Where I’d invest $20,000 into ASX shares right now

If I had to invest $20,000 into ASX shares right now I would choose 4 stocks including infant formula business A2 Milk Company Ltd (ASX:A2M).
The post Where I’d invest $20,000 into ASX shares right now appeared first on Motley Fool Australia. –

Where to invest

There are a number of great ASX shares worth buying right now with $20,000 in my opinion.

Here are four of them, with a slant towards longer-term growth:

Pushpay Holdings Ltd (ASX: PPH) – $6,000

I think that Pushpay is one of the most promising ASX growth shares right now.

It’s a digital donation business that facilitates payments to large and medium US churches.

Pushpay was growing before COVID-19, but the restrictions and social distancing seem to have brought forward the adoption of Pushpay’s technology. It also offers a livestreaming service to connect with the church with its congregation.

The ASX share is now profitable and cashflow positive. Its profit margins are growing rapidly.

At the current Psuhpay share price it’s trading at 40x FY21’s estimated earnings.

A2 Milk Company Ltd (ASX: A2M) – $6,000

I think that A2 Milk is one of the best ASX growth shares with its strong brand power and large cash pile (with no debt).

A2 Milk is being disrupted by COVID-19 impacts. A2 Milk is struggling because of impacts to the daigou seller channel due to less students and less tourism from China. 

But I think the COVID-19 impacts are only going to be temporary on the ASX share. A2 Milk is rapidly building its Chinese based business, which will hopefully make up for the disrupted sales in Australia and New Zealand during the 2021 calendar year.

A2 Milk is guiding that it can grow its FY21 revenue by 4% to 10%. I think A2 Milk looks really good value when you look out to FY22 and FY23.

At the current A2 Milk share price it’s trading at 23x FY23’s estimated earnings.

Bubs Australia Ltd (ASX: BUB) – $4,000

Bubs is another infant formula business that is hurting right now.

It has also been suffering from pantry destocking in recent months just like A2 Milk. Demand was brought forward into the third quarter, so I don’t think it can be surprising that consumers didn’t need as much supplies over the next few months.  

There are a number of moving parts with the ASX share. Its core goat milk infant formula is growing well. In FY20 it grew total infant formula sales by 58%. This division is the most important one because it has a gross profit margin of around 40%, which is higher than other product lines.

Bubs is growing its export market revenue at a fast pace. In FY20 it grew direct sales to China by 32% and export markets outside of China grew by five-fold.

I think the ASX share’s international growth is very promising over the next few years, particularly in places like Vietnam.

It has a solid balance sheet which can be used to fund further growth until it’s cashflow positive, which I don’t think is too far away.

At the current Bubs share price valuation, I think it has very good long-term growth potential.

Future Generation Global Invstmnt Co Ltd (ASX: FGG) – $4,000

Future Generation Global is a listed investment company (LIC) which gives investors exposure to international shares.

The ASX share is invested in funds of some of the best Australian fund managers that target overseas shares.

Some of those managers include: Magellan Financial Group Ltd (ASX: MFG), Cooper, Caledonia, Marsico and Munro Partners.

These fund managers work for free so that Future Generation Global can donate 1% of its net assets to youth mental health charities. This is particularly important right now in my opinion because of everything that’s going on due to COVID-19.

Its portfolio has done very well over the short-term and the long-term. At 31 August 2020, Future Generation Global’s gross portfolio return had outperformed the MSCI AC World Index over the past month, six months, twelve months, three years and since inception in September 2015.

At the current Future Generation Global share price, it’s priced at a 14% discount to the net tangible assets (NTA) at 31 August 2020. The NTA could have grown since then.

These four ASX shares aren’t the only investment ideas I’ve got my eyes though. 

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Tristan Harrison owns shares of Future Generational Global Investment Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia owns shares of and has recommended A2 Milk and BUBS AUST FPO. The Motley Fool Australia has recommended PUSHPAY FPO NZX. 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.

The post Where I’d invest $20,000 into ASX shares right now appeared first on Motley Fool Australia.

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