Author: therawinformant

Two fund managers who look after WAM Leaders Ltd (ASX: WLE) have revealed which sectors they’re expecting to rise as the globe moves on from COVID-19.

WAM Leaders lead portfolio manager, Matthew Haupt, said gross domestic product would jump once a vaccine or treatment came along.

And there has to be businesses to provide that output.

“You’ve got to be positioned for anything linked to economic activity or recovery,” he said in a Wilson Asset Management video.

“Balance sheets will be rewarded finally. They were punished before.” 

Haupt picked out the insurance industry as ready for a big recovery.

“That’s very much out of favour at the moment. But that’s a sector that will benefit from rising yields.”

The sector was rocked last week when a court ruled that insurance companies could not refuse to pay out COVID-related business interruption claims. It remains to be seen how much this will cost the industry.

WAM Leaders portfolio manager, John Ayoub, specifically called out Insurance Australia Group Ltd (ASX: IAG) and QBE Insurance Group Ltd (ASX: QBE) as insurance providers to watch.

He also liked the look of companies that benefit from government spending.

“Stocks like Lendlease Group (ASX: LLC) and Downer EDI Limited (ASX: DOW) will continue to do well over the next 12 to 24 months.”

Mature companies took a broom to their operations

The coronavirus pandemic has given companies an excuse to restructure their business, according to Ayoub.

“What we’re going to see when we come out the other side is more profitability in corporate Australia.”

He took Qantas Airways Limited (ASX: QAN) as an example of a company that executed reforms that would not have been possible pre-COVID.

“They were able to redress their cost base… As you come out the other side, their domestic earnings will probably be greater than their peak earnings for the group in totality from 2018.”

Dividend vs growth shares

Haupt predicted a roaring comeback by dividend shares.

“Dividend payers have been punished in this environment, which is quite bizarre. They will be the next beneficiaries as well.”

He believes that much of the money that flowed this year from dividend shares into fast-growth shares would reverse flow post-COVID.

In fact, Haupt went as far as to forecast share prices of technology shares could crash as much as 40%.

This is because the prospect of ultra-low interest rates would dissipate once a vaccine or treatment is mass-distributed.

“That transition will be quite painful for a lot of people,” said Haupt.

Investors who thought this year brought a permanent and fundamental shift in the way the world operates could get burnt, according to Ayoub.

“Although people have suggested structural change has happened rapidly, as we know from the past, things don’t happen that quickly.”

Earlier this month, IG Group Holdings plc (LON: IGG) surveyed 253 fund managers and economic experts on the sectors they thought would do the best during the recovery period.

Pharmaceuticals was the most popular pick, with 73% thinking it would increase in value over the next 12 months.

But the second most popular answer was a surprise, with technology chosen by 66% of the experts.

“Companies with interests in digital technology and remote working should prove to be strong performers over the next 5 years,” stated the IG report.

“Also, digital companies with fewer physical assets, or ones that are able to embrace the new socially distant, tech-first culture will survive the crisis.”

More reading

• Tech shares could crash 40%, warns fundie
• 5 things to watch on the ASX 200 on Monday
• Landlease (ASX:LLC) share price falls on subdued earnings
• 5 things to watch on the ASX 200 on Friday
• ASX 200 down 0.3%: Altium FY 2021 guidance, Crown drops, insurance shares sink

Motley Fool contributor Tony Yoo owns shares of Qantas Airways 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.

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A prominent fund manager has warned over-inflated technology shares could sink 40% as the world recovers from COVID-19.

United States and ASX tech shares have staged a remarkable rally since the world was first struck hard by the virus at the start of the year.

The S&P/ASX All Technology Index (ASX: XTX) is up more than 120% since it hit the bottom in March. 

Investors have climbed over each other to buy up shares like Afterpay Ltd (ASX: APT) and Temple & Webster Group Ltd (ASX: TPW). That’s multiplied their prices 11-fold and 6-fold respectively since March.

The rally has come as governments and central banks around the globe have lowered interest rates and introduced stimulus to prevent an economic disaster.

WAM Leaders Ltd (ASX: WLE) lead portfolio manager, Matthew Haupt, said this pumps up the attractiveness of companies currently scaling up. But it can’t last forever.

“The rate environment is incredibly low, and everyone’s extrapolating this out for a long period of time,” he said in a Wilson Asset Management video.

“We look at the tech sector as overvalued… Prices could fall 30%, 40%.”

What will make the market turn against tech?

For Haupt, the mass deployment of a coronavirus vaccine will be a turning point.

This is because that will provide governments and central banks confidence to pull back stimulus and ultra-low interest rates.

He said economic crises are normally caused by a bubble, but 2020 is different.

“Everything’s been put on hold, but there is no central bubble to deflate,” he said.

“So if we can get fiscal policy kicking things along and monetary [policy] holding up asset prices, and we can recover out of this… ‘low rate environment forever’ will be proven to be wrong.”

This disjoint will cause “big shocks” to the share market, according to Haupt.

Already the promise of two vaccines mean that the world is moving on from phase 1 (pandemic) to phase 2 (recovery).

“We are in phase 2 if the vaccine is here. But everyone’s caught in phase 1 still,” Haupt said.

“That transition will be quite painful for a lot of people.”

WAM Leaders portfolio manager, John Ayoub, said the beneficiaries from this crazy year can’t stay winners post-COVID.

“You can’t put a multiple on this year’s sales and this year’s earnings. We’d heed caution on that,” he said.

“Although people have suggested structural change has happened rapidly, as we know from the past, things don’t happen that quickly.”

Should you reduce tech in your portfolio?

Due to the inflation in tech share prices, even if you didn’t directly buy any during the year, the chances are they are taking up a higher percentage in your portfolio now.

The Motley Fool last week spoke to several fund managers about what investors can do if they fear overexposure to the sector.

Multiple professionals said the nature of the individual tech shares matter.

“Tech shares come in all shapes and sizes, manufacturers, service companies, intermediaries, intellectual property owners, etc,” Nucleus Wealth head of investments, Damien Klassen said.

“Show concern about your portfolio if you have too many growth and expensive stocks. But, tech shares aren’t all expensive. For every Advanced Micro Devices Inc (NASDAQ: AMD) trading on 90 times last year’s earnings, there is an Intel Corporation (NASDAQ: INTC) trading on 9 times.”

Frazis Capital Partners portfolio manager, Michael Frazis, has done pretty well out of tech, but is now selling down. He’s turning his attention to another fast-growing sector.

“We are dramatically reducing what little we have left invested in 40x revenue businesses,” he told his clients last week.

“Longer term yields have begun to rise, tech valuations are at record highs, and we believe a period of serious multiple compression has already begun.”

More reading

• 2 ASX small cap shares tipped for big things
• 2 great ASX shares to buy
• Are these the new paths for growth of the Afterpay (ASX:APT) share price?
• I have too many tech shares: Do I sell, buy or hold?
• Is the Afterpay (ASX:APT) share price a buy today?

Tony Yoo owns shares of AFTERPAY T FPO and Temple & Webster Group Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Intel. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Temple & Webster Group 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.

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The S&P/ASX 200 Index (ASX: XJO) notched up another week of solid gains last week, pushing the index to its third week in a row of a finish in the green. Since the start of the month, the ASX 200 has added nearly 10%, meaning we are on track to see the best month for ASX 200 shares since April. Back then, the index was coming out of the coronavirus-induced freefall that we saw in March, making this month even more extraordinary. At the level the ASX 200 closed at on Friday afternoon (6,539 points), we are only 1.3% away from reaching the level the index began 2020 at, and 8.7% away from the all-time high of 7,162 points we saw in mid-February.

And all that was despite the… unexpected outage we saw in ASX trading on Monday.

ASX shutdown

Yes, the ASX was closed for the majority of trading on Monday, the first time the exchange has had to shut unexpectedly in years. In fact, after trading opened at 10am on Monday, investors were only treated to approximately 24 minutes of trading before the exchange was shut down by its operator ASX Ltd (ASX: ASX).

The cause? A system-wide IT glitch. As our in-depth coverage revealed at the time, the ASX attributed the system freeze to a new trading platform supplied by the United States Nasdaq exchange. The ASX has reportedly used this platform since January after extensive testing. The ASX said the issue appeared to have been caused by combination orders, which are normally used by large or institutional investors.

Even though trading resumed as normal on Tuesday without a hitch, the ASX is still in a lot of hot water over the issue. The company is currently being investigated by the Australian Securities and Investments Commission (ASIC) over the incident, with ASIC releasing a statement that said the following:

ASIC is actively assessing ASX’s compliance with its market licence obligations and is considering further actions to ensure the adequacy of ASX’s human, financial and technological resources to operate its markets in an orderly manner.

ASIC isn’t the only government body to express concerns either. We also reported that the Reserve Bank of Australia (RBA) weighed in on the outage, stating its “concern” over the incident.

Even so, the markets weren’t evidently as concerned as the regulators, since the ASX 200 promptly banked a 0.2% gain on Tuesday upon reopening. Speaking of…

How did the markets end the week?

The ASX 200 had a top week, rising from the 6,405.2 points it finished the prior week at to 6,539.2 points – a rise of 2.09%. Monday saw a healthy 1.24% gain in the 24 minutes it was open. Finally with a full day of trading under its belt on Tuesday, the ASX 200 gained the 0.21% we discussed earlier. Wednesday and Thursday backed these gains up with additional 0.51% and 0.25% rises respectively, with Friday delivering the only red day of the week with a 0.12% loss.

Meanwhile, the All Ordinaries Index (ASX: XAO) also had a top week, starting out at 6,609.3 points and finishing up at 6,739.9 points for a week-to-week gain of 1.98%.

Which ASX 200 shares were the biggest winners and losers?

In our most salacious segment, we look at the ASX shares that topped and bottomed the ASX 200 charts the previous week. So put the kettle on while we start with the worst-performing ASX 200 shares from last week:

Worst ASX 200 losers	% loss for the week
Evolution Mining Ltd (ASX: EVN)	(8.85%)
Gold Road Resources Ltd (ASX: GOR)	(8.63%)
Silver Lake Resources Limited  (ASX: SLR)	(7.18%)
Northern Star Resources Ltd (ASX: NST)	(7.15%)

As you can see, all four of our losers last week were gold miners (despite the slightly misleading name ‘Silver Lake’). This is likely linked to the price of gold dropping like a nugget over the past fortnight or so. Remember, gold is the quintessential ‘safe-haven’ asset, which likely explains why gold is up more than 23% in price this year. However, the recent news of potentially successful coronavirus vaccines have left investors less partial to a safe haven asset of late, explaining why gold is down ~4.3% in the last 3 weeks. That has likely flowed into the valuations of the ASX gold miners, which is probably why we are seeing such a heavy sell-off in this sector.

Let’s now turn to last week’s winners:

Best ASX 200 gainers	% gain for the week
Unibail-Rodamco-Westfield (ASX: URW)	25.68%
Bendigo and Adelaide Bank Ltd (ASX: BEN)	14.54%
Alumina Limited (ASX: AWC)	12.83%
Mesoblast Limited (ASX: MSB)	12%

Making it 2 weeks in a row on the top of the table last week was real estate investment trust (REIT), Unibail-Rodamco-Westfield. URW is likely to be continuing to benefit from optimism over a COVID-19 vaccine. Its malls across Europe have been hard hit by lockdowns in recent months. The URW share price is now up close to 50% over the past month.

ASX banks were all on fire last week, but Bendigo came out on top. The reasons for optimism in the banking sector are probably also related to vaccine news.

Alumina was being bought up despite no major news out of the resources company, whilst pharma company Mesoblast was in investors’ good books following an announcement of a partnership with Swiss giant Novartis (NYSE: NVS).

What does this week look like for the ASX 200?

We have a couple of notable events to keep an eye on this week. Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) is reporting a half-year result on Wednesday. Further, Harvey Norman Holdings Limited (ASX: HVN) and WiseTech Global Ltd (ASX: WTC) are both holding their annual general meetings this week as well. I’m sure commentators and investors alike will find these companies’ guidances worth paying attention to.

Before we go, here is a look at the major ASX 200 blue chip shares as we start another week in paradise:

More reading

• Here are the 10 most shorted shares on the ASX
• 2 top ASX dividend shares with yields greater than 4%
• 5 things to watch on the ASX 200 on Monday
• Top brokers name 3 ASX shares to sell next week
• 3 leading ASX dividend shares to buy for income

Sebastian Bowen owns shares of National Australia Bank Limited, Newcrest Mining Limited, and Telstra Limited. 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 Macquarie Group Limited and Telstra Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET, Transurban Group, Wesfarmers Limited, WiseTech Global, and Woolworths 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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Every Monday I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Webjet Limited (ASX: WEB) continues to be the most shorted share on the ASX despite another reduction in short interest to 13.2%. Short sellers will be disappointed to learn that COVID-19 vaccine optimism has led to Webjet’s shares surging 50% higher month to date.
• Western Areas Ltd (ASX: WSA) has seen its short interest jump to 11.3%. Short sellers have been increasing their positions in this nickel producer following production issues at its Flying Fox operation.
• Myer Holdings Ltd (ASX: MYR) has seen its short interest rise to 9.7%. Last week US department store operator, Macy’s, reported a 20% decline in same store sales. Investors may be concerned that Myer will be experiencing similarly tough trading conditions.
• Speedcast International Ltd (ASX: SDA) has short interest of 9.4%. The communications satellite technology provider’s shares are still suspended while it undertakes a recapitalisation.
• InvoCare Limited (ASX: IVC) has short interest of 9.2%, which is down week on week. Short sellers may have been closing positions after the funerals company’s shares pushed higher following the announcement of acquisitions in the pet cremation industry.
• Flight Centre Travel Group Ltd (ASX: FLT) is back in the top ten with short interest of 8.6%. Although the travel market outlook is improving greatly, some short sellers aren’t giving up on this travel agent.
• Inghams Group Ltd (ASX: ING) has 8.3% of its shares held short, which is down week on week. Short sellers continue to close positions after the poultry company revealed an improvement in its performance in FY 2021.
• Mesoblast Limited (ASX: MSB) has seen its short interest fall to 8.1%. Unfortunately for short sellers, the Mesoblast share price surged higher last week after announcing a major deal with pharma giant Novartis.
• A2 Milk Company Ltd (ASX: A2M) has seen its short interest rise slightly to 7.8%. Weakness in the daigou channel is weighing heavily on the infant formula company’s performance and has many suggesting it could fail to achieve its guidance.
• Metcash Limited (ASX: MTS) is back in the top ten with 7.8% of its shares held short. It remains unclear why short sellers are targeting this wholesale distributor.

More reading

• 5 things to watch on the ASX 200 on Monday
• Top brokers name 3 ASX shares to buy next week
• These were the best performing ASX 200 shares last week
• ASX 200 ends flat on Friday
• Brokers name 3 ASX shares to buy right now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended A2 Milk and Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and InvoCare 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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There are some very reliable ASX dividend share available to Aussie investors that are consistently growing their payouts for shareholders.

These two businesses are rated as buys by the Motley Fool Dividend Investor service:

Sonic Healthcare Ltd (ASX: SHL)

Sonic Healthcare is a global medical laboratory company. It has operations across many countries including the USA, Australia, Germany, Switzerland, UK, Ireland, Belgium and New Zealand.

It’s playing an important role in the fight against COVID-19. It has performed over 11 million COVID-19 tests to date.

The healthcare company has been awarded a number of contracts in the US, UK and Australia for testing.

Despite COVID-19 severely impacting volumes in the early stages of the pandemic, there has been a recovery and it grew revenue by 11% in FY20, which helped underlying net profit increase by 7%.

In FY20 the ASX dividend share maintained its final dividend, but there had been a 3% increase of its interim dividend, which meant the total FY20 dividend was increased by 1.2% to $0.85 per share.

Due to COVID-19, Sonic wasn’t able to give any FY21 guidance. However, it did say that in general, COVID-19 related falls in its base business saw an associated increase in COVID-19 testing volumes. Base laboratory business revenue (excluding COVID-19 testing) is up on prior year levels in most countries, with negative but improving growth in the US and UK.

Strong COVID-19 testing volumes is currently augmenting growth for Sonic.

In the first quarter of FY21 it saw revenue growth of 29% and earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 71%.

Sonic has a steadily growing dividend and FY20 was another year in that long streak. At the current Sonic share price it offers a grossed-up dividend yield of 2.9%.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Patts is an investment conglomerate which has been listed since 1903 when it started out as a pharmacy business.

It has a diversified portfolio of different assets.

Soul Patts has large stakes in listed businesses spread across many sectors like building products, telecommunications, resources, listed investment companies (LICs), banks, fund managers and pharmacies.

The actual shares the ASX dividend share owns in its portfolio includes TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), Commonwealth Bank of Australia (ASX: CBA), Milton Corporation Limited (ASX: MLT), Bki Investment Co Ltd (ASX: BKI), Magellan Financial Group Ltd (ASX: MFG) and Pengana Capital Group Ltd (ASX: PCG).

It also owns unlisted businesses, either wholly or with sizeable stakes. Some of the unlisted businesses include resources, financial services, swimming schools, agriculture and Ampcontrol.

The investment house recently made a takeover bid for aged care operator Regis Healthcare Ltd (ASX: REG), though the public bid was knocked back because the Regis board believed it materially undervalued the company.

There has also been reports that Soul Patts is investing in regional data centres, though this hasn’t been properly outlined by the company in an ASX announcement yet.

In terms of the dividend, Soul Patts has paid a dividend every year since it listed 1903. It has also increased its dividend every year since 2000, which is the best consecutive dividend growth record on the ASX.

The Soul Patts dividend is funded by the investment income it receives, largely being the dividends from its holdings.

At the current Soul Patts share price it has a trailing grossed-up dividend yield of 3.1%. If a 2 cents per share annual increase of the dividend is paid in FY21 then it offers a forward 3.2% grossed-up dividend yield.

More reading

• 3 leading ASX dividend shares to buy for income
• ASX 200 ends flat on Friday
• ASX stock of the day: Japara Healthcare (ASX:JHC) share price soars 23%
• Why the Oil Search (ASX:OSH) share price is the worst performer today
• Why Kogan, Oil Search, Orica, & Soul Pattinson shares are dropping lower

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Sonic Healthcare 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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It certainly is a tough time to be an income investor.

At present, Westpac Banking Corp (ASX: WBC) is offering investors interest rates of 0.6% per annum on five-year term deposits.

This means that even if you put $100,000 into them, you would earn interest of just $600 each year.

The good news is that there are countless dividend shares on the Australian share market that offer significantly better yields.

Two ASX dividend shares with yields greater than 4% are listed below:

Aventus Group (ASX: AVN)

Aventus is the owner and operator of 20 large format retail parks across Australia. Among its retail parks you will find major retailers such as ALDI, Bunnings, Officeworks, and The Good Guys as tenants.

This high weighting to national retailers and every day needs has allowed Aventus to perform much stronger than other property companies during 2020. In fact, the company was largely able to collect the majority of its rent as normal in FY 2020.

Last week analysts at Goldman Sachs reiterated their buy rating and $2.76 price target on its shares. It notes that Aventus has a quality portfolio with opportunities to create value with its land bank. Based on the latest Aventus share price, the broker estimates that it offers a forward 6.1% dividend yield.

Rural Funds Group (ASX: RFF)

Rural Funds is a real estate investment trust (REIT) which owns a diversified portfolio of high quality Australian agricultural assets that are leased to experienced agricultural operators such as wine giant Treasury Wine Estates Ltd (ASX: TWE).

At the end of FY 2020, the company owned 61 properties with a combined value of $1 billion and a weighted average lease expiry (WALE) of 10.9 years. From this, it was generating adjusted funds from operations (AFFO) of 11.7 cents per share. This allowed the Rural Funds board to declare a full year distribution of 10.8 cents per share.

Thanks to rental increases, the company intends to grow this distribution by its 4% per annum target growth rate in FY 2021 to 11.28 cents per share. Based on the current Rural Funds share price, this works out to be a 4.3% yield.

More reading

• 2 ASX blue chip dividend shares to buy this month
• Brokers name 3 ASX shares to buy right now
• What would it take for the ASX 200 to hit 7,000 again?
• 2 high quality ASX dividend shares to buy today
• Why ASX bank share dividends might be surging soon

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED and Treasury Wine Estates Limited. The Motley Fool Australia has recommended AVENTUS RE UNIT. 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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On Friday the S&P/ASX 200 Index (ASX: XJO) finished a very positive week in a subdued manner. The benchmark index fell 0.2% to 6,405.2 points.

Will the market be able to bounce back from this on Monday? Here are five things to watch:

ASX 200 poised to rise.

The Australian share market looks set to start the week on a positive note despite declines on Wall Street on Friday. According to the latest SPI futures, the ASX 200 is expected to open the day 34 points or 0.5% higher this morning. On Friday the Dow Jones fell 0.75%, the S&P 500 dropped 0.7%, and the Nasdaq fell 0.4% lower. Rising COVID-19 cases in the United States weighed on investor sentiment.

NSW-Victoria border reopens.

Flight Centre Travel Group Ltd (ASX: FLT) and Webjet Limited (ASX: WEB) shares could be on the rise today after the NSW government announced the opening of its border with Victoria today after being closed for 137 days. This is expected to lead to hundreds of flights between Melbourne and Sydney from this week.

Oil prices push higher.

Energy producers including Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) could start the week on a positive note after oil prices pushed higher on Friday. According to Bloomberg, the WTI crude oil price rose 1.4% to US$42.17 a barrel and the Brent crude oil price climbed 1.7% to US$44.96 a barrel. Oil prices recorded their third successive weekly gain thanks to COVID-19 vaccine optimism.

Gold price pushes higher.

Gold miners such as Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could be on the rise today after the gold price pushed higher on Friday night. According to CNBC, the spot gold price climbed 0.45% to US$1,869.60 an ounce. This was driven by optimism over U.S. COVID stimulus.

Lendlease given conviction buy rating.

Goldman Sachs has maintained its conviction buy rating on the Lendlease Group (ASX: LLC) share price. The broker notes that the company is targeting over A$10 billion of project commencements over the next 18 months. It expects this to underpin solid earnings growth over the coming years. Goldman has a $16.65 price target on Lendlease’s shares.

More reading

• 5 things to watch on the ASX 200 next week
• These were the worst performing ASX 200 shares last week
• These were the best performing ASX 200 shares last week
• ASX 200 ends flat on Friday
• This broker reckons Woodside Petroleum (ASX:WPL) shares are a screaming buy today

Motley Fool contributor James Mickleboro 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 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.

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Some investors may avoid buying cheap shares at the present time due to the potential for a second stock market crash. Risks such as Brexit and coronavirus could realistically prompt weaker financial performances from businesses that translate into falling share prices.

However, the past performance of the stock market shows that it has always experienced challenging periods. The key takeaway for investors is that it has always recovered from them to post new record highs.

Furthermore, today’s cheap share prices may factor in many of the risks facing the economy. This could mean there are buying opportunities available.

The threat of a stock market crash

The potential for a stock market crash may be elevated at the present time. Investors often become increasingly bearish during periods of major change when they find it more difficult to accurately forecast the outlook for businesses. With political uncertainty present across many of the world’s major economies and coronavirus continuing to cause disruption, it would be unsurprising for investor sentiment to weaken to some extent in the coming months.

However, many bear markets have been impossible to predict. This year’s stock market decline took place over a very short period of time, with very few investors accurately predicting that it would happen. It’s a similar story with previous market declines. Therefore, a downturn can take place at any time and without prior warning. This means that all investors must accept that their holdings may be in loss-making territory at times.

Long-term growth potential

Despite the constant threat of a stock market crash, indexes such as the FTSE 100 Index (FTSE: UKX) and S&P 500 Index (SP: .INX) have produced relatively impressive returns over recent decades. In fact, their annual total returns have been in the high single-digits even though they have experienced severe bear markets such as the global financial crisis and dot com bubble.

Their returns may have been more volatile than those of other assets such as cash and bonds. However, they have also been higher over the long term. As such, investors who are able to live with the potential for short-term paper losses may be better off investing money in a portfolio of stocks instead of holding lower-risk assets. Over time, they may deliver significantly higher returns.

Buying cheap shares today

At the present time, many cheap shares appear to account for elevated risks that could cause a stock market crash. Therefore, even though risks are higher at the present time, now could be an opportune moment to purchase a wide range of companies for the long term.

Their wide margins of safety may provide some support should there be another market downturn. Meanwhile, their low valuations may also mean they can offer impressive returns in the coming years that have a positive impact on your financial prospects.

More reading

• 2 ASX small cap shares tipped for big things
• 3 reasons why I’d buy the best dividend shares today
• 2 ETFs that ASX investors need to know about
• Top fund manager Dalio warns investors to stay away from cash
• Top brokers name 3 ASX shares to sell next week

Motley Fool contributor Peter Stephens 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’s worth remembering that all companies start somewhere and don’t become Afterpay Ltd (ASX: APT) overnight.

Two ASX shares that are still at the start of their journeys and have been tipped to have bright futures are listed below. Here’s what you need to know about them:

Mach7 Technologies Ltd (ASX: M7T)

Mach7 is a $286 million developer of enterprise imaging and informatics solutions for image viewing, storage, and workflow management. These solutions can be implemented individually or as a comprehensive end-to-end image management and diagnostic viewing platform. They have been designed to assist healthcare organisations with removing technology limitations to ensure patient information flows easily and can be accessed instantly.

Earlier this month the company announced a seven-year contract with Trinity Health for the license and associated support services for its eUnity enterprise viewer. The total value of this contract is A$5.26 million. Trinity Health is the fifth largest healthcare Integrated Delivery Network (IDN) in the United States and will be installing it across multiple facilities within its 92 hospitals located across 22 US states.

This news went down well with Morgans, which has reiterated its add rating and $1.49 price target on the company’s shares. It notes this could be the first of many deals due to its material tender pipeline. The Mach7 share price ended the week at $1.22.

MyDeal.com.au Limited (ASX: MYD)

MyDeal.com.au is an online retail marketplace provider with a market capitalisation of $300 million. The company has a focus on furniture, homewares, appliances, technology, baby products, and hardware. This focus has delivered strong results so far in FY 2021, with the company recently revealing first quarter gross sales growth of 317% to $56.67 million. This strong growth was driven by the accelerating shift to online shopping and a 268% increase in active customers to 669,897 compared to the prior corresponding period.

Another positive is the company has $40 million from its recent initial public offering (IPO) that can be used to drive future growth. This includes growing its private label business, investing in its proprietary technology, and investing in advertising to grow its customer base and brand.

One broker that likes what it sees here is RBC Capital Markets. It has just initiated coverage on MyDeal with a buy rating and $1.60 price target. It thinks the company is at an inflection point as annualised gross transaction value exceeds $200 million and customer numbers approach 700,000. The MyDeal share price last traded at $1.16.

More reading

• Are these the new paths for growth of the Afterpay (ASX:APT) share price?
• I have too many tech shares: Do I sell, buy or hold?
• Is the Afterpay (ASX:APT) share price a buy today?
• Top brokers name 3 ASX shares to buy today
• Afterpay (ASX:APT) share price under pressure by US BNPL giant

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 and recommends MACH7 FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended MACH7 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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The best dividend shares could offer more than just a relatively high passive income. The stock market crash has caused a wide range of high-quality businesses to trade at low prices that do not account for their recovery prospects.

As such, undervalued companies with impressive shareholder payouts could become more popular in a low interest rate environment. This may boost their prices and lead to impressive total returns in the coming years.

The passive income potential of dividend shares

Of course, the most obvious reason to buy the best dividend shares today is their passive income prospects. The stock market crash has caused many income stocks to trade at lower prices than at the start of the year – even after the recent market rebound. Therefore, it is possible to obtain high yields from high-quality income shares that may not be available permanently in many cases.

A large proportion of the stock market’s past total returns have been derived from the reinvestment of dividends. Therefore, income shares may be of interest to a wider range of investors than those who are purely interested in a passive income. Over time, many companies may also be able to increase their dividend payouts as the economic outlook improves. This may further improve their total return potential over the coming years.

Relative income appeal

At the same time as dividend shares offer a generous passive income, many other assets currently fail to provide a worthwhile income opportunity. Low interest rates mean that the returns on cash savings accounts have fallen to historic lows. Similarly, the returns on investment grade bonds may struggle to keep pace with inflation over the long run. This may reduce an investor’s spending power and make it more difficult to obtain a worthwhile passive income over the coming years.

Meanwhile, high house prices mean that the yields available on property may be relatively unattractive. Investors must also pay various fees when owning investment property, while it is likely to be more difficult to diversify when owning property directly. This may increase overall risk, and could lead to a less stable passive income than that on offer via a portfolio of dividend shares.

Capital return prospects

Dividend shares also offer scope for impressive capital returns. As mentioned, their prices have fallen in many cases due to the stock market crash. This could mean that their financial prospects are currently undervalued by investors. As the world economic outlook improves and investor sentiment strengthens, income shares could make capital gains that have a positive impact on investor portfolios.

Therefore, building a diverse portfolio of income shares could be a logical approach. Their low prices, passive income potential and relative appeal could make them a profitable investment for a wide range of investors over the coming years.

More reading

• 2 ETFs that ASX investors need to know about
• Top fund manager Dalio warns investors to stay away from cash
• Top brokers name 3 ASX shares to sell next week
• Is National Storage (ASX:NSR) a dividend share to buy?
• Top brokers name 3 ASX shares to buy next week

Motley Fool contributor Peter Stephens 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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