Some of the country's top fund managers have revealed some great ASX share picks for 2021.
There was a huge amount of disruption in 2020 due to the COVID-19 pandemic.
These businesses have been identified by fundies as among the best opportunities for 2021:
Sonic Healthcare Limited (ASX: SHL)
Kelli Meagher, portfolio manager from Sage Capital, went for large healthcare player Sonic Healthcare.
Ms Meagher thinks that the market is under-appreciating how long the COVID-19 testing is going to go on for. She said that the ASX share is already significantly benefiting from all of the additional testing due to COVID-19.
The fund manager pointed out that COVID-19 testing isn't going to go away after the vaccine and it's not known how long the vaccine actually lasts. Sonic could get another leg of growth from antibody testing, which tests if someone is immune and whether the vaccine worked for three months or six months.
Ms Meagher likes the global growth, the management team and the cashflow generation of Sonic. She also pointed out that it could buy acquisitions with the extra profit it's generating. She also said that it had a "nice little dividend yield of 4%", and it should do well in 2021.
According to Commsec, the Sonic share price is valued at 17x FY21's estimated earnings.
Galaxy Resources Limited (ASX: GXY) and Pilbara Minerals Ltd (ASX: PLS)
Fund manager Julia Weng from Paradice Investment Management decided to go for two lithium ASX shares, Galaxy Resources and Pilbara Minerals.
Paradice has been doing a lot of research into electric vehicles and the implications on battery materials. Ms Weng pointed out that electric vehicles are currently at a 5% market penetration.
There has been numerous policy changes emerge during the pandemic. In previous years, electric vehicle growth was driven by China. But there has been subsidies and tax exemptions come out of the US and Europe.
The fundie said that Europe is producing more electric vehicles than China. General Motors itself will have 30 models of electric vehicles by 2025. Paradice believes that will underpin the demand for battery materials.
However, there hasn't been a lot of lithium supply because of depressed lithium prices.
Ms Weng thinks that the lithium price has to increase to incentivise stronger production from here.
The Pilbara Minerals share price has risen by 185% since the start of November 2020 to $1.11 – it just matched its all-time high from January 2018. The Galaxy Resources share price has gone up by 159% since 25 September 2020.
