As 2020 draws to a close, we cast our net out for the best ASX shares to buy now to take with you into 2021.
Today we look at two shares that one fund manager has highlighted. One stands to benefit from the expected nationwide reopening and return of shoppers in 2021. The other stands to benefit from the forecast global infrastructure spending splurge, led by China.
An ASX share to benefit from the reopening
First up is EML Payments Ltd (ASX: EML).
Dushko Bajic is the Head of Australian Equities Growth at First Sentier Investors.
In an interview with Livewire, Bajic said they’ve been analysing and adding, “great stocks to the portfolio that we believe are beneficiaries of the reopening as the world normalises in the years ahead.”
Bajic went on to say:
[E]xamples include… EML Payments, which is a company that provides gift cards and general-purpose re-loadable cards. We believe that they will be a big beneficiary of foot traffic returning more broadly in the economy.
EML Payments, with a market cap of $1.46 billion, is part of the S&P/ASX 200 Index (ASX: XJO). And the company has been posting strong revenue growth in its recent quarterly reports.
EML reported revenue of $40.6 million for the first quarter of the 2021 financial year (FY21). That’s up 75% from the first quarter for FY20. Earnings before interest, tax, depreciation and amortisation (EBITDA) also leapt 215% year-on-year.
The EML Payments share price has yet to fully recover from the COVID market crash, which saw its shares plummet 77% from 14 February through to 24 March. Since that low, shares have soared 206% higher. Year-to-date the share price remains down 12%.
An ASX share to benefit from the global infrastructure splurge
The second ASX share is Fortescue Metals Group Limited (ASX: FMG).
The Aussie mining giant – the fourth largest iron ore producer in the world – has a market cap of $72.3 billion and pays a juicy dividend yield of 7.7%, fully franked.
Dushko Bajic notes, “[W]e’ve also done well out of the Pilbara iron ore sector of Australia, which is one of the great comparative advantages of our economy and one of the great sources of investment in the stock market.”
He says that Fortescue, in particular, is a company that’s “really low on the cost curve and generating very strong returns, not only for our economy, but also as stocks and earnings for us as individual investors in the company.”
Indeed, Fortescue is trading at a price to earnings (P/E) ratio of only 10.3 times. And that’s after seeing its share price rocket 117% higher in 2020.
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Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends EML Payments. The Motley Fool Australia has recommended EML Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.