The ASX is full of investment opportunities, but I think we can maximise our returns when we pick the shares that are trading at good value, whether we’re investing with $1,000 or $10,000.
That doesn’t mean going for the cheapest shares you can see. You could be trying to catch a falling knife.
But I do think we can be opportunistic about our choices if we pick good long term ideas like these two:
Webjet (ASX: WEB)
Webjet is a digital travel business spanning both global consumer markets (‘B2C’) and wholesale markets (‘B2B’). It was established in 1998 and now claims to be the leading online travel agency (OTA) in Australia and New Zealand. Webjet says it was the world’s first to use ‘Travel Services Aggregator’ technology and is now leading the industry in blockchain innovation.
The Webjet share price is up 10% since the middle of October and I think there could be more gains to come after the company recently provided some expectations at Goldman Sachs’ third annual tech day.
It boasted that WebBeds, the business to business segment, is now the world’s second largest and fastest-growing accommodation supplier to the travel industry with FY19 total transaction value (TTV) of $2.2 billion. Interestingly, it’s Asia that’s delivering the most growth. In FY20 the APAC region is expected to deliver the most bookings by region.
In FY20, a full year contribution from DOTW will add $89 million to APAC TTV, plus $75 million to $125 million of organic growth opportunities in China, India and Japan as well as organic growth in other APAC markets. By FY23 APAC TTV is expected to be more than $1 billion. It seems to be a good opportunity.
Webjet is valued at 13 times the estimated earnings for the 2021 financial year, which seems cheap because of the negative effects of Thomas Cook’s collapse this year.
BetaShares FTSE 100 ETF (ASX: F100)
The UK share market remains shaky as the Brexit process continues. But there appears to be light at the end of the tunnel, so investing in a basket of London-listed businesses could be a good way to diversify an ASX-focused portfolio and get access to some cheap global companies.
Unilever, HSBC, BP, Royal Dutch Shell, GlaxoSmithKline and other big companies are constituents of this ETF and are quite different to the businesses we can find on the ASX.
UK shares have attractive dividend yields due to their lower prices and quite high payout ratios, which is why the dividend yield is around 5%.
Summary
I think both options are trading cheaply. The UK share market would be the better option for diversification and could be the better short term dividend option. But Webjet is likely to grow at a strong pace over the coming years and its dividend is rising too, so over 3+ years it could make bigger total returns and over the longer term it could end up paying higher dividends from today’s prices.
Other shares to consider for a diversified portfolio are the reliable businesses in the free report below.
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