Author: therawinformant

The Afterpay Ltd (ASX: APT) share price has been on a tearing run in recent times.

Shares in the group have edged 1.5% lower in this morning’s trade as the S&P/ASX 200 Index (ASX: XJO) got off to a weak start.

Despite concerns of being overvalued at the start of the year, however, Afterpay’s value has rocketed 167.0% higher in 2020.

That has been music to the ears the buy now, pay later leader’s shareholders. But some have started to question whether or not the Afterpay share price is still good value.

Here are a few reasons why I think Afterpay’s stock can continue to rise in 2021.

Why the Afterpay share price can climb higher

For one thing, the company has shown an ability to maintain a low bad debts expense while growing.

There were concerns that Afterpay’s growth would see a similar rise in write downs and bad debtors. That hasn’t proved to be the case so far with strong technology systems keeping losses low.

I think the addressable market for Afterpay is also still significant. The group now has global operations including in the United States and United Kingdom.

More and more market entrants are trying to carve out a piece of the market. However, Afterpay is a true industry leader with a strong network and significant financial backing.

I think the global market remains a lucrative prospect for Afterpay. Tencent taking a 5 per cent stake in the business will only boost its profile in Asia.

The regulatory environment is starting to look more settled. We’ve seen numerous inquiries that have not restricted Afterpay’s growth in recent years.

If we see a strong economic bounceback from the coronavirus pandemic then I could see the Afterpay share price hitting $100 per share in early 2021.

Foolish takeaway

I think a combination of market opportunity and strong management is the key.

If Afterpay can carve out even a small piece of major international markets then it can be worth more than its current $23 billion.

More reading

• Why the Jumbo (ASX:JIN) share price is moving higher today
• 3 ASX 200 passive investing shares to buy today
• Why ASX oil stock prices are set to slide this morning
• Is the Westpac (ASX:WBC) share price in the buy zone?
• Will the Fortescue (ASX:FMG) share price outperform in 2021?

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

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The BrainChip Holdings Ltd (ASX: BRN) share price has continued its disappointing run and is sinking lower again on Wednesday.

At the time of writing the artificial intelligence technology company’s shares are down 8% to 34 cents.

This means the BrainChip share price is now down a whopping 65% since peaking at a record high of 97 cents just three weeks ago.

Why is the BrainChip share price crashing lower?

This decline appears to be a bit of a reality check for investors after a period of irrational exuberance took its market capitalisation well above $1 billion.

Investors were fighting to get hold of the company’s shares after it announced a collaboration with VORAGO Technologies at the start of September.

This collaboration is intended to support a Phase I NASA program for a neuromorphic processor that meets spaceflight requirements.

Management believes its Akida neuromorphic processor is uniquely suited for spaceflight and aerospace applications due to the device being a complete neural processor and not requiring an external CPU, memory, or Deep Learning Accelerator.

While this collaboration sounds impressive on paper, it is a long way off from getting a thumbs up from the space agency.

As I have mentioned previously, the Phase I program is open to anyone. NASA has invited companies to provide “concept of operations of the research topic, simulations and preliminary results. Early development and delivery of prototype hardware/software is encouraged.”

It is Phase 2 where things would get a little more interesting and a working prototype would be required.

NASA explained: “Phase II deliverables include a working prototype of the proposed product and/or software, along with documentation and tools necessary for NASA to use the product and/or modify and use the software. Hardware products should include both layout and simulation.”

Even then, there’s no guarantee that BrainChip’s product would be selected if it moved onto the second phase. There are other companies with vastly larger budgets attempting to create similar products.

What now?

I would suggest investors stay clear of BrainChip and wait to see how its products develop in the future.

In the meantime, I would recommend investors get exposure to artificial intelligence through an established tech company like Appen Ltd (ASX: APX).  

More reading

• Forget day trading and buy and hold these fantastic ASX shares
• BrainChip (ASX:BRN) and Novonix (NVX) were among the most traded shares on the ASX last week
• Has the BrainChip (ASX:BRN) share price weakness created a buying opportunity?
• Forget BrainChip (ASX:BRN) and buy and hold these outstanding ASX shares
• BrainChip (ASX:BRN) and Afterpay (ASX:APT) were among the most traded shares on the ASX last week

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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For many investors, the idea of active investing is hard to get their minds around. Not only that, but for many it can be a financially dangerous idea. It takes a high level of research and knowledge to consistently pick good S&P/ASX 200 Index (ASX: XJO) shares to invest in. However, there are passive options for investing. In other words, companies that do the investing for you.

These 3 options are among some of Australia’s best investment managers. They all have long track records of achievement and manage a number of the leading funds, ETFs and listed investment companies in the ASX 200 today.

Magellan Financial Group Ltd (ASX: MFG)

Magellan is one of my favourite investment managers and runs some very profitable listed and unlisted equities funds. The company has grown its share price an average of 52.7% every year and has recently announced a 40% stake in a new Australian investment bank, Barrenjoey Capital Partners. Magellan is truly a funds management powerhouse with a bright future and an impressive past. 

This ASX 200 fund manager has a current price to earnings ratio (P/E) of 26.59, and a current trailing 12 month dividend yield of 3.7%. If the company continues to grow at the rate it has done over the past decade it will double any initial investment within 2 years. 

Charter Hall Group (ASX: CHC)

Charter Hall is an ASX 200 company specialising in the real estate sector. It manages a number of real estate investment trusts (REITs) that are very defensive. However, it also delivers high distributions to unit holders. For example, the company owns the Charter Hall Retail REIT (ASX: CQR), specialising in convenience retail in regional or sub regional markets. Another interesting REIT is the Charter Hall Long WALE REIT (ASX: CLW). 

This company also has impressive historical performance. Nevertheless, it is the FY20 performance that captured my attention. It managed to increase its funds under management by 33% during the coronavirus pandemic, which demonstrates good management acumen. 

WAM Capital Limited (ASX: WAM)

Unlike the first two, WAM Capital is an ASX 200 listed investment company (LIC) managed by Wilson Asset Management Pty Ltd. However, it has had a very good track record and is worth including in anything relating to passive investing. 

Since inception in August, 1999 the WAM Capital LIC has beaten its benchmark, the All Ordinaries Total Return Index (ASX: XAOA), by 7.8%. The fund sold down illiquid small caps in February, and took advantage of the March selloff. This included participating in 27 capital raisings with an average gain of 26%.

More reading

• Why ASX oil stock prices are set to slide this morning
• Is the Westpac (ASX:WBC) share price in the buy zone?
• Will the Fortescue (ASX:FMG) share price outperform in 2021?
• Is the WAM Capital (ASX:WAM) 10% dividend yield sustainable?
• 3 reasons to buy Magellan (ASX:MFG) today

Motley Fool contributor Daryl Mather 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 Electro Optic Systems Hldg Ltd (ASX: EOS) share price is surging higher on Wednesday morning following the release of a positive announcement.

At the time of writing the aerospace and defence-focused technology company’s shares are up 7% to $5.94.

This compares to a 0.7% decline by the S&P/ASX 200 Index (ASX: XJO).

What did Electro Optic Systems announce?

Investors have been buying the company’s shares today after it provided an update on the contract negotiations it entered into with the Commonwealth of Australia in July for the acquisition of 251 Remote Weapon Stations and related materiel.

According to today’s release, the company has completed contract negotiations with the government for the aforementioned weapon stations.

The release explains that the contract is valued at over $94 million. Management notes that it will not only enhance Australian Army capability and secure EOS’ supplier base, it will also boost Australian jobs and create opportunities for small businesses.

The contract finalisation includes $28.5 million of cash flow to Electro Optic Systems in the fourth quarter of 2020. This will assist in securing the EOS Australia supply chain, consisting of 146 small businesses and over 1,100 employees.

It also advised that the 251 Remote Weapon Stations will be integrated on to Bushmaster and Hawkei protected mobility vehicles. Forty Remote Weapon Stations are scheduled for delivery in the fourth quarter of 2020, with the remainder to be delivered in 2021.

What are Remote Weapon Stations?

Electro Optic Systems’ offers a wide range of fully stabilised remotely operated weapon stations that can be integrated onto various vehicle platforms and used for different mission profiles.

Its remote weapon systems ensure full weapon readiness while the crew operate the system protected within the vehicle. All its stations have been designed with a high level of commonality and modularity to offer users a flexible firepower solution.

More reading

• ASX 200 falls slightly, miners surge higher
• The Electro Optic (ASX:EOS) share price is climbing today. Here’s why.
• Why now is a good time to buy ASX defence shares
• 3 booming ASX shares for the new space age
• Why the DroneShield (ASX:DRO) share price is up even higher today

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 Electro Optic Systems Holdings Limited. The Motley Fool Australia has recommended Electro Optic Systems Holdings 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 Corporate Travel Management Ltd (ASX: CTD) share price is back on the market today and could be on the move.

What’s been happening in recent days?

Corporate Travel shares haven’t traded since last Friday ahead of an equity capital raising.

The Aussie travel group has successfully raised $262 million via an Institutional Entitlement Offer at $13.85 per share with 90% take-up.

That represents a 14.3% discount to the $16.16 that the Corporate Travel share price closed at on Friday. The travel share will be worth watching as investors process the discount against current valuations.

The funds will be put to work as Corporate Travel announced its latest acquisition. The travel group is set to purchase Omaha, USA-based corporate travel business, Travel & Transport (T&T).

Corporate Travel’s latest target posted calendar-year 2019 total transaction value of US$2.8 billion. The funds raised in recent days will be used for the acquisition, integration of the company and to provide balance sheet flexibility.

What does this mean for the Corporate Travel share price?

Time will tell if the acquisition is a good one for Corporate Travel. The group already has strong offshore earnings and the T&T acquisition could boost this.

But I think it also represents an important turning point. It’s not long ago that the Corporate Travel share price was down 60% to 70% for the year.

However, things change quickly during a global pandemic. CEO Jamie Pherous has declared that Corporate Travel has gone from the hunted to the hunter.

The Aussie travel group believes it has the strength to see out the coronavirus pandemic. The company has now turned its attention to acquisition opportunities with fresh capital.

To me, that confidence is a good sign. Shareholders don’t always love acquisitions but they do like certainty.

If Corporate Travel can continue to execute its strategy with a focus on balance sheet management, I think 2021 could be a good year.

Foolish takeaway

Corporate Travel has shown it is capable of balancing risk and reward in 2020. The company also provided a trading update yesterday and flagged lower earnings in August and July.

I think the Corporate Travel share price will be on the move in early trade as investors process the news.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 ends the day flat, BOQ (ASX:BOQ) shares drop on impairments
• ASX 200 up 0.15%: a2 Milk sinks lower, Bank of Queensland tumbles, CTM’s major acquisition.
• Corporate Travel Management (ASX:CTD) to raise $375m for Travel & Transport acquisition
• Are ASX travel shares like Webjet (ASX:WEB) set to soar?

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management 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 market is poised to open weaker this morning but ASX oil stocks are likely to come under even more pressure.

Futures pricing is tipping a 1% drop in the S&P/ASX 200 Index (Index:^AXJO) on Wednesday on a poor overnight lead from Wall Street.

The 3.3% thumping in the Brent crude price to a two-week low of US$41.03 a barrel will add to the pain for oil-exposed stocks.

ASX oil stock prices on slippery slope

These include the Woodside Petroleum Limited (ASX: WPL) share price, Santos Ltd (ASX: STO) share price, Oil Search Limited (ASX: OSH) share price and Origin Energy Ltd (ASX: ORG) share price – just to name a few.

The oil price is testing the psychologically important 100-day moving average, according to Bloomberg. A break below that could pave the way for the commodity to slip even lower in the near-term.

Short-term pressure on the oil price

The weakness comes as a resurgent wave of new COVID-19 cases dominate headlines. The official global number of deaths from the pandemic exceeds one million and New York is looking like the latest hotspot.

The reintroduction of social restrictions will curtail movement and that means weak oil demand, and this isn’t the only short-term challenge the market’s facing.

There are reports that Russia is likely to pump more than the agreed quota it promised OPEC. Members of the oil cartel will be under pressure to lift supply too to make up for the huge revenue shortfall.

ASX energy stocks are in for a rough ride.

Little good news for medium to long-term outlook

Compounding the near-term gloom are downbeat medium-term forecasts for oil. Three of the world’s largest independent oil traders warn that consumption won’t recover in any meaningful way for at least 18 months, reported Bloomberg.

The dour predictions coincide with modelling that shows the peak in demand for oil is only ten or less years away.

Total SE predicted that the demand peak will come around 2030. Mubadala Investment Company, one of the largest state wealth funds of the United Arab Emirates (UAE), echoed the same conclusion.

Meanwhile, Pierre Andurand, chief investment officer and founder of Andurand Capital Management LLP, believes demand growth will come to an end in 2026.

Decarbonising your investment strategy

The silver lining is that ASX energy stocks are far more exposed to gas than to oil. While gas prices are linked to crude, the energy source is seen as a little more enduring.

This is particularly so as the Morrison government is using gas as a stopgap measure in its transition roadmap towards a greener future.

If you haven’t already started thinking about decarbonising your investment portfolio, you really should.

More reading

• Is the Westpac (ASX:WBC) share price in the buy zone?
• Will the Fortescue (ASX:FMG) share price outperform in 2021?
• 5 things to watch on the ASX 200 on Wednesday
• 2 must-buy ASX 200 shares I rate highly
• 3 ways to protect your ASX share portfolio in a market crash

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. Connect with me on Twitter @brenlau.

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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ASX renewables shares could be hot property next year. According to an article in The Australian Financial Review, renewable energy could lead to strong employment in coming years.

The International Renewable Energy Agency predicts that stimulus for the industry could create a global jobs boom of up to 5.5 million over the next three years.

That could mean global renewable energy jobs grow from 11.5 million to almost 30 million worldwide by 2030.

So, if there is to be a boom, which ASX renewable shares could be set to cash in?

3 ASX renewable energy shares to buy for 2021

The first one I’ve got my eye on is Infigen Energy Ltd (ASX: IFN). The Infigen share price is currently trading near a 52-week high at 92 cents per share.

That might put some people off but I think there could be further growth in store. Infigen is a developer, owner and operator of renewable energy generation assets across Australia. 

The major issue here is that Infigen’s board has recommended a unanimous takeover of the ASX renewable energy share by Iberdrola SA, a Spanish electricity company. That means you may have to look elsewhere for medium-term industry exposure.

That’s where I see Tilt Renewables Ltd (ASX: TLT) come in. The Tilt share price has also had a solid year, climbing 3.3% higher to $3.37 per share.

Tilt is dual-listed in Australia and New Zealand. The ASX renewable energy share has Infratil Ltd (ASX: IFT) as a major shareholder which means it can be hard to get a hold of.

Tilt has eight operational wind farms across Australia and New Zealand. I think that, combined with a strong pipeline, leaves it well placed for any industry boom.

Finally, I think AGL Energy Limited (ASX: AGL) is worth a look. AGL is one of the largest energy ‘gentailers’ (generators and retailers) in Australia.

While it’s far from a pure-play ASX renewable energy share, I do think it has the size and scale to pivot accordingly.

That could make the AGL share price worth a look if we see continued growth in the industry in coming years.

More reading

• 3 reasons I like the AGL Energy (ASX:AGL) share price today
• Why AGL Energy (ASX:AGL) and these ASX shares just hit new lows
• Here’s why some ASX dividend shares just go nowhere
• ASX 200 drops 0.2%, Scentre soars
• Amaysim share price down following FY20 results and divestment announcement

Motley Fool contributor Ken Hall 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 Westpac Banking Corp (ASX: WBC) share price has slumped 29.1% lower in 2020 to $17.16 per share. It’s far from alone as ASX bank shares have been hit hard by the fallout from the coronavirus pandemic. But, the tide could be starting to turn for the Westpac share price. The company has just copped the biggest corporate fine in Australian history for its AUSTRAC breaches.

Despite some uncertainty at the moment, I still think the Westpac share price could be in the buy zone for long-term investors.

Why the Westpac share price could be in the buy zone

For starters, Westpac has now got some certainty around the AUSTRAC penalty. The bank will pay a $1.3 billion fine for the many breaches of anti-money laundering/counter-terrorism financing (AML/CTF) laws.

Obviously that’s not good for shareholders in the short term but it does reduce the unknowns going forward.

Secondly, the Reserve Bank of Australia (RBA) is continuing to inject cash into the economy. That’s increasing liquidity and helping tilt the competitive advantage back towards the big four banks.

The RBA has set up a number of facilities to help keep businesses afloat and maintain lending throughout COVID-19. However, the big four banks like Westpac can afford to lend for low rates and squeeze their competitors like Bendigo and Adelaide Bank Ltd (ASX: BEN).

The Westpac share price has still underperformed the S&P/ASX 200 Index (ASX: XJO). That means many investors will understandably not be bullish on buying right now.

However, I think there could be an opportunity ahead of the bank’s full-year earnings update on 2 November.

The Westpac share price is currently trading at 12.9x earnings with a 10.1% dividend yield. That dividend may well drop on the back of APRA’s recommendation to reduce dividends and the $1.3 billion AUSTRAC fine.

However, I still think the medium to long-term outlook is strong for Westpac. That means I’ll be looking hard at whether or not to add the bank to my portfolio in 2021.

More reading

• Why ASX oil stock prices are set to slide this morning
• Will the Fortescue (ASX:FMG) share price outperform in 2021?
• 5 things to watch on the ASX 200 on Wednesday
• 2 must-buy ASX 200 shares I rate highly
• 3 ways to protect your ASX share portfolio in a market crash

Motley Fool contributor Ken Hall 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 I were buying ASX blue chip shares today, I’d choose the ones I’m going to write about in this article.

There isn’t an official definition of a blue chip. For me, it’s a sizeable business that is a leader in its industry that has been around for a while. It could also be described as a business that can keep doing well in good times or bad.

With that in mind, I think these ASX shares fit the blue chip description:

A2 Milk Company Ltd (ASX: A2M)

A2 Milk one of the leading infant formula brands in the Asia Pacific region. The company has grown strongly over the past five years as it grows its market share and international distribution network. When I think of infant formula, the first brand that comes to mind is A2 Milk.

The A2 Milk share price has fallen 15% this week and it’s down 25% since 18 August 2020.

I think it can be smart to take advantage of short-term problems and temporary share price falls.

Whilst the ASX blue chip share is expecting revenue to fall in the first half of FY21, I strongly believe FY22 and onwards will show pleasing growth. Remember, share prices often move before we learn of the actual earnings.

The USA and Chinese markets look very promising over the longer-term. A2 Milk is still expecting overall revenue growth in FY21, with a revenue range of NZ$1.8 billion to NZ$1.9 billion. That would represent growth of between 4% to 10%, up from NZ$1.73 billion in FY20.

Brickworks Limited (ASX: BKW)

Brickworks is one of the country’s leading building products companies. It’s the national leader for bricks. It also produces and sells a number of other products where it has a good market position. Those other categories include: roofing, precast, masonry and paving.

The ASX blue chip share has been growing for decades as it expands it product range. The joint venture cement terminal, Southern Cross Cement, has just been commissioned and Brickworks owns 33% of this business. Brickworks thinks this joint venture has the lowest cost position and lowest capital invested of all south-east Queensland suppliers.

Brickworks is also the market leader for bricks in the north east of the US after recent acquisitions. The company has closed a plant there, which was part of the plan to improve efficiencies across the US network.

The ASX blue chip share’s profit could benefit strongly from a rebound if COVID-19 impacts subside sooner rather than later.

Brickworks also has strong, reliable investments. It has a 50% stake of a quality industrial property trust which will soon count Coles Group Limited (ASX: COL) and Amazon as tenants. Brickworks also owns around 40% of quality investment house Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). These two assets helped stabilise the Brickworks share price during the crash earlier this year.

Tassal Group Limited (ASX: TGR)

Tassal is fairly small, but it’s the Australian market leader of fish in the country and it has been operating for over 30 years, so I think it can count as an ASX blue chip share.

FY20 was another solid year for the company with revenue rising, operating net profit after tax (NPAT) growing 13.3% and statutory net profit jumping 18.3%.

It wasn’t too long ago that Tassal expanded into the prawn industry. Now it has two fish sectors that it can generate growth with, which is attractive in my opinion. Diversification is a wise idea. 

In FY20 it had a prawn harvest of 2,460 tonnes. In FY21 it’s expecting a prawn harvest volume of 4,000 tonnes.

The Tassal share price hasn’t recovered yet from the COVID-19 crash, it’s still down around 20%. For a growing business, that suggests it could be a good time to buy. As a bonus, it offers a partially franked dividend yield of 5%.

More reading

• 2 outstanding ASX shares to add to your retirement portfolio
• ASX 200 ends the day flat, BOQ (ASX:BOQ) shares drop on impairments
• Leading brokers name 3 ASX shares to sell today
• The latest 3 ASX stocks that brokers just upgraded to “buy”
• ASX 200 up 0.15%: a2 Milk sinks lower, Bank of Queensland tumbles, CTM’s major acquisition.

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of A2 Milk and 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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I think the Fortescue Metals Group Limited (ASX: FMG) share price can outperform in 2021. The Fortescue share price is up 49.9% this year and is streaming ahead of the S&P/ASX 200 Index (ASX: XJO).

That might make some investors wary of buying in, but I think there’s a lot to like right now.

What does Fortescue do?

Fortescue is one of the largest iron ore producers in the world. It’s part of the ‘big four’ alongside BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Brazil-based Vale.

The Aussie mining group recently reported full-year production of 178.2 million wet metric tonnes of iron ore. That saw Fortescue’s revenues increase by 29% to US$12,820 million as net profit after tax jumped 49% to US$4.7 billion.

Why the Fortescue share price can outperform in 2021

I think there’s a lot to like about the Fortescue share price for 2021 and beyond.

Strong iron ore prices are being predicted by not only the market but the federal government. The commodity is reportedly set to underpin the FY21 budget and help pull Australia through a recession.

If that proves to be the case, it would be good news for Fortescue. The Aussie miner has managed to dodge much of the scrutiny faced by the likes of Rio Tinto thus far.

The BHP share price has lagged Fortescue largely due to its petroleum segment struggling thanks to weak oil prices.

I also think Fortescue has the history and tact to manage its relationship with China. China is by far the largest purchaser of Australian iron ore products which makes it a key customer.

There’s also the metrics to support the Fortescue share price being a buy. The Aussie miner’s shares are trading at a price-to-earnings (P/E) ratio of just 7.4x with a 10.9% dividend yield.

BHP shares trade at 16.6x earnings with Rio Tinto at 15.3x, both with lower dividend yields. That to me says that Fortescue shares could outperform and be an option for both dividend and growth investors in 2021.

More reading

• Why ASX oil stock prices are set to slide this morning
• Is the Westpac (ASX:WBC) share price in the buy zone?
• 5 things to watch on the ASX 200 on Wednesday
• 2 must-buy ASX 200 shares I rate highly
• 3 ways to protect your ASX share portfolio in a market crash

Motley Fool contributor Ken Hall 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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