There are 3 emerging trends bubbling away underneath the headlines which promise to be lucrative for astute investors. However, 3 dramatic movements have dominated commodity news. The collapse of the oil price. The momentum in the iron ore market. And the bull run in the gold sector.

Aluminium is a busted flush

The transport sector uses approximately 27% of global aluminium production. While the full extent of the economic damage of COVID-19 is yet to be revealed, it is safe to say car purchases are likely to fall. Furthermore, if stay-at-home becomes an endemic trend, or if there are second or third waves of infection, then car sales are likely to be hit further.

The aviation industry has also fallen silent. There is no clear indication of when this is likely to open up again between states, let alone between nations. The demand for new aircraft from cash-strapped airlines is likely to also fall. This is without even considering the glut in aluminium globally.

For investors, there are several companies to be wary of. Alumina Limited (ASX: AWC) will see a sustained fall in earnings. Aluminium is a notoriously slow market to respond to buying signals. Rio Tinto Limited (ASX: RIO) will also feel the weight of this trend on earnings. 

Copper a surprise emerging trend

Copper entered the current crisis in a good position. It had reasonable inventory levels with falling supply pipeline of copper mines. However, during the lockdowns, numerous large-scale copper mines were closed. The copper spot price has just hit an 8 week high. It paints a good picture of post-pandemic spot prices. 

Copper is a ubiquitous base metal. With such wide applications, the impacts will be uneven. The surprise development has been the antibacterial elements of copper and the use of copper coatings has already begun. It is also starting to be used to build fittings for hospitals as well as other high traffic areas. 

The big ASX winners here are companies like Sandfire Resources Ltd (ASX: SFR) or BHP Group Ltd (ASX: BHP). BHP, in particular, is the world’s third-largest copper producer and will likely emerge from lockdown stronger than when it started.

Nickel supported by reduced supply

Nickel is still sitting at its lowest price for 12 months. While this is due to the demand pause during lockdowns, it is not out of character for a cyclical commodity like this. Nonetheless, as we enter the post-pandemic phase, the nickel price is likely to rise.

In the medium term, the nickel price has a strong upside. The emerging trend is on the supply side. Indonesia has banned exports of nickel ore, placing a structural change on global supply. In addition, nickel stands to benefit from any future technology advances in batteries and electric cars. It is estimated that around 50kg of nickel is required for each car.

BHP again stands to benefit as the world’s fifth-largest Nickel producer. IGO Ltd (ASX: IGO) and South32 Ltd (ASX: S32) will likely see a positive impact on earnings as nickel producers. Meanwhile, Western Areas Ltd (ASX: WSA) remains a reasonable nickel pure play.

More reading

• 3 ASX dividend kings to buy and hold forever
• Top ASX Dividend Stock Picks for May 2020
• 3 cheap ASX 200 shares for value investors
• Are there any safe havens in ASX aviation shares?
• These ASX 200 shares saw the biggest falls last week

Motley Fool contributor Daryl Mather 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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Traditional ASX blue-chip shares are cutting their dividends. Income investors looking for growing dividends may do well holding Carsales.Com Ltd (ASX: CAR), JB Hi-Fi Limited (ASX: JBH) and Domino’s Pizza Enterprises Ltd. (ASX: DMP).

For my analysis, I looked at 2010 to 2019 calendar years.

Carsales

Carsales has grown its dividend except in 2013 when the dividend fell from 31 cents in 2012 to 28 cents in 2013. Since then, Carsales’ dividend has grown each year, as can be seen by the chart below:

Despite the headwinds, CEO Cameron McIntyre stated in a recent business update: “Our market leading position, strong customer proposition and diversification across geography and product supports our resilience and positions Carsales well into the future.”

The Carsales share price trades 28% lower from its 52-week high of $19.60. I believe this reflects the short-term uncertainty in the economy. Having said that, Carsales is a quality tech company growing its dividend in 9 out of the last 10 years and could continue to reward patient growth and income investors over the next decade.

JB Hi-Fi

JB Hi-Fi has rewarded patient long-term investors with a growing dividend between 2012 and 2019. While short-term headwinds are impacting the economy, JB Hi-Fi has a track record of a growing dividend, as can be seen by the chart below:

Last week on 6 May, JB Hi-Fi released a third-quarter market update detailing an acceleration in sales. It attributed the rise in sales to anticipated easing of government restrictions. New Zealand was the only market in which it experienced a decline in sales. Strong growth in JB Hi-Fi and The Good Guys more than offset the weakness.

JB Hi-Fi also secured an additional $260 million of short-term debt facilities. However, it does not expect this will be needed despite a continued withdrawal of earnings guidance for FY20.

Despite the headwinds, JB Hi-Fi is a quality company that I believe will grow its dividends over the next decade despite the immediate uncertainty. The market appears to agree, sending the JB Hi-Fi share price up 42% over the past 12 months.

Domino’s Pizza

Domino’s is a dividend success story, managing to increase its dividend each year between 2010 and 2019. After paying an 18 cent dividend in 2010, this has heated up to $1.15 in 2019. In addition to paying rising dividends, the Domino’s share price has rallied 38% over the past 12 months.

Domino’s is reopening stores as worldwide restrictions issued by governments begin to be eased. It is seeing a shift in how consumers are ordering, with food delivery services soaring on the back of restrictions. In recognition of this, Domino’s has hired more team members.

In financial news, the balance sheet remains strong with no committed short-term debt and more than $260 million cash as of 27 March 2020.

The company’s medium-term outlook is unchanged for new store openings of 7% to 9% per year, growth in same-store sales of 3% to 6% per year, and increased net capital expenditure of $60 million to $100 million per year.

Despite the strong financial situation, some franchisees are waiting to see if stores will be reopened, dependent on local market conditions.

On balance, Domino’s appears to be in good shape for the long term. In my view, patient long-term shareholders could see further increases in dividends.

Foolish takeaway

Investing is a marathon, not a sprint. Shareholders in Carsales, JB Hi-Fi and Domino’s that have played the long game have seen both capital and income growth. I suspect this will continue and the recent uncertainty offers an opportunity to buy growing dividends at growing companies.

More reading

• Carsales share price down 26% since February. Is it now a good buy?
• Analysts think this ASX auto share could be turning the corner
• These 3 ASX 200 retail shares are absolutely thriving right now
• 3 ASX 200 pandemic winners and 3 losers
• Are ASX retail shares undervalued today?

Motley Fool contributor Matthew Donald has no position in any of the stocks mentioned. The Motley Fool Australia has recommended carsales.com Limited and Domino’s Pizza Enterprises 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.

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On Monday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three that have just been given sell ratings are listed below.

Here’s why these brokers are bearish on them:

ASX Ltd (ASX: ASX)

A note out of the Macquarie equities desk reveals that its analysts have retained their underperform rating and lifted the price target on this stock exchange operator’s shares to $71.50. This follows the release of its April update last week. Although Macquarie notes strong average daily volume growth and a sharp increase in capital raisings during the second half, it still feels its shares are overvalued at the current level. It estimates that ASX Ltd’s shares are changing hands at 31x estimated full year earnings. Its shares are trading at $83.00 this afternoon.

Cochlear Limited (ASX: COH)

According to a note out of Goldman Sachs, its analysts have retained their sell rating and $156.00 price target on this hearing solutions company’s shares following its recent trading update. That update revealed that Cochlear’s sales were down 60% in April because of a sharp reduction in elective surgeries during the pandemic. And although there has been a recovery in elective surgeries now, the broker isn’t overly confident on the trajectory of the recovery. It suspects it may take longer than the market expects and therefore holds firm with its sell rating. Cochlear’s shares are changing hands for $187.98 on Tuesday.

Domain Holdings Australia Ltd (ASX: DHG)

Analysts at Morgans have retained their reduce rating and $2.25 price target on this property listings company’s shares. According to the note, the broker expects a sharp decline in listing volumes in the fourth quarter of FY 2020 and further declines in the first two quarters of FY 2021. In light of this, it has reduced its revenue forecasts accordingly. Domain’s shares are trading at $2.93 this afternoon.

More reading

• ASX 200 sinks 1.3%: Big four banks drag ASX lower & Altium issues sales warning
• These 10 ASX 200 shares have fallen the most over the last year
• Carsales share price down 26% since February. Is it now a good buy?
• These were the top 10 ASX 200 shares over the last year
• Brokers may be upgrading this ASX stock even as it delivered a plunge in profits

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 Cochlear Ltd. The Motley Fool Australia has recommended Cochlear 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 Leading brokers name 3 ASX shares to sell today appeared first on Motley Fool Australia.

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