The National Tyre & Wheel Ltd (ASX: NTD) share price is gaining traction today on the back of an FY20 trading update and related full-year guidance.

At the time of writing, National Tyre & Wheel shares have raced 26.79% higher so far today to 35.5 cents per share. This takes its current market capitalisation to around $36 million, so we’re very much at the smaller end of the ASX spectrum here.

About National Tyre & Wheel

As its name suggests, the company is in the business of tyres and wheels. It supplies the latest generation of tyres and wheels to consumers in Australia, New Zealand and, to a lesser extent, South Africa.

The company has a number of different brands under its banner to service the car, SUV, 4WD, light commercial and caravan segments. These brands include Exclusive Tyre Distributors, Cooper Tires, Mickey Thompson, and Dynamic Wheel Co.

Although National Tyre & Wheel’s history dates back to 1989, it is relatively new to the ASX scene after listing in December 2017.

Why the National Tyre & Wheel share price is gaining traction

This morning, the company released an FY20 trading update, providing details of recent trading conditions along with forecasts for the full-year.

According to the announcement, trading results in April and May have exceeded expectations and volatility has subsided to the extent that shorter predictions can now be made with reasonable certainty.

As a result, the company provided guidance for FY20 operating earnings before interest, tax, depreciation and amortisation (EBITDA) of between $8.9 million and $9.3 million. Additionally, the first quarter of FY21 is expected to be consistent with this trajectory.

Some of its subsidiaries have received JobKeeper support, while others remain above the eligibility threshold. JobKeeper payments received in the fourth quarter of FY20 will amount to $0.96 million, representing 25% of people costs in that period.

National Tyre & Wheel believes its experience in Australia and New Zealand over the past 2 months is generally consistent with the overall performance of the tyre and wheel industries. According to the company, these industries are proving to be resilient in response to a difficult economic environment.

As for Top Draw Tyres, National Tyre & Wheel’s 50%-owned South African subsidiary, trading remains limited by government-imposed restrictions. The company also warned of a potential impairment charge of up to $1.8 million relating to the value of intangible assets.

Importantly, National Tyre & Wheel stated it has no present need to increase non-trading debt or raise capital. As of 30 April, the company had cash on hand of $18.4 million, placing it in a net cash position of $6 million.

In addition, National Tyre & Wheel has reinstated its dividend policy after temporarily suspending it on 3 April. The board will now apply the policy based on trading results over the coming months.

More reading

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Motley Fool contributor Cathryn Goh 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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It has been a very eventful day for the S&P/ASX 200 Index (ASX: XJO). At lunch the benchmark index has recovered from a sharp decline in early trade to be up 0.1% to 5,784.3 points.

Here’s what has been happening on the market today:

Big four banks rocket higher.

The performance of the big four banks on Wednesday has been the ASX 200’s saving grace. The banking sector has been storming higher for a third day in a row, which has offset heavy declines in other parts of the market. Investors appear to believe the banks were oversold over the last three months and have been piling in. The best performer in the group has been the Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price with a stunning 8.5% gain.

Afterpay sinks.

It looks as though investors have decided to take profit on a few growth shares today. One of the most notable examples of this is the Afterpay Ltd (ASX: APT) share price which is down 5.5%. Prior to today the payments company’s shares were up over 400% from their March lows. This impressive share price performance has been driven largely by its strong sales and customer growth and the arrival of Tencent Holdings as a substantial shareholder.

ALS result impresses.

The ALS Ltd (ASX: ALQ) share price is pushing higher on Wednesday after the release of a solid full year result. For the 12 months ended 31 March, the testing services company reported a 10% increase in revenue from continuing operations to $1,831.9 million and a 4.3% lift in underlying net profit to $188.8 million. ALS’ profits were in line with management’s guidance. Pleasingly for shareholders, the ALS board had enough confidence in its outlook and balance sheet to declare a final dividend. It will be paying shareholders a partially franked 6.1 cents per share.

Best and worst ASX 200 performers.

The best performer on the ASX 200 on Wednesday has been the Southern Cross Media Group Ltd (ASX: SXL) share price with a 31% gain. This was despite there being no news out of the beaten down media company. The worst performer has been the Saracen Mineral Holdings Limited (ASX: SAR) share price with an 8.5% decline after a decent pullback in the gold price.

More reading

• The ASX 200 stock hit by the Brazilian COVID-19 wave
• Why the NAB share price is surging higher today
• Why Afterpay, CSL, Fortescue, & Newcrest shares are dropping lower
• Why ALS, Metcash, NAB, & Pointsbet shares are racing higher
• Where I would put $10,000 into ASX 200 shares today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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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Wesfarmers Ltd (ASX: WES) recently consolidated part of its Target store network and made changes to its online strategy.

Is Wesfarmers in the buy zone in light of these recent changes?

Overhaul of Target store network

Last week, Wesfarmers announced it will implement a strategy to reduce its underperforming Target store network, including converting some larger Target stores into Kmart stores. Some of the Country Target stores will also be converted to either smaller Kmart stores or closed completely.

Wesfarmers’ aim is to end up with a stronger and more sustainable chain of retail businesses. The group’s network of Target stores has underperformed for quite some time despite implementing strategies to improve performance. The sharp downturn in foot traffic during the coronavirus crisis appears to have triggered Wesfarmers to take this latest action.

Enhancement of online retail strategy

Wesfarmers’ online offerings have seen strong growth over the past year or two, in particular, increased demand during the coronavirus crisis. This includes its online Target and Kmart offerings, as well as its pure online offering, Catch.

In a market update at the end of April, Wesfarmers revealed its retail businesses are expanding and upgrading their online offerings to support an increase in demand for product driven by the pandemic. Initiatives recently deployed include a ‘drive and collect’ service at its Bunnings and Officeworks stores nationwide.

Wesfarmers provided a further update on its evolving online strategy through a release last week, revealing that its Target network overhaul will be complemented by increased investment in its online capabilities.

Foolish takeaway

I am attracted to Wesfarmers as a potential company to buy during the coronavirus crisis due to its high level of diversification. Wesfarmers has operations in general retail segments of home improvement, merchandise and office supplies and other segments including industrial.

Wesfarmers has a track record of performing relatively well during challenging economic times such as the one we are in and the group’s strong balance sheet positions it well to ride out the current crisis.

I believe this latest move to consolidate its Kmart and Target portfolio and enhance its online offering should further strengthen an already solid business.

On current prices, Wesfarmers also pays an attractive trailing fully franked dividend yield of 3.87%.

More reading

• 3 easy rules for building a massive ASX share portfolio
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• Leading brokers name 3 ASX 200 shares to sell today

Motley Fool contributor Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of 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.

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