If I were looking for some ASX shares to buy in this vaccine rally, then there a few ideas I’d consider including A2 Milk Company Ltd (ASX: A2M).
It seems there’s some good news in the US – it seems a vaccine being developed by Pfizer has shown in the initial data that it’s 90% effective.
That has put a rocket under a number of sectors like travel, oil and so on. But I wasn’t looking to invest in oil shares before the global pandemic and I’m not looking to buy shares now.
But there are quite a few ASX shares that have been impacted by COVID-19 effects that do look interesting to me:
A2 Milk Company (A2M)
Prior to COVID-19, A2 Milk was generating the type of profit growth that some other of the top ASX growth shares were.
But along came COVID-19 and caused a major impact. Initially, A2 Milk performed well as customers stocked up. But then there was the lockdown in Victoria as well as all of the border closures in NZ and Australia. The fact is, a lot of infant formula purchases came from international visitors – students, people on holidays, just daigou in general. This has impacted local demand, as well as hurting A2 Milk’s ability to get product into China in the short term.
However, I still believe A2 Milk shares have a very promising long term future. It continues to expand internationally and this current malaise could unwind in the 2021 calendar year. A2 Milk was already predicting the revenue would rise in FY21.
According to CommSec, A2 Milk shares are priced at 29 times the estimated earnings for the 2021 financial year.
Tyro Payments Ltd (ASX: TYR)
Tyro Payments is a business supplies merchants with payment terminals. There’s a good chance that one of your local restaurants or cafes has one of their terminals. It has also announced a deal with Bendigo and Adelaide Bank Ltd (ASX: BEN) to take over the bank’s many thousands of terminals in an alliance.
A successful vaccine could assist more people getting back to their normal life – more eating out, more retail shopping and so in. Tyro could be a good beneficiary from this trend.
Tyro still has a while to go before it’s hugely profitable, but payment networks can have very good scale benefits, as we’ve seen with Visa and Mastercard.
EML Payments Ltd (ASX: EML)
EML Payments is another payment business. It offers a variety of services including physical gift cards, virtual gift cards, general reloadable cards and so on.
Some areas of EML’s business, particularly physical gift cards, have been impacted significantly by COVID-19 impacts. If most of the normal demand were to return then that could be a real boost for EML.
It actually has a global footprint, which is one of the main things that I look for in good ASX growth shares.
Summary thoughts
I like each of the above ideas for a situation where life can largely return to normal. But there are also a few shares that have fallen today. I still believe that a shift to digital donations is here to stay, so the decline in the Pushpay Holdings Ltd (ASX: PPH) share price looks like an attractive opportunistic decline for buying.
