Author: therawinformant

A leading fund manager, being the Eley Griffiths, has revealed one top ASX share that it thinks is worth owning.

Eley Griffiths is one of the fund managers that is taking part of the Future Generation initiative. This is where two listed investment companies (LICs) have been set up for philanthropic purposes.

Future Generation Investment Company Ltd (ASX: FGX) donates 1% of its net assets each year to youth charities, whilst Future Generation Global Invstmnt Co Ltd (ASX: FGG) donates 1% of its net assets each year to youth mental health charities.

The Future Generation LICs invest in the funds of fund managers, like Eley Griffiths, who work for free so that the donations can be made. There are no management fees or performance fees.

How does Eley Griffiths invest?

It has a number of different funds. One of those funds is the Eley Griffiths Group Emerging Companies Fund. This fund has a consistent record of outperformance of the S&P/ASX Small Ordinaries Accumulation Index.

At 30 September 2020, over the prior year the fund (which invests in ASX shares) had outperformed the index by 15.2%, over the past two years it had outperformed by an average of 12.5% per annum and over the past three years it has outperformed by 12.2% per annum. Since inception in March 2017, it has delivered average returns per annum of 20.5%, outperforming the index by an average of 13.1% per annum.

Eley Griffiths Group says that it has a disciplined investment process and a belief that portfolios are built from bottom-up stock picking whilst being influenced by top-down considerations.

The backbone to the investment philosophy combines a price-for-growth valuation metric with a formal assessment of management and industry structure. The fund manager says this process generates buy and sell signals.

Fund manager’s thoughts on the share market

Eley Griffiths believes the global economy has moved to a recovery phase, commencing in China and spreading outward as consumers normalise in a coronavirus world and businesses begin to invest again. In the short term, passage of the US stimulus bill and the US presidential election may weigh on sentiment.

The fundie also thinks that stock market valuations are full but not excessive and prevailing equity risk premiums continue to reinforce the case for enlarged equity allocations versus that of bonds and fixed interest.

What’s the ASX share idea?

One high conviction holding of Eley Griffiths’ is Reject Shop Ltd (ASX: TRS). The fund manager said: “the ASX share sits at the early stages of a planned multi-year turnaround. New management have a reset balance sheet, strong brand and an operating model awaiting refinement. We have identified several levers where value for shareholders should be unlocked.”

The Reject Shop share price has gone up by 176% since the price bottomed on 27 March 2020 due to COVID-19.

In FY20 the ASX share reported that its FY20 saes grew by 3.4% with comparable store sales growth of 3.5%. In the first half comparable sales rose 0.5% and in the second half it rose 7.1%.

Before AASB 16, FY20 earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 30.1% to $23.7 million. It generated $4.5 million of earnings before interest and tax (EBIT), up from a loss of $23.3 million in FY19, and it made $2.7 million of net profit after tax (NPAT), up from a $16.9 million loss in FY19.

At the end of FY20 it had $92.5 million of cash on the balance sheet and no drawn debt. It generated free cashflow of $61.6 million, up from a $1.9 million outflow in the prior corresponding period.

In FY21 the company will be focused on EBIT growth with cost reductions through business simplification and operational efficiency.

More reading

• Reject Shop (ASX:TRS) share price tumbles but it’s property stocks that should be worried

Motley Fool contributor Tristan Harrison owns shares of FUTURE GEN FPO and Future Generational Global Investment Company 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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Some investors may be avoiding equity markets due to the threat of a second stock market crash. Economic risks are currently relatively high. This could lead to tough trading conditions for many businesses that causes investor sentiment to deteriorate.

Clearly, a market downturn is likely to be painful for all investors in the short run. However, it can also provide buying opportunities for long-term investors. The stock market has a long track record of recovering from even its very worst declines. This could help an investor to generate impressive returns, and may even improve their prospects of retiring early.

The prospect of a second market crash

Determining whether a second market crash will occur is an extremely challenging task. However, risks such as Brexit, the coronavirus pandemic and an unstable economic outlook may mean that there is an elevated chance of challenging conditions for investors. They could contribute to declining profitability and deteriorating investor sentiment in the coming months. This could prompt a return to large stock price falls as investors factor in lower profit guidance over the medium term.

Clearly, there is no guarantee that a further market decline will occur. Current stock prices may already factor in the aforementioned threats to global economic growth. However, the wide range of risks and their potential impact on global GDP growth may mean that investor sentiment is highly changeable at the present time.

Buying cheap shares in a downturn

As mentioned, a market crash would be a painful experience for most investors. They would experience losses on their current holdings. This may dissuade them from entertaining the idea of buying more stocks in order to avoid further losses.

However, a market decline can provide excellent buying opportunities for long-term investors. During a downturn, high-quality companies that are likely to return to strong profit growth in the long run can trade at exceptionally low prices. Weak investor sentiment towards the equity market can produce a wide range of bargain stocks that go on to deliver impressive capital returns.

While there is no guarantee that any share will recover from a stock market crash, a diverse portfolio of shares is relatively likely to produce impressive long-term returns. The track record of indexes such as the S&P 500 Index (SP: .INX) and FTSE 100 Index (FTSE: UKX) shows that they have always experienced sustained bull markets following bear markets. Therefore, owning a broad range of high-quality businesses is likely to allow an investor to take part in a long-term recovery.

Retirement prospects from investing money in shares

Buying shares after a second market crash may appear to be a risky move. In the short run it can mean additional paper losses due to the potential for the stock market to move lower.

However, the stock market’s recovery potential may mean that equities offer a relatively attractive means of building a retirement nest egg. As such, capitalising on low stock prices may prove to be a logical response to any further market downturn.

More reading

• 2 quality ETFs that are popular with ASX investors
• Top brokers name 3 ASX shares to sell next week
• 2 great ASX growth shares to buy
• Top brokers name 3 ASX shares to buy next week
• 5 things to watch on the ASX 200 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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As my colleague wrote recently, exchange traded funds (ETFs) continue to grow in popularity with Australian investors.

After two record-breaking months of inflows in a row, the Australian ETF industry is now worth an estimated $73.8 billion.

Unsurprisingly, with more and more funds piling in, the number of ETFs for investors to choose from has continued to grow.

Among the many options. here are two popular ETFs that investors ought to know about :

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

The BetaShares Asia Technology Tigers ETF gives investors the opportunity to invest in the biggest and brightest technology and ecommerce companies that have their main area of business in Asia. BetaShares notes that through a single trade, this ETF provides diversified exposure to a high-growth sector that is under-represented in the Australian share market.

There are a total of 50 companies included within the ETF. Among these you will find industry giants such as Alibaba, Baidu, JD.com, and Tencent Holdings. The latter is the company behind the hugely popular WeChat app, which has over 1.2 billion users. It is also a substantial shareholder of Afterpay Ltd (ASX: APT).

BetaShares NASDAQ 100 ETF (ASX: NDQ)

Another popular ETF from BetaShares is the BetaShares NASDAQ 100 ETF. As its name implies, this ETF aims to track the performance of the NASDAQ 100. This comprises 100 of the largest non-financial companies listed on Wall Street’s famous exchange.

Among the 100 companies you will find tech giants such as Amazon, Apple, Microsoft, Netflix, and Google parent, Alphabet. In addition, investors will be gaining a slice of non-tech household names including Starbucks, Pepsico, and Lululemon.

BetaShares notes that the ETF has a strong focus on technology, which once again gives diversified exposure to a high-growth potential sector that is under-represented in the Australian share market.

More reading

• Best performing Aussie ETFs right now
• 2 tech ETFs generating big returns
• Zip and Flight Centre were among the most traded shares on the ASX last week
• I would buy the BetaShares NASDAQ 100 ETF (ASX:NDQ) and these ETFs this month
• 2 ETFs to buy next week

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 BETANASDAQ ETF UNITS. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS. 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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Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were bearish.

Three sell ratings that caught my eye are summarised below. Here’s why top brokers think investors ought to sell these shares next week:

A2 Milk Company Ltd (ASX: A2M)

According to a note out of Citi, its analysts have retained their sell rating and $14.20 price target on this infant formula and fresh milk company’s shares. The broker has been looking at the a2-only market in China and notes increasing competition from a local producer. It has concerns that if competitors price their a2-only products at lower levels to appeal to the mass market, it could damage the a2 Milk Company brand. The a2 Milk share price ended the week at $14.45.

Commonwealth Bank of Australia (ASX: CBA)

Analysts at Morgans have downgraded this banking giant’s shares to a reduce rating with a reduced price target of $63.00. The broker made the move following the release of Commonwealth Bank’s first quarter update. It notes that the bank’s net interest margin has been contracting due to the low interest rate environment and lower lending margins. This has led to the broker downgrading its earnings forecasts through to FY 2023. In light of this, it sees no reason to change its rating any time soon. The CBA share price last traded at $73.14.

InvoCare Limited (ASX: IVC)

A note out of the Macquarie equities desk reveals that its analysts have retained their underperform rating but increased the price target on this funerals company’s shares to $9.40. This follows the announcement of the acquisitions of two pet cremation businesses for $49.8 million. Although it sees this as a positive, it has concerns over market share losses by its core business and feels its valuation is stretched. The InvoCare share price was fetching $11.55 on Friday.

More reading

• 2 great ASX growth shares to buy
• 5 things to watch on the ASX 200 next week
• Brokers name 3 ASX shares to buy right now
• After 8 months, ASX 200 shares are finally out of correction territory
• 2 ASX growth shares to buy this month

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. The Motley Fool Australia has recommended 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 great ASX growth shares that are rated as buys by one of the Motley Fool investment services.

Here are two of those ASX growth share picks:

A2 Milk Company Ltd (ASX: A2M)

A2 Milk is a leading infant formula business with its A2 Platinum range. It also sells things like liquid milk, milk powder and ice cream.

Whilst the company’s headquarters are based in New Zealand, it has sizeable operations in Australia, Asia, the US and Canada.

The expansion into Canada is only a recent addition. It is in an exclusive licensing agreement with Agrifoods Cooperative for the production, distribution, sale and marketing of A2 Milk branded liquid milk for the Canadian market.

The A2 Milk share price has fallen by 28% since 30 July 2020. The ASX growth share recently gave a trading update.

It’s suffering from a variety of COVID-19 issues including the flow-on effect of pantry destocking continuing into FY21 after strong sales in the third quarter of FY20 and lower than anticipated sales to retail daigous in Australia because of reduced tourism from China and international student numbers.

In September it said it also started to see additional disruption to the corporate daigou and reseller channel, particularly because of the stage 4 lockdown in Victoria. That lockdown has now finished.

A2 Milk explained that sales in the daigou channel represent a significant portion of infant formula sales in Australia and New Zealand, so it expects ANZ revenue to be materially below plan for the first half.

However, the ASX growth share said that with strong growth of its Chinese infant milk formula business, management think it’s a single channel logistical issue and A2 Milk believes the daigou impacts are just short-term.

A2 Milk is expecting revenue to fall by 4% to 10% in the first half, but then grow by 4% to 10% overall in FY21.

At the current A2 Milk share price it’s trading at 23x FY23’s estimated earnings according to Commsec.

A2 Milk is currently rated as a buy by the Motley Fool Share Advisor service.

Altium Limited (ASX: ALU)

Altium is an electronic PCB software business. The ASX growth share has grown significantly over the past five years. The Altium share price has risen by 653% since November 2015.

COVID-19 caused disruption to Altium’s FY20 result – it impacted its revenue and its underlying earnings before interest, tax, depreciation and amortisation (EBITDA) margin. Altium had to reduce prices and extend payment terms to continue to bring in new clients during the final quarter of FY20. That’s why normalised earnings per share (EPS) only went up 5% in FY20.

However, the company pointed to the fact that it successfully launched Altium 365, its new cloud platform, and it’s pivoting the business towards this product to ensure its success.

Altium said that Altium 365 was causing excitement and gaining strong early adoption. Altium CEO Mr Aram Mirkazemi said: “This is most heartening and an early validation of our vision and strategy for this new digital platform to transform the electronics industry.”

The ASX growth share is still aiming for 100,000 subscribers by 2025 to achieve market leadership, where it has just passed the half-way mark. However, it may take another six to twelve months to reach its 2025 goal of US$500 million in revenue.

According to Commsec numbers, at the current Altium share price, it’s trading at 47x FY23’s estimated earnings.

Altium is still rated as a buy by the Motley Fool Pro service.

More reading

• 5 things to watch on the ASX 200 next week
• 3 fantastic ASX shares to buy next week
• 2 ASX growth shares to buy this month
• Why are ASX tech shares all over the place today?
• 2 ASX 50 shares to buy today

Tristan Harrison owns shares of Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia owns shares of and has recommended 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.

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Last week saw a large number of broker notes hitting the wires once again. Three buy ratings that caught my eye are summarised below.

Here’s why brokers think investors ought to buy them next week:

IDP Education Ltd (ASX: IEL)

According to a note out of Morgans, its analysts have upgraded this language testing and student placement company’s shares to an add rating with an improved price target of $25.09. The broker believes an effective COVID-19 vaccine could lead to international borders opening quicker than expected. This would be a big boost to IDP Education’s business. The broker also believes the company will be in a significantly better market position once trading conditions return to normal. The IDP Education share price ended the week at $23.53.

REA Group Limited (ASX: REA)

Analysts at Morgan Stanley have retained their overweight rating and $150.00 price target on this property listings company’s shares. According to the note, the broker believes that REA Group is well-placed to deliver significantly better than expected operating leverage in the near future. Particularly given the cyclical recovery in listing volumes and an additional boost from people moving for working from home reasons. The REA Group share price last traded at $138.17.

Telstra Corporation Ltd (ASX: TLS)

A note out of Credit Suisse reveals that its analysts have retained their outperform rating and $3.85 price target on this telco giant’s shares. This follows the announcement of a plan to split the company into three separate entities. It was also pleased with management’s commentary around its mobile business and expects postpaid ARPU growth in the second half. In addition to this, Credit Suisse is forecasting a 16 cents per share fully franked dividend in FY 2021. The Telstra share price ended the week at $3.13.

More reading

• AGL Energy (ASX:AGL) ventures into broadband business
• Brokers name 3 ASX shares to buy right now
• Why this broker is calling Telstra (ASX:TLS) shares a buy today
• These blue chip ASX dividend shares offer 5%+ yields
• The ASX 200 fell 0.5% on Thursday

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 Idp Education Pty Ltd. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended REA 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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It certainly was a great week for the S&P/ASX 200 Index (ASX: XJO) last week.

The benchmark index climbed a sizeable 215 points or 3.5% to end the period at 6,405.2 points.

Another busy week awaits investors next week. Here are five things to watch:

ASX 200 futures pointing higher.

A strong finish to the week on Wall Street looks set to give the local market a boost on Monday. According to the latest SPI futures, the ASX 200 is expected to rise 51 points at the open tomorrow. On Friday night in the United States, the Dow Jones rose 1.4%, the S&P 500 climbed 1.4%, and the Nasdaq pushed 1% higher. The S&P 500’s gain led to it closing at a record high.

Elders result.

The Elders Ltd (ASX: ELD) share price will be in focus on Monday when it hands in its full year results. The agribusiness company has been tipped by Goldman Sachs to deliver a better than expected result. It commented: “We are 5%/8% above Bloomberg EBIT/EPS consensus and expect a strong result.” It is forecasting EBIT of $116 million and earnings per share of 71 cents. Goldman has a conviction buy rating and $13.65 price target on its shares.

Afterpay AGM.

On Tuesday the Afterpay Ltd (ASX: APT) share price could be on the move when it holds its annual general meeting. Last month the payments company released a business update which revealed first quarter underlying sales of $4.1 billion. This was up 115% on the prior corresponding period. If Afterpay releases a trading update, investors will no doubt be keen to see if this sales growth has been maintained.

Aristocrat Leisure full year result.

The Aristocrat Leisure Limited (ASX: ALL) share price will be one to watch on Wednesday when it releases its full year results for FY 2020. The gaming technology company is widely expected to report a sharp decline in revenue and profits due to the impact of COVID-19 on its operations. According to a note out of Goldman Sachs, its analysts have forecast revenue of $3.94 billion and net profit after tax before amortisation of $471 million. This will be a 10% and 47% decline, respectively, over the prior corresponding period. This is despite Goldman forecasting a 27% increase in Digital revenue to $2,273 million.

Annual general meetings.

Annual general meeting season continues next week with a range of popular companies holding their virtual events. This includes infant formula company A2 Milk Company Ltd (ASX: A2M) on Wednesday and electronic design software provider Altium Limited (ASX: ALU) and job listings giant SEEK Limited (ASX: SEK) on Thursday.

More reading

• These were the best performing ASX 200 shares last week
• 3 fantastic ASX shares to buy next week
• Top fund manager tells investors to ‘go long’ in 2021
• ASX 200 drops 0.2% on Friday
• What to expect from the Aristocrat Leisure (ASX:ALL) FY 2020 results

James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Elders Limited and SEEK 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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The stock market crash means that investors can purchase a wide range of cheap shares today. Although ongoing risks such as coronavirus and Brexit may cause apathy towards the stock market among some investors, shares could deliver impressive returns over the long run.

Their likely recovery, low valuations and a lack of other opportunities elsewhere means that now may be the right time to build a diverse stock portfolio before the opportunity passes.

A likely recovery for cheap shares

Cheap shares are unlikely to remain at their current prices in perpetuity. Ultimately, the economy’s performance is set to improve over the coming years. This could strengthen the operating conditions for many businesses and help to justify higher valuations.

This outcome may seem somewhat distant to many investors. However, bull markets can quickly gain momentum. Previous bear markets have led to sustained bull markets that have lasted for many years. For example, the global financial crisis gave way to a decade-long bull run that lifted valuations across a wide range of sectors to their highest-ever levels.

Therefore, investors should not assume that cheap shares will be around forever. History suggests they are likely to be only temporary in nature, with today’s uncertain economic environment providing a rare opportunity for investors to buy significantly undervalued shares.

Low valuations across unpopular sectors

Some sectors have recovered strongly after the 2020 stock market crash so that they do not contain many, or even any, cheap shares. However, other sectors are currently extremely unpopular among investors. For example, industries such as travel, financial services and commodity-related businesses are in low demand among investors due to the challenging operating conditions they face in the short run.

In some cases, those low valuations are merited due to weak balance sheets and high risks being present. However, in other cases, stock prices have diverged from their intrinsic values so that investors can purchase high-quality companies while they offer wide margins of safety. Historically, doing so has provided investors with greater scope to benefit from a rising stock market.

A lack of other opportunities

Cheap shares may also be worth buying today because of the lack of opportunities available elsewhere. Low interest rates mean that cash and bonds may struggle to offer above-inflation returns over the coming years. High house prices may also cause property returns to disappoint. Meanwhile, gold’s popularity signifies that investors may already have priced in a prolonged period of low interest rates.

Therefore, now may be an opportune moment to build a diverse portfolio of undervalued stocks. They may not trade at such low prices over the long run. This could mean that investors who can look beyond short-term risks can generate impressive returns as a likely economic recovery takes hold.

More reading

• How to get rich with ASX dividend shares
• These were the worst performing ASX 200 shares last week
• Market crash 2.0: how I’d prepare for the next market sell-off
• 3 top ASX dividend shares to buy
• Are these beaten down ASX shares bargain buys?

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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Arguably one of the biggest benefits of buy and hold investing is growing dividends.

A prime example of why this is the case is biotherapeutics giant CSL Limited (ASX: CSL).

Based on the current CSL share price, the company’s shares offer investors a rather paltry 1% dividend yield.

In light of this, few people (if any) would class CSL as a dividend share. Especially when compared to the likes of telco giant Telstra Corporation Ltd (ASX: TLS) and big four bank Commonwealth Bank of Australia (ASX: CBA).

However, there will be a small group of investors that get incredibly excited twice a year when CSL pays its dividend – its early investors.

Why is this?

Long before listing on the Australian share market, CSL was known as Commonwealth Serum Laboratories. It was established in Melbourne in 1916 to service the health needs of a nation isolated by war.

Since then it has provided Australians with access to 20th century medical advances including insulin and penicillin, and vaccines against influenza, polio and other infectious diseases. Next year it is quite likely to be supplying the country with a COVID-19 vaccine.

CSL eventually landed on the Australian share market in 1994 for the equivalent of 76 cents per share. This means that if you invested $50,000 into its shares at that point, you would have approximately 65,800 shares.

According to a note out of Ord Minnett, its analysts are expecting the company to pay a ~$3.34 dividend in FY 2021. If this proves accurate, it will mean that those early investors will be receiving a yield on cost (the yield on the price you paid for shares) of 440%.

This equates to an incredible $219,772 in dividends over the next 12 months, which is 4.4 times their original investment. All for just buying and then holding onto those shares over the years.

This is quite staggering and goes some way to demonstrating just how effective buy and hold investing can be.

More reading

• 3 fantastic ASX shares to buy next week
• After 8 months, ASX 200 shares are finally out of correction territory
• Latest ASX stocks to be hit by a broker downgrade
• ASX 200 hits 8-month high. Here’s why we could go higher from here
• CSL (ASX:CSL) share price higher after starting COVID-19 vaccine manufacturing

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 CSL Ltd. The Motley Fool Australia owns shares of and has recommended Telstra 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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Despite a soft finish to the week, the S&P/ASX 200 Index (ASX: XJO) recorded another strong gain last week. The benchmark index rose a sizeable 215 points or 3.5% to 6,405.2 points.

Not all shares were able to climb higher with the market last week. Here’s why these were the worst performers on the ASX 200 over the five days:

Ramelius Resources Limited (ASX: RMS)

The Ramelius share price was the worst performer on the ASX 200 last week with a 14.1% decline. Investors were selling its shares after a pullback in the gold price following news of a potentially effective COVID-19 vaccine being developed. This led to a huge improvement in investor sentiment and a collapse in demand for safe haven assets. For the same reason, the shares of Silver Lake Resources Limited (ASX: SLR), Saracen Mineral Holdings Limited (ASX: SAR), Westgold Resources Ltd (ASX: WGX), and Northern Star Resources Ltd (ASX: NST) all fell by around 9% over the five days.

Super Retail Group Ltd (ASX: SUL)

The Super Retail share price wasn’t far behind with an 11.9% decline. Investors were selling the retailer’s shares after analysts at Morgans downgraded them to a hold rating with an $11.78 price target. It made the move on the belief that its sales will be impacted from a post-vaccine redirection in spending.

Bapcor Ltd (ASX: BAP)

The Bapcor share price was a disappointing performer and sank 8.3% lower last week. The catalyst for this was the COVID-19 vaccine news. Investors were selling off shares that have been COVID-winners like Bapcor and rotating into underperforming areas like travel and banking. For the same reason, the ARB Corporation Limited (ASX: ARB) share price fell 8% over the five days.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

The Domino’s share price was out of form and dropped 6.3% lower over the week. Once again, this was driven by concerns that its sales could be impacted post-vaccine when consumer spending is redirected to other areas such as travel and tourism. This led to analysts at Macquarie downgrading the pizza chain operator’s shares to an underperform rating with a $72.10 price target.

More reading

• 3 top ASX dividend shares to buy
• ASX gold stocks could rebound as experts tip high highs for gold in 2021
• Why Elders, Jumbo, Northern Star, & PolyNovo shares are charging higher
• ASX 200 down 0.35%: Ramsay Q1 update, NEXTDC’s international expansion, gold miners surge
• 3 shares that have reacted adversely to vaccine news

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bapcor and Super Retail Group Limited. The Motley Fool Australia has recommended ARB Limited and Domino’s Pizza Enterprises 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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