The global economy has taken a beating because of the pandemic in 2020. With countless businesses shutting down and even borders closing in response to the worldwide health threat, the whole market has been in the early stages of recession throughout the year.
But as Australian hospitality and travel industries began limping back to normal, few ASX (Australian Securities Exchange) shares were buoyed by a miraculous rally. Despite all the market volatilities, the stock market has staged an incredible recovery over the past few months, rising up to significant heights.
This sudden upsurge has again gained the traction of several market experts, investors, and analysts. Without further ado, we have scoured the best 3 ASX shares that are ready to go off this year as per expert predictions.
3 ASX Shares Ready To Go Off This Year
1. Nextdc Ltd (NXT)
Nextdc is a prominent data center operator that provides businesses with an array of services. Their service list includes Data-Centre-as-a-Service (DCaaS), Data Centre Infrastructure Management-as-a-Service (DCIMaaS), and Professional Services. Even Though NXT had a drop earlier in 2020, the pandemic pushed up the demand for computing infrastructure worldwide.
With increased interest, the shares of Nextdc have gone up more than 23% from the previous year. Yet another reason for its upsurge is the increased insider buying. The Non-Executive Director of Nextdc Limited, Jennifer Lambert, has recently bought AU$70k worth of stock at the rate of AU$11.39 per share. Even though it wasn’t a big buy, it boosted their shareholding by 25%.
Further, post a bullish broker note by the American financial conglomerate Goldman Sachs, investors have flocked to get their hands on these ASX shares.
The message said, “We note investors’ concerns about the expected rise in inflation affecting equity valuations, but Nextdc's strength, especially given that its hyper-scale contracts incorporate inflation escalators. We believe the growth outlook remains attractive.”
Following suit, several experts also opined that NXT is one of the best ASX shares that are ready to go off this year. Raymond Chan, JP Morgan's head of Asian Desk, is betting on NXT as he says that it might see another spike up in the coming quarter.
He told SwitzerTV Investing, “It’s all eyes on.. how many of the optional (client) contracts are exercised in the next 3 months.”
He added that June is usually the time when client renewals are announced, but he suspects that it might be delayed this year due to the pandemic. Moreover, he opined that “The delay may impact the share price, but if we see some contract wins, that will be a catalyst for Nextdc to move to the next level.”
However, demand for Nextdc's services has been growing at a rapid pace over the past few months, and it shows no sign of slowing down any time soon. In fact, according to predictions with the growing demand, it has the potential to underpin solid earnings growth in the coming years.
2. United Malt Group Ltd (UMG)
Deviating from the usual tech stocks, United Malt Group is one of the largest malting groups in the world. It is the fourth largest commercial maltster globally and has been gaining significant traction lately.
In March 2020, the United Malt Group, a novice business venture at the time, was listed as a separate business on the Australian Securities Exchange (ASX). Several experts and analysts have been predicting that the gradual rise in UMG share price is a major post-COVID recovery play. Matthew Haupt, Catriona Burns, and Oscar Oberg, the Wilson Asset Management Portfolio managers, opined the same.
In a memo to their clients, they wrote, “We remain positive on agricultural stocks and have transitioned more into those set to benefit from tailwinds in the re-opening trade.”
They further added, “United Malt Group Limited is the world’s fourth-largest commercial maltster, operating as a network of companies spanning North America, the UK, and Australia. It also operates an international distribution business, providing a full-service offering for craft brewers and distillers.”
In North America and Britain, UMG had big business in the brewery and distillery supplies. But with the pubs shutting down and people not visiting out to bars in the past 18 months, UMG took a major hit.
The memo by the Asset Management Portfolio managers read that, “Now, the company stands to benefit from increased patronage in restaurants and pubs, as the US and UK economies recover and reopen.”
“United Malt Group also has a series of initiatives to support growth, including an upgrade and expansion of its malting capacity in the UK and investment in a bespoke craft warehouse and distribution center in Victoria.”
The UMG shares are up almost 9% this year, despite market volatilities. As of writing, it's trading at $4.46. Moreover, Wilson funds WAM Capital Limited (WAM), WAM Research Limited (WAX), and WAM Leaders Ltd (WLE) currently hold United Malt.
3. Computershare Ltd (CPU)
Computershare Limited is one of the most undervalued ASX shares today. It saw a significant rise of over 20% in its share price in the past couple of months.
Computershare Limited is an Australian stock transfer company that offers a wide range of services, including issuer service, mortgage service, employee equity plans, communication, business, stakeholder relationship management, and technology services.
CPU is one among the ASX shares that are ready to go off this year because it temporarily holds dividends and acquisition proceeds that are headed to shareholders. They can easily earn short-term interest from this pool of funds.
The money-spinner company has been struggling hard for the past 18 months due to market volatilities with almost near-zero rates. But, Raymond Chan has pointed out that this situation would turn around soon. He said, “I would see Computershare as an interesting stock as an inflation hedge.”
Chan further added that “Computershare is one of the few that can leverage the upside of rising interest rates… You can imagine in the future if the interest rates continue to go back up because of inflation, it will earn more money.”
Several investors have already bought in Computershare stocks with their price going up almost 19% this year, and over 33% in the past 12 months. But Chan also says that “The PE (ratio) is not too low, but certainly not too high — around 22 times at the moment.”
As per predictions, Computershare’s earnings are expected to increase almost by 54% over the next few years. It indicates a highly optimistic future ahead, leading to more robust cash flows, which will result in higher share value.
The Covid-19 turmoil has adversely affected the global financial market. But most of the Australian shares have already partially recovered their pre-Covid levels and are expected to bounce back completely in the coming years.
If you are looking out for stocks that experts believe are worth keeping an eye on, the 3 ASX shares mentioned above are your best bets, according to expert predictions.
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