There are some ASX shares that could benefit strongly as Australia opens up from COVID-19.
Victoria is still not out of stage 4 restrictions, but many other areas of the country are seeing a return to (somewhat) normal.
The country recovering from COVID-19 will help some businesses that saw their activity hit over the past six months.
Here are three ASX shares that could really benefit:
Tyro Payments Ltd (ASX: TYR)
Tyro is a payments solution business used by more than 32,000 merchants. It provides point of sale machines and it has also recently expanded into ecommerce.
The business also offers loans in the form of merchant cash advances and fee-free, interest-bearing merchant transaction accounts.
Tyro is leveraged to the reopening of the country because many of its merchants are small businesses like cafes. The more customers that use the merchants that Tyro services, the more Tyro will benefit.
Before COVID-19 the ASX share was a strong growth story. In February 2020 it saw total transaction value rise by 30%. April and May saw a large decline in value. But June and July saw a pick up of activity again. August was hampered with Melbourne's lockdown.
However, in the first few days of September Tyro has seen transaction growth of 24%. When Melbourne comes out of lockdown I think there could be strong growth from Tyro.
The Tyro share price is still down 23% from its pre-coronavirus high.
Ramsay Health Care Limited (ASX: RHC)
The private hospital business has suffered heavily from not being able to do as many private operations as it would like across its hospital network. It had to cut its dividend, which was on a great 20-year streak.
Ramsay reported that statutory net profit was down 47.9% to $284 million because of COVID-19.
However, the 2021 calendar year could be a strong year for the ASX share – particularly if an effective vaccine can be delivered in Australia, the UK and Europe. Many of the private operations that would have already been done at a Ramsay hospital are still waiting to be done.
I believe there could be a long waiting list of people wanting to do their operation.
In normal times Ramsay would be a solid defensive ASX share. The conditions have been difficult for Ramsay, but I don't think it's going to last forever. The ageing tailwinds are still there and the public waiting list have probably substantially grown.
However, the private health insurance affordability could still be a long-term problem. So I'm not sure I'd be an ultra-long-term investor in Ramsay shares.
At the current Ramsay share price it's trading at 24x FY22's estimated earnings.
InvoCare Limited (ASX: IVC)
The funeral business has been another to suffer because of COVID-19 impacts. Thankfully, there has been a reduction in influenza deaths due to social distancing measures.
There has also been a limitation of visitors at various times in various locations. Victoria is the obvious place that's facing restrictions at the moment.
The ASX share recently reported that its underlying earnings before interest and tax (EBIT) had fallen by 50.4% in the FY20 half-year report.
However, COVID-19 restrictions won't always be there. It's a morbid thought, but the number of deaths will probably return to the long-term average over time. Death volumes are expected to grow by 1.4% per annum between 2016 to 2025 and then increase by 2.2% per annum from 2025 to 2050.
At the current InvoCare share price it's trading at 20x FY22's estimated earnings.
Foolish takeaway
I think each of these ASX shares could deliver a market-beating performance over the next 12 months. I don't think they're priced for a full recovery from COVID-19 conditions, even though a vaccine seems fairly likely at this stage. At the current prices I'd probably go for Tyro, as I think that business has the best chance of delivering solid long-term growth rather than just a once-off bounce.
