The ASX share market continues to ebb and flow on various pieces of news.
Will the RBA cut rates down to 0.75% or even 0.5%? Will Australian quantitative easing start soon? Will the US Federal Reserve be more supportive? Is Australia headed into recession?
I think local and global worries can create opportunities for investors to buy some shares at attractive prices. If I were lucky enough to be given $10,000 to invest then I would invest it as follows:
WAM Global Limited (ASX: WGB) – $3,000
With Australia’s economy looking a bit wobbly and the Australian dollar slowly falling against the US dollar, I think it could be wise to increase our investment exposure to the international share markets.
It would be impossible for us to individually find the best opportunities in all the different regions, so why not leave the share choosing to professionals at places such as WAM Global, which is a listed investment company (LIC), which invests in global shares.
The WAM Global portfolio is full of smaller and medium sized international businesses that offer good growth potential. I think WAM Global is attractively priced at a 12% discount to the net value of the shares at the end of May 2019.
Magellan Global Trust (ASX: MGG) – $3,000
Magellan Global Trust is a listed investment trust (LIT) which also invests overseas with a focus on the highest quality businesses in the world such as Visa, Oracle and Alphabet (Google).
It is consistently beating its benchmark after fees over the long term whilst targeting a 4% distribution yield on the value of its assets.
It’s trading at a 3% discount to its underlying assets, which isn’t bad for its high-performance.
Costa Group Holdings Ltd (ASX: CGC) – $2,000
The best time to buy shares of a cyclical business is when it’s facing shorter-term headwinds such as the ones that Costa is faced with now. Fruit flies are not always going to be an issues for its citrus fruit and its berries won’t always face crumbly issues.
Costa has a global growth plan in Australia, North Africa and China which gives it many alternatives to expand. Plus, there is a long-term shift to healthier eating and Costa should be a net beneficiary of this trend.
Naos Emerging Opportunities Company Ltd (ASX: NCC) – $2,000
Small cap valuations have taken a bit of a beating in recent times, which has led to small cap managers seeing the value of their portfolios decline and the price investors are willing to pay for the share prices of those LICs decline too, which has affected this Naos LIC.
It looks at the smallest businesses with market capitalisations under $250 million, which is far smaller than your typical share, but that’s where hidden treasure might be found.
The share performance of small caps is fairly like to revert at some point, which could give this Naos LIC a dual boost.
It’s currently trading at a 15% discount to the pre-tax NTA with a trailing grossed-up dividend yield of 12%.
I think each of these shares have the potential to beat the returns offered by the ASX index over the medium-term, with better income prospects from the LICs. If I had to pick two it would be WAM Global and Naos for their double digit discounts to their last-reported underlying values.
Other ASX shares I’d consider for market-beating returns are these top ASX stocks which all look great value to our leading analysts.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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