Author: therawinformant

The Bank of Queensland Limited (ASX: BOQ) share price rallied today after two brokers upgraded the stock. But it’s not the only ASX stock to get boosted to a “buy” today.

The BOQ share price extended yesterday’s gain by 2.5% to $6.90 ahead of the close when the S&P/ASX 200 Index (Index:^AXJO) gained 0.7%.

The bank jumped by over 5% on Wednesday after it posted a pleasing full year result. This prompted Credit Suisse to lift its recommendation on the stock to “outperform” from “neutral” as it increased its 12-month price target to $7.60 from $5.50 a share.

Cost control and margins prompt broker upgrade

The broker was impressed with the bank’s strong cost control in a tough environment and the 3 basis point uplift in its second-half net interest margin (NIM).

Management also managed to deliver a CET1 ratio of 9.78%. This is ahead of its cash buffer target range of 9% to 9.5%.

“With this result, we now see the downside to be limited with a COVID‐19 provision conservatively set together with good execution of strategy delivering underlying profit growth,” said the broker.

Downside risks limited

But Credit Suisse isn’t the only broker upgrading the stock. Morgans changed its recommendation to “add” from “hold” as the bank’s cash earnings of $225 million was 4% ahead of its expectations.

“While we have not materially changed our credit impairment charge forecasts for FY21F and FY22F, and despite our forecasts being more optimistic than FactSet consensus, we believe our forecasts are starting to look conservative in light of emerging data,” said Morgans.

The broker’s 12-month price target on the stock increased to $7.20 from $5.50 a share.

Challenger upgraded due to better than expected quarterly

Meanwhile, the Challenger Ltd (ASX: CGF) share price also benefitted from a broker upgrade today.

Bell Potter upped its rating on the annuity products company to “buy” from “hold” following its September quarterly update.

“We do this due to the strong sales figures in its Life business in addition to the robust net-flows it’s seeing on the Funds Management side,” said the broker.

“CGF flagged improving margin through a more attractive asset allocation and the capital position remains higher than target ratios.”

Blowing past estimates

The group’s sale of life insurance was more than twice Bell Potter’s estimate of $100 million for the quarter.

Its fixed-Term annuities (ex MS&AD) sales of $634 million also blew past the broker’s $330 million estimate.

Bell Potter increased its price target on Challenger to $4.70 from $4.20 a share.

The CGF share price jumped 2.6% on Thursday to $4.40.

More reading

• Looking to invest in ASX real estate shares? Read this first
• Top brokers name 3 ASX shares to sell today
• Why Bank of Queensland, BHP, Pro Medicus, & Redbubble shares are charging higher
• ASX 200 up 0.9%: Big four banks rise, Pro Medicus jumps, miners charging higher
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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There are two broad schools of thought when it comes to seeking out responsible investments on the ASX. By ‘responsible’, we mean shares that place a high value on their environmental, social and governance (ESG) policies. Also known as the ‘triple bottom line’.

The first is that you should invest in shares which you believe will deliver you the absolute highest returns, regardless of ESG considerations. Then, if you so choose, you can use some of those gains to support your favoured environmental or social causes.

The second is to seek out shares that are actively pursuing ESG policies. Ideally then, your investment can not only return capital gains but your money can also have a positive impact on the world around you. Hence, you’ll also hear this referred to as ‘impact investing’.

We’ll leave it to you to decide how to balance the two choices. But according to this morning’s press release from the Responsible Investment Association Australasia (RIAA), ESG investment is booming.

Hitting new heights

In 2018, professionally managed responsible investments in Australia totalled $980 billion. Today that figure is $1.15 trillion, representing growth of 17%. RIAA notes that 37% of all professionally managed investments are now managed using one or more responsible investment approaches.

And it looks like this trend has a lot more growth ahead of it.

Michelle Lacey is the Head of Core Client Group, Australia, AXA Investment Managers. According to Lace:

RIAA’s research shows Australian investors would like to increase their allocation towards impact investments more than fivefold over the next five years, so we believe this should be a particular area of attention for financial advisers.

This rapid growth is also seeing an increasing range of ESG investment options opening up, says Yo Takatsuki, Head of ESG Research and Active Ownership at AXA IM.

Takatsuki adds:

Funds that have been established to target specific social and environmental objectives, often called impact funds, are becoming far more ambitious in their investment goals. They are attracting sophisticated investors who expect very clear and detailed reporting, both quantitative and qualitative.

With that in mind, the Association urges financial planners and managers to be familiar with ESG investments, pointing to their free Financial Adviser Guide to Responsible Investment publication.

And ESG investing doesn’t mean you’re sacrificing share price gains for a healthy conscience.

Quite the contrary, according to Simon O’Connor, Chief Executive Officer of RIAA. He says:

The rapid growth in responsible investment has been driven by client demand and strong investment outcomes, with clear evidence that responsible investments deliver stronger risk-adjusted returns.

There you have it.

Maybe you can have your cake and eat it too, investing responsibly on the ASX and reaping big share price gains.

More reading

• Bank of Queensland (ASX:BOQ) among the latest buy ideas from brokers
• Why the Aspen (ASX:APZ) share price is charging higher?
• How I’d get ready for buying opportunities in the next stock market crash
• Why the Wisr (ASX:WZR) share price is up 8%
• 3 exciting ASX growth shares to buy for stellar long term returns

Motley Fool contributor Bernd Struben 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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The Aspen Group Limited (ASX: APZ) share price is pushing higher today after a strong quarterly announcement. The real estate investment trust (REIT) is up 4.85% in afternoon trade, reaching a price of $1.08.

What does Aspen do?

Aspen Group is an ASX-listed property group formed in 2001 which is strategically focused on providing “value for money” accommodation.

Aspen has owned and managed holiday and accommodation parks since 2004. The group currently owns 9 tourist parks across Australia.

Quarterly trading update

Aspen revenue in the first quarter of FY21 increased 8% to $8.79 million despite the impact of COVID-19. The company also saw a major boost in both operating profit and earnings before interest, taxes, depreciation and amortisation (EBITDA) as it cut down on expenses. EBITDA rose 59% to $3.18 million while operating profit soared from $1.72 million to $2.85 million.

All these factors drove 37% growth in underlying earnings per share (EPS) compared to 1Q FY20.

With the holiday season fast approaching, Aspen is pivoting back to the more profitable short-stay business model. Impressively, three of its NSW parks are now almost fully booked for the peak summer period at rates above the previous corresponding period.

Moreover, the company has ongoing insurance claims for lost profits and physical damage due to the bushfires last summer. These are still being negotiated and are not included in the results, which are expected shortly.

What now for the Aspen share price?

The company advised it was in a good position to acquire properties on attractive terms thanks to the recessionary environment. As such, Aspen would continue to seek opportunities to grow its portfolio of affordable accommodation properties through development and acquisition.

However, wages expenses will increase as the REIT will not meet the current Job Keeper requirements for the rest of the year. 

In addition, due to the ongoing impacts of the pandemic , the company was unable to update on profit or distribution guidance for FY21.

Aspen’s share price is trading 6.78% lower this year, largely in line with the All Ordinaries Index (ASX: XAO) drop of 6%.

More reading

• Here’s why the Clean TeQ (ASX:CLQ) share price has surged 10% today
• The Michael Hill (ASX:MHJ) share price has rocketed 11% today. Here’s why.
• The iSelect (ASX:ISU) share price was on the move today. Here’s why.
• Why the Spirit (ASX:ST1) share price is shooting the lights out today
• The Azure Minerals (ASX:AZS) share price has rocketed 62%. Here’s why.

Motley Fool contributor Daniel Ewing 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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The next stock market crash may not be all that far away. After all, risks such as political uncertainty in the US and the ongoing coronavirus pandemic may cause investor sentiment to weaken after its recent recovery.

As such, now could be the right time to start planning for the next stock market downturn. Through reviewing your existing holdings and identifying attractive stocks, you could capitalise on future buying opportunities that may only be available for a limited amount of time.

Reviewing your existing holdings ahead of a stock market crash

Many companies have very different prospects now than they did prior to the stock market crash. In some cases, they may face challenging futures. This could mean that they are less attractive as investments than they were in the past. Similarly, some stocks may now be trading on excessive valuations that are not representative of their financial prospects.

It could be a good idea to review your holdings to identify such companies. This may lead you to sell some of them, which would raise cash that can be used to purchase more attractive opportunities in the next market decline. Clearly, this process can be challenging – especially if you sell a stock at a loss. However, it may be a logical approach to take that allows you to enjoy higher returns in the long run.

Identifying attractive stocks and sectors

The speed of the recent stock market crash caught many investors by surprise. Within a matter of weeks, indexes such as the S&P 500 Index (SP: .INX) had rebounded from their March lows. This meant that investors had very little time to react to low valuations that were present across a wide range of sectors.

Therefore, it may be a good idea to identify attractive stocks and sectors prior to the next market downturn. This may mean that you can react more quickly to share price declines that may swiftly be replaced by gains. By analysing a stock now, you can build a list of businesses that, should they decline in value to more appealing price levels, could be worth adding to your portfolio at some point in the coming months or years.

Ensuring you have a sound financial position

One of the difficulties with a stock market crash is that it often coincides with a challenging wider financial position for investors. For example, a weak economic outlook may mean that your employment prospects are less secure. This may mean that you are less inclined to take risks, such as buying shares, when the best opportunities arise.

It could be worth ensuring that you have a sound financial position ahead of the next market decline. This may mean that you have cash savings that can sustain you in a difficult economic period. Doing so may enable you to fully take advantage of cheaper stock prices that are likely to be ahead over the long run.

More reading

• Why the Wisr (ASX:WZR) share price is up 8%
• 3 exciting ASX growth shares to buy for stellar long term returns
• Here’s why the Clean TeQ (ASX:CLQ) share price has surged 10% today
• The Redbubble (ASX:RBL) share price rocketed 25% higher today: Is it a buy?
• Why the BHP (ASX:BHP) share price is up on AGM news

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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The Wisr Ltd (ASX: WZR) share price is soaring today after the company provided an update on its loan origination. At the time of writing, the Wisr share price is trading 7.89% higher at 20.5 cents.

The fintech is Australia’s first neo lender. Wisr offers a unique form of personal lending compared to services provided by the major banks. It claims to offer more competitive interest rates by tailoring loans to meet customer needs and eliminating early repayment penalties and annual fees.

The company also boasts the country’s only credit score comparison service.

Wisr displays impressive growth

The Wisr share price is on the move after the company delivered record growth results for Q1. New loan originations were $61.9 million, a 47% increase on Q4 FY20 and a 166% increase on Q1 FY20. The increase takes the company’s total loan originations since inception to $306.7 million, with the most recent $50 million coming in during the last three months.

Furthermore, the average customer credit score of 732 is the highest average in the company’s history. This also compares very favourably to the average Australian credit score, which is 600 according to data supplied to Wisr by Equifax. The impressive credit performance reinforces the strong nature of the company’s loan book, and customer credit quality.

About the Wisr share price?

Despite having delivered 47% quarterly growth in new loan originations, it would appear that Wisr still has room to grow. This, in part, is thanks to the recently added vehicle financing product, which opens up a potential addressable market that may be worth up to $35 billion, according to a report published by The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

Today’s rise in the Wisr share price would have been a welcome boost to shareholders who have watched shares in the neo-lender fall 28% since the start of the financial year, excluding today.

Anthony Nantes, CEO of Wisr was also pleased as he stated:

We’re excited for the quarter ahead, as Wisr’s business model and commitment to the financial wellness of customers is strongly resonating in-market and driving record growth in all key financial metrics.

The Wisr share price is trading 7.8% higher so far this year.

More reading

• 3 exciting ASX growth shares to buy for stellar long term returns
• Here’s why the Clean TeQ (ASX:CLQ) share price has surged 10% today
• The Redbubble (ASX:RBL) share price rocketed 25% higher today: Is it a buy?
• Why the BHP (ASX:BHP) share price is up on AGM news
• Countries are panic buying food and this isn’t reflected in ASX agriculture stocks

Motley Fool contributor Daniel Ewing 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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If you’re looking for strong returns over the 2020s, then I think the three ASX growth shares listed below could be worth considering.

I believe all three ASX shares are well-placed to grow their earnings strongly over the long term. This could lead to their shares being market-beaters in the 2020s. Here’s why I like them:

ELMO Software Ltd (ASX: ELO)

ELMO is a cloud-based human resources and payroll software company. It provides businesses with a unified platform to streamline a range of processes. Demand for its offering has been growing strongly in recent years, even during the pandemic. This led to ELMO delivering impressive annualised recurring revenue (ARR) growth in FY 2020.

Pleasingly, more strong organic growth is expected in FY 2021. This should be bolstered by the major new acquisition of UK-based Breathe for an initial payment of 18 million pounds (A$32.4 million). Breathe is a fast-growing, scalable human resources platform for small businesses. Its annualised recurring revenue (ARR) as of 31 August 2020 stood at 3.6 million pounds (A$6.5 million) and has been growing at over 30% annually. Considering its sizeable cash balance, I suspect there could be further acquisitions in the pipeline.

Nearmap Ltd (ASX: NEA)

Another ASX growth share I would buy is Nearmap. It is a leading aerial imagery technology and location data company which gives businesses instant access to high resolution aerial imagery, city-scale 3D datasets, and integrated geospatial tools. The beauty of its platform is that users can undertake site visits from the comfort of their home or workplace. Not only does this offer significant time and cost savings for users, it is also very helpful during this age of social distancing and remote working. 

Looking ahead, management appears confident that its growth will accelerate thanks to its recent capital raising and new growth initiatives. It is targeting annualised contract value (ACV) growth of 20% to 40% per annum over the long term, with underlying churn of less than 10%. Thanks to the quality of its offering, particularly its latest AI product, I believe it is well-placed to achieve this.

NEXTDC Ltd (ASX: NXT)

A final ASX growth share to consider buying is NEXTDC. It is an innovative data centre operator which owns a collection of world class centres in key locations across Australia. Over the last few years NEXTDC has experienced very strong demand for capacity in its centres. So much so, this year the company brought forward capacity additions in response to customer demand.

The good news is that the shift to cloud is still only just getting started. I expect this to lead to a sustained increase in demand for its services over the next decade. I’m confident this will underpin very strong earnings growth over the long term. In addition to this, I suspect NEXTDC could look to accelerate its growth by expanding into the Asia market in the coming years.

More reading

• How top ASX tech shares like Afterpay (ASX:APT) have performed in 2020
• Why the Nearmap (ASX:NEA) share price is surging 8% higher today
• 4 ASX shares rated as strong buys by brokers
• Top brokers name 3 ASX shares to buy today
• Top ASX tech shares to buy in October 2020

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Elmo Software. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. The Motley Fool Australia has recommended Elmo Software and Nearmap Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Clean TeQ Holdings Limited (ASX: CLQ) share price is up 9.84% at 34 cents in late afternoon trading today. This follows the company’s ASX announcement this morning updating investors on the new drilling program at its Sunrise project in New South Wales.

Today’s gains see Clean TeQ’s share price up 20% so far in the month of October. Despite falling 60% during the COVID-19 market rout earlier this year, the Clean TeQ share price is up 52% year-to-date, reflecting a 205% gain since 24 March.

For comparison, the All Ordinaries Index (ASX: XAO) is down 6% so far in 2020.

What does Clean TeQ Holdings do?

Melbourne-based Clean TeQ Holdings is a global leader in metals recovery and industrial water treatment through the application of its proprietary continuous ion exchange technology. This is via its wholly owned subsidiary Clean TeQ Water.

The company is also the 100% owner of the Clean TeQ Sunrise Project in New South Wales. According to Clean TeQ, this counts among the largest cobalt deposits outside of Africa, and has some of the largest and highest-grade accumulations of scandium on the planet.

Clean TeQ has a market cap of $250 million.

What did the Clean TeQ share price gain 10%?

This morning, Clean TeQ announced that it had mobilised a drill rig at its Sunrise Project site to start a 6-hole diamond core drill program.

Clean TeQ is hopeful the drilling – reaching 400 to 600 metres below ground – will intersect dunite structures that are proposed to be the source of platinum in the Sunrise laterite at the surface.

According to the company, the Sunrise laterite hosts a significant platinum resource of 103.1 Mt @ 0.33 g/t Pt for 1,076,170 ounces of platinum, using a 0.15 g/t Pt cut-off grade. Around 90% falls in the measured and indicated categories.

This places it amongst the largest platinum resources in Australia. The company notes that the average grade is relatively low. However areas of significantly higher-grade platinum mineralisation exist inside the resource envelope.

Clean TeQ stated:

Given the high platinum grades near surface and historic intercepts beneath the laterite, a program of work has commenced to test the structural geology of the Tout Intrusive Complex and to establish a platinum resource that will either integrate with the development of the Sunrise nickel-cobalt-scandium mine, or be developed as a stand-alone operation.

Clean TeQ shareholders are no strangers to volatility. Depending on the results of the diamond core drilling program, the Clean TeQ share price could move sharply in either direction.

More reading

• Why the Clean TeQ (ASX: CLQ) share price is up today
• The Michael Hill (ASX:MHJ) share price has rocketed 11% today. Here’s why.
• The iSelect (ASX:ISU) share price was on the move today. Here’s why.
• Why the Spirit (ASX:ST1) share price is shooting the lights out today
• The Azure Minerals (ASX:AZS) share price has rocketed 62%. Here’s why.

Motley Fool contributor Bernd Struben 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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The Redbubble Ltd (ASX: RBL) share price has been an exceptionally strong performer on Thursday.

At one stage today the ecommerce company’s shares were up a massive 25% to a record high of $6.02.

In afternoon trade the Redbubble share price has given back a good portion of these gains but is still up a sizeable 8% to $5.20.

Why is the Redbubble share price on fire on Thursday?

Investors have been fighting to get hold of Redbubble’s shares following the release of an impressive first quarter update.

That update revealed that Redbubble’s strong growth has continued into FY 2021, with Marketplace Revenue growing 116% over the prior corresponding period to $147.5 million.

Pleasingly, margin expansion led to its gross profit growing at an even quicker rate of 149% to $64.5 million.

But perhaps best of all, was that Redbubble delivered first quarter earnings before interest and tax (EBIT) of $22.1 million. This compares to a loss before interest and tax of $1.5 million a year earlier.

How did this compare with expectations?

According to a note out of Goldman Sachs, Redbubble delivered quarterly revenue in line with its expectations.

It commented: “Marketplace revenue (product & shipping) for the Redbubble Group (Redbubble & TeePublic marketplaces) in 1Q21 was A$147.5mn, up 116% on pcp (+122% in cc.) and in line with our expectation of A$146.8mn.”

One metric which is outpacing the broker’s forecasts is its gross profit margin.

“Gross profit margin for Redbubble Group was 43.7% in 1Q21, versus 37.8% in 1Q20 and 41.6% in 4Q20. This is currently materially ahead of our FY21E expectation of 39.2%,” Goldman explained.

This ultimately led to its EBIT margin also tracking significantly ahead of Goldman Sachs’ expectations for a margin of 9.6% in FY 2021.

It said: “Redbubble Group 1Q21 operating EBIT was A$24.8mn, up from A$0.0mn in 1Q20. This excludes A$2.7mn in other income/ expenses in 1Q21. Operating EBIT margin was 16.8% (for context, 4Q20 was 4.7% and GSe FY21E 9.6%).”

Is Redbubble a buy?

While Goldman Sachs has retained its buy rating and $5.20 price target on its shares, I suspect it will revisit its valuation in the near term.

One thing the broker will no doubt be weighing up when reassessing its valuation is the sustainability of its margins, which are being positively impacted by heightened sales of fashionable face masks during the pandemic.

Goldman commented: “We would expect the market to focus on the sustainability of the strength on GP Margin and the contribution that face masks may be making to its revenues (noting that in its August update, face masks were around 28% of revenues in July).”

If it believes these strong margins are sustainable, I suspect a price target increase could be coming.

More reading

• Why Bank of Queensland, BHP, Pro Medicus, & Redbubble shares are charging higher
• Redbubble (ASX:RBL) share price on watch after delivering stellar Q1 growth
• 3 unstoppable ASX shares to buy with $3,000
• The Redbubble (ASX:RBL) share price is up 320% in 2020: Can it go higher?
• 3 ASX tech shares to buy and hold for the next decade

Motley Fool contributor James Mickleboro 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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The BHP Group Ltd (ASX: BHP) share price was up 2.60% at the time of writing today at $36.96. This came after the company’s 2020 AGM yesterday.

What did the AGM discuss?

BHP chair Ken MacKenzie outlined the resource producer’s financial highlights at the AGM.

In the year to 30 June 2020, BHP had earnings of US$22.1 billion and an earnings before interest, taxes, depreciation and amortisation (EBITDA) margin of 53%. Free cash flow was US$8.1 billion.  Net debt for the group was US$12 billion at 30 June 2020 which, according to the chair, was at the bottom of the group’s target range. Shareholder returns were 120 US cents per share in the 2020 financial year, representing a pay out ratio of 67%. The company had a 17% return on capital employed in FY2020.

Mr MacKenzie pointed to the issues facing the world over the year to 30 June 2020 including social unrest in Chile, bushfires in Australia and the COVID-19 pandemic. However, he said that BHP had performed “solidly” over the period despite global adversity.

He described BHP’s products as essential for global economic growth and for a transition to a lower carbon world. He said the company’s priorities remained the same as they had been over the last 3 years. These were safety, portfolio, capital discipline, capability and culture and social value.

Mr MacKenzie reiterated the company’s push toward copper and nickel and its plan to divest a number of coal assets currently held by BHP.

BHP CEO Mike Henry also addressed the AGM and highlighted that BHP was committed to a 30% reduction in operational emissions over the next decade with a plan to reduce these emissions to a net zero by 2050.

Mr Henry said the company was currently moving toward ‘future facing’ commodities including copper, nickel and potash. This would take place as growth in demand for iron ore, metallurgical coal and oil and gas slowed.

The CEO added the company was investing in long-term growth while maximising the value of its current assets. He said while the outlook for commodities was uncertain, there was some optimism from the “strength and consistency” of the economic recovery underway in China.

About the BHP share price 

BHP is a major resources producer with interests in iron ore, coal, copper, nickel, potash, oil and gas. BHP has been listed on the ASX since 1961 and has a history dating back to 1885.

Earlier this month, BHP announced that it would acquire an additional 28% interest in the Shenzi oil asset from Hess for US$505 million.

The BHP share price is up 53.43% since its 52-week low of $24.05, however, it has fallen 5.26% since the beginning of the year. The BHP share price is up 2.27% since this time last year.

More reading

• Countries are panic buying food and this isn’t reflected in ASX agriculture stocks
• Why Bank of Queensland, BHP, Pro Medicus, & Redbubble shares are charging higher
• ASX 200 up 0.9%: Big four banks rise, Pro Medicus jumps, miners charging higher
• Why it’s always a good time to buy blue chip ASX shares
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Chris Chitty 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 isn’t only Aussie shoppers that are guilty of panic food buying. Countries are rushing to snap up agricultural products and this could be a good sign for some ASX stocks.

I don’t believe this news is factored into the share prices of listed agribusinesses, but that could soon change.

It seems that countries from Egypt to China are scurrying to boost their strategic food reserves, reported Bloomberg.

Countries joining the food buying spree

Jordan is holding record wheat reserves and Egypt, the world’s top buyer of the grain, took the unusual step of tapping international markets during its local harvest and has boosted purchases by more than 50% since April.

Taiwan also indicated it will add to its food reserves and China is buying to feed its growing hog herd, according to Bloomberg.

Agriculture prices on the rise

The shopping spree comes at a time when the resurgence of COVID-19 in many parts of the world is disrupting global supply chains.

The disruption and increased demand are pushing prices for food up. Floods in China and bad harvests in Turkey and Morocco are also contributing to food inflation.

The Bloomberg Agriculture Subindex, which measures key farm goods futures contracts, jumped by nearly 20% since June.

Drivers for the agri boom

Experts who were interviewed point to a fundamental shift from “just in time” to “just in case”.

So far, it’s only a relatively small group of countries that are worried about being caught out. But if other governments joined the fray, we could see higher food prices through 2021.

Australia’s most important trading partner will have no small part to play in this trend. China is single-handedly supporting the iron ore price, much to the benefit of BHP Group Ltd (ASX: BHP) and friends.

China’s impact on food prices

The Asian giant could have a similar effect for commodities as it looks to build on its colossal food reserves as part of its five-year plan.

The irony is that China is punishing Australia by restricting imports of our barley, beef and wine. It no doubt has other sources to buy from, but it may have to loosen the block to reign in higher prices.

ASX stocks to benefit from rise of agriculture

As I mentioned earlier in the piece, I don’t believe investors have caught on to the potential agriculture boom.

Some ASX agriculture-exposed stocks that could benefit from this possible thematic include the Costa Group Holdings Ltd (ASX: CGC) share price, Nufarm Limited (ASX: NUF) share price and Graincorp Ltd (ASX: GNC) share price – just to name a few.

More reading

• Why the BHP (ASX:BHP) share price is up on AGM news
• Why Bank of Queensland, BHP, Pro Medicus, & Redbubble shares are charging higher
• ASX 200 up 0.9%: Big four banks rise, Pro Medicus jumps, miners charging higher
• Why it’s always a good time to buy blue chip ASX shares
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Brendon Lau owns shares of BHP Billiton Limited and Nufarm Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia owns shares of and has recommended COSTA GRP 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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