Motley Fool Australia

Top ASX Stock Picks for September 2020

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We asked our Foolish writers to pick their favourite ASX stocks to buy in September. 

Here is what the team have come up with…

Daniel Ewing: Adairs Ltd (ASX: ADH)

Adairs is my pick for the month of September – it has been a massive beneficiary of the shift to online retail and this is reflected in the strength of its share price in 2020. In picking this over competing retailers such as Nick Scali Limited (ASX: NCK), I’d cite the fact that it actually makes more money despite earning less revenue. Furthermore, while it has physical stores, for a lot of these stores Adairs has the option to walk away from the leases at any point if the coronavirus pandemic worsens. On top of this, it offers an attractive 3.16% yield.

Motley Fool contributor Daniel Ewing owns shares of Adairs Ltd.

Chris Chitty: Treasury Wine Estates Ltd (ASX: TWE)

In my opinion, Treasury Wine Estates is oversold. At the time of writing, its share price is up less than 18% from its 52-week low reached during widespread panic selling in March. The ASX 200 index has recovered more than 23% over the same period.

This underperformance has come since China announced that it would investigate Australian wine imports. However, all of Asia, including China, only made up a quarter of Treasury Wine’s consolidated net sales revenue in the 2020 financial year. Treasury Wine has sales in over 70 countries and in my opinion, it can achieve sales growth outside China. I think it will outperform over the long-term.

Motley Fool contributor Chris Chitty does not own shares in Treasury Wine Estates Ltd.

Lloyd Prout: Bigtincan Holdings Ltd (ASX: BTH)

In my view, Bigtincan is a great long-term buy-and-hold share for growth investors. Bigtincan develops software to increase efficiency and automate sales and marketing functions for enterprise clients.

The company reported a great set of FY20 results recently, with revenue growth of 56% to $31 million. This includes organic growth of 38%, which was at the top end of guidance range. The company had $71.9 million in cash and equivalents as at 30 June.

With a market capitalisation of $300 million–400 million, the share price will be volatile. But in my opinion, over the long-term as digitisation increases, the business and share price should thrive.

Motley Fool contributor Lloyd Prout owns shares in Bigtincan Ltd and expresses his own opinions.

Brendon Lau: Worley Ltd (ASX: WOR)

The contract engineering group posted a solid FY20 result that showed its controversial acquisition of ECR last year is paying off. The stock is looking cheap as it significantly underperformed the market. In my view, the big jump in revenue and earnings, together with a strong order book and an increase in synergies from ECR, will help trigger a re-rating in the stock.

Motley Fool contributor Brendon Lau owns shares of Worley Ltd.

Bernd Struben: Sydney Airport Holdings Pty Ltd (ASX: SYD)

Sydney Airport has seen much of its business evaporate in the face of COVID-19. While the share price has gained 19% from its March lows, it’s still down 39% since 6 December 2019. And while the company has historically been a reliable dividend payer, it did not pay a dividend on 30 June.

But people need air travel. Especially in Australia. And when they can do so again, I believe they will do so in droves. If you have a longer-term investment horizon (2 plus years), I believe Sydney Airport will exceed its December 2019 highs and recommence with regular dividends.

Motley Fool contributor Bernd Struben does not own shares in Sydney Airport Holdings Pty Ltd.

James Mickleboro: Appen Ltd (ASX: APX)

At the end of August, the Appen share price fell heavily after the release of its half year results. Although it delivered a 25% increase in revenue to $306.2 million and a 20% lift in statutory net profit after tax, investors appear to have been expecting an even stronger result from the artificial intelligence services company.

I think this share price weakness has created a buying opportunity for investors in September. Particularly given its very positive long-term growth outlook, thanks to the growing importance of machine learning and artificial intelligence and its leadership position in the market.

Motley Fool contributor James Mickleboro does not own shares in Appen Ltd.  

Glenn Leese: JB Hi-Fi Limited (ASX: JBH)

JB Hi-Fi is a leader in the consumer electronics space. The popular brand is a regular stop for shoppers, which is no surprise considering its sales, iconic branding and huge range of products. JB Hi-Fi operates through 3 subsidiaries, JB Hi-Fi Australia, JB Hi-Fi New Zealand and The Good Guys (acquired in 2017).

The share price has rewarded investors with a massive 150% growth over the last 6 months, with no signs of slowing down. An increase in working from home, online retail sales and demand for entertainment products have created the perfect storm for the consumer electronics company.

Motley Fool Contributor Glenn Leese does not own shares in JB Hi-Fi Limited.

Matthew Donald: NextDC Ltd (ASX: NXT)

NextDC delivered a solid FY20 result with revenue and earnings growth. It’s my top September stock pick because I believe it can continue increasing its number of customers, contract utilisation and interconnections.

It continues to develop data centres around Australia, driven by surging demand. Additionally, the growth of e-commerce should drive the NextDC share price higher now and into the future.

As testament to its growth story, it recently became a member of the S&P/ASX 100 Index (ASX: XTO) for the first time. I expect NextDC’s FY21 revenue and earnings to keep growing.

Motley Fool contributor Matthew Donald does not own shares in NextDC Ltd.

Phil Harpur: Megaport Ltd (ASX: MP1)

Megaport is an ASX tech share that provides a ‘network as a service’ offering. This enables enterprises to increase or decrease their fixed broadband bandwidth requirement according to their individual needs.

Megaport recently reported total revenues of $58.0 million for FY 2020. That was a very impressive 66% over the prior year. Monthly recurring revenue also grew very strongly, increasing by 57% on a year-on-year annualised basis. I believe that Megaport is well placed to continue to expand over the next 5 years, driven by the rising demand for cloud computing and the need for rapid network connectivity.

Motley Fool contributor Phil Harpur owns shares of Megaport Ltd.

Sebastian Bowen: Coles Group Ltd (ASX: COL)

Of all the dividend shares reporting their earnings last month, Coles was one of the most impressive in my view. As rival Woolworths Group Ltd (ASX: WOW) (along with many other dividend shares) delivered a dividend cut, Coles instead went the other way and increased its final dividend by 14.6%. As such, I think Coles is a great buy this September as a reliable ASX share for an uncertain world.

The Coles share price has also recently pulled back from all-time highs, so I think there is a strong buying case if this profile appeals to your investing temperament or goals going forward. 

Motley Fool contributor Sebastian Bowen owns none of the shares mentioned.

Ken Hall: Xero Limited (ASX: XRO)

Aussie tech shares impressed during the August earnings season with Afterpay Ltd (ASX: APT) and others rocketing higher. However, I have my eye on another member of the ‘WAAAX’ group: Xero. Xero reports its earnings off-cycle so the accounting software provider’s shares quietly crept higher in August.

Strong customer retention and acquisition are what I like. Yes, Xero shares trade at an exceptionally high price-to-earnings (P/E) ratio. However, I think the potential growth and addressable market on offer make that worth a look in September. I would hate to miss out on potential growth before its next earnings announcement.

Motley Fool contributor Ken Hall does not own shares in Xero Limited.

Nikhil Gangaram: 5G Networks Ltd (ASX: 5GN)

My pick for September is 5G Networks. The telecommunications company recently released a very promising financial report for FY20. For the full-year, 5G Networks reported that the company had doubled earnings before interest, taxes, depreciation and amortisation (EBITDA), whilst also highlighting a 700% increase in operating cash flow.

In my opinion, the company has genuine short and long-term revenue drivers. With the COVID-19 pandemic driving people to work from home, the cloud-based services offered by 5G Networks should see heightened demand. From a technical perspective, the 5G Networks share price is trading near all-time highs and is poised to rise further, in my view.

Motley Fool contributor Nikhil Gangaram does not own shares in 5G Networks Ltd.   

Daryl Mather: Jumbo Interactive Ltd (ASX: JIN)

Jumbo Interactive sells lottery tickets on license from Tabcorp Holdings Limited (ASX: TAH). Coronavirus lockdowns pushed more sales online, which resulted in the company increasing its active players by 9% and its FY20 EBITDA by 7.6% – even with 10 fewer major jackpots.

During the lockdown, the company re-signed its agreement with Tabcorp up to 2030, removing one of the larger risks for investors. The company has also signed 4 agreements with charities through FY20. This allows charities to use the platform to sell lottery tickets also.

I think Jumbo Interactive is under valued and well positioned for growth. 

Motley Fool contributor Daryl Mather does not own shares in Jumbo Interactive Ltd.

Where to invest $1,000 right now

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*Returns as of June 30th

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Jumbo Interactive Limited and MEGAPORT FPO. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends 5G NETWORK FPO and BIGTINCAN FPO. The Motley Fool Australia owns shares of and has recommended BIGTINCAN FPO and Treasury Wine Estates Limited. The Motley Fool Australia owns shares of Appen Ltd and COLESGROUP DEF SET. The Motley Fool Australia has recommended Jumbo Interactive Limited and MEGAPORT 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.

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