I think there are some wonderful ASX shares that are worth buying in May 2021. Opportunities are appearing with the volatility.
There are some shares that are being sold off because of growth rates slowing. But for the long term, I reckon they could be good ideas:
Redbubble Ltd (ASX: RBL)
The artist product business has been sold off – it’s down 25% from when it released its trading update, as well as a strategy change.
That new strategy seems to have spooked the market. Instead of getting steadily more profitable, it has decided to try to maximise its market share and growth. That means more marketing spending and operational investing, as well as lower EBITDA margins (EBITDA explained).
But before investors get too hung up on margins, remember that in several years Redbubble can become a much bigger business. Then the margins can jump higher.
The FY21 third quarter saw marketplace revenue increase 54% whilst gross profit grew 55%. EBIT went up 91%. That’s strong growth when investors were worried about a post-COVID drop in sales.
I think today’s price of $4.10 could seem excellent value in a few years after it has grown its operations a lot.
VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)
This is one of my favourite exchange traded funds (ETFs). It combines a number of things that are good about investing, in the form of an ASX share.
The MOAT ETF only invests in quality businesses, so it avoids the rubbish ones. The shares are chosen by Morningstar analysts where they believe the business is trading at attractive value. Really good businesses at good prices can create strong returns.
Strong returns are what this ETF has delivered. Looking at the last three years, its net average return per year has been 20.6%. I wouldn’t expect that strong of a return per year over the next five years, particularly with rising interest rates, but it shows how well the ETF can do.
At the end of April, some of the largest positions were: Wells Fargo, Alphabet, Cheniere Energy, General Dynamics, Philip Morris, Northrop Grumman, Corteva, Zimmer Biomet, Medtronic, Yum! Brands and Berkshire Hathaway.
Management costs are 0.49%, which is very fair for what this ETF is in my opinion.
There are some other ASX growth shares that could be good considerations in May 2021.
