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Top ASX shares to buy in January 2021

best asx shares to buy in january represented by 2021 formed with gold piggy bank
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With the year that was 2020 finally behind us, we asked our Foolish contributors to compile a list of some of the ASX shares experts are saying to Buy in January.

Here is what the team have come up with…

Bernd Struben: Nitro Software Ltd (ASX: NTO)

Nitro Software is a document productivity software company. Nitro’s list of global customers in 2019 included 65% of the Fortune 500 list. The company’s product line features Nitro Pro, Nitro Cloud, Nitro Analytics, and its recently launched Nitro Sign.

With a market capitalisation of around $615 million at the time of writing, Nitro falls into the ASX small-cap category. As with all ASX small-cap shares, Nitro arguably carries more risk while offering the potential for higher growth.

Indeed, 2020 saw Nitro Software deliver on that growth. With the pandemic resulting in the work-from-home shift, the company’s subscription revenue grew 60% year over year, as at September. At the time of writing, the Nitro share price was up 98% in 2020.

Motley Fool contributor Bernd Struben does not own shares of Nitro Software Ltd.

Tristan Harrison: Pushpay Holdings Ltd (ASX: PPH)

This digital donation business is expecting to more than double its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) in FY21.  

In its recent FY21 half-year result the company demonstrated operating leverage with the EBITDAF margin rising from 17% to 31%. Pushpay expects “significant operating leverage to accrue as operating revenue continues to increase, while growth in total operating expenses remains low.” 

Over the long term, Pushpay is aiming to reach US$1 billion of annual revenue. It’s currently servicing large and medium United States churches, but the company is now also looking at targeting its services to smaller churches.  

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

Sebastian Bowen: CSL Limited (ASX: CSL) 

CSL should be an interesting ASX share to watch in this first month of the new year. Compared with 2018 and 2019 (which saw double-digit appreciation in the CSL share price), in 2020 CSL shares had a pretty muted year, and have been stuck in neutral for a while now.

Top notch shares like CSL often draw attention when this occurs, as the market doesn’t usually punish quality companies for long. Even with this healthcare giant’s arguably-lofty price-to-earnings (P/E) ratio at present, the company is still growing revenues, earnings and dividends at a healthy pace.  

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

James Mickleboro: Xero Limited (ASX: XRO)

Another option for investors to look at in January is Xero. Over the last few years, Xero has evolved from a cloud-based accounting platform to a full service small business solution. This has underpinned strong customer growth and even stronger revenue growth.

Pleasingly, analysts at Goldman Sachs believe Xero’s growth is still only getting started and believe it has a “multi-decade runway for strong revenue growth.” This is thanks to its already sizeable addressable market and the potential for it to broaden and monetise its app ecosystem and expand into new geographies. Goldman Sachs has a buy rating and $157.00 price target on its shares.

Motley Fool contributor James Mickleboro does not own shares of Xero Limited.

Tristan Harrison: Pacific Current Group Ltd (ASX: PAC) 

Pacific is a business that wants to partner and invest in “exceptional” investment managers, it helps with expertise to grow.  

Speaking to Livewire, Dean Fremder of Perpetual Limited (ASX: PPT) said: “The stock’s really cheap. It’s on nine times earnings. It’s growing earnings at double digits, so more than 10% a year… we think they can pay out a much larger portion of their earnings as dividends.” 

In FY20 underlying earnings per share (EPS) grew by 18% to $0.51 cents and the dividend grew by 40% to $0.35 per share. In the FY21 first quarter, funds under management grew 14% to $106.4 billion. 

Motley Fool contributor Tristan Harrison does not own shares of Pacific Current Group Ltd. 

Sebastian Bowen: Afterpay Ltd (ASX: APT)

Another stock to consider in 2021 is Afterpay. This buy now, pay later (BNPL) pioneer has continued to confound its critics and delight its shareholders in 2020.

After announcing a very well-received partnership with Chinese e-commerce giant Tencent back in May, Afterpay has gone from strength to strength. Its knockout numbers for the 2020 financial year only added to this momentum.

As the clear global leader in this growing space, it’s hard to believe Afterpay will take its foot off the gas next year. Betting against this company in recent years has not been a good move. I wouldn’t start in 2021. 

Motley Fool contributor Sebastian Bowen does not own shares of Afterpay.

James Mickleboro: CSL Limited (ASX: CSL)

This biotherapeutics giant could be a top option in January following a recent pullback in its share price. This weakness has been driven by concerns over plasma collection headwinds and disappointment over the termination of a COVID-19 vaccine trial with University of Queensland. The latter was due to the vaccine interfering with certain HIV diagnostic assays.

Pleasingly, this hasn’t had an impact on its guidance for FY 2021. Management continues to forecast a net profit after tax of US$2.170 to US$2.265 billion in constant currency. This represents growth of 3% to 8%.

One broker that believes the CSL share price is in the buy zone is UBS. It is positive on its outlook and has a buy rating and $346.00 price target on its shares.

Motley Fool contributor James Mickleboro does not own shares of CSL Limited.

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 February 15th 2021

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd., PUSHPAY FPO NZX, and Xero. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Nitro Software Limited and PUSHPAY FPO NZX. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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