In my opinion, JB Hi-Fi Limited (ASX: JBH) shares could be one of the best ASX shares to buy right now.

It’s a big call, especially with top growth shares like Afterpay Ltd (ASX: APT) rocketing higher in 2020.

But here’s why I think the Aussie retailer could be a strong ASX share to buy and hold for the long-term.

Defensive earnings

JB Hi-Fi has already proven it can be a defensive buy when times are tough. The S&P/ASX 200 Index (ASX: XJO) has slumped 11.75% in 2020, while the JB Hi-Fi share price has climbed 4.7% higher.

JB Hi-Fi has been a beneficiary of shifting consumer spending habits throughout the coronavirus pandemic. Strong government stimulus during the crisis has helped to prop up the economy and stimulate some discretionary spending.

This stimulus, combined with a shift towards work from home, means JB Hi-Fi has seen strong electronics sales and enjoyed solid defensive earnings, at least in 2020.

The JB Hi-Fi share price is actually up 70.1% since its low on 25 March and is now closing in on its record high of $46.09 per share.

Impressive online presence

I think JB Hi-Fi’s strong online presence is absolutely critical to its ability to compete in the Aussie retail sector moving forward. In my opinion, JB Hi-Fi has a solid user interface and user experience, as well as a strong digital marketing strategy.

That’s good news for the JB Hi-Fi share price, particularly if we see a continued decline in brick-and-mortar retail stores in coming decades.

Strong dividend share

The JB Hi-Fi share price has experienced strong capital gains in recent years, on top of being a solid dividend share.

Shares in the Aussie retailer are yielding 3.78% right now, which in my view is a good return in the current market.

There aren’t many ASX shares out there with a solid base for the future, capital gains and dividends. That could make investors look closely at investing in JB Hi-Fi as a diversification option in their portfolios.

Foolish takeaway

The JB Hi-Fi share price has been rocketing higher in recent months, but there could be more growth on the way.

I like the technical environment despite potential headwinds for Aussie retail. I wouldn’t rely on JB Hi-Fi as a defensive share in the future, but more spending on home office setups could be good news for the short to medium-term.

There’s no magic answer to investing in ASX shares. All we can do is stick to a buy-and-hold strategy and remember we’re investing in companies with long-term prospects, not just buying and selling shares.

The JB Hi-Fi share price is trading at a price-to-earnings ratio of 17.65 right now, so it might not be a cheap buy. However, if you like capital gains and dividends, I think it could be one to add to the watchlist.

More reading

• Here are 3 Australian share market trends to watch this week
• Is the a2 Milk share price a buy after falling nearly 5% on Friday?
• The NAB share price has fallen 24%. Should you buy?
• James Hardie share price in spotlight as it upgrades profit guidance
• ASX 200 Weekly Wrap: ASX back in the green

Motley Fool contributor Ken Hall 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.

The post Is there a better buy than JB Hi-Fi shares today? appeared first on Motley Fool Australia.

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There is a range of Australian share market trends that I think will continue across this week. Some have been building for a few weeks while others only started recently. 

Real estate trading

Real estate trading will likely continue to be very heavy this week. Australian real estate investment trusts (A-REIT) have been among the heaviest-traded shares on the Australian share market over the past 3 weeks. The trading has benefitted companies like office investor DEXUS Property Group (ASX: DXS). However, it has been a little undecided over retail-exposed REITs.

Of all the major real estate companies, it is Scentre Group (ASX: SCG) and Vicinity Centres (ASX: VCX) that have seen their share prices drop marginally. I think this is likely to continue this week. Despite the HomeBuilder package, I think the reality surrounding the housing market is likely to sink in, possibly impacting GPT Group (ASX: GPT), in particular.

Discretionary retail shares

The release of the ABS Retail Trade survey appeared to catch the market off-guard. The survey announced a rise in retail turnover of 16.3% in May 2020. The largest rise in the survey’s 38-year history. This provided a lift to the Australian share market when the survey was released during Friday’s trading. I believe this lift will continue through this week.

It included larger companies like Wesfarmers Ltd (ASX: WES), Harvey Norman Holdings Limited (ASX: HVN) and JB Hi-Fi Limited (ASX: JBH). However, it is also likely to focus attention on small caps like Lovisa Holdings Ltd (ASX: LOV) and Accent Group Ltd (ASX: AX1).

Construction and building

The government’s infrastructure spending package is going to be a slow-burning trend in the Australian share market over the next few weeks. However, I expect investors to be taking positions during this week. The federal government announced fast-track approval processes for 15 major projects as well as an additional $1.5 billion in infrastructure funding. This is aside from any spending currently underway within each state. 

Many engineering companies are likely to benefit from this. Yet I think that Boral Limited (ASX: BLD) is going to benefit no matter what. Boral is the largest supplier of construction materials throughout Australia. It also has an international presence in the US and other countries. As such, it is likely to benefit from stimulus spending in many regions.

More reading

• Infrastructure shares boosted by government spending
• Is there a better buy than JB Hi-Fi shares today?
• James Hardie share price in spotlight as it upgrades profit guidance
• ASX share price winners and losers of last week
• ASX 200 Weekly Wrap: ASX back in the green

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended Accent Group 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.

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The Challenger Ltd (ASX: CGF) share price won’t be going anywhere on Monday after the annuities company requested a trading halt.

Why is the Challenger share price in a trading halt?

Challenger requested a trading halt this morning while it launches an equity raising which aims to further strengthen its capital position and provide flexibility to enhance earnings.

Challenger’s equity raising comprises a fully underwritten institutional placement of $270 million and a non-underwritten share purchase plan aiming to raise up to $30 million.

These funds will be raised at $4.89 per new share, which represents an 8.1% discount to the last close price of $5.32.

Management notes that the equity raising will further strengthen Challenger Life’s capital position during this period of ongoing market uncertainty. This will be achieved by initially increasing its regulatory capital position to 1.78 times APRA’s prescribed capital amount and its common equity tier 1 ratio to 1.17 times the prescribed capital amount.

How will Challenger deploy these funds?

Challenger intends to prudently and progressively deploy the capital raised. This will be primarily used in investment grade fixed income opportunities that are expected to be return on equity (ROE) accretive for shareholders.

Once fully deployed, Challenger’s defensive portfolio mix will be maintained, and the Life business’ prescribed capital amount ratio is expected to return to around the top end of its target range of 1.3 times to 1.6 times on a pro forma basis.

Managing Director and Chief Executive Officer, Richard Howes, commented: “Challenger is in a strong capital position with the raising further strengthening CLC’s balance sheet, and providing the opportunity to seek out compelling ROE accretive investment opportunities over time.”

“In response to the impact of ongoing market volatility, we have reduced capital intensity and maintained a strong capital position by repositioning the portfolio to more defensive settings. This has increased the cash and liquids we have on CLC’s balance sheet to over $3 billion,” he added.

One positive from the market volatility is that Challenger is seeing a lot of opportunities for it to deploy capital.

Mr Howes explained: “Following the pandemic market sell-off, fixed income asset risk premiums have widened significantly and we are now seeing opportunities, primarily in investment grade, to selectively invest this cash and liquids balance and generate pre-tax ROEs in excess of 20% on the capital backing these investments.”

“This is well above our pre-tax ROE target of the RBA cash rate plus a margin of 14%. Importantly, we can capture these opportunities, while maintaining our current defensive portfolio settings, with a high weighting to investment grade fixed income,” he concluded.

More reading

• 3 long-term ASX 200 shares I’d buy right now
• What are the best ASX shares for dividends?
• ASX 200 jumps almost 4%, Webjet share price soars
• 2 unloved ASX shares that could stage a big turnaround
• Should I keep my stake at the current Monadelphous share price?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger 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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