Day: 12 May 2022

While share markets have turned pretty dark in recent months, we know from past experience that it could all turn around pretty quickly.

However, to combat rising interest rates, experts are emphasising quality.

There is no universal definition of “quality”, but some of the more popular interpretations include profitability and tailwinds that are resistant to economic cycles.

As such, here are 2 ASX shares that have been beaten up pretty badly this year but experts reckon could surprise in a year’s time:

‘We’ve been buying it’

It’s fair to say Megaport Ltd (ASX: MP1) shareholders have been sweating bullets this year.

The stock price has fallen a painful 62% so far in 2022.

Megaport’s far from the only technology company to suffer the wrath of a violent rotation away from growth shares though.

Burman Invest chief investment officer Julia Lee doesn’t think it will get any easier for the tech sector in the immediate future.

However, she reckons Megaport is worth a go if you have patience.

“If you’re a longer-term investor there’s certainly opportunities in the type of market that we’re in,” she told Switzer TV Investing.

“If you can… ride out the cycle then there’s no problem in accumulating high-quality businesses like Megaport.”

Megaport provides virtualised networking pipes to corporate customers. In the internet age when customer demand for connectivity can vary wildly, its services can be dialled up or down according to need.

And the already formidable transition of computing to the cloud has only accelerated since the COVID-19 pandemic arrived.

“We’re still seeing that shift to the cloud. They’ve had that first mover advantage.”

Shaw and Partners senior investment adviser Adam Dawes also rates Megaport shares as a buy.

“We really like this one. We’ve been buying it and putting it in clients’ portfolios,” he said.

“It’s even lower than $8 today — I think there’s definitely some value there.”

37%: has this education stock discounted enough?

Lee also favours international education placement provider IDP Education Ltd (ASX: IEL), despite its valuation dropping more than 37% since November.

“It made a very smart acquisition in India,” she said.

“I like that they’ve actually managed to improve on the business. The margins coming through that India acquisition are much higher than a couple of years ago, which is nice to see.”

With the world outside of China moving past coronavirus restrictions, international study placements will gather steam again.

Notwithstanding the share price drop over the past 6 months, Lee admits IDP is still expensive by many measures.

“It does have a very high multiple. It trades on a [price to earnings] multiple of over 40 times,” she said.

“But I think that post-COVID, as things start to move… this is going to be one of those companies that’s going to be bigger and better than it was before COVID hit.”

Dawes likes the current discounted price for IDP shares, but feels like it was too expensive to start with.

“[During] COVID, it shouldn’t have really traded where it was and it always trades at a real premium to the rest of that sector, and even the market,” he said.

“I’d be waiting for this sell-off to potentially ease before you get back into this one. I think there’s probably still some more selling to go.”

The post 2 ASX shares that could surprise you in a year’s time appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has positions in MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Idp Education Pty Ltd and MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. 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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There are some interesting ASX dividend shares that could be ideas for income in 2022 and beyond.

The ASX share market has gone through much volatility this year. Inflation is currently relatively high, which is impacting market thoughts on where interest rates are headed.

This volatility has sent the valuation of some businesses down, which has pushed up the dividend yield of some ASX dividend shares, like these two:

Beacon Lighting Group Ltd (ASX: BLX)

Most readers may know Beacon for its lighting retail stores. It also services trade customers. Beacon Lighting has an e-commerce offering for customers and it has a growing international division.

It’s currently rated as a buy by the broker Citi with a price target of $3. That implies a potential rise of around 50%. However, it acknowledged that a rise in interest rates and a slowdown in household spending could hurt sales. Despite that, Citi believes that Beacon has long-term growth potential.

According to Citi, Beacon has a projected grossed-up dividend yield of 6% in FY23.

Beacon Lighting’s profit margins continue to climb. In the recent FY22 half-year result, the gross profit margin increased from 68.5% to 70% and the net profit after tax (NPAT) margin increased from 14.6% to 14.9%. Online sales jumped 41% to $20.3 million, with online sales representing 15.4% of total retail sales.

The ASX dividend share continues to open new stores. It currently has around 120. Further, it has identified the potential for 184 stores around Australia.

Internationally, the company recently launched its American website in a bid to build Beacon Lighting’s market presence in the USA. International sales rose by 65% to $8.1 million. It has also established a new online ceiling fan sales channel in China with Tmall Global.

Garda Diversified Property Fund (ASX: GDF)

This business owns 17 properties. It describes itself as a real estate investor, developer, and manager with investments along the eastern seaboard of Australia, from Cairns to Melbourne. In April 2022, its investments were worth around $603 million, split almost equally between industrial properties and commercial office properties.

It’s currently rated as a buy by the broker Morgans with a price target of $1.83. This implies a possible upside of around 20%.

Last month, the company updated the market with its latest valuation and net tangible assets (NTA) numbers. The business saw a $22.5 million valuation uplift, helping the NTA rise by 14 cents per security to $1.86. That means the current Garda Diversified Property Fund share price is at an 18% discount to the NTA.

Morgans thinks that the ASX dividend share is going to pay a distribution of 7.4 cents per security in FY23. That translates into a forward distribution yield of 4.8%.

Garda boasts that its active management, combined with “strong market fundamentals”, continues to deliver value for investors.

Looking at a few portfolio metrics, its portfolio occupancy rate in the FY22 half-year result was 94%, with 3.2% fixed annual rent increases. The weighted average lease expiry was 5.6 years.

The post 2 buy-rated ASX dividend shares for income in 2022 appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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History will be made on Thursday as the first-ever exchange-traded fund (ETF) representing direct ownership of Bitcoin (CRYPTO: BTC) starts trading in Australia.

ETFS 21Shares Bitcoin ETF (EBTC) — along with its Ethereum (CRYPTO: ETH) counterpart ETFS 21Shares Ethereum ETF (EETH) — are local products that directly own cryptocurrencies.

While there are already ETFs that track the ups and downs of the crypto industry, those funds never actually buy Bitcoin itself.

Vendor ETF Securities emphasised that the new funds “do not use derivatives of any kind”.

“They are not built as feeder funds into offshore ETFs. Nor do they engage in any lending or staking of the bitcoins and ether.”

So that’s all good and well, but why would an investor bother buying into these ETFs instead of purchasing Bitcoin or Ether themselves?

The case for owning Bitcoin in your own wallet

Purchasing Bitcoin and Ether yourself can be cheaper, as you’re not paying a commission or a management fee to an ETF provider.

Having Bitcoin in your own wallet also means they can be easily exchanged for other crypto, like Solana (CRYPTO: SOL) or Terra (CRYPTO: LUNA).

If your Bitcoin ownership was tied up in an ETF, that’s impossible to do without cashing out to a fiat currency.

Holding Bitcoin via an ETF could be more secure

ETF Securities stated in a blog post this week that the main advantages of crypto ETFs are security and tax considerations.

The vendor noted that Bitcoin funds have existed for years in Europe, yet none of them have been victims of hacks or theft.

“The history of cryptocurrency is littered with instances of hack attacks and thefts. All of which have occurred in unregulated environments and all of which have occurred on low quality exchanges, like Binance.”

One of the reasons ETF providers charge fees is to provide “institutional-grade security arrangements”.

“This top-flight security involves storing all bitcoins offline in ‘cold storage’,” the blog said.

“By keeping bitcoins disconnected from the internet, they are out of reach from hackers. By contrast, many bitcoin exchanges use ‘hot storage’ meaning they remain connected to the internet.”

ETF Securities is also keeping its cold storage devices in a Faraday cage to protect them from power surges.

“Bitcoin ETFs use additional security measures like sharding, which is where private keys are split up across different custodian vaults around the world,” said the blog post.

“Moving bitcoins in and out of a bitcoin ETF always requires approval from two people or more. And the two people must work for different organisations.”

Tax advantages for owning Bitcoin through an ETF

Ease of tax reporting is a major convenience of owning crypto through an ETF, according to ETF Securities.

This is especially the case if the Bitcoin is part of your self-managed superannuation portfolio.

“As bitcoin ETFs can be bought and sold within your existing brokerage account – such as CommSec, NABtrade, Interactive Brokers – they can more easily be placed into your existing SMSF infrastructure,” the blog read.

“This means less work for you, your accountant, and potentially lower capital gain taxes.”

While some crypto exchanges allow accounts to be opened in the name of an SMSF, most do not.

“This can mean that accountants either cannot add them to your SMSF, or that it will require more work for them. And this in turn can cause greater charges from your accountant.”

The post Why should I buy Bitcoin ETF shares instead of just buying Bitcoin? appeared first on The Motley Fool Australia.

More reading

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• First-ever Aussie Bitcoin and Ethereum ETFs finally launch this week
• Bitcoin price slumps to 4-month lows. Now what?

Motley Fool contributor Tony Yoo has positions in Bitcoin, Ethereum, and Solana. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin, Ethereum, and Solana. The Motley Fool Australia has positions in and has recommended Bitcoin, Ethereum, and Solana. 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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On Wednesday, the S&P/ASX 200 Index (ASX: XJO) fought hard to end its losing streak and record a small gain. The benchmark index rose 0.2% to 7,064.7 points.

Will the market be able to build on this on Thursday? Here are five things to watch:

ASX 200 expected to sink

The Australian share market looks set to resume its decline on Thursday after higher than expected inflation in the United States spooked Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 54 points or 0.8% lower this morning. On Wall Street, the Dow Jones fell 1%, the S&P 500 dropped 1.65%, and the Nasdaq sank 3.2%.

Xero full-year results

The Xero Limited (ASX: XRO) share price will be one to watch on Thursday. This morning the cloud accounting platform provider is scheduled to release its full-year results. According to a note out of Goldman Sachs, it is expecting Xero to report revenue of NZ$1,108 million. This comprises ANZ revenue of NZ$650 million and international revenue of NZ$458 million. The broker has also pencilled in an EBITDA margin of 19.6% and EBITDA of NZ$218 million.

Oil prices surge

It could be a very good day for energy shares including Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) after oil prices rebounded. According to Bloomberg, the WTI crude oil price is up 5.4% to US$105.14 a barrel and the Brent crude oil price is up 4.5% to US$107.07 a barrel. Oil prices rose after Russian gas flows to Europe declined.

IDP CEO resigns

The IDP Education Ltd (ASX: IEL) share price could come under pressure today amid the surprise resignation of the language testing company’s CEO, Andrew Barkla. Mr Barkla is stepping down from the role in September after more than seven years leading IDP. A global search for a new CEO will now commence.

Gold price rises

Gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a good day after the gold price pushed higher overnight. According to CNBC, the spot gold price is up 0.65% to US$1,852.90 an ounce. Inflation concerns and a softer US dollar gave the precious metal a boost.

The post 5 things to watch on the ASX 200 on Thursday appeared first on The Motley Fool Australia.

More reading

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Idp Education Pty Ltd and Xero. The Motley Fool Australia has positions in and has recommended Xero. 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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