Author: therawinformant

Last week was a reasonably subdued one for the S&P/ASX 200 Index (ASX: XJO). The benchmark index ended the period 9.8 points or 0.2% lower than where it started it at 6,167 points.

A busy five days await investors next week. Here are five things to watch:

ASX futures pointing higher.

The Australian share market looks set to start the week on a positive note. According to the latest SPI futures, the ASX 200 is expected to open 18 points higher on Monday. This follows a reasonably positive end to the week on Wall Street, which saw the Dow Jones fall 0.1%, but the S&P 500 rise 0.35% and the Nasdaq push 0.4% higher. 

Coles first quarter update.

The Coles Group Ltd (ASX: COL) share price will be one to watch on Wednesday when it releases its first quarter sales update. Expectations are high for the supermarket giant, with the market expecting supermarket same store sales growth of ~7% for the quarter. According to a note out of Goldman Sachs, it expects total first quarter sales of $9,365 million, up 7.7% on the prior corresponding period. 

Fortescue production update.

The Fortescue Metals Group Limited (ASX: FMG) share price could be on the move on Thursday when it hands in its first quarter production update. Goldman Sachs has forecast a 10% quarter on quarter decline in iron ore shipments to 42.5MT. This is expected to be achieved with a lofty realised selling price of US$102 per tonne and a lowly unit cost of US$13.70 per tonne.

ANZ full year results.

Also on watch on Thursday will be the Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price when it releases its full year results. Another note out of Goldman Sachs reveals that it expects the bank’s second half cash earnings (from continued operations) to be down 8% to $2,670 million. The broker has also pencilled in a final partially franked dividend of 40 cents per share.

Annual general meetings.

It will be another busy week of annual general meetings. Among the most notable meetings are Blackmores Limited (ASX: BKL) and Corporate Travel Management Ltd (ASX: CTD) on Tuesday. This will be followed by Super Retail Group Ltd (ASX: SUL) and Vocus Group Ltd (ASX: VOC) on Wednesday,  JB Hi-Fi Limited (ASX: JBH) on Thursday, and Carsales.Com Ltd (ASX: CAR) on Friday. These companies are likely to release trading updates at their meetings.

More reading

• These were the best performing ASX 200 shares last week
• These were the worst performing ASX 200 shares last week
• The ASX 200 was mixed today, it finished down 0.1%
• CleanSpace (ASX:CSX) share price rockets 62% higher following IPO
• Why the Iluka (ASX:ILU) share price nearly halved 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 Blackmores Limited, Corporate Travel Management Limited, and Super Retail Group Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool Australia has recommended carsales.com 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 has caused some of the best shares around to trade at cheap prices. This could present a buying opportunity for long-term investors. Solid businesses may offer less risk and higher growth potential than their peers. Buying them at low prices may provide greater scope for capital growth.

While they may experience further volatility in the near term, over the long run they could boost your portfolio’s returns. They could even help you to make $1 million.

Buying the best shares currently available

Focusing your capital on the best shares you can find may improve your financial prospects. They are likely to include those companies that have a clear competitive advantage versus their peers. This may mean they can adapt to changing operating conditions, as well as survive a weak economic period better than most companies in the same industry.

Over the long run, holding solid businesses in your portfolio can reduce your overall risk and improve returns. They may be able to rely on stronger finances to support investment in growth. Similarly, they may use a wide economic moat to deliver higher profit growth that translates into a rising share price. As such, identifying the most attractive businesses in a specific sector through analysing their finances and market position could be a worthwhile move.

Cheap prices following the stock market crash

Although some of the best shares have rebounded after the stock market crash, many attractive businesses continue to trade at cheap prices. This may be because they face uncertain trading outlooks in the near term that have caused investors to demand a wider margin of safety.

As with any asset, buying at a lower price is more advantageous than purchasing it when it is more expensive. Today’s cheap stocks may not produce rapid returns to match their previous record highs. However, as the world economy’s outlook improves, they are likely to experience more robust trading conditions that lifts their profitability. This may lead to capital returns for investors who purchase them today while they offer wide margins of safety.

Making a million

Investing in the best shares today may improve your prospects of making a million. The stock market’s 8% long-term annual return would turn a $100,000 investment today into $1m over a 30-year time period. However, you could reduce the amount of time it takes to build a seven-figure portfolio by focusing your capital on a range of high-quality businesses while they trade at low prices.

History suggests that stock prices will move higher in the coming years as the economic outlook improves. Therefore, now may be the right time to capitalise on low valuations to improve your financial outlook.

More reading

• 5 top ASX shares to buy with $5,000
• Stock market crash 2020: a once-in-a-lifetime chance to get rich?
• Don’t worry about low interest rates, just buy these ASX dividend shares
• Got $1,000? You should buy one of these 8 ASX shares
• Here’s my top ASX share to buy and hold through the 2020s

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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A new month is upon us, so what better time to look at giving your portfolio a little lift with a few new additions.

Five top ASX shares which I’m tipping as market beaters over the next few years are listed below. Here’s why I would invest $5,000 across them:

Bravura Solutions Ltd (ASX: BVS)

Bravura Solution is a provider of software and services to the wealth management and funds administration industries. I’m a big fan of the company due to its leading Sonata wealth management platform, which I believe has a significant global market opportunity. In addition to this, the company has been bolstering its offering with acquisitions over the last couple of years. These look to have positioned Bravura perfectly for long term growth.

Pushpay Holdings Group Ltd (ASX: PPH)

Pushpay is a leading donor management and community engagement platform provider for the faith sector. This may be a niche market, but it certainly is a very lucrative one. The company is aiming to win a 50% share of the medium to large church market in the future, which represents a US$1 billion opportunity. Given that FY 2020’s revenues increased 32% to US$129.8 million, this clearly gives it a long runway for growth over the 2020s. Due to the quality of its platform and last year’s US$87.5 million acquisition of church management system provider Church Community Builder, I believe it will achieve its target.

REA Group Limited (ASX: REA)

REA Group is the property listings company behind the market-leading realestate.com.au website and several international equivalents. It has been a strong performer over the last few years despite the housing market downturn. So, with the housing market tipped to rebound in 2021, I believe its medium to long term outlook is looking very positive.

SEEK Limited (ASX: SEK)

Another ASX share to consider buying is this job listings giant. I think it could be a great investment option thanks to its investments in growth opportunities, its domination of the ANZ market, and its growing China-based Zhaopin business. Combined, I believe SEEK is well-positioned to deliver strong revenue growth over the next decade. This could lead to more market-beating returns for its shares over the 2020s.

Zip Co Ltd (ASX: Z1P)

Finally, I believe this buy now pay later provider could be a top long term option. This is due to the growing popularity of the payment method with consumers and retailers, the demise of credit cards, the launch of its Tap & Zip product, and its international expansion. The latter includes its recent entry into the $5 trillion U.S. market via the acquisition of QuadPay.

More reading

• Got $1,000? You should buy one of these 8 ASX shares
• Here’s my top ASX share to buy and hold through the 2020s
• ASX 200 recovered throughout today, but finished 0.3% lower
• Why you should pay attention when management buy (or sell) ASX shares
• Why Domino’s, Oil Search, Resolute, & Zip shares are dropping lower

James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia owns shares of and has recommended Bravura Solutions Ltd. The Motley Fool Australia has recommended PUSHPAY FPO NZX, REA Group 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 2020 stock market crash highlighted the extreme volatility that can be present in the stock market. Indexes such as the FTSE 100 Index (FTSE: UKX) and S&P 500 Index (SP: .INX) declined rapidly in a short space of time. While some stocks have recovered, many others continue to be viewed negatively by investors as a result of an uncertain economic outlook.

As such, there could be buying opportunities that rarely present themselves. Through taking a long-term view and buying a diverse range of undervalued stocks today, you could improve your financial prospects.

Stock market crash 2020: an unusual event

The 2020 stock market crash was a very rare event. It prompted a bear market, with many indexes across the world slumping by over 20% in a matter of weeks. The last time such a large fall was experienced across global equity markets was during the global financial crisis in 2008/09. Prior to that, the dot com crash and an uncertain geopolitical outlook in the early 2000s also prompted severe declines for global stock markets.

Therefore, in the past 20 years, there have been only a small number of instances where stock prices have declined severely en masse. This means that buying opportunities such as those still available today are relatively rare. Investors who can go against the consensus views of their peers and buy high-quality shares at cheap prices may generate impressive returns in the long run.

Today’s buying opportunities

While some shares have recovered following the stock market crash, many others continue to trade at low prices. Investor sentiment towards sectors that face an uncertain near-term outlook is especially weak, with banks, retailers and consumer goods companies trading at low prices. In some cases, they are trading significantly below their historic averages. This suggests that they offer a wide margin of safety, and could deliver high capital returns in the long run.

Of course, the economic outlook is likely to remain uncertain for many months. Therefore, it is sensible to diversify across a range of sectors. With consumer sentiment apparently changing rapidly in response to lockdown measures put in place across many major economies, having exposure to a range of industries within your portfolio could be a profitable move.

A long-term perspective

While there may yet be another stock market crash, the reality is that such buying opportunities are few and far between. Investors who use them to their advantage through purchasing undervalued stocks can generate market-beating returns. Over time, they can make a real difference to your portfolio’s performance and your financial outlook.

Therefore, while buying shares may seem like a risky move today, it could be a logical step for any long-term investor to take. The stock market’s track record of recovery suggests that many undervalued stocks will deliver recoveries as the economic outlook improves.

More reading

• Don’t worry about low interest rates, just buy these ASX dividend shares
• Got $1,000? You should buy one of these 8 ASX shares
• Here’s my top ASX share to buy and hold through the 2020s
• How to turn $20,000 into $350,000 in 10 years with ASX shares
• These were the best performing ASX 200 shares last 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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According to the latest economic report out of Westpac Banking Corp (ASX: WBC), its team expect the Reserve Bank to cut the cash rate down to 0.1% before the end of the year.

After which, the bank is forecasting rates to stay on hold at this level until at least the end of 2022.

I agree with this view and feel it could be many years before interest rates return to normal levels again.

In light of this, I would suggest income investors stick with dividend shares for the foreseeable future.

But which ASX dividend shares should you buy? Two I rate highly are listed below:

Rural Funds Group (ASX: RFF)

The first ASX dividend share to consider is this agriculture-focused property company. Rural Funds owns a total of 61 high quality properties which are leased to experienced agricultural operators on long-term agreements.

It is these long term agreements and their built in rental increases that most attract me to the company. These give Rural Funds great visibility on future earnings and, barring any unforeseen events, will allow the board to deliver on its target of increasing its distribution by 4% each year. In FY 2021 the company plans to lift its distribution to 11.28 cents per share. Based on the latest Rural Funds share price, this equates to a 4.8% yield.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

Another option for income investors to consider buying is this dividend-focused exchange traded fund (ETF). The Vanguard Australian Shares High Yield ETF gives investors access to 65 of the highest yielding blue chip shares on the Australian share market. This includes the likes of utilities company APA Group (ASX: APA), banking giant Commonwealth Bank of Australia (ASX: CBA), and Bunnings owner Wesfarmers Ltd (ASX: WES).

I like the ETF for two main reasons – the diversity it offers investors and its attractive yield. In respect to the latter, I estimate that it offers a FY 2021 dividend yield in the region of 4% to 5%.

More reading

• Why Rural Funds (ASX:RFF) is a great ASX dividend share
• APA Group (ASX:APA) plots a steady path to low emissions future
• ASX 200 recovered throughout today, but finished 0.3% lower
• Why Domino’s, Oil Search, Resolute, & Zip shares are dropping lower
• Why it makes sense to invest in ASX shares

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. The Motley Fool Australia owns shares of APA Group and Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Don’t worry about low interest rates, just buy these ASX dividend shares appeared first on Motley Fool Australia.

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I think there are a number of ASX shares that are worth buying at the current prices with $1,000 (or more).

In my opinion, each of the below picks could be really good long-term options:

Pushpay Holdings Ltd (ASX: PPH)

This ASX tech share is a donation payments business which services the large and medium US church sector. It’s aiming for US$1 billion of annual revenue from this target market.

I think the company has a compelling future for the rest of the decade with growth being brought forward by COVID-19. The rising profit margins are very attractive to me.

At the current Pushpay share price it’s valued at 41x FY21’s estimated earnings. 

I’ve written about Pushpay many times as an idea, here is the latest longer-form article.

Redbubble Ltd (ASX: RBL)

Redbubble is an artist product business that sells things like wall art, masks, phone cases, clothing and so on through an online marketplace.

The company is seeing enormous growth as consumers shift to online purchasing. In the first quarter of FY21 it saw marketplace revenue growth of 116% and gross profit growth of 149%. It’s a very scalable business due to network effects. It is steadily adding new product lines which increases its total addressable market.

In my opinion, Redbubble has a very promising growth trajectory over the next five years.

I have covered Redbubble in a longer article here.

Temple & Webster Group Ltd (ASX: TPW)

This ASX share is another e-commerce business. It sells furniture and home furnishings online. It’s another business benefiting from the big shift to online shopping.

The Temple & Webster share price has crashed 24% lower after giving its trading update this week. Was it bad? The year to date to 19 October 2020 revenue was up 138% and it generated earnings before interest, tax, depreciation and amortisation (EBITDA) of $8.6 million – more than the whole of FY20.

Looking out five years, I think this is a good opportunity to buy shares of a very fast-growing business.  

WAM Microcap Limited (ASX: WMI)

WAM Microcap is a listed investment company (LIC) which aims to invest in ASX shares with market capitalisations under $300 million.

I think the investment team at WAM Microcap is one of the best LIC teams out there. Its portfolio has generated strong results – since inception in June 2017 it has generated returns of 21.2% per annum (before fees, expenses and taxes).

It also offers a grossed-up dividend yield of 5.3%.

MFF Capital Investments Ltd (ASX: MFF)

MFF Capital is another LIC which has done well. The ASX share has been one of the best LICs over the past decade under the stewardship of Chris Mackay.

It owns a portfolio of high quality global shares with good growth prospects like Visa, Mastercard, Berkshire Hathaway, Home Depot and Microsoft.

I believe good long-term returns can continue, with a steadily rising dividend as a bonus.

Here’s the latest longer article I wrote about MFF Capital.

Future Generation Global Invstmnt Co Ltd (ASX: FGG)

Future Generation Global is another LIC that gives exposure to global shares. However, it invests in the funds of fund managers that invest in global shares. Those managers work for free so that Future Generation Global can donate 1% of its net assets to youth mental health charities. It’s a great setup. 

Its portfolio has outperformed the global share market over the short-term and longer-term. It’s trading at a discount to its net tangible assets (NTA) per share and it’s starting to grow its (small) dividend.

This is a longer article I wrote about Future Generation Global.

A2 Milk Company Ltd (ASX: A2M)

I think A2 Milk could be the best value ASX growth share in the ASX 200.

The infant formula business is certainly going through a tough time at the moment due to COVID-19 impacts on domestic customer demand and logistics.

However, I believe it still has a very strong future – particularly in North America. I think short-term difficulties give us an opportunity to buy shares cheaper of this attractive global growth business.

At the current A2 Milk share price it’s valued at 23x FY23’s estimated earnings.

I made a bull case for the A2 Milk share price in a longer article here.

Bubs Australia Ltd (ASX: BUB)

Bubs is also an infant formula ASX share that’s suffering due to COVID-19 at the moment.

There are a few moving parts to Bubs, with the Chinese element worrying some investors.

However, there are two key areas of Bubs that make me bullish about its long-term future when you look out five years. First, its gross profit margin is steadily rising as more of its revenue comes from infant formula. Second, its growth prospects in markets outside of China, such as Vietnam, look very promising and could help drive revenue and profit much higher in FY22 and beyond.

I wrote about Bubs in a longer article here.

More reading

• Here’s my top ASX share to buy and hold through the 2020s
• 3 sublime ASX growth shares to buy this month
• The Adore Beauty (ASX:ABY) share price surged 10% higher today
• Why Iluka, Link, Resolute, & Temple & Webster shares are tumbling lower today
• I think the Bubs (ASX:BUB) share price is a steal

Tristan Harrison owns shares of Future Generational Global Investment Company Limited, Magellan Flagship Fund Ltd, and WAM MICRO FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX and Temple & Webster Group Ltd. The Motley Fool Australia owns shares of and has recommended A2 Milk and BUBS AUST FPO. The Motley Fool Australia has recommended PUSHPAY FPO NZX and 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.

The post Got $1,000? You should buy one of these 8 ASX shares appeared first on Motley Fool Australia.

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I think there are only a few ASX shares that are going to be able deliver very strong returns over the rest of the decade. If I were going to buy one share and hold it through the 2020s it’d be Pushpay Holdings Ltd (ASX: PPH).

What is Pushpay?

Pushpay is a digital donation business. It facilitates electronic giving to the large and medium US church sector.

Cash used to be the clear leader in how people donated to churches. Pushpay is at the leading edge of enabling donations these days with its technology. It offers an app for the church to connect with the congregation. Not only does it allow people to donate through the app, but there are various other community things that can be done in the app including livestreaming services.

Pushpay’s technology is very useful in this period with COVID-19 impacting the US. Social distancing and restrictions have significantly brought forward adoption of Pushpay.  

Why I think it’s a great ASX share

I think a lot of shares are going to produce better returns than cash over the next five to ten years.

However, there are only a certain number of ASX shares that are going to end up outperforming the market by a lot.

I believe Pushpay could be one of those to do very well. On the revenue side of things, it was already doing well – in FY19 it grew revenue by 40%. In FY20 it grew revenue by 32%.

For me, one of the most attractive things about Pushpay is that it’s rapidly growing its profit margins. In FY20 the ASX share managed to increase its gross profit margin from 60% to 65%. Even more importantly, its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) margin also rose by five percentage points from 17% to 22%.

This rising profitability means that new revenue adds more to Pushpay’s bottom line than in previous years. It shows that Pushpay is a very scalable business.

Whilst the company is aiming for US$1 billion of revenue, which represents huge growth from where Pushpay’s revenue is at the moment (it generated US$129.8 million of revenue in FY20), I think it’s the increase in profitability that is the most exciting thing about the ASX share.

Pushpay is steadily growing its market share of a sector that is likely to keep seeing regular yearly donations for a very long time. Plus, I think people would keep donating even during tough times – as they are right now. To me, Pushpay is a pretty defensive business on top its growth potential.

At the current Pushpay share price it’s priced at 41x FY21’s estimated earnings. This is the current year, where Pushpay is expecting to double its EBITDAF to a range of US$50 million to US$54 million.

Optionality for further growth

I think there’s a lot of growth potential from just the core Pushpay business.

However, I believe that there is a lot of other growth avenues that Pushpay could target along the road. For starters, there are other countries with churches that it would be pretty easy for Pushpay to just shift its software across to.

There are obviously other religions that the ASX share could target in the US and abroad.

Outside of religious donations, there is a huge amount of global donations for other charities and causes that are processed by other providers that Pushpay could try to organically grow into, or acquire a bolt-on acquisition to kickstart that diversification.

This additional growth may not be at the front of Pushpay’s plans, but I think it shows there is long-term growth potential with this business.

I think Pushpay is one of the most exciting shares on the ASX. I’d be very happy to buy some shares today.

More reading

• Why you should pay attention when management buy (or sell) ASX shares
• Why it makes sense to invest in ASX shares
• ASX 200 shares hit by multiple takeovers
• Where to invest your first $500 into ASX shares today
• This is where I’d invest $1,000 right now into ASX tech shares

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 PUSHPAY FPO NZX. The Motley Fool Australia has recommended PUSHPAY FPO NZX. 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 Here’s my top ASX share to buy and hold through the 2020s appeared first on Motley Fool Australia.

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