The ASX 200 (INDEXASX: XJO) is going through a bit of recovery at the moment, but I think we need to keep an eye out for opportunities if the coronavirus selloff gets worse.
The last few weeks has been the definition of volatility. The best way to take advantage of the lower prices is to buy. It's your purchase price that will decide your investment returns. Over the coming days and weeks we may be presented with some of the best share prices that we've seen over the past few years.
Here are three shares I'll be close to buying if the coronavirus selloff gets worse:
REA Group Limited (ASX: REA)
REA Group is the owner of Australia's leading property portal, realestate.com.au.
The company owns an excellent piece of digital real estate. It's the first place that buyers go to look for property and the most important place for sellers to list their property. It gives REA Group a moat because it's hard for a competitor to just come and steal the top position, it's taken over a decade for REA Group to build up this position. It's a self-fulling circle, the more potential buyers there are the more sellers will use it and vice versa.
Being number one means that REA Group can increase its prices with little to no detrimental effect. This is great for long-term compounding returns.
Australians love property and will keep buying and selling for the foreseeable future, so REA Group can expect fairly consistent earnings year after year.
After the recent share price falls, it's trading at 29x FY22's estimated earnings.
A2 Milk Company Ltd (ASX: A2M)
The A2 Milk share price hasn't been as heavily affected as many of the other high-growth shares. At its half-year result it revealed to the market that its revenue in the first two months of the second half of FY20 has been even better than expected, despite the lockdowns in China.
Families still need to consume A2 Milk products whether there's a coronavirus going around or not. Indeed, in these worrying times I think families are more likely to want to go for higher-quality products.
A2 Milk is continuing to invest in increasing its brand awareness and its distribution which will lead to longer-term earnings growth.
It's got a great balance sheet with no debt and a large cash balance. It's currently trading at 26x FY22's estimated earnings.
CSL Limited (ASX: CSL)
The big healthcare blue chip has been one of the best performers over the past decade. It has fallen over the past few weeks as well, but it's only down 10% which is a lot less than most other shares.
CSL is fairly well positioned for any negative economic effects from the coronavirus. People will continue to need healthcare services which CSL is an important element of with its blood plasma products.
I like that CSL continues to invest in research and development to create new products which will mean new earnings streams. It currently invests around 10% of its revenue into R&D each year.
Foolish takeaway
Each of these shares are high-quality. They are among the best in the ASX 200. However, for me they would need to fall a bit more – say 10% – to be rated as a better buy than some of the other shares I'm looking at. But it's a decent time to buy shares of any of the three, though keep in mind the share market could fall further in the coming weeks.
