Changes are happening - please bear with us while we update our site.

Changes are happening - please bear with us while we update our site. Click here to give us your advice and feedback.

2 ASX recovery shares I’d buy before Treasury Wine (ASX:TWE)

I believe there remains to be quite a lot of potential upside as our economy reopens and gradually recovers. Here are 2 that I'm liking at the moment.

With many ASX travel and leisure shares still trading at significant discounts to their pre-COVID levels, there remains to be quite a lot of potential upside as our economy reopens and gradually recovers.

This isn’t to say this will happen any time soon though, so you’d probably have to take a long-term outlook for these types of companies.

Why I’m holding on Treasury Wine shares at the moment

I recently wrote an article that outlines the catalysts this company needs to get back on its feet. TWE shares are still down nearly 50% compared to where they were pre-COVID.

TWE share price chart

Source: Rask Media 1-year TWE share price chart

Right now, Treasury Wine’s exports to China have been hit with a 169.3% tariff for smaller containers, which could potentially be in effect until August 2021. Given that Chinese exports account for roughly 30% of TWE’s total earnings, it could take a substantial amount of time for sales to recover even if the overall COVID-19 recovery is much quicker.

For this reason, I think there are some other ASX shares that are better leveraged to the overall reopening of the economy and aren’t subjected to trade barriers like TWE is facing.

Aristocrat Leisure

Aristocrat Leisure Limited (ASX: ALL) is a leading gaming provider and publisher that operates across Australia, New Zealand, the Americas and other countries. The Aristocrat share price has made a slow and steady recovery since its March lows and currently trades at a 15% discount to pre-COVID levels.

ALL share price chart

Source: Rask Media 1-year ALL share price chart

What I find interesting is that the Aristocrat share price has nearly made a full recovery despite its land-based segment still significantly underperforming. Part of the reasoning behind this is that the company was bolstered by its digital arm, which saw a 29% increase in revenue in FY20.

Many analysts are predicting a bounce-back in Aristocrat’s land-based segment. I believe that this, combined with further growth in its digital segment, will result in some significant earnings growth down the track.

Webjet

The travel sector is finally looking up with multiple potential vaccines in the works.

Everyone seems to have a different opinion on exactly how long it’ll take for travel volumes to return to pre-COVID levels. However, to me, it seems likely that there will be a substantial amount of pent up demand once international travel is phased back in.

Around half of Webjet Limited’s (ASX: WEB) revenue comes from WebBeds, its business-to-business (B2B) platform that essentially acts as a middleman between hotels (looking to fill rooms) and other travel provider clients. It’s important to note that prior to COVID-19, this segment alone was really just starting to take off. Management has stated that it plans for WebBeds to eventually become the number one player in this space (it currently holds the #2 position).

For further reading, here’s how I compare Webjet and Flight Centre shares.

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report for FREE by CLICKING HERE NOW and creating a 100% FREE Rask Account.

(Psst. By creating a free Rask account, you’ll also get access to 15+ online courses, 1,000+ podcasts, invites to events, a weekly value investing newsletter and more!)

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.
Skip to content