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Top ASX Stock Picks for October 2020

Top ASX stocks for October represented by variety of different halloween balloons
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We asked our Foolish writers to pick their favourite ASX stocks to buy in October. 

Here is what the team have come up with…

Daniel Ewing: Damstra Holdings Ltd (ASX: DTC) 

Damstra is an Australian provider of integrated workplace management solutions to multiple industry segments across the globe. Hence, the company is perfectly positioned to benefit from the changed working conditions of the post-pandemic world. Damstra’s extensive range of products is evidence of this, with its recently added fever detection software being particularly relevant in current conditions.

The company also recently completed its acquisition of Vault Intelligence Ltd (ASX: VLT), a software company offering solutions which combine health, safety, compliance and risk management. Vault is an important lever to Damstra’s United States expansion, with the company aiming to increase the 25% of its revenue that is currently generated internationally.

Motley Fool contributor Daniel Ewing owns shares of Damstra Holdings Ltd.

Chris Chitty: Magellan Financial Group Ltd (ASX: MFG)

Magellan has a strong track record as a fund manager which dates back to 2006. This company has steadily grown its funds under management and now manages over $100 billion spread across more than ten funds and exchange-traded funds (ETFs), making it one of Australia’s largest fund managers.

Magellan is also set to extract value from its recently announced 40% interest in Australia’s newest investment bank, Barrenjoey. Given Magellan’s prospects to continue growing in size and reach, I think it could offer huge additional value to shareholders in the near future.

Motley Fool contributor Chris Chitty does not own shares of Magellan Financial Group Ltd.

Aaron Teboneras: Fortescue Metals Group Limited (ASX: FMG) 

The Fortescue share price has fallen around 15% (at the time of writing) since the company released its full-year results in late August. Although this was mostly attributed to investors taking profit, I believe it has created a strong buying opportunity. 

Fortescue reported a stellar scorecard for FY20, achieving record shipments of iron ore and boasting the world’s lowest cost margins. The mining giant has also heavily invested in the future. Its $1.7 billion Eliwana Mine and Rail project is due to be completed in December this year. 

I think that Fortescue’s lean business model coupled with its share price dip makes it a top ASX stock pick for October. 

 Motley Fool contributor Aaron Teboneras does not own shares of Fortescue Metals Group Limited. 

Daryl Mather: Centuria Capital Group (ASX: CNI)

Centuria Capital Group is an investment management company focused on property-based assets in the office, industrial and medical sectors. Its portfolio includes two listed real estate investment trusts (REITs), an assortment of unlisted REITs, a debt investing fund and a range of co-investments.

During FY20, the company increased its assets under management by 42% via acquisition of a leading New Zealand fund manager and a portfolio of petrol station assets under long lease to BP plc (LSE: BP).

The company is selling at a relatively high price-to-earnings (P/E) ratio of 31.2, at the time of writing. I believe this is high because earnings reduced by 60% during the pandemic lockdown, not because the share price is inflated. Moreover, the company has a trailing 12-month dividend yield of around 4.3%.

Motley Fool contributor Daryl Mather does not own shares of Centuria Capital Group.

Bernd Struben: CSL Limited (ASX: CSL)

If you’re looking for a quality, long-term investment for October, look no further than CSL Limited. The global biotechnology company develops innovative biotherapies and influenza vaccines. In the wake of the global pandemic, CSL’s services will likely see sustained growth in demand.

CSL has delivered strong, reliable share price growth to patient investors since listing on the ASX. At the time of writing, the CSL share price is up around 43% since October 2018 and around 170% since October 2016. 2020 has been exceptionally choppy, but the CSL share price is still up around 4% year to date at the time of writing. CSL also has an annual dividend yield of 1%, unfranked.

Motley Fool contributor Bernd Struben does not own shares of CSL Limited.

Tristan Harrison: Redbubble Ltd (ASX:RBL)

In FY20, Redbubble saw its marketplace revenue grow by 36% with gross profit rising 42% and operating earnings before interest, tax, depreciation and amortisation (EBITDA) increasing by 141%. In the first month of FY21, marketplace revenue grew by 132% with similar sales levels in the first two weeks of August. I think Redbubble is on track to deliver a strong FY21 result and may benefit from improving economies of scale over the coming years.  

The Redbubble share price still looks good value to me considering its $38 million of free cash flow generated in FY20 and its likely future growth. 

Motley Fool contributor Tristan Harrison does not own shares of Redbubble Ltd. 

Regan Pearson: Eroad Ltd (ASX: ERD)

Eroad Ltd is a Kiwi tech company that provides devices which track vehicles and collect road user charges. Although the company only listed on the ASX in September, it has been achieving strong growth across New Zealand and the US, with annual revenue growing at a compounded annual rate of 42% over the last six years. The company has been burning through cash to fund this growth, but it did report a small profit in the 2020 financial year.

At the current Eroad share price of $4.04 (at the time of writing), I think the company’s shares offer great, long-term value.

Motley Fool contributor Regan Pearson does not own shares of Eroad Ltd. 

Ken Hall: Super Retail Group Ltd (ASX: SUL)

The Super Retail share price has surprised many in 2020 but I think it has further to run. Its diversified retail portfolio has shown signs of strong cash generation. I think that bodes well for strong dividends in FY21 which could be valuable given the current market. On top of that, the Super Retail share price has already gained 3.4% this year (at the time of writing). That’s an impressive feat given the S&P/ASX 200 Index (ASX: XJO) has slumped lower in 2020.

That combination of capital gains and potentially strong dividends has me putting Super Retail shares in the buy zone. 

Motley Fool contributor Ken Hall does not own shares of Super Retail Group Ltd.

Brendon Lau: Newcrest Mining Limited (ASX: NCM)

Gold stocks have been underperforming in recent times. But I believe gold will start to rebound as we head to the November US Presidential Election, with the likely political uncertainty benefitting the precious metal. One good way to gain leverage to this thematic is to invest in our largest gold producer.

The Newcrest Mining share price has been lagging its peers with a near 10% decline over the past year compared to 20% plus gains by Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST). I believe the gap will start to close over the coming months.

Motley Fool contributor Brendon Lau owns shares of Newcrest Mining Limited.

Sebastian Bowen: Cochlear Limited (ASX: COH)

My October stock pick is this ASX health care giant. Cochlear is one of the most successful ASX companies from the past few decades in my view. It has managed to place itself in the seemingly permanent centre of the global hearing aid industry. With a 60% share of the global hearing aid/assistance markets and a growing presence in emerging markets, I think this company is well set up to thrive into the 2020s and beyond.

What’s more, I think the Cochlear share price is currently looking fairly cheap by historical standards and would make a great buy this October.

Motley Fool contributor Sebastian Bowen does not own shares of Cochlear Limited.

Glenn Leese: Openlearning Ltd (ASX: OLL)

Openlearning is a Sydney-based education software-as-a-service (SaaS) company with a massive global reach. It has pioneered creative concepts such as micro credentials and online portfolios for prospective employers to view. Openlearning is currently partnered with over 100 education institutions, has more than 2.5 million students and offers thousands of courses.

From March to early September, the Openlearning share price was ‘trapped’ between 18 and 28 cents. In mid-September, the share price finally broke out, reaching heights of 41 cents. I believe a recent pullback to 29 cents (at the time of writing) presents a value-for-money opportunity for investors to secure equity in Openlearning.

Motley Fool Contributor Glenn Leese owns shares of Openlearning Ltd.

James Mickleboro: Lendlease Group (ASX: LLC)

With the Lendlease share price down sharply in 2020, I think now could be an opportune time to make an investment. Especially given the international property and infrastructure company’s recent strategy shift. Lendlease’s new strategy has changed its business model and earnings mix towards that of industrial property giant Goodman Group (ASX: GMG). I believe this is a great move and has positioned the company perfectly to deliver solid and consistent earnings growth over the next decade.

Overall, I feel this could make its shares bargain buys at the current level.

Motley Fool contributor James Mickleboro does not own shares of Lendlease Group.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of June 30th

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. and CSL Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Damstra Holdings Ltd. The Motley Fool Australia owns shares of and has recommended Damstra Holdings Ltd and Super Retail Group Limited. The Motley Fool Australia has recommended Cochlear Ltd. and OpenLearning Limited. 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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