The recent strong run in ASX bank share prices is a sign that the value trade is finally springing back to life.

For the longest while, it was growth stocks like tech that dominated while value stocks played second fiddle.

Investors are rediscovering their taste for these laggards in the big post COVID-19 rebound!

Zero to hero

Financials were the best performing sector on the S&P/ASX 200 Index (Index:^AXJO) today and over the last five trading days.

The rally was fuelled by the sector heavyweights. These are the Commonwealth Bank of Australia (ASX: CBA) share price, the Westpac Banking Corp (ASX: WBC) share price, the Australia and New Zealand Banking Group (ASX: ANZ) share price and the National Australia Bank Ltd. (ASX: NAB) share price.

Shares in the big four jumped by at least 5% on Tuesday, and despite their recent outperformance, they remain significantly below where they were trading before the coronavirus outbreak.

The same can’t be said for other large cap stocks, and that’s what’s driving the big bank rally, in my view.

Better than feared

What is also helping drive the sector higher is the realisation that the COVID-19 disaster isn’t going to do as much damage to the economy as previously thought.

Treasury is the latest to admit it was too pessimistic as it upgraded Australia’s peak unemployment rate to 8% from 10%, reported Business Insider.

The better-than-Armageddon outlook is one reason why Citigroup released a bullish report on the sector.

Dividends on the comeback

While loan deferments and the government’s stimulus support packages end in September and pose a risk to the economy, the broker thinks the deadline may also be a blessing.

“A ‘Rip the BandAid off’ approach by the banks is set to accelerate mortgage impairments, bringing housing losses to fruition,” said Citi.

“However, an outcome of managing balance sheet risk will be in providing a pathway to dividends being reinstated.”

That will be music to the ears of investors as dividends are the main reason why retail investors buy bank stocks.

Don’t underestimate the dividend recovery

ANZ Bank and Westpac opted to defer paying their interim dividends until the coronavirus dust settled, while NAB took an axe to its latest distribution. CBA reports on a different earnings cycle and will only declare its interim dividend in August.

“We forecast higher than consensus dividend growth out to FY22 on milder than expected loan loss outcomes,” added Citi.

“This should see stock prices continue to move higher based on attractiveness of their dividend yields.”

The broker is recommending all the big four banks as a “buy”.

Another to bank on

But it isn’t only our ASX domestic banks that are benefiting from the improving outlook for the broader economy.

The Macquarie Group Ltd (ASX: MQG) share price also made a strong recovery with V-shaped bounce in global markets likely to provide a tailwind to the investment bank’s earnings.

The stock is a “buy” in my book as I think there’s more upside for the Macquarie share price.

More reading

• Why the CSL share price continues to trail the ASX 200
• ASX 200 jumps 2.4%, unloved shares keep rising
• Top brokers just upgraded these 3 ASX stocks to “buy”
• Not keen on Westpac? Then buy these top ASX dividend shares instead
• What 2020 has taught us about investing

Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, Macquarie Group Limited, National Australia Bank Limited, and Westpac Banking. The Motley Fool Australia owns shares of and has recommended Macquarie 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 The ASX bank dividend recovery may be better than what the market thinks appeared first on Motley Fool Australia.

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Although the ANZ region’s tech sector is small in comparison to those in the United States, Europe, and China, it isn’t short of quality.

I believe there are a good number of quality tech companies which are worthy of a spot in most portfolios.

Three of my favourites are listed below. Here’s why I like them:

Afterpay Ltd (ASX: APT)

The first ASX tech share to consider buying is Afterpay. I think the payments company could be a fantastic long term investment due to the sizeable market opportunity it has in the ANZ, UK, and United States markets. These markets alone have the potential to drive strong sales growth for a long time to come. But I don’t expect the company to stop there. It is already plotting an expansion into Canada and I wouldn’t be surprised to see it launch in mainland Europe and Asia in the coming years. The latter could be supported by its new substantial shareholder, Tencent Holdings. It is the US$535 billion owner of WeChat.

Nearmap Ltd (ASX: NEA)

Another ASX tech share to look at is Nearmap. It is a leading aerial imagery technology and location data company which also has a sizeable market opportunity. A recent market update reveals that its annualised contract value (ACV) has hit $102 million financial year to date. This means Nearmap is on course to achieve its ACV guidance of $103 million to $107 million in FY 2020. This is still only a fraction of its total addressable market (TAM), which is estimated to be worth $2.9 billion per year. And it is worth noting that this TAM relates to the countries it currently operates in. As with Afterpay, I believe Nearmap could expand into other territories in the future.

Xero Limited (ASX: XRO)

A final tech share to consider buying is Xero. It is a leading cloud-based business and accounting software provider which has been growing at a rapid rate for many years. This has led to the company surpassing 2 million subscriptions for the first time earlier this year. While this may seem like a large number, it still has a long runway for growth over the next decade. Especially given how less than 20% of the global English-speaking target market is believed to be using cloud-based accounting software at present. I expect more businesses to shift to this technology in the coming years, underpinning solid subscription and sales growth.

More reading

• Will ASX 200 shares hit a record high in June?
• Why CSL, Elders, Evolution, & Xero shares are dropping lower
• These are the 10 most shorted ASX shares
• 3 quality ASX 200 shares to buy and hold until at least 2030
• ASX shares could be the best way to grow your wealth in 2020

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 AFTERPAY T FPO, Nearmap Ltd., and Xero. The Motley Fool Australia has recommended Nearmap Ltd. 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 Why I would buy Afterpay and these exciting ASX tech shares appeared first on Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) has continued to recover strongly.

Over the weekend New Zealand officially declared itself COVID-19 free. Most Australian states reported no new cases. International share markets performed well on Monday, so it was not surprising to see the ASX do well too.

Unloved shares keep bouncing

Some of the ASX 200 shares to have seen the biggest selloff during the coronavirus crash are among the ones bouncing back the hardest today.

The Credit Corp Group Limited (ASX: CCP) share price jumped 15.7% today.

The Worley Ltd (ASX: WOR) share price increased by 14.6%.

Virgin Money UK Plc (ASX: VUK) saw its share price rise by 14.3%.

The Flight Centre Travel Group Ltd (ASX: FLT) share price soared 13.8% higher.

The Scentre Group (ASX: SCG) share price went up almost 10%.

Wesfarmers Ltd (ASX: WES) retail trading update

The (mostly) retail ASX 200 conglomerate released an impressive trading update today.

In the second half of FY20 to 31 May 2020, Wesfarmers has seen strong growth. Bunnings sales were up 19.2% compared to the prior corresponding period. Officeworks sales were up 27.8%. Catch’s gross transaction value was up 68.7%. Kmart sales were up 4.1%. Only Target has seen a revenue decline in the second half, with sales retreating 1.8%.

Excluding Catch, Wesfarmers’ online sales are up 60% in the financial year to date.

However, whilst sales are up strongly, costs have risen too for the ASX 200 company because of coronavirus restrictions and expenses to ensure safe stores.

CSL Limited (ASX: CSL) share price drops on acquisition

The ASX 200 biotech giant’s share price fell over 2% today after announcing an acquisition. The falling US dollar isn’t helping either.

CSL is exercising its option to acquire biotech company Vitaeris. This company is a clinical-stage biotechnology company focused on the phase III development of a treatment for rejection in solid organ kidney transplant patients.

CSL said the cost of the acquisition is modest and does not materially change the company’s profit expectation for 2020. However, there will be extra R&D expenses in FY21 estimated to be between $30 million to $50 million.

More reading

• Why the CSL share price continues to trail the ASX 200
• The ASX bank dividend recovery may be better than what the market thinks
• Why Credit Corp and Zip Co shares jumped over 15% higher today
• Top brokers just upgraded these 3 ASX stocks to “buy”
• Not keen on Westpac? Then buy these top ASX dividend shares instead

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 Wesfarmers Limited. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and Scentre Group. 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 jumps 2.4%, unloved shares keep rising appeared first on Motley Fool Australia.

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