Stock Pick

  • Should I keep my stake at the current Monadelphous share price?

    model construction workers working on increasing pile of coins, asx 200 building shares, boral share price

    It is an important practice to properly review your stock investment portfolio on a regular basis and ask yourself questions like: “Why do I own shares of Monadelphous Limited (ASX: MND) at its current share price?” For me, this is just before the end of the financial year because it helps me with my tax planning. I would recommend doing something similar annually, bi-annually or every quarter when results are announced.

    During this year’s review, I found myself asking the question: “Do I still want ‘in’ at the current Monadelphous share price?” This is a very personal question so it is important to define who I am as an investor and my investment strategy.

    My share investor profile

    • Demographic: Generation Y
    • Investment time horizon: 50 years +
    • Investing experience: High
    • Risk tolerance: Very high
    • End goals: Join the Financial Independence Retire Early (FIRE) movement and go travelling. Pass on a legacy to my kids.

    My share investment strategy

    Because I have so long to invest and minimal financial commitments, I am able to be an ultra long-term, aggressive growth investor. My strategy is to build a highly diversified portfolio of quality growth companies with a lot of risk yet massive multi-bagger potential. I invest funds into the market on a monthly basis (or as close to as possible).

    So, at the current Monadelphous share price, should I keep owning shares?

    Monadelphous is a share that I bought at the start of my investing career. At the time there was an increase in capital expenditure in the materials sector and Monadelphous was benefitting as a result. My investment was also benefiting with a gain of up to 28% (excluding a healthy dividend) within a few years. Unfortunately, that all changed and I’m currently sitting on an annualised total return of about half of what the S&P/ASX 200 Index (ASX: XJO) has achieved. The Monadelphous share price is $12.70 at the time of writing.

    In general, I’m not a massive fan of the resources sector because there is no real pricing power. Often the lowest cost producer wins, but there is still direct commodity price risk. But, because I was so keen on diversifying at the time, I felt I needed some exposure to the sector. Monadelphous seemed like a great shot because not only was it exposed to capital expenditure during boom times, but it had a strong and growing maintenance business to soften the cyclical nature of the industry.

    With many more years of investing under my belt, I now have a very diversified portfolio. Further, I know that so long as I am comfortable with my sector allocations I don’t need to be invested into everything out there. Monadelphous like Challenger Ltd (ASX: CGF) doesn’t fully align with my investment strategy, so I have to ask myself if I should hold or sell. Right now, I’m not sure.

    Foolish bottom line

    Writing your investing reasons down is extremely important. It allows you to understand what you were thinking at the time, without any hindsight bias. This makes it a powerful tool for making buy or sell decisions with your shares. Additionally, it provides a great resource for educating yourself as an investor. 

    Investment strategies and goals will change so a point of reference is crucial. Invest based on your own personal circumstances and goals at that point in time.

    Take a look at this report to learn whether one of these high quality shares will suit your current strategy!

    5 ASX stocks under $5

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    Motley Fool contributor Lloyd Prout owns shares of Monadelphous Limited and expresses his own opinions. The Motley Fool Australia owns shares of and has recommended Challenger 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 Should I keep my stake at the current Monadelphous share price? appeared first on Motley Fool Australia.

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  • Beston Global share price rockets 40% on sale of dairy farms

    The Beston Global Food Company Ltd (ASX: BFC) share price is flying higher today after the company announced the sale of its dairy farms in Mount Gambier.

    As its name suggests, Beston Global is in the business of food. The company aims to provide natural and verifiably safe food and beverages to global markets.

    To achieve this, it owns the raw materials, utilises technology in the production process, and controls distribution.

    Beston Global’s range of products focuses on the food groups of dairy and meat.

    Why is the Beston Global share price rocketing?

    This morning, Beston announced it has signed an agreement to sell its dairy farms in Mount Gambier to Aurora Dairies for $40.4 million cash.

    Under the terms of the agreement, Beston will receive all milk from the farms, which is currently around 17 million litres per annum, over a 10-year period. It also has the option to extend this period.

    The sale process for the farms was conducted through an international open tender process which commenced at the beginning of this year.

    Beston highlighted that the proposed transaction achieves its strategic objective of releasing capital for re-investment in higher returning dairy factory assets, while securing long-term milk supply from the farms.

    Proceeds from the sale will be used to reduce balance sheet gearing to around 10% and fund the company’s mozzarella and lactoferrin production expansion.

    The transaction is subject to approval from the Foreign Investment Review Board and other usual conditions. Subject to the relevant approvals and conditions being satisfied, Beston expects to complete the transaction by 30 September 2020.

    Management commentary

    In today’s announcement, chief executive Jonathan Hicks noted that the demand for the company’s mozzarella products has been steadily increasing. This is despite the closure of restaurants and other food service outlets during the COVID-19 lockdown period.

    And in regard to the update, Mr Hicks said:

    “The sale of the farms, the securing of milk supply and the positioning of the business to focus on Beston’s strategic growth initiatives comes at a good time for the business as we work through the other side of the restrictions brought on by COVID-19.”

    At the time of writing, the Beston Global share price has rocketed 40% higher to 7.7 cents. This takes the company’s current market capitalisation to around $36 million.

    If Beston Global is too small and illiquid for your liking, check out the top ASX growth shares below instead.

    3 “Double Down” stocks to ride the bull market higher

    Motley Fool resident tech stock expert Dr. Anirban Mahanti has identified three stocks he thinks can ride the bull market even higher, potentially supercharging your wealth in 2020 and beyond.

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    Motley Fool contributor Cathryn Goh 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 Beston Global share price rockets 40% on sale of dairy farms appeared first on Motley Fool Australia.

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  • All Technology Index sees stunning comeback

    Cyber technology and software image

    The S&P/ASX All Technology Index (ASX: XTX) launched at the end of February this year, right before the March market meltdown. The meltdown battered the All Technology Index, causing it to fall from above 2,000 to below 1,200. Since then, however, the index has staged a roaring recovery, climbing to nearly 2,200. The index sits at 2,075.20 at the time of writing. 

    Market meltdown takes toll

    Many of the major constituents on the Index were battered in the market meltdown. Afterpay Ltd (ASX: APT) fell nearly 80% from its peak, while WiseTech Global Ltd (ASX: WTC) fell more than 60%. Shares in Webjet Limited (ASX: WEB) fell 76%, EML Payments Ltd (ASX: EML) shares dropped 75%, and Domain Holdings Australia Ltd (ASX: DHG) shares fell 54%. 

    V-shaped recovery

    But since the March low point, the index has seen a V-shaped recovery led by strong surges in the share price of constituent companies. At the time of writing, Afterpay is now up more than 400% from its low, while the WiseTech Global share price has gained more than 100%. Webjet shares are up 100% from their low, EML Payments shares are up 208%, and Domain Holdings shares are up 95%. 

    Following the recovery, the companies in the All Tech Index boast a combined market capitalisation of more than $100 billion. There’s no doubt the index had a rocky start, but it serves an important purpose. In the 5 years prior to its launch, the number of tech shares listed on the ASX doubled from 100 to over 200. The All Technology Index is designed to be a broader, more inclusive index than the previously existing S&P/ASX 200 Information Technology Index (ASX: XIJ), which only covers tech companies in the ASX 200. 

    Impressive returns 

    Despite its rollercoaster start, the All Technology index is seen as highly investable, with returns from investing in technology exceeding returns on the benchmark S&P/ASX 200 Index (ASX: XJO) in recent years. Over the 3 years prior to the launch of the All Technology Index, the ASX 200’s annualised total return was around 10%. Over the same period the technology companies that would have been in the All Technology Index (had it existed) would have returned over 20%.

    Since the market low in March, ASX 200 has gained 32% (at the time of writing). The All Tech Index, on the other hand, has surged more than 75%, showing the strength of its constituent stocks. There is no doubt ASX technology shares are increasingly popular with investors. The All Technology Index will continue to provide an accessible option to invest in the sector and gauge its progress. 

    For more ASX shares with potential for serious gains, don’t miss the free report below.

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    Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO, Emerchants Limited, and WiseTech Global. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. 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 All Technology Index sees stunning comeback appeared first on Motley Fool Australia.

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