Day: 22 May 2020

Last week the S&P/ASX 200 Index (ASX: XJO) was on form again and stormed 1.7% higher to end the period at 5,497 points.

While a good number of shares pushed higher last week, some climbed more than most.

Here’s why these were the best performing ASX 200 shares over the period:

The NRW Holdings Limited (ASX: NWH) share price was the best performer on the index last week with a 31.3% gain. Investors were buying the infrastructure contractor’s shares following the least of a trading update. That update revealed that NRW delivered unaudited revenue of $1.6 billion for the 10 months to April 30. This represents record revenue for the company compared to any previous full financial year. NRW’s earnings before interest, tax, depreciation, and amortisation came in at $177 million for the 10 months.

The Nearmap Ltd (ASX: NEA) share price was on form last week and jumped 22% higher despite there being no news out of it. This gain means the aerial imagery technology and location data company’s shares are now up a massive 53.5% since this time last month. Investors may believe that Nearmap’s shares had fallen too hard this year.

The Lynas Corporation Ltd (ASX: LYC) share price wasn’t far behind with a 21.8% gain. This looks to have been driven by a positive broker note out of Canaccord Genuity. It initiated coverage on the rare earths miner with a buy rating and a target price of $3.80. The broker believes that rare earth demand could recover in a post-COVID-19 world. It suspects this could lead to a shortage of the materials by 2023, placing upward pressure on prices.

The Orocobre Limited (ASX: ORE) share price was a strong performer last week with a 21.7% gain. This was despite there being no news out of the lithium miner. Last week the price of the battery making ingredient stabilised after heavy declines a week earlier. And with economies around the world now reopening, investors may believe that the worst is over for Orocobre and its peers.

More reading

• How to tidy up your super in just 10 minutes this weekend
• These were the worst performing ASX 200 shares last week
• Where to invest $1,000 in ASX ETFs today
• How these 3 ASX financial shares have proved their doubters wrong
• How to use ASX shares to become a millionaire

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Nearmap 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 These were the best performing ASX 200 shares last week appeared first on Motley Fool Australia.

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It’s becoming easier and easier to forget but, back in March, the S&P/ASX 200 Index (ASX: XJO) was in the throes of the fastest bear market on record. Between 20 February and 23 March, the ASX 200 fell over 35% – losing more than a third of its value in just 4 weeks. 

Since then, the ASX 200 has rallied over 20% – assuaging some of the nasty losses many ASX investors experienced. 

But some ASX financial shares have gone one better than the index by at least doubling in value since those March lows.

Afterpay Ltd (ASX: APT)

Afterpay shares have performed extremely well since the lows in March when investors sent this company back down to the bargain basement at ~$8 per share. Today, Afterpay has printed a fresh, all-time high and has just this week broken the $45 mark for the first time. That’s an increase of over 400% in just two months – now that’s a good size gain!

EML Payments Ltd (ASX: EML)

EML Payments is another payments company the ASX has decided it may have misjudged in March. Back then, EML plumbed depths of $1.20 per share. This week, however, EML shares were commanding almost $3.80 per share. That’s more than a 3-bagger in just two months. Got FOMO yet?

Credit Corp Group Limited (ASX: CCP)

Credit Corp is another financial company that the markets have clearly re-rated since March. Much like Afterpay, investors were initially very concerned over this company’s credit risk when the scale of the economic fallout from coronavirus became clear. 

But it’s obvious the market’s worst fears back then are no longer expected to eventuate. Since Credit Corp touched lows of ~$6 per share on 23 March, the stock has more than doubled and was trading above $15 for most of the week.

Notice anything in common yet?

Why are these ASX financial shares storming higher?

Well, in my view it’s all to do with credit risk. When it became obvious that our economy was destined for a nasty recession as a result of the coronavirus pandemic, any company that held large amounts of debt or credit risk was clearly not the first choice for investors. Recessions usually involve higher rates of loan default, which can quickly cripple any business, but especially those who don’t enjoy the scale and government backing of the big ASX banks.

What’s more, new-age financials like Afterpay and EML have never been tested in a recession, so clearly investors weren’t really feeling like taking a chance on these companies back in March. However, things have changed since then. For instance, Afterpay has reported its service remains more popular than ever, and that it isn’t facing the wave of defaults investors feared.

Foolish Takeaway

It’s ASX shares like these that once again show the benefits of taking a contrarian position ‘against the crowd’. It’s not always wise to bet against the market, but if you do it successfully, the results can be extremely lucrative.

More reading

• How to use ASX shares to become a millionaire
• Is the Afterpay share price a buy at $44?
• Top brokers are urging you to buy this slumping ASX 200 stock next week
• 3 ETFs perfect for an ASX growth investor
• ASX 200 drops 1% on Friday

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Emerchants Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Emerchants Limited. 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 these 3 ASX financial shares have proved their doubters wrong appeared first on Motley Fool Australia.

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Investing in ASX shares to grow and build a passive income is a great way to reduce the hours you need to work. By initially growing an ASX share portfolio and then converting it to generate income means you could be working part-time sooner than you thought.

The basic idea

In November 2019, the Australian Bureau of Statistics found that an employee’s average weekly total earnings was $1,256.20. Rounding this slightly we will work with an average annual income of $65,000. Meaning, to work part-time we would need to offset around half of this, or $32,500.

The basic idea is to initially invest consistently in growth-orientated shares. Building a large enough portfolio which can then be focused on dividend shares to generate a passive income of $32,500.

When chasing an income from ASX shares, I believe it pays to be prudent. This means not just choosing the shares with the highest yields, but instead looking into the future to see how sustainable those yields are. For this reason, despite a  number of shares offering dividend yields of up to 10%, I believe a more reliable and achievable yield would be around 5% to 7% when we consider franking credits. So let’s take the middle ground and base our calculations on a 6% dividend yield for the portfolio.

This means, in order to generate $32,500 from a yield of 6%, we would need to grow a starting portfolio of $541,667.

Growing your portfolio

This is where the journey begins.

Growing a portfolio to $541,667 may initially sound a little like a fantasy. However, you may be surprised how quickly this could be achieved through consistent investing. 

In fact, if you were to invest just $1,000 a month and earn a market average return of roughly 10% per year, it would take just over 17 years to amass $541,667.

However, if you do your research well (and dare I say with a little luck) and manage to invest in growth companies which outperform the market, you could be working part-time much, much sooner. For example, if you had made investments into companies such as Altium Limited (ASX: ALU), A2 Milk Company Ltd (ASX: A2M) or even Macquarie Group Ltd (ASX: MQG) you would have significantly reduced the growing time.

Earning income from your portfolio

Once your portfolio has reached its capital goal ($541,667 in our average example) it will be time to slowly alter its holdings to dividend-focused shares. You may even have found that some of your growth shares are now paying meaningful dividends and can remain in the portfolio. However, to achieve your average 6% dividend return you will likely need to sell some of your growth shares and invest that capital into reliable dividend payers.

A few great ASX shares I would suggest to look at today when building an income-focused portfolio are Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Rural Funds Group (ASX: RFF), Dicker Data Ltd (ASX: DDR), and Vanguard Australian Shares High Yield ETF (ASX: VHY).

Foolish takeaway

Finding the right combination of shares to achieve your desired income may be a little tricky at first. Additionally, the income from your portfolio will be ‘lumpy’ as most companies pay dividends twice a year. However, over time and by choosing the right dividend shares, your income will also hopefully grow.

It may sound like a lot to take in. But, remember, this is the big picture. A great way to start will be by breaking it down into your monthly investments.

More reading

• Here’s how I would put $10,000 to work on the ASX
• Why I would buy these quality ASX dividend shares today
• The latest ASX small caps broker picks to buy today
• Fund managers have been buying these ASX shares
• Is the Altium share price a buy at $36?

Motley Fool contributor Michael Tonon owns shares of Macquarie Group Limited, RURALFUNDS STAPLED, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited, Macquarie Group Limited, RURALFUNDS STAPLED, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of A2 Milk and Altium. 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 to reduce your work to part-time using ASX shares appeared first on Motley Fool Australia.

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There are some ASX shares that I’d invest $1,000 into every single month.

I’m making the distinction because with some shares you wouldn’t want to commit to buying them every month. Sometimes individual ASX shares trade at good value and sometimes they aren’t.

But there are some ASX shares that it could make sense that you could invest $1,000 into every month, particularly in these coronavirus times. Here are three of those monthly ideas:

iShares S&P 500 ETF (ASX: IVV)

One of the best potential investments that people can make is a S&P 500 fund. You can buy this ETF on the ASX but it gives you exposure to many of the best businesses in the world.

I’m sure you know many of its top holdings. Shares like Microsoft, Alphabet, Apple, Amazon, Facebook, Berkshire Hathaway and so on. There are plenty of other useful shares within the holdings like Walmart, Costco and Netflix.

Not only does this ETF give you exposure to much better global businesses compared to ASX shares. But you also get it for a very cheap management fee. Blackrock’s annual cost for this ETF is 0.04%. You could easily invest $1,000 a month into this.

Future Generation Global Invstmnt Co Ltd (ASX: FGG)

This is a listed investment company (LIC) which invests in global shares, but it also has a philanthropic aspect too. It donates 1% of its net assets each year to youth mental health charities.

It invests in globally-focused fund managers based in Australian which are judged to be among the best in the country.

The fact you get to be invested in so many portfolios is attractive. Each fund would have its own group of non ASX shares, so you might be invested in many dozens of different shares. I think that’s great diversification. At the moment it’s trading at a big discount to the underlying net tangible assets (NTA) per share. I think it offers a lot of positives, which is why I’d be happy to invest $1,000 a month into this.

Magellan High Conviction Trust (ASX: MHH)

You may not want an investment into a large group of shares. Perhaps you only want to be invested in a high-conviction portfolio of around 10 of the best shares in the world which you can’t find with ASX shares.

At the moment it’s invested in shares like Alibaba, Alphabet, Microsoft, Facebook and Visa. These are all great businesses which have good balance sheets, attractive growth prospects and digital business models which are good in times like this. I think it’s a great idea to invest $1,000 a month into something like this.

As a bonus it targets a 3% distribution yield.

Which ASX share to buy?

I think all three of these ideas are likely to achieve outperformance compared to most ASX shares and the ASX index as a whole. At the moment I’d probably go for Future Generation Global because it’s trading at such a large NTA discount.

More reading

• Save your future self from financial misery
• Don’t delay: Start investing today in shares to become rich
• The importance of diversifying your ASX portfolio and how you can do it
• The smartest shares to buy if you have $2,000
• How I’d invest $50,000 into ETFs

Motley Fool contributor Tristan Harrison 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 3 ASX shares that I’d invest $1,000 into EVERY month appeared first on Motley Fool Australia.

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With smart investing and the magic of compounding, a humble sum like $10,000 has the potential to change your life in the long term. You have worked hard and sacrificed for your money, so instead of wasting it, why not put it to work?

For those who are just getting started investing, the coronavirus pandemic has created great long-term opportunities. Here are 4 ASX share ideas that can put your money to work.

Macquarie Group Ltd (ASX: MQG)

I would start by buying $2,500 worth of Macquarie Group shares. Given the uncertain market, Macquarie has the ability to adapt to volatile market conditions by switching between market-facing and annuity-style operations.

Aristocrat Leisure Limited (ASX: ALL)

I would put another $2,500 to work by buying shares in gambling machine manufacturer Aristocrat Leisure. The company has a strong, recurring revenue stream from leasing machines and also makes revenue through outright sales of its machines.

Additionally, the company has excellent growth potential with heavy exposure to the lucrative gaming industry in the US and online operations, which provides it with earnings flexibility. Despite the pandemic shutting down most casinos, Aristocrat is well-positioned to expand its market share when operations restart.

Brambles Limited (ASX: BXB)

I believe most portfolios should be balanced by having exposure to a defensive earner that can generate revenue through all market cycles. Therefore, logistics giant Brambles is the third company I would invest $2,500 in. Brambles owns more than 330 million pallets and crates which are used to transport goods from manufacturers to retail stores and online operators. 

Operating in approximately 60 countries around the world through its iconic CHEP brand, Brambles has a sturdy business model with resilient exposure to the demand for essential consumer goods.

Woolworths Group Ltd (ASX: WOW)

With the remaining $2,500, I would buy shares in Woolworths. Apart from the surge in demand for essential goods during the pandemic, Woolworths is also poised to adapt to future demand with the supermarket giant investing heavily in its e-commerce operations.

Woolworths recently reported a near 11% surge in group sales for the quarter to $16.5 billion, with supermarket sales rising more than 40% in the week ending March 22. Although the costs of larger operations will increase, Woolworths also has exposure to the liquor and hotel industries, which are expected to recover post-pandemic.

Foolish takeaway

The way I have allocated $10,000 in this case is relatively conservative. In my opinion, for long-term and sustainable growth, this is a prudent strategy in building wealth. Although the ASX shares I have chosen may not be to every investor’s taste, I think it reflects how a balanced portfolio should look.

More reading

• Top brokers are urging you to buy this slumping ASX 200 stock next week
• The latest ASX small caps broker picks to buy today
• Is Afterpay an ASX blue chip of tomorrow?
• Brokers name 3 ASX 200 shares to buy right now
• Where growth, income, and value investors can invest right now

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia owns shares of Woolworths Limited. 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 Here’s how I would put $10,000 to work on the ASX appeared first on Motley Fool Australia.

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If you’re anything like me, you’re probably hoping your investment in ASX shares will make you a millionaire. But when the S&P/ASX 200 Index (ASX: XJO) plummets lower it can make you question your investment strategy.

But the reality is that the maths behind investing is quite straight forward. Let’s take a look at how ASX shares can help you become a millionaire by the time you reach retirement.

How to use ASX shares to become a millionaire

Let’s check out an example to demonstrate. Consider your average 35 year old investor with a diversified ASX share portfolio. To keep things simple, we’ll ignore taxes and brokerage on shares and assume an 8% per annum average return with dividends reinvested.

This average investor starts with $50,000 in ASX shares and adds $5,000 per year to his portfolio. 

What we can see is that, through the magic of compound interest, his investment in ASX shares can most definitely make this investor a millionaire by the retirement age of 65. Even 10 years prior to retirement, this ASX share portfolio is worth $461,858. However, by retirement age, the portfolio has more than doubled to $1,069,549 and the investor has become a millionaire.

How can you do the same with your ASX share portfolio?

So, what does this example really tell us? The answer is that a diversified share portfolio and long-term outlook can really pay off in the future.

While the Afterpay Ltd (ASX: APT) share price might have rocketed 400% higher since mid-March, it’s not a wise strategy to put all your eggs in one basket.

By constructing a portfolio of high-quality ASX shares and holding for decades ahead, you could generate the 8% per annum average return illustrated in this example.

Of course, it’s wise to invest only what you can afford to lose. You don’t want to be forced to sell at a bad time because you over-invested and suddenly need that cash back.

It’s also important to remember that it’s never too late to start investing. Every day your money is in the market is a day that it can potentially be working towards make you a millionaire.

More reading

• Is the Afterpay share price a buy at $44?
• Top brokers are urging you to buy this slumping ASX 200 stock next week
• 3 ETFs perfect for an ASX growth investor
• ASX 200 drops 1% on Friday
• The latest ASX small caps broker picks to buy today

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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 to use ASX shares to become a millionaire appeared first on Motley Fool Australia.

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