There are some ASX shares that I’d buy if the ASX crashes again.
Some shares have performed really strongly since the worst of the crash in March 2020. I think they may be too expensive to buy now, but could be great buys if the share market dropped again.
Here are my three picks that I’d buy if the ASX drops again:
Temple & Webster Group Ltd (ASX: TPW)
Temple & Webster is a high-flying ecommerce business. It’s an online seller of furniture and homewares. Customers are flocking to the online retailer for the large range, fast shipping and good prices.
The FY20 result of the ASX share was impressive in my opinion. Full year revenue was up 74% to $176.3 million. FY20 second half revenue was up 96% and the fourth quarter revenue grew by 130%. Earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 466% to $8.5 million.
The Temple & Webster share price has risen by 410% since 23 March 2020. Its growth has certainly accelerated since the COVID-19 lockdowns started. But I’d prefer to buy it at a cheaper price.
How much cheaper? Well that depends how much the ASX share is going to fall in this theoretical crash. I’d love to buy shares for under $2 but who knows if it will ever go under that price again. At this stage I think I’d be happy to buy shares under $6.
Kogan.com Ltd (ASX: KGN)
Kogan.com is another online retailer that has seen enormous growth since March 2020. Both Kogan.com’s share price and earnings are soaring.
Kogan.com sells a large range of different products like devices, appliances and furniture. It also offers other services like insurance, mobile, telecommunications, energy and superannuation.
A couple of weeks ago the ASX share announced some of its growth numbers for the fourth quarter of FY20. Gross sales grew by more than 95%, gross profit rose by over 115% and adjusted EBITDA increased by around 150%.
The Kogan.com share price is up almost 400% since 16 March 2020. It has been a very strong performer – but can things continue?
Will sales continue to be as strong as jobkeeper starts to tail off and lockdown effects lift in some of the country? Time will tell, but I don’t think I’d want to buy shares above $12.50 with how much uncertainty there is about retail conditions.
Pro Medicus Ltd (ASX: PME)
I think that Pro Medicus is one of the highest-quality ASX shares around. It’s a medical technology business that provides radiology information systems.
It has clients from across the world with recent major wins in both Europe and the US.
The company was one of the ASX 200 shares to fall the hardest during the first COVID-19 crash. It dropped to under $15 on 19 March 2020. It then just about doubled to around $30 at the end of May, but it has slid back to $22.60 at the time of writing.
Aside from providing remote training to clients using screen-share technology etc, the ASX share said its operations haven’t really changed because most of the work was done remotely anyway.
Pro Medicus is in a very strong position. It had cash on the balance sheet of $38.8 million at 31 December 2019 with no debt, so its balance sheet isn’t in any danger. In the FY20 half-year result it reported an earnings before interest and tax (EBIT) margin of 50.2%, which is one of the highest on the ASX.
It’s worth holding the best ASX shares in your portfolio, it just needs to be at the right price. I’d actually be happy to buy a small parcel of Pro Medicus today, but if it dropped below $20 I’d be willing to load up for the long-term with how low interest rates are right now.
I think all three of these ASX shares look like they could continue to be winners over the next decade, but we need to ensure we pay the right price for them. Today, I’d buy Pro Medicus shares, but I think all three would fit into a growth portfolio if the ASX crashed again.
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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and Temple & Webster Group Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus Ltd. The Motley Fool Australia has recommended Kogan.com ltd and Temple & Webster Group 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.