I think 2020 so far is a year that has been defined by finding winners on the stock market. The coronavirus pandemic brought with it a massive acceleration of certain trends in the economy. The share market rally we have all been enjoying for the past 6 or so months hasn’t been defined as much by the companies that might be left behind by these changes, more so the companies that look set to benefit the most. It’s been a ‘buy the winners, hold the losers’ kind of market in my eyes.
Think about it. We’ve seen ridiculous share price gains in tech shares. Zip Co Ltd (ASX: Z1P) up more than 400% since March. Sezzle Inc (ASX: SZL) up more than 1,800%. Over in the United States, we’ve similarly seen shares like Apple Inc (NASDAQ: AAPL), Tesla Inc (NASDAQ: TSLA) and Zoom Video Communications Inc (NASDAQ: ZM) shoot the moon.
Yet we haven’t seen a terminal decline in companies that are unquestionably struggling. Companies like Qantas Airways Limited (ASX: QAN) have fallen sure. But it was only 3 years ago when you could have picked up Qantas shares for the same price as what you can buy them for today. And there was an actual market for international travel back then.
So I’m here today to talk about some ASX shares that I think investors should avoid like the plague. I don’t have anything against these companies, I just don’t think they will make good investments today.
3 ASX shares I wouldn’t touch in 2020
Myer Holdings Ltd (ASX: MYR)
Poor old Myer… It was a struggling company before the pandemic, and now things are just not good for this Australian icon. Whilst I wish Myer well, I just don’t think that this is a company investors should bank on today. The winds of change are not filling Myer’s sails (or sales for that matter). I think e-commerce and online competition will continue to eat away at Myer, and I don’t think investors should hang around to watch.
Scentre Group (ASX: SCG)
Scentre is the owner of the Westfield brand of shopping centres, many of which coincidentally house a Myer store. The pandemic has been brutal for Scentre, with lockdowns effectively decimating its business model. While things are looking a little better for the group these days, I still don’t think that mall-owners are a great bet in 2020. Online shopping just isn’t good news for physical brick-and-mortar stores and Scentre has thousands of these stores paying rent every month. This isn’t a wagon I’m hitching to.
Afterpay Ltd (ASX: APT)
Afterpay has become a favourite ASX share for investors in 2020. But I think this is a company best avoided right now. The Afterpay share price is a case study in volatility. There are a lot of traders and speculators attracted to this share, and I think investing at anywhere near the current share price is a bad idea. Afterpay is a great company with a potentially bright future, but I would stay away from it until some of the hype has left the building on this one.
Investing is a game of opportunity cost – when you invest in one company, you can’t invest in another. As such, I wish Afterpay, Scentre and Myer all the best, but I just think there are better places to have your money in 2020 than these 3 companies.
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Sebastian Bowen owns shares of Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Apple, Tesla, and Zoom Video Communications. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Apple and Sezzle Inc. 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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