Today, we’ll look at the best shares to buy right now that we think are undervalued stocks on the ASX in 2021.
Even though we are trading near highs after the huge rally from all the stimulus, the world right now is flush with cheap money and we expect the market to continue to be bullish in the short to medium term.
As the coronavirus comes under control, a lot of these stocks are looking highly attractive with good valuations or strongly geared into the recovery.
Best Shares to Buy Right Now which are Undervalued Stocks on the ASX
These stocks are the best share to buy right now as they show strong potential but are considered to be undervalued stocks as they have not necessarily rallied along with the rest of the market.
Unlike dividend-paying blue-chip shares which tend to hold their value better, these stocks tend to be higher risk.
If you are looking for something with an even higher risk for a better potential return, we have a list of the 5 best penny stocks on the ASX.
Qantas Airways (ASX QAN)
The coronavirus pandemic has impacted almost every business sector in a way that hasn’t been seen before in the modern world.
The travel and hospitality industries have faced an existential threat due to a practical standstill in tourism and business travel.
However, the hardship brought by the pandemic might prove to be a boon for industry leaders as it weeds out smaller or weaker competitors.
This has been the case for Qantas Airways (ASX:QAN).
After Virgin’s bankruptcy, Qantas is in a position to dominate Australia’s domestic sector with solid liquidity and a near-monopoly.
Additionally, Qantas has been named as one of the world’s most financially secure airlines during the pandemic.
Furthermore, the recent lockdown could be an upside catalyst for the stock as the vaccination rate accelerate across Australia.
A2 Milk (ASX:A2M)
A2 Milk Company Ltd (ASX:A2M) has been a stock market darling over the past few years due to its fast-growing business and robust performance.
However, contrary to initial assessments, COVID-19 handed a blow to the company’s fortunes.
The pandemic severely impacted one of A2M’s major sales channels, hurt the company’s outlook, and resulted in multiple downgrades.
As with all hyper-growth stocks, any perceived apprehensions about the company’s operations will trigger a severe correction.
The recent three child policy announced by China as well as expectations of borders openings could revitalise the diagou revenue channel in mid-2022.
Even though there are China trade tension and headwinds, we expect demand to continue to rise along with a recovery in revenue in the Diagou channel.
Webjet Limited (ASX:WEB) is a digital travel services provider that acts as an intermediary in the B2B travel accommodation market.
It also operates an online travel agency and provides transportation services such as rental cars and motorhomes.
COVID-19 hit the travel industry particularly hard, bringing it to a virtual standstill.
However, the company has a strong liquidity position, dominant market share, a very competitive cost structure and is likely to outperform once the industry recovers.
Origin Energy (ASX:ORG)
Origin Energy (ASX ORG) is a leading integrated energy company and Australia’s largest energy retailer by revenue size and customer accounts.
With a new technology acquisition in play, Origin plans to improve its customer experience and reduce costs with a new highly automated platform called Kraken.
With this new platform and reduced costs, Origin could see growth in their EPS and dividends in the near future.
As a utility, Origin is a good and steady dividend play with growth potential that can add a dependable ballast to a portfolio.
Freelancer Ltd (ASX:FLN) is an Australia-based online freelance portal with a worldwide reach.
The company, a pioneer of the gig economy has since morphed into the largest freelance portal by the number of users.
The company’s growth plateaued in the years leading up to the pandemic due to stiff competition from rivals such as Toptal, UpWork and Fiverr.
However, the pandemic was a shot in the arm for the company and revitalized its business due to the transition to online and remote work.
The company benefited from a massive rise in demand for popular gigs due to the acceleration of digitisation caused by the pandemic.
How We Pick The Best Shares To Buy Right Now
Stock markets are generally driven by three factors within the markets.
Understanding these forces helps us time the market and buy or sell stock at the most opportune moments.
In general, the markets and stocks are firstly driven on a short-term basis via supply and demand imbalances.
This is the order flow on a day to day basis as investors buy or sell a stock for different reasons.
This order flow is generally hard to forecast and requires strong technical analysis and understanding of the underlying market to properly time.
Secondly, markets and stocks are driven by macroeconomic forces in the medium-term.
Factors include but are not limited to changes in interest rates, consumer sentiment, government policies and so forth.
Understanding the nuances and how the different countries interact with each other in terms of trade and politics is key to understanding the forces that drive the markets as a whole.
Finally, stocks in the long-term are driven by fundamentals. Factors include but are not limited to quantitative factors such as earnings growth, profit margin and return on equity.
Qualitative factors include factors such as competition, operating environment, political and policy environment.
To be able to pick the best shares to buy now, it is essential to combine market timing, macroeconomic and fundamental analytics.
Do you want to boost your income and trade like a professional? We've put together a FREE 5-day online course that can help you become a consistent and profitable trader.
We combine statistical analysis, backtesting and high probability options strategies to show you how to trade like a professional. Start your free course instantly here.
This is general advice only. MF & Co Asset Management has not considered your personal financial needs, objectives or current situation. This information is not an offer, solicitation, or a recommendation for any financial product unless expressly stated. You should seek professional investment advice before making any investment decision.
We are sorry that this post was not useful for you!
Let us improve this post!
Tell us how we can improve this post?
Henry is a co-founder of MF & Co. Asset Management with over 15 years of experience as a trader, investor and asset manager. His focus is on quantitative and qualitative stock analytics and advanced options strategies combined with statistical analysis to trade and invest for clients. You can catch him on ausbiz as a regular contributor talking on macroeconomic and trading themes.