If I were investing with $750 today there are at least two ASX shares that I would buy.
You don't need $10,000 to start investing. The great thing about investing in shares is that you can invest relatively small amounts. If you were investing in property you normally need a deposit of at least 10% of the property value.
I think these two ASX shares would make really good buys:
Bubs Australia Ltd (ASX: BUB)
Bubs is an infant formula business which specialises in goat milk products.
I think it has done a good job of growing the business from a small operator into a company which could deliver big growth. It has its own manufacturing facility in Australia and sells a variety of products.
Infant formula is the main engine for growth though. Bubs' infant formula has a gross profit margin of around 40%, which is much higher than the overall business gross margin 24%. As infant formula becomes a larger part of the business, Bubs will become more profitable for its revenue.
In FY20 the ASX share's infant formula revenue grew by 69%, so that segment is now 55% of the business, up from 30% in FY19. Total revenue grew by 32% to $62 million over the year.
Whilst I'm excited by the Chinese revenue growth potential, I think the 'other markets' is particularly exciting which now represents 10% of revenue. Vietnam is a key growth market right now. Asia is a very big market, even if you exclude China.
Bubs recently decided to pursue in-market manufacturing in China. So Bubs is going to acquire a stake in the Beingmate manufacturing facility in China. It's also looking to launch its China label products into the general trade channel.
The launch of Bubs vitamins and minerals could also be a good move if it gains traction with customers, particularly in Asia.
There are a lot of things going on with Bubs. But I think it only has to be reasonably successful with its overseas growth to deliver solid shareholder returns from the current Bubs share price of under $0.90.
WAM Microcap Limited (ASX: WMI)
I think ASX small cap shares are a great way to deliver good returns. However, you need to be even more picky with small caps than large caps. Smaller businesses have a lot more growth potential, but there's also a lot more risk.
It's a lot easier to grow a company's revenue from $100 million to $200 million than it is to grow revenue from $10 billion to $20 billion.
WAM Microcap is a listed investment company (LIC) which invests in small caps with market capitalisations under $300 million at the time of acquisition. Its portfolio has performed very well since inception, its gross returns per annum has been 17.8% since June 2017.
Some of its current ASX share investments are names like Citadel Group Ltd (ASX: CGL), Redbubble Ltd (ASX: RBL), City Chic Collective Ltd (ASX: CCX), Reject Shop Ltd (ASX: TRS), People Infrastructure Ltd (ASX: PPE) and Temple & Webster Group Ltd (ASX: TPW).
WAM Microcap offers diversification as it's invested in dozens of names in its portfolio. But it also offers protection with a relatively large cash position. At 31 July 2020, it had a 15.9% cash position weighting. That provides some downside protection and also means it has ammunition if share prices fall.
The LIC is able to pay out a growing dividend from its investment profits. At the current WAM Microcap share price it has an ordinary grossed-up dividend yield of 5.9%. It has also paid a special dividend in each financial year since it listed.
Foolish takeaway
I think WAM Microcap is a nice option for total returns with a mix of dividend and capital growth. Meanwhile, Bubs is an exciting option for long-term growth if it can capture a bit of market share in Asia.
