The Fortescue Metals Group Limited (ASX: FMG) share price hit another new all-time high today. Fortescue’s shares had been trending higher for most of the year, despite a brief (but sharp) dip in March, along with the rest of the broader S&P/ASX 200 Index (ASX: XJO). But since falling to a low of $8.58 on 9 March, the Fortescue share price has rallied over 62% to today’s new high of $13.95 before edging slightly lower to $13.93 at the close.

Real winners have been hard to find on the ASX 200 in recent months (especially in the dividend space), so is it too late to invest in Fortescue?

Why Fortescue shares are hitting the roof

Fortescue is an iron ore miner and one of the biggest in Australia at that. The company has a market capitalisation of over $40 billion (based on today’s closing share price). Unlike most other mining giants such as BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO), Fortescue is a pure-play on iron ore, with the red dirt comprising almost all of the company’s earnings.

And it’s this red dirt that is sending the Fortescue share price higher today. Iron ore prices have been holding up remarkably well since the coronavirus pandemic set in. They haven’t dipped below US$80 per tonne in 2020 so far. But this week, iron ore prices have pushed over US$90 per tonne amid global supply concerns.

According to the Australian Financial Review (AFR), the Brazilian mining sector is currently being severely affected by COVID-19, and supply cuts are very likely in 2020. Brazil is one of the largest exporters of iron ore, so this supply squeeze is causing global iron ore prices to rise, and the Fortescue share price to follow suit.

Is the Fortescue share price a buy at these levels?

On one level, there is a lot to like about the Fortescue share price today. Fortescue is an extremely low-cost producer of iron ore and has an average cost of extraction of around US$13 per tonne. With iron ore prices currently sitting around US$92 per tonne, Fortescue has basically got itself a license to print money. This money will no doubt fund massive dividend payments for Fortescue’s shareholders if the iron ore price stays anywhere close to its current level – which in itself is a scarce commodity these days.

But by investing in Fortescue (as with all ASX resources shares) you are always taking on pricing risk. Fortescue has no control over the pricing of the commodity it mines, which leaves it at the mercy of the market. Iron ore is a notoriously volatile commodity as well, having touched both US$187 a tonne and US$40 a tonne in the last decade.

Foolish Takeaway

I think Fortescue is a great company, and one well worth adding to a diversified ASX portfolio. Its costs are so low that I don’t think it will ever be in serious risk of bankruptcy, even in a sustained iron ore bear market. Saying that, anything can happen with commodity prices (just take a look at oil recently). As such, I would probably wait until this company isn’t trading at all-time highs before adding it to my buy list.

More reading

• Is the ASX 200 getting too far ahead of itself?
• Macquarie picks the best stocks to buy for the post COVID-19 rebound
• Could ASX 200 iron ore shares save the Australian economy?
• Are CBA shares in the buy zone?
• 3 ASX shares that will have strong dividends in 2020

Motley Fool contributor Sebastian Bowen 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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The S&P/ASX 200 Index (ASX: XJO) may be getting a bit too far ahead of itself at the moment. Or is it?

It has recovered 22% since that market low on 23 March 2020. The ASX 200 is still down 22% from the all-time high on 20 February 2020. What’s going to happen next?

Bear case for the ASX 200

Several major economies are predicting that this is going to be one of the most economically painful periods. Perhaps it will be the most painful ever. I’m not sure either way about that, but to me it seems unlikely that the ASX 200’s low would be in a month after the sell-off started if the real economy does get that bad. Maybe investors are getting complacent about the situation.

There’s a large amount of economic support for populations at the moment. Unemployment benefits have been boosted and Australia’s jobkeeper program is unprecedented. But how long will these last? The Australian federal government seems keen to lower the cost somehow. If these programs are ended prematurely it could cause shares to fall.

The GFC is a completely different situation to this, but the ASX 200 market selloff and economic damage took more than a few months to get through.

Bull case

There is already early signs of positive news of a vaccine for the coronavirus. There are dozens of teams around the world trying to develop a treatment or vaccine.

Central bank support and extremely low interest rates are supporting asset prices like the ASX 200. Perhaps that support is artificial, but it’s there nonetheless. The RBA has already said that low interest rates are probably going to stay around for at least for a few years.

A fall of more than 20% is a sizeable drop even after the recovery we’ve seen. These prices are still (long-term) good value compared to before and interest rates are a lot lower. Time will tell whether the bull or bear case is right. I think there could be more pain to come, but I’m still regularly investing each month.  

Within the ASX 200 I still there are plenty of opportunities like Brickworks Limited (ASX: BKW).

More reading

• Here’s why the Fortescue share price hit an all-time high today
• Macquarie picks the best stocks to buy for the post COVID-19 rebound
• Are CBA shares in the buy zone?
• 3 ASX 200 blue chip shares I would buy today
• The ASX big bank stock most likely to outperform in the COVID-19 recovery

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Brickworks. 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 the ASX 200 getting too far ahead of itself? appeared first on Motley Fool Australia.

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Day trading may provide you with an adrenaline kick and potentially even decent returns, but statistically it creates far more losers than winners.

Cory Michael from Vantage Point Trading told Forbes: “The success rate for day traders is estimated to be around only 10%, so …90% are losing money.”

But those in the 10% aren’t necessarily winning. Mr Michael added: “Only 1% of [day] traders really make money.”

In light of this, I think investors interested in building their wealth should consider a more prudent investment strategy that involves buying and holding shares over the long term.

With that in mind, here are three ASX shares that I believe investors should consider:

Afterpay Ltd (ASX: APT)

The first share to consider buying is Afterpay. I think this payments company would be a great option for long term focused investors. This is due to the continued success of its international expansion which I expect to drive further strong underlying sales and customer growth for a long time to come. Especially if it decides to expand into mainland Europe and Asia.

Cochlear Limited (ASX: COH)

Another option to consider is Cochlear. It is a hearing solutions company which I feel could be a long term market beater. I believe its outlook is very positive due to the ageing populations tailwind. This is because as people age their hearing will tend to fade and require some form of assistance. I expect this to lead to increasing demand for hearing solutions products over the next couple of decades.

Pushpay Holdings Group Ltd (ASX: PPH)

Pushpay is another payments company to consider. It provides a donor management platform to the faith, not-for-profit, and education sectors. The company has carved out a leadership position in the sector and has been experiencing very strong demand for its offering. The good news is that it is still only scratching at the surface of its sizeable market opportunity. This could mean there is still plenty more growth to come from this rapidly growing tech company.

More reading

• Cochlear share price edges lower on patent infringement news
• 2 millionaire-maker ASX internet growth shares
• Where to invest $500 in ASX shares right now
• This ASX fintech share is soaring again as the economy reopens
• 3 industries that may never recover from COVID-19

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 owns shares of and has recommended PUSHPAY FPO NZX. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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.

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