With the ALL ORDINARIES (Index: ^AXAO) (ASX: XAO) down 7% over the past six months, it could be a good time to put some money to work into ASX shares.
If I had $25,000 to invest into ASX shares, these are ones I’d consider:
UBS IQ MSCI Asia APEX 50 Ethical ETF (ASX: UBP)– $3,000
This exchange-traded fund (ETF) tracks the 50 largest shares listed in Asia outside of Japan. Not only are the businesses in this ETF trading at a cheaper price compared to their western counterparts, the Asian countries they operate in are generally growing at a faster pace than western countries too.
The biggest holdings like Tencent, Alibaba, Samsung and Taiwan Semiconductor could all get a valuation boost if a trade deal can be agreed between China and the US. President Trump may want to get a deal done soon with all the negativity that’s happening surrounding his presidency.
Bapcor Ltd (ASX: BAP) – $4,000
Bapcor is trading at 20x FY18’s continuing earnings, which I think is a very attractive business that is growing solidly with its core business (Burson) with solid same store sales growth of more than 4%, an expanding store network and rising profit margins.
The auto parts business is going into new sectors such as truck parts, plus the geographic expansion into Asia could be a long-term growth tailwind if the first few stores go well.
Paragon Care Ltd (ASX: PGC) – $6,000
Paragon is trading at 8x FY19’s estimated earnings, which seems very cheap indeed.
This company sells healthcare products to various clients through its online purchasing platform. The platform gives the company an advantage compared to most of its competitors, particularly as it offers more products because Paragon has acquired a number of other businesses such as surgery equipment to expand its product range.
Paragon is also exposed to the ageing tailwinds – more elderly people should lead to higher demand for products over time. It has a grossed-up dividend yield of 7.6%.
Magellan Global Trust (ASX: MGG) – $7,000
Magellan Global Trust was one of the few listed investment vehicles to generate a positive return during 2018 and it outperformed the MSCI World Net Total Return Index (AUD) by 4.5% after all fees and expenses.
In the portfolio it has a sizeable cash balance, high quality growth shares like Alphabet and Visa and quality defensive shares like HCA Healthcare. The combination of defence, growth and cash should hopefully mean continued outperformance of the global index over time.
I’m willing to buy shares today because I think international businesses as a whole have better growth prospects than our ASX blue chips because they aren’t just focused on the domestic economy.
Challenger Ltd (ASX: CGF) – $5,000
Share markets and other assets are sometimes volatile, which can lead to declines. That has been a major cause for the drop of Challenger share price in recent months.
The likely growth of annuities due to more retirees, mandatory superannuation contributions and compounding can now be accessed at a cheaper price than last week.
When share markets start growing again, sentiment should hopefully return – which is why I’m comfortable holding onto my shares for the long-term. It currently has a grossed-up dividend yield of 6.8%.
I believe all of the above shares will beat the returns of the ASX over time, particularly as most of them are trading at the lowest price for a few years. If I had to pick two it would be Challenger and Paragon.
If I had another $10,000 to invest into ASX shares I’d heavily consider some of these reliable winners.
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Motley Fool contributor Tristan Harrison owns shares of Bapcor, Challenger Limited, MAGLOBTRST UNITS, and Paragon Care Limited. The Motley Fool Australia owns shares of and has recommended Bapcor and Challenger Limited. The Motley Fool Australia has recommended Paragon Care 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.
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. 2019