Day: 12 May 2020

The Australian aviation could be heading for a major overhaul in 2020 because of the coronavirus pandemic.

At present Virgin Australia Holdings Limited (ASX: VAH) is in administration after failing to gain the required financial support to keep its operations running.

While there are a number of suitors rumoured to be interested in taking over the struggling airline, if it fails to find a buyer it won’t necessarily mean Qantas Airways Limited (ASX: QAN) has the market to itself.

This morning Regional Express Holdings Ltd (ASX: REX) confirmed reports that it is looking into the feasibility of commencing domestic airline operations.

In response to the news, the regional airline operator’s shares rocketed 45% higher this morning.

What did Regional Express announce?

Regional Express revealed that it has been approached by several parties that are interested in providing the equity needed for it to start domestic operations in Australia.

The preliminary estimate of equity required is in the vicinity of $200 million, though the structure of any potential equity raising is yet to be determined.

The company’s board is now exploring this opportunity and has begun talks with potential equity partners. At this point, the board believes that with sufficient capital injection the start of domestic operations would be a particularly compelling proposition.

Though, it warned that if the company were to go ahead with the launch, it would take some time before the first flights took off. It intends to make a decision within the next eight weeks, with operations expected to commence on March 1 2021 if it chooses to go ahead with it.

The Qantas share price is pushing higher today despite the news. It would appear as though shareholders are not overly concerned by the potential competition from Regional Express.

More reading

• Up 140% since March: the ASX airline share flying under the radar
• In a post-COVID world, could Australia be the next superpower?
• 3 ASX 200 pandemic winners and 3 losers
• Are there any safe havens in ASX aviation shares?
• These ASX 200 shares saw the biggest falls last week

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX shares have been smashed in 2020. Some sectors, like travel and retail, have seen companies shed billions in value amid the COVID-19 shutdown. But it’s not all doom and gloom on the markets right now.

There are definitely buying opportunities for savvy investors at the moment. There has been a lot of panic selling while many growth and value shares have outperformed the S&P/ASX 200 Index (ASX: XJO) over the last 6 weeks or so.

Here are a couple of the smartest ASX shares to buy if you have $2,000 to spare right now.

What are the smartest ASX shares to buy?

If you’re more of a passive investor, the Vanguard Australian Shares Index ETF (ASX: VAS) may be one to buy. Sure, this means you’re not going to realise the upside of a growth share like NextDC Ltd (ASX: NXT). But it does mean your risk is diversified and you’re investing in a broad basket of high-quality ASX shares for the long-term.

In fact, the laziest investors can sometimes do the best. According to an article in the Australian Financial Review (AFR), many investors were buying and selling in March and April. However, those who bought and held a broad market index like Vanguard Australian Shares Index ETF rode the ASX down and then back up again.

Having said that, I think those Fools looking specifically for undervalued shares could look elsewhere. Individual stock picking is more speculative than buying ETFs but there’s no doubt it can pay off. That’s especially the case in uncertain times like we’re experiencing right now.

As such, ASX shares like CSL Limited (ASX: CSL) and Webjet Limited (ASX: WEB) could be in the buy zone.

CSL has been a solid growth and dividend share for a number of years. In fact, the CSL share price is up more than 40,000% since its IPO in 1994. Furthermore, I think there’s a solid outlook for the biotech giant this year. CSL’s non-cyclical earnings and strong research and development (R&D) pipeline could pay dividends (literally) in 2020 while its ASX 200 peers slash theirs.

Webjet shares could be undervalued after falling 65.93% in 2020. The Aussie economy is starting to come back to life as COVID-19 restrictions are eased. This means domestic travel could soon follow, resulting in the possibility of the ASX travel share outperforming in the near future.

More reading

• ASX gold shares steady: Can gold provide your portfolio with defensive and safe returns?
• Is $1,000 of A2 Milk shares a good investment?
• How can the ASX 200 soar with rising unemployment?
• Safe dividend stocks to buy today for the COVID-19 world
• 2 quality ASX shares to buy for long-term growth

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The gold spot price has remained steady at 8-year highs of around US$1,704 per ounce. Furthermore, the combination of a weak Australian dollar and an elevated gold spot price has created very healthy margins for Aussie gold miners.

Given its safe haven and hedging characteristics, could gold shares in the S&P/ASX 200 Index (ASX: XJO) provide investors with both a defensive asset and safe returns?

Let’s take a look at 3 mid to top-tier ASX gold miners.

Saracen Mineral Holdings Limited (ASX: SAR)

Mid-tier producer Saracen has largely been unaffected by COVID-19. Proactive control measures including longer fly-in fly-out rosters, additional charter flights and buses to support social distancing, and reduced capital works have allowed the company to operate in a business as usual manner.

In the company’s March quarter update, it highlighted record quarterly production thanks to its first full quarter contribution from its KCGM acquisition. I believe Saracen is in a strong position moving forward given its 7-year track record of meeting or beating guidance and is currently tracking ahead of FY20 guidance.

With a globally renowned Super Pit acquisition under its belt and a moderate price-to-earnings ratio of 34, Saracen may represent good value at today’s prices.

Northern Star Resources Ltd (ASX: NST)

Northern Star Resources is likewise a growth engine following the joint acquisition of KCGM. Some of its COVID-19 related measures resulted in temporary reductions in production, leading to increases in unit costs in the March quarter. However, Northern Star expects improved performance in the June quarter.

That said, it still experienced quarter-on-quarter improvements in both gold production and costs per ounce. As it stands, the March quarter had an average all-in sustaining cost (AISC) of A$1,590/oz, with the current spot price at the time of writing at A$2,637.5.

If investors feel uneasy buying Saracen which is currently at record all-time highs, Northern Star may be the alternative growth-orientated gold miner to consider. 

Evolution Mining Ltd (ASX: EVN)

Evolution Mining is widely regarded as the lowest cost producer alongside Newcrest Mining Limited (ASX: NCM). In its March quarterly report, it highlighted no material impact from COVID-19, but group gold production had declined 3% quarter on quarter.

The company remains confident that it will meet its FY20 gold production guidance of around 725,000 ounces at an AISC at the top end of guidance of A$990/oz.

Evolution noted that should current spot metal prices be maintained during the June quarter, net cash flow is expected to be $90 million to $95 million higher, but AISC would be negatively impacted by A$20 to $25/oz due to higher royalties and lower by-product credits. 

More reading

• The smartest ASX shares to buy if you have $2,000
• Is $1,000 of A2 Milk shares a good investment?
• How can the ASX 200 soar with rising unemployment?
• ASX 200 down 0.9%: CBA reveals $1.5bn COVID19 provision & gold miners charge higher
• Why CBA, CSR, Fortescue, & Northern Star shares are pushing higher

Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post ASX gold shares steady: Can gold provide your portfolio with defensive and safe returns? appeared first on Motley Fool Australia.

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A2 Milk Company Ltd (ASX: A2M) shares have been one of the top ASX 200 performers in 2020. In fact, the Kiwi dairy group’s shares have climbed 27.88% since the start of the year. That in itself sounds pretty impressive, but then you remember how many of A2 Milk’s ASX 200 peers have performed so far this year.

The S&P/ASX 200 Index (ASX: XJO) is down 20.43% since 2 January amid the COVID-19 pandemic and an oil price war between Saudi Arabia and Russia. This makes A2 Milk’s share price growth even more remarkable in the face of a broader market downturn.

So, is there still time to buy into the Kiwi dairy group for a good price today?

Should you invest $1,000 in A2 Milk shares?

It’s easy to see why the group’s shares are rocketing higher. We saw ASX supermarket shares surge as panic buying increased in February and March. However, many supermarket suppliers also benefitted from this increased demand at the checkout.

That drove A2 Milk shares to a new 52-week high of $19.23 per share on 16 April. To some, this could signal that its shares are overvalued right now.

It’s hard to go past the dairy company’s recent success if you’re looking to invest. Of course, past performance is not a reliable indicator of future performance. But at the same time, with A2 Milk’s increasing share price pushing its overall value to $13.3 billion, there’s a lot to like about this company.

Compare that to 5 years ago, when A2 Milk shares were trading at just $0.48 per share. Now, if you didn’t invest in the dairy group in 2015, there’s no point crying over spilled milk! In fact, all of us wish we’d bought A2 Milk in the last 5 years.

Foolish takeaway

I don’t think the current $18.00 per share valuation should put you off buying A2 Milk. Sure, there are challenges facing the dairy industry in Australia and New Zealand. However, A2 Milk has also had success in Asia and is deepening its overseas network, which should see it well placed for continued growth in the years ahead. I still think A2 Milk shares could easily be a top 10 ASX share within the next decade.

More reading

• The smartest ASX shares to buy if you have $2,000
• ASX gold shares steady: Can gold provide your portfolio with defensive and safe returns?
• How can the ASX 200 soar with rising unemployment?
• Safe dividend stocks to buy today for the COVID-19 world
• 2 quality ASX shares to buy for long-term growth

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Is $1,000 of A2 Milk shares a good investment? appeared first on Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) has rallied 19% off its March lows despite rising unemployment. This has been assisted by government measures:

• $130 billion JobKeeper payment to eligible businesses and employees
• Record low interest rates set by the Reserve Bank of Australia (RBA) and quantitative easing
• Cash flow boosts to eligible businesses
• Increase in payments to eligible welfare recipients
• Early access to superannuation for eligible citizens

The list above is not exhaustive but representative of measures taken by the government and the RBA to try to cushion the economy.

Why has the government stepped in?

The COVID-19 pandemic has had a detrimental impact on the Australian economy. Unemployment is estimated to rise to 10% from 5.1% according to Treasury figures. Without the stimulus measures, unemployment would have been higher. The Treasurer said the economic shock from coronavirus is set to be far more significant than the Global Financial Crisis.

According to research firm Roy Morgan, a staggering 3.92 million Australians (27.4% of the workforce) were unemployed or under-employed and looking for more work in the second half of March.

Relationship between unemployment and the share market

The market rally is surprising to many, particularly when economic indicators, such as unemployment, are soaring. The share market is more concerned about predicting the future than it is about the present. Furthermore, the recent decline and upswing is explained by the market’s ongoing re-evaluation of risk.

The bounce in the market is also in anticipation of a ‘V-shaped’ recovery.  While it’s yet to be seen whether government stimulus will have the desired effect, it’s reassuring for investors to see economic support.

Prices of shares are influenced by company earnings. While earnings have been hit hard in some sectors, other sectors have thrived on the back of the crisis with more demand.

An example of a sector hit hard by economic shocks are financial institutions such as Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Australia and New Zealand Banking GrpLtd (ASX: ANZ), and Westpac Banking Corp (ASX: WBC). A low interest rate environment squeezes net interest margins which impact earnings significantly.

In contrast, a sector that has performed very well are ASX healthcare shares such as Ansell Limited (ASX: ANN) and Fisher & Paykel Healthcare Corp Ltd (ASX: FPH). This is on the back of increasing demand for their healthcare products.

Foolish takeaway

It appears optimism on the share market has replaced pessimism somewhat. Over the coming months, as more economic data is released, investors will have a clearer picture of any economic recovery.

More reading

• ASX 200 down 0.9%: CBA reveals $1.5bn COVID19 provision & gold miners charge higher
• Dividends are drying up – but not for these ASX shares
• Why CBA, CSR, Fortescue, & Northern Star shares are pushing higher
• Safe dividend stocks to buy today for the COVID-19 world
• 2 quality ASX shares to buy for long-term growth

Motley Fool contributor Matthew Donald owns shares of National Australia Bank Limited. The Motley Fool Australia has recommended Ansell Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post How can the ASX 200 soar with rising unemployment? appeared first on Motley Fool Australia.

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With the share market still trading notably lower than its February highs, I believe there are some great opportunities for investors right now.

If you have $3,000 gaining just a modicum of interest in a savings account, I would seriously consider putting it to work in the share market instead.

Here are two top ASX 200 shares I would buy with $3,000:

Bravura Solutions Ltd (ASX: BVS)

Bravura Solutions is a leading provider of software products and services to the wealth management and funds administration industries. It is best known for its Sonata wealth management platform which allows users to connect and engage with their clients anytime, anywhere, through computers, tablets or smartphones. Sonata has been growing very strongly in recent years and looks set to continue for some time due to its quality and sizeable market opportunity.

This should be bolstered by recent acquisitions of Midwinter and Finocomp. Midwinter allows financial advisers to provide comprehensive face to face financial advice and looks well placed to capitalise on the continued change in the Australian financial advice industry. Whereas FinoComp’s software adds functionality to Bravura and cross-sell opportunities. Another positive is that demand for its offering has not been impacted by the pandemic. Management recently reaffirmed its guidance for mid-teens profit growth in FY 2020 (excluding the benefits of the aforementioned acquisitions).

ResMed Inc. (ASX: RMD)

Another share to consider buying with $3,000 is ResMed. It has been growing at a very strong rate over the last decade and has become one of the world’s leading sleep treatment companies. Pleasingly, this strong form has continued in FY 2020. During the first half the company delivered a 22% lift in operating profit to US$368.9 million. It then followed this up with a 47% increase in third quarter profits earlier this month.

Although ResMed’s growth in the coming quarters could be hit by lower sleep apnoea diagnoses because of the pandemic, outside this, I’m confident that it is well-placed to continue its positive trajectory for many years to come. This is due to its world-class product portfolio and the massive number of undiagnosed sleep apnoea sufferers globally. The company estimates that there are upwards of ~1 billion people impacted by sleep apnoea globally. The vast majority of these are currently undiagnosed.

More reading

• Why CSR, Kogan, Premier Investments, & ResMed shares are storming higher
• These were the top 10 ASX 200 shares over the last year
• In a post-COVID world, could Australia be the next superpower?
• 5 top ASX shares to buy and hold for a decade
• Fund manager thinks investors should look beyond the worst economic data since the Great Depression

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Bravura Solutions Ltd. The Motley Fool Australia has recommended Bravura Solutions Ltd and ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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At lunch on Wednesday the S&P/ASX 200 Index (ASX: XJO) is off its lows but on course to record another decline. The benchmark index is down 0.9% to 5,352.5 points.

Here’s what has been happening:

Commonwealth Bank third quarter update.

The Commonwealth Bank of Australia (ASX: CBA) share price is trading higher today after the release of its third quarter update. For the three months ending March 31, Commonwealth Bank delivered cash net profit from continuing operations of $1.3 billion. This was down 41% on the average quarterly cash net profit it posted in the first half. The coronavirus pandemic was the main drag on its results. The banking giant revealed an additional credit provision of $1.5 billion for the potential longer term impacts of COVID-19.

Big banks under pressure.

The rest of the big four banks are trading lower on Wednesday after overnight declines by their U.S. counterparts. The worst performer in the group is the Australia and New Zealand Banking Grp Ltd (ASX: ANZ) share price with a 1% decline. Its shares were down as much as 2% at stage this morning.

Gold miners charge higher.

One area of the market which is pushing higher today is the gold mining industry. Two of the biggest gold miners, Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST), are up around 2% at lunch. This has helped drive the S&P/ASX All Ordinaries Gold index 1.25% higher today. Investors have been buying the gold miners due to a rise in the gold price and increasing demand for safe haven assets.

Best and worst ASX 200 performers.

The best performer on the ASX 200 today has been the Pilbara Minerals Ltd (ASX: PLS) share price by some distance with a 7% gain. This is despite there being no news out of the lithium miner today. The worst performer has been the Ausnet Services Ltd (ASX: AST) share price with a 6.5% decline. This morning Ord Minnett downgraded its shares to a lighten rating with a $1.75 price target following its FY 2020 result.

Returns as of 7/4/2020

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More reading

• How can the ASX 200 soar with rising unemployment?
• Revealed: 5 dividend shares for reliable income
• Dividends are drying up – but not for these ASX shares
• Why CBA, CSR, Fortescue, & Northern Star shares are pushing higher
• Safe dividend stocks to buy today for the COVID-19 world

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