deliver the strongest returns over the next few years due to the focus on growth, though Vitalharvest and Brickworks look good value to me.
These 3 stocks could be the next big movers in 2020
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In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.
*Returns as of 6/8/2020
Motley Fool contributor Tristan Harrison owns shares of Magellan Flagship Fund Ltd. The Motley Fool Australia owns shares of and has recommended Brickworks, BUBS AUST FPO, and COSTA GRP FPO. 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.