October will be yet another pivotal moment in 2020 for Australian investors. Victoria is likely to open up further, enabling more people to get closer to normal life. And some state borders will reopen.
On the business front, banks are likely to start renegotiating loans and calling in bad debts. In addition, several states have already extended the Government's Commercial Tenancy Code of Conduct.
The result is a unique chance for investors to choose which ASX shares to buy for medium to long-term profits.
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Retail companies
Premier Investments Limited (ASX: PMV) is a great retail share to buy. It is already starting to see revenues return after openings in most of Australia. With Victoria representing a large percentage of its annual sales, it is likely to see a fast recovery from its physical shops. The company achieved an increase in online sales by 50% in 2H20 against the previous corresponding period. This resulted in 25.5% of total sales for the half. The company still expects its earnings before interest and taxes to be 9.7% – 11.7% when compared with 2H19.
Premier owns 100 of The Just Group, who's brands include Smiggle, Just Jeans, Jay Jays, and Dotti. It also owns 28.06% of Breville Group Ltd (ASX: BRG) which is performing very well.
Premier Investments is currently selling at a price to earnings ratio (P/E) of 25.61, with a trailing 12-month dividend yield of 3.75%.
Bank shares to buy
National Australia Bank Ltd. (ASX: NAB), like all banks, has carried much of the economic burden of the coronavirus. Primarily this has been due to demands from banking regulator, APRA. The treasurer has indicated that temporary insolvency and bankruptcy protections will be extended a further three months to December 31. Nevertheless, banks are already contacting more than 450,000 borrowers to see if they can restart payments, or if they require further assistance.
All care has been taken by banks and government to ensure that borrowers impacted by COVID-19 are not tipped into insolvency early. Nonetheless, they will be moving to normalise financing terms. Those unable to restart payments may be offered restructuring, such as interest-only loans. But, if borrowers are judged as unable to repay, there may be a need for "tailored assistance", according to the Australia Banking Association.
National Australia Bank is currently trading at a P/E of 15.52 with a trailing 12-month dividend yield of 6.5%. This is a solid ASX share to buy at a good price.
Entertainment shares
Right now, South Australia is talking about opening borders with NSW. In addition Victoria appears to be moving faster than anybody thought it would. The likelihood of further border opening is high, and already there is a 50km bubble around the NSW/Victorian border.
One of the companies able to take advantage of this is Ingenia Communities Group (ASX: INA). It develops, operates and sells residential housing in retirement, lifestyle and holiday communities. Despite the pandemic, the company still managed to increase earnings per share (EPS) by 5%, and increased operating cash flow by 13%. I think Ingenia is a great share to buy for short term gains as well as strong performance over the medium to long-term.
