Stock Pick

  • The NAB share price has fallen 24%. Should you buy?

    Model of bank building on top of charts, bank shares, NAB share price, westpac share price

    The National Australia Bank Ltd. (ASX: NAB) share price has fallen 24.2% lower in 2020 but is the ASX bank share in the buy zone?

    Why the NAB share price has slumped 24.2%

    ASX bank shares were under real pressure during the February/March bear market. Investors panicked with many thinking that bank balance sheets could be stressed by mass loan defaults across the economy.

    However, as we now know, this hasn’t proven to be the case. A combination of record government stimulus measures and a better-than-expected pandemic response has left the Aussie banks in a solid position.

    So while the NAB share price is down 24.2%, it could have been much worse. The real question is whether or not NAB is a cheap buy at its current valuation.

    Is NAB a cheap buy right now?

    In order to determine whether the NAB share price is cheap, it pays to compare it to some of its peers.

    The Westpac Banking Corp (ASX: WBC) share price is down 25.0% this year while Commonwealth Bank of Australia (ASX: CBA) shares have fallen 14.0%.

    If we use the S&P/ASX 200 Index as a benchmark, which is down 11.1% for the year, then all 3 of these ASX 200 bank shares are underperforming in 2020.

    While the big four are similar, it’s not as simple as saying that because NAB’s share price has fallen more than CommBank’s has, it’s an automatic buy.

    NAB trades at a price-to-earnings (P/E) multiple of 16.8 times. Compared to CommBank which is at 12.46 and Westpac at 13.64, this would appear to make NAB a touch expensive.

    It’s also true that NAB is yielding 6.1% right now compared to the higher-paying Westpac and CommBank yields of 9.6% and 6.3% respectively.

    Of course, dividend yields can be misleading, especially with the ASX banks currently holding back on distributions under APRA’s orders.

    However, from what I can see, the NAB share price isn’t a cheap buy right now. ASX bank shares, in general, could be undervalued, but I don’t think NAB is a real stand-out at $18.67 per share.

    Here are a few Foolish ASX shares that could be worth a look in 2020.

    5 stocks under $5

    We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.

    And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

    Learn More

    *Extreme Opportunities returns as of June 5th 2020

    More reading

    Motley Fool contributor Ken Hall 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 The NAB share price has fallen 24%. Should you buy? appeared first on Motley Fool Australia.

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  • Where to invest $10,000 into ASX shares right now

    ASX Investing

    ASX shares continue to be a great place to invest money to make good returns over the long-term. I’m excited by many of the opportunities that I could put $10,000 into.

    Not every ASX share looks great value at the moment. COVID-19 has caused a lot of uncertainty for the economy and the stock market.

    There are some shares which I think are opportunities and others which could be worth leaving on the watchlist for now.

    If I had $10,000, these are the ASX shares I’d pick:

    A2 Milk Company Ltd (ASX: A2M) – $3,000 

    A2 Milk has been one of the best ASX shares over the past five years. This COVID-19 period is a difficult time for many businesses, but A2 Milk continues to grow. A2 Milk said it’s expecting FY20 revenue to be in the range of $1.7 billion to $1.75 billion. This would be growth of 30% to 34% on FY19’s revenue.

    The amount of growth that the ASX share can potentially achieve in North America alone is very attractive and it’s adding thousands of stores to its US distribution network every six months.

    It’s currently trading at 28x FY22’s estimated earnings. I think that’s a reasonable price considering how much profit growth the company is creating each year.

    Brickworks Limited (ASX: BKW) – $3,000 

    I believe that Brickworks is a great value ASX 200 share at the moment. The company has already been making good shareholder returns for decades. At the current Brickworks share price I’d want to buy shares.

    The best time to be greedy is when people are fearful about shares. COVID-19 is probably going to cause the Australian construction sector to have a difficult time over the next 12 months. But I think this is creating a good value opportunity to buy Brickworks shares whilst they are cheaper. I believe construction will return because it normally acts cyclically over time. Immigration will return at some point. 

    Brickworks currently has a market capitalisation of $2.29 billion. Its industrial property trust stake is worth $710 million (growing) and its shareholding of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) is worth $1.84 billion. Those two divisions have a combined pre-tax value of $2.55 billion.

    Pushpay Holdings Ltd (ASX: PPH) – $2,000

    Pushpay is one of the most exciting ASX shares to me at the moment. Since the start of May the Pushpay share price has risen 90.7%. These COVID-19 conditions are causing more people to donate through Pushpay’s electronic giving system rather than alternative means.

    In FY21 the company is expecting to at least approximately double earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF).

    The ASX share continues to improve its gross margin at an attractive rate. In FY20 the gross margin rose from 60% to 65%. This means each new $1 of revenue is more profitable. Management are expecting even higher margins over time. 

    US churches are a great growth area for Pushpay and represent a $1 billion revenue opportunity for Pushpay.

    Magellan High Conviction Trust (ASX: MHH) – $2,000

    Some of the best global shares aren’t on the ASX. Businesses like Alibaba, Alphabet, Microsoft, Facebook and Visa are listed overseas.

    Magellan High Conviction Trust is a listed investment trust (LIT) which looks to invest in the best businesses in the world, like the ones I just mentioned.

    The strategy for the LIT is to hold around 10 different shares – the ones that the investment team have the highest conviction in.

    I like the idea of getting international share diversification. However, I don’t want to invest in many of the other businesses out there. I just want exposure to the best ones. I think that’s exactly what this LIT provides.

    As a bonus, it comes with a 3% distribution yield target. I think that’s a nice mix of rewarding shareholders whilst benefiting from capital growth. It’s currently trading at a discount to its net asset value (NAV), but I’m a little concerned about the upcoming US election on the US stock market which is why I only allocated $2,000 to this pick.

    Foolish takeaway

    I really like each of these shares. Each of them gives Aussie investors exposure to growing non-Australian earnings. At the current prices I’m attracted to Brickworks and A2 Milk the most, I think they have very good investment returns potential at this level. 

    5 stocks under $5

    We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.

    And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

    Learn More

    *Extreme Opportunities returns as of June 5th 2020

    More reading

    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 and PUSHPAY FPO NZX. The Motley Fool Australia owns shares of A2 Milk. 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 Where to invest $10,000 into ASX shares right now appeared first on Motley Fool Australia.

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  • Bolton Scores Pyrrhic Victory in Court Ruling on Trump Book

    Bolton Scores Pyrrhic Victory in Court Ruling on Trump Book(Bloomberg) — A federal judge excoriated former national security advisor John Bolton for exposing the U.S. to harm with his tell-all memoir about President Donald Trump but said it’s too late to issue an order that would stop publication of the book.U.S. District Judge Royce Lamberth in Washington on Saturday rejected the Justice Department’s last-ditch attempt to block the publication on national security grounds, paving the way for “The Room Where It Happened: A White House Memoir” to go on sale June 23.In his judgment, Lamberth slammed Bolton for gambling with national security and going ahead with the book before it cleared a pre-publication review by the Trump administration to ensure it did not contain classified information.“He has exposed his country to harm and himself to civil (and potentially criminal) liability,” the judge wrote. “But these facts do not control the motion before the Court. The government has failed to establish that an injunction will prevent irreparable harm.”He also wrote that the government is likely to prevail as the case moves to the next stage of the breach-of-contract lawsuit, which could allow it to seize Bolton’s $2 million book advance as well as any royalties he receives. President Trump unleashed on Twitter, saying Bolton must “pay a very big price.”The legal battle over the book began Tuesday when the Justice Department sued Bolton for breach of contract, claiming he had pulled out of the pre-publication review process that he agreed to undergo when he got his security clearance. The next day, the government escalated its response, seeking an injunction to stop publication, even though detailed excerpts were already appearing in major newspapers and some 200,000 copies had been shipped to booksellers.According to reviews and published excerpts, Bolton’s book paints an unflattering portrait of the White House, describing Trump as ignorant of basic foreign policy facts and motivated largely by political self-interest. In one passage that has been widely reported, Bolton wrote that Trump urged the Chinese president, Xi Jinping, to buy agricultural products from the U.S. because it would help the Trump campaign build political support in rural states.Next StageFor the next phase of the legal process, focus will turn to whether Bolton was in breach of contract.“It’s hard if you’re John Bolton to wake up this morning and say, ‘Thank you, Judge Lamberth, I’m vindicated,’” said Harry Sandick, a former federal prosecutor in New York. “The court concluded that on the merits he did not follow the rules.”The Justice Department did not immediately respond to an email asking whether it plans to appeal before the book is released on Tuesday. Bolton’s lawyer, Chuck Cooper, said in a statement that he took issue with judge’s conclusion that Bolton had breached his contract. “The full story of these events has yet to be told — but will be,” he said.Adam Rothberg, a spokesman for the book’s publisher, Simon & Schuster, said the company was “grateful that the Court has vindicated the strong First Amendment protections against censorship and prior restraint of publication.”Horse BoltedIn court filings, Bolton argued the government delayed the review process to ensure the book didn’t come out before November and hurt the president’s reelection chances. He also said the book’s publication should be protected under the First Amendment.The judge ruled that the government hadn’t carried its burden of establishing that an injunction would prevent “irreparable injury” — a requirement for securing such a restraining order — because the book is already circulating widely.“By the looks of it, the horse is not just out of the barn — it is out of the country,” Lamberth wrote.The pre-publication review process began about six months ago, when Bolton submitted an early draft to Ellen Knight, an official on the National Security Council, according to the government’s lawsuit. After several rounds of edits, Knight concluded in April that the book no longer contained classified information, the complaint said. But in May, Michael Ellis, a senior NSC official, reopened the review process.Bolton’s decision to go ahead with publishing the book, even as the government continued to examine it, was an “unprecedented decision by an author to submit a manuscript for pre-publication review but then to bail out of that process before it’s completed,” government lawyer David Morrell argued at a hearing on Friday. “There is a massive interest that the government has here in ensuring that authors who become disgruntled and don’t like the process aren’t able to just bail out.”Trump’s RoleAll week, critics of the government have speculated that Trump may have played a role in delaying the pre-publication review of the book. Under questioning from Lamberth, Morrell said on Friday that he wasn’t aware of whether Trump had personally directed intelligence officials to designate material in the book as classified.“There are certain passages in this book that will damage the national security of the United States,” Morrell said. “These NDAs aren’t just bureaucratic contrivances. They serve an important function,” he said, referring to a non-disclosure agreement that Bolton signed.The judge slammed Bolton’s conduct in his ruling, saying “the damage is done” and there’s no returning to the status quo after his unilateral action.“In taking it upon himself to publish his book without securing final approval from national intelligence authorities, Bolton may indeed have caused the country irreparable harm,” Lamberth wrote. “But in the Internet age, even a handful of copies in circulation could irrevocably destroy confidentiality.”Pentagon PapersThe judge’s decision aligned with predictions from legal experts who had dismissed the possibility that the White House could stop the book’s publication, citing the Pentagon Papers case, in which the Supreme Court rejected a similar request from President Richard Nixon.Jameel Jaffer, executive director of the Knight First Amendment Institute at Columbia University, said in a statement that court was right to reject the government’s request for a prior restraint, especially since the requested injunction went further than the one sought in the Pentagon Papers case.“In other respects, though, the ruling is a troubling reaffirmation of broad government power to censor in the name of national security,” Jaffer said. “The prepublication review system puts far too much power in the hands of government censors, and reform of this dysfunctional system is long overdue.”The case is U.S. v. Bolton, 20-cv-01580, U.S. District Court, District of Columbia (Washington).(Adds comment from eight paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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