Stock Pick

  • Is the Wesfarmers share price in the buy zone?

    buy shares

    The Wesfarmers Ltd (ASX: WES) share price has fallen 5.99% lower in 2020, but is the Aussie conglomerate in the buy zone?

    Why the Wesfarmers share price has slumped lower

    Normally a year to date share price fall of 5.99% wouldn’t be considered a good thing. However, the S&P/ASX 200 Index (ASX: XJO) has slumped 16.62% over the same period which means the group’s shares have actually outperformed in 2020.

    Investors are struggling to value many businesses in the current climate and the Wesfarmers share price is tough to evaluate at the best of times. The company has interests in a wide range of industries and sectors including retail, mining and chemicals.

    Investors are clearly pricing in a potentially negative impact on earnings from COVID-19 in 2020. I think one of the hardest-hit areas of the business could be the group’s retail arm which includes brands like Kmart and Target.

    However, I think the Wesfarmers share price could currently be undervalued and here are a few reasons why…

    Wesfarmers has a lot of cash right now

    Wesfarmers has been sitting on a big pile of cash for years. How big? The group’s FY 2019 annual report from August 2019 suggests it’s a $795 million pile. This could swell even larger in 2020 after the $1.1 billion sale of another part of its stake in Coles Group Ltd (ASX: COL).

    That’s good news for shareholders and the Wesfarmers share price in the current environment. Cash is king right now and Wesfarmers has plenty. On top of that, it could be well-placed to pounce on any undervalued companies targeted for acquisition.

    The conglomerate is always looking for efficiency

    Despite some potential business challenges, Wesfarmers is always looking to improve efficiencies. The group recently flagged closures for underperforming Target stores and sold off its remaining coal mining interest in December 2018.

    These improvements in efficiency could be good news for the Wesfarmers share price in 2020. If the business uses the current climate to continue re-aligning its strategy, earnings could be more stable than many investors expect.

    If you’re after more ASX dividend shares like Wesfarmers, don’t miss out on this top income share today!

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    Edward has just named what he believes is the number one ASX dividend stock to buy for 2020.

    This fully franked “under the radar” company is currently trading more than 24% below its all-time high and paying a 6.7% grossed-up dividend.

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    Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Wesfarmers 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 Is the Wesfarmers share price in the buy zone? appeared first on Motley Fool Australia.

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  • 2 top ETFs for high growth

    Exchange Traded Fund (ETF)

    Some exchange-traded funds (ETFs) offer high growth for investors despite the coronavirus.

    I like how cheap some ETFs out there are such as BetaShares Australia 200 ETF (ASX: A200) and Vanguard U.S. Total Market Shares Index ETF (ASX: VTS).

    The ASX does have some impressive growth companies, but they’re not the largest positions within the ASX 200. The biggest businesses in Australia are mature businesses in slow growth industries.

    I think these two ETFs have high growth, with an Asian flavour:

    Vanguard FTSE Asia ex Japan Shares Index ETF (ASX: VAE)

    The Asian region is handling the coronavirus much better than some western nations right now. South Korea, Singapore and Vietnam have all done impressive things with their own tactics. China is now in a much stronger position than the US to push on from this pandemic.

    Vanguard is one of the best ETF providers in the world and this ETF has a management fee of just 0.4% per annum.

    Due to Asia’s growing prominence, stronger savings rate and middle class wealth effect, I like the idea of getting exposure to Asian shares.

    I think this ETF has high growth because it’s invested in businesses like Alibaba, Tencent, Taiwan Semiconductor Manufacturing, Samsung and Ping An Insurance. These businesses could easily be described as the equal of their western counterparts. But the ETF is actually invested in over 1,250 businesses, not just those few names, which is great diversification.

    According to Vanguard, the ETF has an earnings growth rate of 11.6%, a return on equity (ROE) of 14.76% and a price/earnings ratio of just 13.3x. I believe these are attractive statistics and show the ETF has high growth potential.  

    BetaShares Asia Technology Tigers ETF (ASX: ASIA)

    Perhaps you don’t want to be invested in 1,250 Asian shares. Maybe you just want exposure to 50 of the biggest and best Asian technology and online retail shares. Well that’s exactly what this ETF offers.

    If you just looked at the holdings, you’d see similar names. But this ETF has larger positions of each tech name. Alibaba is 9.7% of the portfolio, Tencent is 9.7%, Taiwan Semiconductor Manufacturing is 9.2% and Samsung is 9%.

    This high growth ETF has returned an average of 14.6% per annum after fees since inception in September 2018.

    Around two thirds of the ETF is invested in three sectors: ‘semiconductors’, ‘interactive media & services’ and ‘internet & direct marketing retail’. These are attractive growth areas.

    BetaShares Asia Technology Tigers ETF’s management fee is a bit higher at 0.67%, but it’s still a lot cheaper than typical active fund managers.

    Foolish takeaway

    Asian high growth ETFs have higher risks (particularly relating to China), but they could generate higher returns. If you just want a tech-focused ETF then the BetaShares offering could be a great pick. But choosing a broad investment exposure to the whole of Asia and every industry is also a very compelling prospect.

    But Asia isn’t the only place to have high growth ETFs and great businesses.

    One “All In” ASX Buy Alert, that could be one of our greatest discoveries

    Investing expert Scott Phillips has just named what he believes is the #1 Top “Buy Alert” after stumbling upon a little-owned opportunity he believes could be one of the greatest discoveries of his 25 years as a professional investor.

    This under-the-radar ASX recommendation is virtually unknown among individual investors, and no wonder.

    What it offers is an utterly unique strategy to position yourself to potentially profit alongside some of the world’s biggest and most powerful tech companies.

    Potential returns of 1X, 2X and even 3X are all in play. Best of all, you could hold onto this little-known equity for DECADES to come.

    Simply click here to see how you can find out the name of this ‘all in’ buy alert… before the next stock market rally.

    Find out the name of Scott’s ‘All in’ Buy Alert

    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 BetaShares Asia Technology Tigers ETF. 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 2 top ETFs for high growth appeared first on Motley Fool Australia.

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  • 3 five-star ASX 200 shares to buy right now

    asx shares to buy

    If you’re looking for new additions to your portfolio, then I think the three ASX 200 shares listed below would be great options.

    I believe they are amongst the best on offer on the Australian share market and could generate strong returns for investors over the next decade.

    Here’s why I rate them as five-star stocks:

    a2 Milk Company Ltd (ASX: A2M)

    I continue to rate this infant formula and fresh milk company as a five-star stock. I’m a big fan of the company due to its strong and unique brand, its wide margins, and positive long term growth potential. Overall, I believe these have put a2 Milk Company in a position to continue growing its earnings at a solid rate for many years to come. In FY 2020 the company is expecting to deliver another stellar result. The top end of its recently upgraded guidance implies year on year revenue growth of 34.1% and EBITDA growth of 35.4%.

    CSL Limited (ASX: CSL)

    Another five-star stock to consider is CSL. I think the biotherapeutics giant is arguably the highest quality company that Australia has ever produced and could be a great long term investment. This is thanks to CSL’s world class operations, leading therapies, growing plasma collection network, and its potentially lucrative research and development pipeline. I believe these leave the company well-placed to continue generating strong returns for investors over the next decade and beyond.

    Xero Limited (ASX: XRO)

    A final five star stock to consider is Xero. I think the leading cloud-based business and accounting software provider is a fantastic long term investment option. This is thanks partly to the quality and stickiness of its product, which has consistently led to Xero’s retention rate remaining sky high. I feel this gives it a great foundation to build on. In addition to this, the company is still only scratching at the surface of its massive market opportunity. I expect further market share gains over the next decade to drive strong earnings growth and returns for investors.

    And below is a fourth option that this leading analyst believes is a five-star option. So much so, he is urging investors go all in…

    One “All In” ASX Buy Alert, that could be one of our greatest discoveries

    Investing expert Scott Phillips has just named what he believes is the #1 Top “Buy Alert” after stumbling upon a little-owned opportunity he believes could be one of the greatest discoveries of his 25 years as a professional investor.

    This under-the-radar ASX recommendation is virtually unknown among individual investors, and no wonder.

    What it offers is an utterly unique strategy to position yourself to potentially profit alongside some of the world’s biggest and most powerful tech companies.

    Potential returns of 1X, 2X and even 3X are all in play. Best of all, you could hold onto this little-known equity for DECADES to come.

    Simply click here to see how you can find out the name of this ‘all in’ buy alert… before the next stock market rally.

    Find out the name of Scott’s ‘All in’ Buy Alert

    More reading

    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 CSL Ltd. and Xero. 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 3 five-star ASX 200 shares to buy right now appeared first on Motley Fool Australia.

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