Do you have $1,500 to invest into ASX shares? There are a few shares that I'd buy today.
You could decide to invest your entire amount into one share pick or split it across two or even all three ideas. However, it probably wouldn't be very efficient to invest just $500 into three picks – it would cost more brokerage.
Here are my three ideas:
Bubs Australia Ltd (ASX: BUB)
I believe that Bubs has a very promising long-term future. The infant formula business just announced its final quarter of FY20 which saw a revenue decline due to the huge amount of growth in the FY20 third quarter. However, the company reported a strong 32% increase in FY20 revenue to $62 million.
I think Bubs an exciting ASX share because of a few reasons.
The biggest reason is the large potential of the international markets for Bubs. In the last quarter of FY20, China direct sales increased by 26% compared to the prior corresponding period and represented 22% of gross revenue. Other export markets, which excludes China, saw fourth quarter sales growth of 71% and this represented 8% of total sales.
Asia alone is a huge market and can support a much larger Bubs business. Hopefully it can continue to grow its revenue by pleasing double digits each year.
The company also made two other exciting announcements yesterday. Jennifer Hawkins will be its global brand ambassador and it also launched Vita Bubs, a vitamin and mineral supplement range. The company expects this will materially add to domestic revenue.
In five years I believe the ASX share will be much larger, particularly if it's able to win a decent market share with its organic grass-fed (cow) milk infant formula range.
I'd be very happy to buy shares at the current Bubs share price, particularly after yesterday's dip.
Magellan Global Trust (ASX: MGG)
Magellan Global Trust is one of my favourite ASX share picks at the moment.
The listed investment trust (LIT) has a number of positives. It only invests in high-quality global shares like Alphabet, Microsoft, Tencent and Alibaba. These types of companies have business models that should have resilient demand even in the face of COVID-19. I like the diversification the LIT offers.
The Aussie dollar has strengthened considerably against the US dollar, it's now worth around US$0.72, which is the highest it's been over the past year. It's better to buy US shares when the Aussie dollar is stronger rather than lower (all other things being equal).
I like being able to buy LITs and LICs (companies) at a discount to their net asset values (NAV). At the current Magellan Global Trust share price it's trading at a 3.5% discount to the NAV. Not a huge discount, but it's cheaper than if you paid for the underlying shares yourself.
As a bonus, the ASX share targets a 4% distribution yield. I think that's a good yield in the current world we live in where interest rates are almost 0%.
MFF Capital Investments Ltd (ASX: MFF)
MFF Capital is LIC that also largely avoids ASX shares. It targets international shares. It's actually run by Magellan Financial Group Ltd (ASX: MFG) co-founder Chris Mackay. He has steered MFF to strong returns over the past decade. MFF's total shareholder returns has been an average of 17.4% per annum over the past ten years.
One of the main benefits about investing in MFF Capital is that it has lower costs compared to most other internationally-focused LICs. MFF pays a fixed management fee in dollar terms. So as MFF gets bigger its costs as a percentage of assets reduces.
It has two large, high-conviction ideas with Visa and Mastercard, the payment giants. Those two holdings alone make up more than a third of the LIC's holdings. I really like them as ideas because they're leveraged to whatever happens next with COVID-19. An increase of ecommerce purchases would help Visa and Mastercard. More in-store purchases would also be beneficial if global COVID-19 cases and COVID-19 restrictions improve.
The ASX share also has a large cash position (41.3% of the portfolio) which is a useful thing to have when share prices are so high, COVID-19 is still spreading and there's an unpredictable US election coming up. It's defensively positioned for whatever happens next.
The MFF Capital weekly pre-tax net tangible assets (NTA) was $2.78 on 24 July 2020, compared to the current share price of $2.64. That's a 5% discount. I'd prefer to buy with a double digit discount, but a 5% discount is good for this strong-performing LIC.
Foolish takeaway
I really like all of these ASX shares. At the current prices I'd probably go for Bubs. Though I think the US election will open up some opportunities for US shares.
