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This is where I’d invest $1,000 right now into shares

Tristan Harrison
Corporate travel jet flying into sunset

The ASX is a great place to find opportunities to invest $1,000 into shares. I think there are some very compelling options right now.

I think it’s great that we can invest a relatively small amount like $1,000 into shares compared than the tens of thousands of dollars necessary for a deposit to buy a property.

If I were investing $1,000 into ASX shares right now, I’d choose this share:

Webjet Limited (ASX: WEB) 

Webjet is a digital travel business spanning both global consumer markets through business to consumer (‘B2C’) and wholesale markets through business to business (‘B2B’).

Any business that can make profit at a high profit margin is definitely worth thinking about. Management think that WebBeds, which is now one of the largest B2B travel businesses in the world, can reach an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 50% in time.

Webjet is growing revenue at an impressive rate each year, which is a great feature when combined with rising profit margins.

In the first half of FY20 Webjet is predicting that underlying EBITDA will be at least $80 million, which is growth of at least 37% up from $58 million. Underlying EBTIDA excludes one off revenues & costs (like Thomas Cook) and the impact of AASB16. Within that result, management are expecting continuing growth from WebBeds with at least 25% organic EBITDA growth after adjusting for the additional contribution from Destinations of the World (DOTW – an acquisition), with an improved EBITDA margin.

For the whole of FY20 Webjet is expecting underlying EBITDA of between $157 million to $167 million, which would be growth of around 26% to 34% with organic growth of 16% to 23% after adjusting for the additional 5-month contribution from DOTW.

The point of outlining all these growth stats is that Webjet is a fast-growth business and it’s creating a market-leading position.

If a business can grow its earnings at a faster rate than its price/earnings ratio (the multiple of its earnings it’s priced at) then it is considered good value on a ‘PEG’ ratio basis. Webjet is trading at under 15x FY21’s estimated earnings, which looks cheap if it can grow organically by 15% a year for the next few years.

Foolish takeaway

Not only does Webjet look good value, there’s a chance it could receive a takeover offer in 2020. I think Webjet could be one of the best-performing ASX shares in the ASX 200 this year, which is why I’d want to invest $1,000 into Webjet in 2020.

The post This is where I’d invest $1,000 right now into shares appeared first on Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Webjet Ltd. 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 Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020