The S&P/ASX 200 Index (ASX: XJO) edged 0.1% lower today to 5,775 points.

Investors are gaining confidence that the Australian economy is going to do better than previously expected with the big difference in the cost of jobkeeper.

Big ASX banks fly higher

The big four ASX banks make up a large part of the ASX 200 index. If it wasn’t for the ASX banks the ASX may have had a pretty bad day today.

The share price of Commonwealth Bank of Australia (ASX: CBA) rose almost 5%. The share price of Westpac Banking Corp (ASX: WBC) went up 8%. Australia and New Zealand Banking (ASX: ANZ) saw its share price drop by 8.6%. The share price of National Australia Bank Ltd (ASX: NAB) went up 7.8%.

Blackmores Limited (ASX: BKL) capital raising

Blackmores announced this morning that it was doing a capital raising of up to $117 million. The company is aiming for $92 million from institutional investors and another $25 million from retail investors.

Management still think it can hit its underlying profit guidance of between $17 million to $21 million.

Whilst immunity products are seeing more demand, the ASX 200 business is seeing less demand for other products. 

CSL Limited (ASX: CSL) drops

The huge ASX 200 healthcare company suffered a valuation setback today. Australia’s dollar is getting stronger, which makes CSL less attractive in Australian dollar terms.

The CSL share price fell by 6.4% in one of the worst days since the coronavirus sell-off started. Not too long ago CSL reaffirmed its profit guidance for the year in constant currency terms.

More reading

• Is now the right time to be buying ASX bank stocks?
• 2 outstanding ASX 50 shares to buy today
• Soaring share price: Is CBA a buy?
• ASX 200 up 0.1%: Big four banks rocket, Afterpay sinks lower
• Why the NAB share price is surging higher today

Tristan Harrison 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. The Motley Fool Australia owns shares of and has recommended Blackmores 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 edges down, bank share prices fly appeared first on Motley Fool Australia.

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It has been an oddly disappointing month for the A2 Milk Company Ltd (ASX: A2M) share price.

Since the start of May the infant formula and fresh milk company’s shares are down 4.5%.

This compares to a gain of 4.5% month to date by the benchmark S&P/ASX 200 Index (ASX: XJO).

Why is a2 Milk Company underperforming?

With no news out of the company this month, this decline appears to have been driven by profit taking after strong gains over the last few months.

After all, although a2 Milk Company’s shares have underperformed this month, they are smashing the market in 2020 with a 22% year to date gain.

Should you be selling your shares?

I wouldn’t be a seller of a2 Milk Company’s shares right now. In fact, I would be tempted to take advantage of this share price weakness to buy more shares.

This is because I think the company is one of the best growth shares on the local market and a great long term option.

Especially given the massive opportunity it has in the China market. At the end of the first half of FY 2020 its products were in 18,300 stores in the country and generated revenue of NZ$146.7 million over the six months. This gave it a modest China consumption market share of 6.6%.

Can it continue to grow its sales in China?

Based on its sales and distribution network at the end of the first half, a2 Milk Company was averaging approximately NZ$8,000 sales per store per six months.

We can extrapolate this to NZ$16,000 a year, which is the equivalent of just over NZ$300 per week per store or NZ$60 per working day.

I don’t think it is hard to imagine a2 Milk Company selling a greater volume of units per store in the China market over the coming years. Especially with the company investing heavily in marketing in the country.

Furthermore, while 18,300 stores is a large number, it is by no means the entire market. I expect further growth in its distribution in the coming years to also support its sales growth over the next decade.

Combined with its expanding fresh milk footprint and strong demand for infant formula from other channels, I believe the future is very bright for a2 Milk Company. In light of this, I would buy a2 Milk Company shares and hold onto them for the long term.

More reading

• 3 outstanding ASX growth shares to invest $3,000 into today
• 3 timeless investing lessons from 2020 (so far!)
• Where to invest $5,000 in ASX growth shares today
• 3 ASX 200 shares to watch this week
• 3 ASX 200 growth shares I want to buy for my portfolio

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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 Is the A2 Milk Company share price in the buy zone? appeared first on Motley Fool Australia.

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