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What are the best shares to buy in 2020?

Analysts offer their COVID-19 market crash and recession-proof stock picks.

Updated

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Important note

Due to recent events, the stock market is facing unprecedented volatility. Some analysts suggest that it's too early to start buying shares, others disagree. No-one can say for certain which direction stocks will go; these are investment ideas only and should not be taken as financial advice.

Looking to stock up on good quality companies during the market volatility? With the COVID-19 pandemic likely to have a long-lasting impact on global economies, it's not easy picking which companies are the best investments for 2020 – or which should be avoided.

So we spoke to stock analysts Michael Wayne from Medallion Financial and Bell Direct's Jessica Amir to get their views on which stocks are worth considering over the next 12 months.

Remember! Stocks are risky and unpredictable – a stock that's right for one person, might not be the best choice for you. That's part of what makes investing in the stock market both challenging and exciting!

Bargain buys

During a major stock market crash, most company shares will fall, so savvy investors will be looking to scoop up good quality stocks at discount prices. According to Wayne, some of these top bargains are likely to be found in the financial and travel sectors.

He told Finder investors should look out for quality financial businesses that have seen prices fall over 30% from their heights as well as travel-related companies that are expected to recover once quarantine measures lift.

"Financial market facing businesses get hammered during periods of market turmoil. Once trading conditions normalise, prices tend to stabilise and recover quickly."

Wayne's stock picks: Macquarie Group, Magellan Financial Group, Sydney Airport Holdings, IDP Education.

Recession-proof

Investors should prepare for the possibility of an extended recession according to Amir. If we do see a deep global recession, consumer staple companies such as food and beverage retailers are expected to be among the safest.

"Thinking about what’s needed regardless of economic growth slowing, regardless of Coronavirus (which will pass)," said Amir.

"Take note of the good news that is coming out amid corona. Who is staying on track to meet their earnings forecast and why?"

Amir's stock picks: Coles Group, Woolworths Group, Metcash, Telstra, AGL Energy.


Shares to watch in 2020

1. Macquarie Group (ASX. MQG)6. Coles Group (ASX:COL)
2. Magellan Financial Group (ASX:MFG)7. Metcash (ASX:MTS)
3. Sydney Airport Holdings (ASX: SYD)8. AGL Energy Ltd (ASX:AGL)
4. IDP Education (ASX:IEL)9. Telstra (ASX:TLS)
5. Woolworths Group Ltd (ASX:WOW)10. The Reject Shop (ASX:TRS)

1. Macquarie Group (ASX. MQG)

Macquarie Group is a major Australian investment bank and financial services company with operations around the world.

  • Blue chip financial sector company
  • Financials expected to rise once volatility ends
  • Trading 34% below February peak (April 10, 2020)
  • High annual dividend of $5 per share (2019)


2. Magellan Financial Group (ASX:MFG)

Magellan is an Australian funds management firm that offers investment funds to retail and institutional investors primarily in Australia and New Zealand.

  • Financial sector company and investment manager
  • Annual dividend of $2.04/share (2019)
  • Trading 30% below February's peak (April 10, 2020)
  • Financial companies expected to rise once crisis eases


3. Sydney Airport Holdings (ASX: SYD)

Sydney Airport Holdings is the owner and operator of Australia's busiest airport, Sydney's international Kingsford Smith airport located in Mascot.

  • Travel and transportation sector stock
  • Good quality travel stocks expected to rise once quarantine ends
  • Trading over 37% below December peak (10 April, 2020)
  • Annual dividend $0.39 per share (2019)


4. IDP Education (ASX:IEL)

IDP Education is an educational sector business engaged in the placement of international students into universities and schools in Australia, US, UK, Canada and New Zealand.

  • Consumer services and educational sector business
  • Stocks that rely on travel expected to rise once quarantine ends
  • Trading 40% below February peak (April 10, 2020)
  • Annual dividend of $0.24/share


5. Woolworths Group Ltd (ASX:WOW)

Woolworths Group operates major consumer stores and supermarkets in Australia, New Zealand and India. Along with Big W stores and Woolworths supermarkets, it operates food, beverage and hotel segments.

  • Food and retail sector stock
  • Supermarket and staple food stocks typically well placed to weather a recession
  • Trading 19% below February peak (April 10, 2020)
  • Fully franked annual dividend of $1.03 per share (2019)


6. Coles Group (ASX:COL)

Coles Group is an Australian company that operates supermarkets and retail stores. Its business segments include Coles Supermarkets, Coles Liquor, Flybuys, Coles Financial Services and Spirit Hotels.

  • Food and retail sector stock
  • Supermarket and staple food stocks typically better placed to weather a recession
  • Trading 8% below February peak (April 10, 2020)
  • Last paid dividend was $0.3/per share (fully franked) on February 27, 2020


7. Metcash (ASX:MTS)

Major Australian retail and supermarket conglomerate better known for its businesses such as IGA, Mitre 10, Timber & Harware and liquor chains including Cellarbrations, IGA liquor and The Bottle O.

  • Food and retail distribution sector stock
  • Supermarket and staple food stocks typically better placed to weather a recession
  • Trading 15% below March peak (April 10, 2020)
  • Annual dividend of $0.13/per share fully franked (2019)


8. AGL Energy Ltd (ASX:AGL)

Australian energy company engaged in distributing natural gas, electricity, solar and energy efficiency products to consumer and wholesale markets.

  • Utility and renewable power sector stock
  • Utility stocks typically better placed to weather a recession
  • Trading 17% below February peak (April 10, 2020)
  • Annual dividend of $1.11/per share (2019)


9. Telstra (ASX:TLS)

Major Australian telecommunications company and provider of mobile and fixed broadband, pay TV and digital content services.

  • Major telecommunications sector stock
  • Staple blue chips such as major telcos expected to better weather a recession
  • Trading 19% below Janurary peak (April 10, 2020)
  • Annual dividend of $0.1/per share (2019)


10. The Reject Shop (ASX:TRS)

The Reject Shop is an Australian retailer of discount variety merchandise, including toiletries, homewares, personal care products, household cleaning products, kitchenware, leisure items and snack foods.

  • Retail trade and specialty store company
  • Discount stores often viewed as "recession-proof"
  • Trading 40% below January peak (April 10, 2020)
  • Reports it has started to receive stock again from Chinese suppliers and its sales are up 6% in second half so far (April 10).

Buy shares through an online broker

To buy shares you'll need to find a broker. You can use the table below to compare online brokers (also known as share trading platforms) available in Australia.

Data indicated here is updated regularly
Name Product Standard brokerage fee Inactivity fee Markets International
IG Share Trading
Finder Award
IG Share Trading
AUD 8
AUD 50 per quarter if you make fewer than three trades in that period
ASX shares, Global shares, Forex, CFDs, Margin trading
Yes
Brokerage discount: $5 on Australian shares for active traders & $0 commission on US and global shares
Enjoy some of the lowest brokerage fees on the market when trading Australian shares, international shares, forex and CFDs, plus get access to 24-hour customer support.
eToro Share Trading (US stocks)
USD 0
USD 10 per month if there’s been no login for 12 months
Forex, CFDs, US shares
Yes
Zero brokerage share trading on US stocks with trades as low as $50.
Note: This broker offers CFDs which are volatile investment products and most clients lose money trading CFDs with this provider.
Join the world’s biggest social trading network when you trade stocks, commodities and forex from the one account.
Superhero share trading
AUD 5
No
ASX shares
No
Trade ASX stocks and ETFs with a flat $5 brokerage fee and a low minimum investment of just $100.
CMC Markets Stockbroking
AUD 11
No
ASX shares, Global shares, Forex, CFDs, Margin trading, Options trading, mFunds
Yes
$0 brokerage on global shares including US, UK and Japan markets.
Trade up to 9,000 products, including shares, managed funds, forex, commodities and cryptocurrencies, plus access up to 15 major global and Australian stock exchanges.
ThinkMarkets Share Trading
AUD 8
No
ASX shares, ETFs
No
Fast sign-up: Start trading in just a few minutes
Switch between your ASX share trading account and your forex account on your mobile and access some of the lowest brokerage fees on the market with a flat $8 commission (until $200,000).
ANZ Share Investing
AUD 19.95
No
ASX shares, Global shares, Margin trading, Options trading
Yes
Earn 1 Qantas Point per AU$3 spent on brokerage fees on certain instruments.
Access Morningstar reports, company announcements and and live pricing via ANZ’s share investing platform. Available for desktop and mobile.
Westpac Online Investing Account
AUD 19.95
AUD 63.50 per year on the global markets account
ASX shares, Global shares, Options trading, US shares
Yes
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Compare up to 4 providers

Important: Share trading can be financially risky and the value of your investment can go down as well as up. Standard brokerage fee is the cost to trade $1,000 or less of ASX-listed shares and ETFs without any qualifications or special eligibility. If ASX shares aren’t available, the fee shown is for US shares.

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, options or any specific provider, service or offering. It should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involve substantial risk of loss and therefore are not appropriate for all investors. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.


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