We’re almost halfway through 2021 already. There could be some ASX share opportunities in June 2021.
I believe that ASX shares are one of the best ways to grow wealth over time. There are some really good businesses out there for investors to think about.
I’m not looking at businesses like BHP Group Ltd (ASX: BHP) and Westpac Banking Corp
(ASX: WBC) that may already be at their peak. I want to find businesses that still have plenty of growth potential:
Redbubble Ltd (ASX: RBL)
Redbubble is a leading e-commerce business that sells quality products with designs on them that have been created by independent artists. Third party fulfillers around the world get the products to customers.
It’s a very scalable business. Redbubble has already developed its website and a lot of the backend infrastructure that’s needed for the running and growth of the business. E-commerce can lead to profit rising quite a lot quicker than the revenue. We saw in the FY21 third quarter
that marketplace revenue grew 54%, gross profit rose 55% and EBIT (EBIT explained) accelerated 91% to a loss of $0.9 million.
The thing is, the Redbubble share price has fallen by 17% over the last month and it’s down almost 44% in 2021 so far.
It seems the decline is because investors didn’t like to hear that Redbubble is going to invest heavily for growth over the next few years to try to capitalise on the enormous e-commerce growth opportunity.
Whilst lower profit margins aren’t ideal, and Redbubble’s growth in percentage terms was slowing, I think this represents a good opportunity to invest in this ASX share whilst it’s down a lot but revenue keeps growing. Amazon has shown what can happen when there’s a big market and you invest heavily going after it.
In a few years, I think Redbubble could be much more profitable.
MFF Capital Investments Ltd (ASX: MFF)
MFF Capital is a very effective listed investment company (LIC) in my opinion. It’s run by portfolio manager Chris Mackay who owns around $240 million worth of shares. He’s very aligned with regular investors.
There are a number of very attractive features about the LIC. It has a mostly fixed cost base, which is already a low percentage of assets. As the LIC grows, the costs as a percentage should drop even further.
The returns have been really good over the last decade. I think the next 10 years could also be good with long-term growth shares like Visa and Mastercard, which are benefiting from the shift to digital payments and e-commerce. It has a few quality, global portfolio. MFF Capital gives investors solid diversification in my opinion. Though it does own a few ASX shares too.
One of the final things that I like about MFF is that it has committed to a growing dividend over the next few years (and beyond, presumably).
Taking all of that into account, I think it looks good value with a share price of $2.73 and a pre-tax net tangible assets (NTA) per share – an underlying value – of $3.134 at the end of May 2021.
