Author: therawinformant

It looks as though interest rates are going to remain at their low levels for several years. As a result, I continue to believe ASX dividend shares are the best place to earn a passive income right now.

But which ASX dividend shares are in the buy zone? I think these two would be top options:

Aventus Group (ASX: AVN)

The first ASX dividend share I think investors ought to buy is Aventus. It is a retail property company which specialises in large format retail parks. Aventus currently operates a total of 20 centres, which are home to a diverse tenant base of 593 tenancies. Among its tenants are major retailers such as ALDI, Bunnings, and The Good Guys.

Thanks to its high weighting to major retailers and every day needs, Aventus has been relatively unaffected by the pandemic. This allowed the company to report a 4.2% increase in funds from operations to $100 million with its full year results. It also revealed solid rent collections of 87% through the COVID-19 period and a high occupancy rate of 98%, which allowed it to pay an 11.9 cents per security distribution for the year. Based on the current Aventus share price, this equates to a generous 4.9% yield. I expect more of the same in FY 2021. Especially given the favourable Federal Budget.

National Storage REIT (ASX: NSR)

Income investors might want to consider this storage giant. Due partly to tailwinds such as population growth and downsizing by baby boomers, demand for storage facilities has been growing at a steady pace over the last few years. National Storage has been able to meet and profit from this demand with new developments, redevelopments of existing sites, and acquisitions. While population growth may be stifled in the short term because of the pandemic, I’m optimistic that a rebound in the housing market in 2021 will give demand a boost.

It also has exposure to the rapidly growing ecommerce market, with a growing number of small businesses actually running their operations from a storage unit. All in all, I believe National Storage is well-placed to continue its steady growth over the 2020s and beyond. For now, I estimate that it will pay an ~8 cents per unit distribution in FY 2021. Based on the current National Storage share price, this represents an attractive 4.3% yield.

More reading

• Why Macquarie (ASX:MQG) analysts are tipping share price gains for this ASX retail landlord
• Forget term deposits and buy these ASX dividend shares instead
• Buy Fortescue (ASX:FMG) and this ASX dividend share for income
• Are these 3 ASX shares strong recovery opportunities?
• Why Mirvac (ASX:MGR) and these ASX REITs could boom in 2020

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

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K2Fly Ltd (ASX: K2F) shares have been on the rise today as the company released its update for the quarter. At the market’s close, the K2Fly share price was trading 9.72% higher at 39.5 cents on the news.

What K2Fly does

K2Fly is a technology company that provides technical assurance and reporting solutions. Its software aids companies’ environmental, social and governance needs. To do this, the tech company supplies people and products as well as helps to form strategic alliances focused on solving problems for clients.

Primarily, K2Fly services the mining, oil and gas, utility and agriculture sectors through two main platforms. RCubed is the company’s mineral resource and reserve reporting program while Infoscope is a solution that supports enterprise land management.

Quarterly update

The K2Fly share price is flying today following the release of some impressive results. The company announced that it had raised invoices for $1.64 million in Q1, which is an improvement of 15% over the equivalent quarter in FY20.

Furthermore, as at 30 September, its cash available was $3.1 million. Adding to this was $0.88 million in receivables collected, predominantly from Tier 1 clients. These numbers reflect that during Q1, K2Fly’s current operations achieved net positive cash flows of approximately $0.37 million. This follows on from being cash flow positive in the previous quarter by $0.7 million.

Moreover, the company’s sales pipeline remains strong. Earlier in the year, K2Fly  announced it had signed a contract with Orano SA. Orano is a multinational, nuclear fuel cycle company with uranium mining operations, and is headquartered in France. Orano signed a five-year contract to implement the RCubed resource governance solution, and the total contract value was in excess of $300,000.

What now for the K2Fly share price?

With the Australian mining sector performing strongly during the global pandemic, K2Fly has seen some strong tailwinds. This looks set to continue for the company with a number of its customers, such as Imerys SA (EPA: NK), recently signing for proof of concept (POC) offerings. Imerys is conducting a paid POC study to implement K2Fly’s land management solution across its 200+ sites globally.

Additionally, K2Fly is continuing to progress a new tailings management and governance solution with its partners SAP SE (NYSE: SAP) and Decipher, which is part of the Wesfarmers Ltd (ASX: WES) group.

Investors are clearly impressed as the K2fly share price has been bid up today.

More reading

• ESG investing after the Rio (ASX:RIO) resignations

Motley Fool contributor Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of 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.

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I’d invest $1,000 right now into ASX share Bubs Australia Ltd (ASX: BUB).

Many ASX shares have been performing strongly recently with a strong run over the past month by many of my preferred picks like Pushpay Holdings Ltd (ASX: PPH), Citadel Group Ltd (ASX: CGL), WAM Microcap Limited (ASX: WMI), Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) and Brickworks Limited (ASX: BKW).

The share market seems to be a bit jubilant at the moment. I’m not sure we’re out of the COVID-19 woods yet, particularly when it comes to the US election.

There are still a couple of places which I think look like really nicely priced long-term opportunities such as infant formula. However, there’s a bit of volatility in that sector right now.

About Bubs

Bubs is a fast-growing infant formula ASX share with a specialisation in goat milk products. Indeed, it has exclusive milk supply from Australia’s largest milking goat herd.

But the company actually sells a variety of products. Not only does it sell a range of goat milk formula, it sells organic grass-fed cow’s milk infant formula, organic baby food, cereals, toddler snacks.

It recently launched Vita Bubs, which is for infant and children’s vitamin and mineral supplements. It is hoped that this segment will be able to achieve relatively high profit margins.

The company has a rapidly growing distribution network. It’s sold across major retailers including Woolworths Group Ltd (ASX: WOW), Coles Group Limited (ASX: COL) and Baby Bunting Group Ltd (ASX: BBN) in Australia. It’s also exported to China, Vietnam, South East Asia and the Middle East.

Why I think the Bubs share price is an ASX share opportunity today

The Bubs share price has been on a bit of a losing run over the past few months. Over the past month it’s down 8.5% and since 11 May 2020 it has dropped 36%.

Some investors may have been a bit bemused by the launch of Vita Bubs and the decision to hire Jennifer Hawkins as global brand ambassador. The choice to move to local manufacturing in China may also be concerning investors – why the change in strategy?

The company’s fourth quarter may have disappointed too, with revenue not being as much as hoped.

No ASX share is perfect. There will be bumps along the way, particularly as we’re going through one of the worst global pandemics in human history with COVID-19.

The quarter to 31 March 2020 saw a lot of pantry stocking sales. But the last few months has seen disruption to sales channels and a de-stocking effect. I believe good growth will return, as early as the quarter to 31 December 2020.

A business shouldn’t be judged on a quarter (or two) of sales in my opinion. Investors need to think about the long-term growth. FY20 saw full year revenue growth of 32% to $62 million with 32% growth of direct sales to China. FY20 infant formula sales – a product with a higher gross margin – went up by 58% to $30 million. It’s largely why the normalised gross margin was able to improve by 3 percentage points to 24%.  

What I’m focused on most is the ex-China export market. There are undoubtedly risks when it comes to selling products in China, but the rest of Asia is a very promising market for the ASX share. Outside of Chin, export sales saw five-fold growth and represented 10% of group revenue. The successful launch in Vietnam was very helpful. That country alone is a big potential market for Bubs.

Foolish takeaway

With a market capitalisation of under $500 million, I think that Bubs has plenty of growth potential. The shift to more sales being infant formula will help margins and profit growth of the overall business. The rapid sales growth in Asia, barring any short-term COVID-19 impacts, looks very promising.

I think this ASX share could be a strong performer over the next five years, particularly if its cow milk infant formula takes off.

I’m looking at other share opportunities at the moment too.

More reading

• Insiders have been buying these ASX shares this week
• Up 22% in a month, is the Soul Patts (ASX:SOL) share price a buy?
• Here’s why the Soul Patts (ASX:SOL) share price is at a new 52-week high
• Top ASX growth shares to buy in October 2020
• Why I would buy Afterpay (ASX:APT) and these ASX growth shares

Tristan Harrison owns shares of WAM MICRO FPO and Washington H. Soul Pattinson and Company 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 Brickworks, BUBS AUST FPO, and Washington H. Soul Pattinson and Company Limited. 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.

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The Charter Hall Social Infrastructure REIT (ASX: CQE) share price has moved 1.79% higher today following an acquisition announcement.

Within the first few minutes of market open, the Charter Hall share price reached as high as $2.89. It has since retreated, and is trading at $2.84 at the time of writing.

What does Charter Hall do?

Charter Hall Social Infrastructure REIT is the largest Australian ASX-listed real estate investment trust that invests in social infrastructure properties.

Managed by the Charter Hall Group (ASX: CHC), the property fund is a part of a $41.8 billion empire that oversees 1,300 properties.

Mater acquisition

Charter Hall advised it will buy a 100% freehold interest in 14 Stratton Street, Newstead in Brisbane, Queensland. The property fund will conduct the sale and leaseback transaction with Mater Misericordiae Limited.

The $122.5 million purchase will be developed into an 11-storey building that will become Mater’s new corporate headquarters. The location is in close proximity to Mater’s existing hospital and training campus in South Brisbane.

The agreement by both parties will see Mater commit to a 10-year lease with two 5-year options. The leaseback will equate to a yield of 4.84%, with fixed annual rental increases of 3.0%.

Charter Hall said the building was currently under construction with settlement to occur around the June 2021 quarter. The property fund said it would use its available investment capacity. That would increase net gearing to approximately 25% and have minimal positive impact on its FY21 operating earnings as a result.

Charter Hall Group CEO David Harrison said:

We are excited about establishing a relationship with Mater as a major tenant customer within our growing Social Infrastructure portfolio, further reinforcing our commitment to grow our reach with major providers of Social Infrastructure services.

We have invested in this near Brisbane CBD location for a decade having developed the $230 million headquarters for Aurizon at 900 Ann Street, Fortitude Valley and the $240 million Bank of Queensland anchored office project at Newstead nearby.

Charter Hall share price summary

The Charter Hall share price has risen 89% since falling to its 52-week low of $1.49 in March. Although materially higher of late, the Charter Hall share price is down almost 12% since the start of the calendar year and 25% from its all-time high achieved in February.

More reading

• 3 ASX 200 passive investing shares to buy today
• Charter Hall Long WALE REIT (ASX:CLW) secures BP funding

Motley Fool contributor Aaron Teboneras 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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Some ASX stocks that have missed out on the recent market recovery are starting to look too cheap to ignore, according to leading brokers.

Investors seem to have forgotten about these laggards even as market sentiment improves and the S&P/ASX 200 Index (Index:^AXJO) looks poised to record gains every day this week.

The bulls have been emboldened by stimulus talk in the US and the growing prospect of a clean Biden victory over Trump.

Potential turnaround prompts “buy” recommendation

But it seems that the Sims Ltd (ASX: SGM) share price didn’t get an invite to party with the stock falling 22% since the start of 2020.

Weak scrap metal prices are the primary reason but Citigroup sees light at the end of the tunnel. The broker believes the scrap market is turning and it reiterated its “buy” recommendation on the Sims share price.

“While HRC scrap spreads are now ahead of LT averages, scrap is cheaper than iron ore/coking coal for BOF-based steel producers,” said Citi.

“Turkey scrap is US$76/t cheaper than raw materials for European BOF operators compared to a LT discount of just US$13/t implying +US$60/t upside to scrap prices once EU steel production ramps back up.

“Likewise, US scrap is ~US$60/t cheaper than Brazilian export pig iron.”

The broker’s 12-month price target on Sims is $9.50 a share.

Strong balance sheet and improving outlook

Meanwhile, the Emeco Holdings Limited (ASX: EHL) is in a deeper hole after coming out of its recent capital raising. Shares in the heavy machinery company slumped 60% since January and Macquarie Group Ltd (ASX: EHL) reckons this is a good time to buy the stock.

The cash injection lowers Emeco’s leverage to 0.9 times, which is the lowest it has been since it floated on the ASX in 2006.

“There is strong demand in gold and iron ore with bidding activity high in the rental business and opportunities to grow the number of fully maintained project sites,” said Macquarie.

“EHL is now strongly placed to capitalise on growth opportunities and has flexibility to navigate the current softness in coal.”

Macquarie rates the stock as “outperform” and its 12-month price target is $1.15 a share.

Possible quick recovery

The Coca-Cola Amatil Ltd (ASX: CCL) share price lost its fizz this year but Goldman Sachs thinks its upside is underappreciated.

Unlike other consumer staples stocks, the COVID-19 pandemic delivered a bigger blow to the beverages group. Coca-Cola Amatil’s sales are largely by dine-in customers and social restrictions have forced food outlets to only offer takeaway.

The company went on a cost cutting drive to survive COVID and the broker thinks the market is underestimating the potential quick recovery.

“Our forecasts for CCL in the short term remain conservative when adjusted for the expected cost savings in FY20,” said Goldman.

“Additionally, in the medium term, our forecasts offer potential upside if the longer term cost savings were to materialize.”

Goldman is recommendation the stock as a “buy” and its 12-month price target on the CCL share price is $10.60 a share.

More reading

• Up 22% in a month, is the Soul Patts (ASX:SOL) share price a buy?
• ASX 200 down 0.2%: Big four banks drop, CIMIC jumps, CSL slides lower
• Here’s why this broker has a buy rating on Coca-Cola Amatil (ASX:CCL) shares
• 5 things to watch on the ASX 200 on Friday
• ASX 200 rises 1% again, Zip (ASX:Z1P) soars 8%

Motley Fool contributor Brendon Lau owns shares of Macquarie Group Limited. The Motley Fool Australia owns shares of and has recommended Macquarie 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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The S&P/ASX 200 Index (ASX: XJO) is home to a large number of blue chip shares for investors to choose from.

This can make it hard to decide which ones to buy over others.

In order to narrow things down, I have picked out four top ASX blue chip shares which I think would be great options for investors today.

Here’s why I would buy them:

Coles Group Ltd (ASX: COL)

The first blue chip to consider buying is Coles. I think it could be a great option due to the solid growth potential it has thanks to its defensive earnings, expansion opportunities, and its refreshed strategy. In respect to the latter, Coles’ Smarter Selling pillar of its refreshed strategy is aiming to deliver $1 billion in cumulative savings by FY 2023. This will be driven by initiatives including the use of technology to automate manual tasks and simplifying above-store roles to remove duplication.

Goodman Group (ASX: GMG)

Another blue chip to buy is this commercial and industrial property company. I’m a big fan of Goodman due to the strength of its portfolio and future property developments. I believe these have left the company well-placed to deliver solid long term earnings and dividend growth. Especially given their exposure to growth markets such as ecommerce through relationships with Amazon, DHL, and Walmart.

SEEK Limited (ASX: SEK)

Another blue chip ASX share that I would buy is SEEK. I think the job listings company would be a great option due to both its dominant position in the ANZ market and its growing China-based Zhaopin business. Together, I believe they have put SEEK in a position to achieve its aspirational revenue target of $5 billion later this decade. This will be a significant increase on the revenue of $1,577.4 million it delivered in FY 2020.

Telstra Corporation Ltd (ASX: TLS)

A final blue chip share to consider buying is Telstra. I like the telco giant due to its attractive valuation and the solid progress it is making with its T22 strategy. This strategy is creating a much leaner operation and one which I believe could return to growth in not so distant future. Particularly given the easing NBN headwind and the arrival of 5G internet. The latter could give Telstra’s mobile revenues a major boost in the coming years.

More reading

• Buying and holding these ASX shares could be the key to becoming wealthy
• Why I think the Seek (ASX:SEK) share price is primed to surge in 2021
• Has the Afterpay (ASX:APT) share price stalled?
• ASX 200 finishes 1.3% higher after federal budget
• 3 reasons the Telstra (ASX:TLS) share price is a buy

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. The Motley Fool Australia owns shares of COLESGROUP DEF SET. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Every so often, I like to take a look to see which shares have experienced meaningful insider buying.

This is because insider buying is often regarded as a bullish indicator, as few people know a company and its intrinsic value better than its own directors.

A number of shares have reported meaningful insider buying this week. Here are a couple which have caught my eye:

Nufarm Limited (ASX: NUF)

A change of director’s interest notice reveals that one of this agricultural chemical company’s directors has been buying shares. According to the notice, Non-Executive Independent Director Marie McDonald picked up 12,500 shares through an on-market trade on 2 October. McDonald paid an average of $3.84 per share, which equates to a total consideration of $48,000.

One broker that would agree that this was a smart move is Morgans. Late last month the broker put an add rating and $5.10 price target on Nufarm’s shares. Its analysts believe FY 2020 is the bottom of the cycle for the company’s earnings and expects strong earnings growth over the coming years.

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

According to a change of director’s interest notice, this investment house’s chairman has been buying shares this month. The notice reveals that Robert Millner picked up a total of 45,000 shares through a series of trades between 30 September and 5 October. Mr Millner paid a total of $1,066,998.32 for the shares, which works out to be an average of $23.71. This has proven to be a successful investment for the company’s chairman. This afternoon the Washington H. Soul Pattinson share price is fetching $25.61. This is approximately 8% higher than the price Mr Millner paid for his shares.

However, Morgans isn’t as positive on this one. Late last month it put a hold rating and $23.32 price target on the company’s shares.

More reading

• Up 22% in a month, is the Soul Patts (ASX:SOL) share price a buy?
• Here’s why the Soul Patts (ASX:SOL) share price is at a new 52-week high
• My 3 favourite ASX dividend shares to buy this year
• 2 ASX shares that every investor should own
• Where I’d invest $10,000 into ASX dividend shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company 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 Optiscan Imaging Limited (ASX: OIL) share price is flat today after the company received advice from the United States Food and Drug Administration (FDA).

At the time of writing, the Optiscan share price is trading at 12 cents. This compares to the All Ordinaries Index (ASX: XAO) which is marginally higher at 0.2% to 6,316 points.

What does Optiscan do?

Optiscan is an Australian-based company that develops endomicroscopic imaging technologies for medical, translational and pre-clinical applications. Optiscan’s products enable real-time imaging at the cellular level in human and animal tissue.

The company is used by leading research institutions and hospitals in North America, Europe, Asia and Australia.

Optiscan’s newest product is the InVivage device, which uses laser light and confocal optics to screen patients for oral cancer.

FDA update

Optiscan advised it received written feedback from the FDA’s Centre for Devices and Radiological Health (CDRH). The letter responded to questions the company had raised about its InVivage device in both January and June 2020.

Following the feedback, Optiscan said its pathway remained on track to apply for a premarket notification (501k) clearance for InVivage. The FDA answered questions regarding the proposed product code, primary predicate device and the use of Convivo device as a reference device.

The company will employ third-party validation, and verification testing will begin in the third quarter to support the submission.

In addition, Optiscan will run a clinical study at the Melbourne Dental School, which is expected to coincide with the verification testing. The trial will aim to illustrate the effectiveness of using a topical imaging agent with InVivage. The testing will start in the current quarter, with submission planned for the first-half of 2021.

Is the Optiscan share price a buy?

Despite Optiscan’s stagnated share price today, shareholders have seen large gains over past few months. Since the March low, the Optiscan share price has jumped from 1.5 cents to 12 cents, representing a gain of 700%.

With a market capitalisation of $57 million, I think there is plenty of runway for the company’s share price. Of course, this depends on whether it can commercialise its InVivage device and pursue sales opportunities.

I would be inclined to keep Optiscan on my watchlist for now and wait for the clinical study results.

More reading

• What’s driving the PayGroup (ASX:PYG) share price higher today
• Why the PYC Therapeutics (ASX:PYC) share price is up 9% today
• Here’s why the CV Check (ASX:CV1) share price has soared 30% today
• Why the Tesserent (ASX:TNT) share price has surged 18% today
• Why the Envirosuite (ASX:EVS) share price has rocketed up today

Motley Fool contributor Aaron Teboneras 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 MyFiziq Ltd (ASX: MYQ) share price is continuing its fantastic run as the company announced it’s engaged investment bank Ladenburg Thalmann as its lead underwriter for an upcoming Nasdaq Composite (NASDAQ: .IXIC) initial public offering (IPO). At the time of writing, the MyFiziq share price has climbed 4.69% so far today to $1.34.

What does MyFiziq do?

MyFiziq has developed dimensioning technology that enables its users to accurately check, track, and assess their body dimensions using only a smartphone.

The company’s goal is to help its partners by empowering their consumers with this capability. This, in return, gives partners the ability to assess, assist, and communicate outcomes with their consumers when navigating day to day life.

The technology has the potential to revolutionise online clothing sales, with the precise measurement technology helping to reduce or eliminate the potential for returns. It also allows for auto-matching to the partner company’s specific size charts. This helps reduce human error in taking tape measurements. Furthermore, the technology has potential for use within insurance and medical fields.

Step aside Brainchip Holdings Ltd (ASX: BRN), as the technology also includes impressive artificial intelligence. The MyFiziq share price has witnessed an astounding 415% increase since the start of the year.

What’s driving the MyFiziq share price?

The MyFiziq share price is on the rise after the company announced it has engaged investment bank, Ladenburg Thalmann, as the lead underwriter for its NASDAQ IPO. The IPO will substantially expand the number of investors available to back the company.

Ladenburg Thalmann is a member of the New York Stock Exchange and has been for more than 135 years. The company offers investment banking and capital markets products and services. The investment bank manages $450 billion worth of assets held by clients.

MyFiziq CEO, Vlado Bosanac, was delighted as he announced, “I am very pleased to be working with the technology group at Ladenburg on the proposed underwriting of the MyFiziq NASDAQ initiative that we have underway.”

Foolish takeaway

I believe today’s news is very positive for this ASX-tech minnow as it seeks to gain market share and funding. In my opinion, partnering with a large investment bank such as Ladenburg Thalmann is a shrewd move and investors could reap the rewards in the years to come.

The MyFiziq share price is up nearly 180% in the last month alone. 

More reading

• Top ASX growth shares to buy in October 2020
• MyFiziq (ASX:MYQ) share price at record high. Here’s why.
• This ASX share soared 175% in September
• Why the MyFiziq (ASX:MYQ) share price is up 400% in just six weeks
• MyFiziq (ASX:MYQ) share price soars 30% on expansion news

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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Is the Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) share price a buy today after the Soul Patts share price has risen 22% in a month?

What has been happening recently?

On 24 September 2020, Soul Patts reported its FY20 result.

It has a fairly complex set of accounts because of all of its investment holdings. Group regular profit after tax dropped 44.7% to $169.8 million. Group statutory profit after tax jumped 284.3% to $953 million.

The regular profit was hurt by lower coal prices for New Hope Corporation Limited (ASX: NHC) and lower TPG Telecom Ltd (ASX: TPG) earnings because of the shift to the NBN. The statutory profit rose after the recognition of the strong TPG share price growth. 

WHSP’s pre-tax net asset value (NAV) fell by 5.3%, outperforming the All Ordinaries Index (ASX: XAO) by 6.9%.

Soul Patts’ dividend is funded by the net cash flows from investments, which rose by 48.8% to $252.3 million. That helped the grow the Soul Patts annual dividend by 3.4% to 60 cents.

The Soul Patts share price hasn’t been the only strong performer. The S&P/ASX 200 Index (ASX: XJO) as a whole has gone up by 4% over the past month, but clearly Soul Patts has outperformed.

Soul Patts has benefited from the recent strength of the Brickworks Limited (ASX: BKW) share price which has risen in response to various stimulus measures in Australia for the construction industry.

It was also recently announced that both Rob Millner and Tom Millner each invested about $1 million into Soul Patts shares on the market at an average price of around $23.74, which is 7.9% lower than the Soul Patts share price right now.

I think that it’s a very good sign when management want to buy shares. If management believe the share price is attractive enough to buy shares then it is probably good enough for regular investors to buy shares as well.

Is it a buy now?

There have been a few developments which should help some of Soul Patts’ subsidiaries, particularly Brickworks. New Hope has also seen a growing share price as coal prices rise. So the price rise is largely justified. 

I strongly believe that Soul Patts is one of the best long-term ASX shares. I don’t think it has the same medium-term profit growth prospects as Altium Limited (ASX: ALU) and Xero Limited (ASX: XRO). But I believe it’s the type of business that you can potentially hold forever thanks to its business model and investment strategy.

The Soul Patts share price has been rising for decades. It has actually been listed since 1903, so it’s one of the oldest businesses in Australia. The benefit of being invested in an ASX share for the long-term is that you don’t activate any capital gains tax events. You don’t want your portfolio’s compounding growth being interrupted by tax if you can help it, unless another opportunity is worth it.

Soul Patts is one of my favourite ASX shares, but I wouldn’t buy it at any price. The recent run up of the price makes me hesitant to buy more for my own portfolio when it’s already a large position (particularly after the gains).

If I didn’t own any Soul Patts shares then I’d be willing to buy a small parcel today and buy more on price weakness. I think that Brickworks still looks a bit cheaper, so I’d buy the building products business for my Soul Patts exposure for now.

I’m looking forward to hearing more about any new investment directions that Soul Patts takes in light of the COVID-19 pandemic and its impacts.

Due to the recent strength of the Soul Patts share price, I’m looking at other share opportunities at the moment.

More reading

• ASX 200 down 0.2%: Big four banks drop, CIMIC jumps, CSL slides lower
• 5 things to watch on the ASX 200 on Friday
• ASX 200 rises 1% again, Zip (ASX:Z1P) soars 8%
• Which ASX ETFs offer the most diversification?
• Here’s why the Soul Patts (ASX:SOL) share price is at a new 52-week high

Tristan Harrison owns shares of Altium and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company 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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