Stock Pick

  • NAB’s CEO is buying shares at decade low prices. Should you take the hint?

    NAB bank share price

    The National Australia Bank Ltd. (ASX: NAB) share price closed today’s trade at $15.75.

    Sure, this share price isn’t quite as low as the levels we saw in March when NAB shares reached $13.20. But it’s still not far from a level that, until March, we hadn’t seen this century. That’s right, you have to go back to 1996 to find a time when NAB shares plumbed the depths they found 2 months ago.

    Even during the global financial crisis, which hit bank shares particularly harshly, NAB shares didn’t see a share price with a 13 at the beginning.

    So we already know this ASX bank has been a lousy investment over the past two and a half decades, even with the healthy dividends NAB used to pay. It’s not often you can say you bought a company that went backwards over 25 years.

    But it’s still one of the largest companies in Australia, has a virtual government guarantee and a formidable market share in the ASX financials sector.

    So is the NAB share price in the buy zone today?

    Are NAB shares in the bargain bin?

    Well, the first thing to note is that no one should be expecting much in the way of dividend payments in 2020.

    Yes, unlike NAB’s compatriots Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group Limited (ASX: ANZ), NAB will be paying a 30 cents per share interim dividend in July.

    But NAB’s past payments make this look like a pittance. Shareholders were treated to an annual dividend of $1.98 per share in 2018. Last year, investors received $1.66 per share in payments. This year, it looks as though NAB shareholders will be lucky to receive 60 cents per share. That’s a 66.7% cut over 2 years – although I’m not blaming NAB entirely for this, due to the impacts of the coronavirus on the economy.

    Still, if an investor bought in at the current NAB share price, this new dividend would translate into an annualised yield of 3.8%, which isn’t really anything to write home about.

    However, these dividends are likely to recover somewhat over time. It’s hard to say how much though – that depends on consumers returning to the credit markets in the months and years ahead, as well as what interest rates end up doing.

    One investor who’s bullish on NAB shares is Nab’s own CEO, Ross McEwan. Mr McEwan recently picked up 47,500 shares worth around $731,500 (at the time) earlier this month. It’s always nice seeing a CEO put their money where their mouth is.

    Foolish takeaway

    In time, I think the NAB share price will recover from the lows we see today. However, I’m not in a rush to add to my existing NAB shares alongside Mr McEwan, even at these depths. There’s a lot of uncertainty in the future of the ASX banks, and I’m not confident that the heavy headwinds the sector is facing have a clear end in sight. Thus, I think there are better places to put your money in this market.

    Such as this ASX dividend share named below!

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    Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited. 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 NAB’s CEO is buying shares at decade low prices. Should you take the hint? appeared first on Motley Fool Australia.

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  • ASX 200 jumped higher, rises more than 2%

    ASX 200

    The S&P/ASX 200 Index (ASX: XJO) jumped higher today, it rose by more than 2% to 5,616 points.

    Whilst the country continues to argue about the $60 billion jobkeeper miscalculation, Treasurer Josh Frydenberg spoke to the ABC to say that the travel sector could receive more support because of the ongoing lockout of international tourists.

    ASX travel shares jump

    As you can imagine, the potential for support of the travel industry was warmly greeted by investors of ASX travel shares.

    The top performers within the ASX 200 were travel shares. The Webjet Limited (ASX: WEB) share price rocketed 15.6% higher and the Flight Centre Travel Group Ltd (ASX: FLT) share price grew 15.2%.

    Other travel shares also rose. The Qantas Airways Limited (ASX: QAN) share price went up 7.2% and the Sydney Airport Holdings Pty Ltd (ASX: SYD) share price climbed 3.9%.

    Afterpay Ltd (ASX: APT) hits new heights

    Last week the ASX 200 buy now, pay later business announced that it had reached 5 million active customers in the US, adding one million customers during this period.

    Investors can’t get enough of the company with the Afterpay share price rising by almost 9% to another all-time high today.

    Today saw the Afterpay share price finish at $48.50. It has been a huge turnaround from a few weeks ago when the share price was as low as $8.90.

    Court win for IOOF Holdings Ltd (ASX: IFL)

    ASX 200 financials business IOOF announced that it has reached an agreement for the class action with no order as to costs. IOOF won’t be paying anything to the plaintiff, the lawyers (Quinn Emanuel) or the litigation funder (Regency).

    The company said it was very pleased with the outcome.

    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.

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    Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Flight Centre Travel Group 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 ASX 200 jumped higher, rises more than 2% appeared first on Motley Fool Australia.

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  • These are the latest ASX shares to be upgraded by brokers to buy

    finger pressing red button on keyboard labelled Buy

    The S&P/ASX 200 Index (Index:^AXJO) may have jumped by more than 20% since hitting the bear market low in March, but there are still value buys to be had.

    Speculation that the federal government has another $60 billion to use as stimulus due to its forecasting bungle is triggering excitement.

    It was originally thought that the Morrison government’s JobKeeper program would cost $130 billion proved to be well off the mark – but in a good way.

    The extra support for our economy could keep our market well supported as we head into the new financial year, and it isn’t too late to buy these ASX shares as brokers have only just upgraded them to “buy”.

    Good connection

    The latest stock to be upgraded by Morgans is the TPG Telecom Ltd (ASX: TPM) share price as the broker mulled over its looming merger with Vodafone Australia.

    “On a stand-alone basis and in constant accounting terms, EBITDA [earnings before interest, tax, depreciation and amortisation] for both TPM and Vodafone is in decline,” said Morgans.

    “So, this merger is all about the economies of scale required to have a profitable and free cash generative #3 player.”

    Upside from synergies

    It’s worth noting that David Teoh, who will be the chairman of the merged entity, has a strong track record of achieving cost savings.

    “We see the largest area of cost saving as TPM using mobile to partially bypass the NBN,” added Morgans.

    “Without mobile, TPM would pay ~$1bn pa to the NBN, so the ability to bypass some of this using wireless technologies will likely save $150m pa in the medium term.”

    While the broker is forced to guess what the capex requirement is for the group, Morgans believes the new entity will be able to generate around $800 million a year in free cash flow.

    Morgans lifted its rating on the stock to “add” from “hold” with a price target of $9.14 a share.

    The stock to bank on

    Meanwhile, the National Australia Bank Ltd. (ASX: NAB) share price got a boost after Bell Potter upgraded the stock to “buy” from “hold”.

    The stock had been under pressure due to its larger exposure to small and medium business lending. Many of these businesses are expected to fold due to the COVID-19 shutdown.

    But despite the risks, the stock is now looking too cheap to ignore, according to Bell Potter.

    Risks are priced in

    “Looking past the COVID-19 noise, NAB exhibited good operational resilience in 1H20,” said the broker.

    “Business and Private Banking cash earnings were stable due to solid lending volumes, steady NIM [net interest margin], cost discipline, better impairment outcomes and higher asset productivity.”

    Bell Potter was also impressed with management’s cost discipline as underlying expenses were flat at $4.1 billion with NAB forecasting around $1 billion in extra savings by the end of this financial year.

    Bell Potter lifted its price target on the stock to $17.30 from $17 a share.

    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 Brendon Lau owns shares of National Australia Bank Limited and TPG Telecom Limited. 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 These are the latest ASX shares to be upgraded by brokers to buy appeared first on Motley Fool Australia.

    from Motley Fool Australia https://ift.tt/2Xr7Syb

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