Australian Shares with Great Potential
Stock markets across the world are under stress right now. First-quarter in particular saw a bloodbath across global stock markets. The panic sell-off that began in late February reached its peak in late March when global markets went in a free-fall. There was a fear of a global economic collapse, fortunately, that didn`t materialize. The global economy is still in the danger zone, however now it seems that instead of a global economic crash we are heading for a prolonged recession that may turn into a depression.
In February and March when panicked investors were liquidating their investments faster than you can say “It is 2008 all over again”, the long-run investors saw an opportunity and instead of panicking, they bought the dip.
This is an old investing strategy that differentiates traders from investors. Traders usually look for brief-term gains and therefore whenever a crisis hits, they liquidate their investment and seek safe havens such as gold and bonds. Long run investors on the other hand are not in the game for short term gains. They have the financial cushion that allows them to bank on long-term gains instead of brief-term speculative profits.
Investors realise the principle of mean reversion, which simply means that in the long term the returns in the market stabilize at the average level of returns in the period. The volatility that we see in the first quarter is not permanent. Over the long term, the returns remain stable and therefore long-run investors bank on this principle to invest in the market and create not just profits but wealth.
Therefore, if you have the investor mindset and want to invest right now when markets are low then we have got a list of top 10 Australian stocks that have got good fundamentals right now and have good potential for the future.
1. a2 Milk Company Ltd (ASX: A2M)
The a2 milk company is a good stock to invest in right now. The company has got good fundamentals. It has got good market share especially in China where the infant formula is in high demand. A2 milk has consistently performed very well in both China and Australia and for this reason, this is one stock to look out for in the long run.
- Market capitalization: $10.55 billion
- Revenue growth: 41.4%
2. Appen Ltd (ASX: APX)
Appen is a developer of human-annotated datasets for machine learning and artificial intelligence. Their data sets are used by some of the most renowned tech companies in the world. AI revolution is being dubbed as the fourth industrial revolution and therefore Appen limited has got a future full of opportunities. If they continue along their current growth trajectory, then there is no reason why this stock shouldn`t perform well in the long run.
- Market capitalization: $3.01 billion
- Revenue growth: 86.2%
3. Audinate Group Limited (ASX: AD8)
Audinate is a digital audio-visual networking technologies provider. It has been impacted in the short run by the Covid-19 pandemic but its long-term outlook remains positive because of its diverse product line.
- Market capitalization: $400.8 million
- Revenue growth: 33.6%(2019)
4. BigTinCan Holdings Ltd (ASX: BTH)
BigTinCan provides enterprise mobility software that allows service organizations to improve the productivity of their workers. BigTinCan has got a lot of high value customers including some of the top banks in Australia and New Zealand and brands like Nike and Sephora. The fundamentals of BigTinCan are good and interesting in spite of the pandemic induced contraction they posted growth figures between 30% and 40%.
With excellent fundamentals, there is no reason why BigTinCan shares shouldn`t show good growth.
- Market capitalization: $225.6 million
- Revenue growth: 30-40% (expected for 2020 June)
5. ELMO Software Ltd (ASX: ELO)
ELMO is a HR and Payroll software company. It falls within the financial services sector, a sector that has been hit less severely as compared to other services sector businesses. The fundamentals of ELMO in the past have been good, and it is well positioned to continue along its growth trajectory.
- Market capitalization: $552.28 million
- Revenue growth: 48% (2019)
6. Kogan.com Ltd (ASX: KGN)
Kogan is an eCommerce company that is also positioned well for growth. The huge surge in online shopping has resulted in rapid growth and good future prospects for Kogan. As the social distancing measures become the new norm, online shopping is set to increase and therefore Kogan has great potential in the future. Based on this factor, we have placed Kogan among the top 10 stocks with good future prospects.
- Market capitalization: $900.58 million
- Revenue growth: 12% (2019)
7. Wisetech (ASX:WTC)
Wisetech is a technology and logistic solution integration firm. It develops cloud-based software that allow users to operate at a global level. Because of their services, they are in the sector that is expected to see growth, especially in the post-Covid-19 scenario. Wisetech is therefore well positioned for future growth and one of our recommended stocks.
- Market capitalization: $8.65 billion
- Revenue growth: 57.2%
8. Afterpay (ASX:APT)
Afterpay is a disruptive company that offers unique payment solutions to customers where they can purchase goods and pay for them later in instalments without any interest. Afterpay is categorized as a consumer finance company. The company was created as a result of the entrepreneur bubble that followed the 2008 crash and aims to grow globally in the coming years.
- Market capitalization: $8.11 billion
- Revenue growth: 91.4%
9. Altium (ASX:ALU)
Altium is a business that develops electronic design software for Windows OS. Altium’s customers are companies in the telecom, science, consumer electronics, automotive and defence sectors. It is like other companies in the tech services sector, well-positioned for future growth.
- Market capitalization: $4.64 billion
- Revenue growth: 22.1%
10. Pro Medicus (ASX:PME)
Pro Medicus is a leading imaging IT provider that targets medical corporations. Pro Medicus specializes in creating software and IT solutions that include information management systems for clinical reporting systems.
- Market capitalization: $2.65 billion
- Revenue growth: 47.9%
This list is based on my personal opinion, so do not consider this as a final word. It is always best to carry out personal due diligence before making your investment decisions. Having said that, these 10 companies have shown good progress in the past and are those companies that belong to sectors that can bounce back in the post-Covid-19 world. It must also be remembered that these analysis and forecasts are based on currently available information.