Author: therawinformant

Benjamin Graham is not someone you hear being talked about with the same reverence as the legendary Warren Buffett. Yet Mr Graham is regarded as one of the greatest investors of all time, and the father of value investing. He was even Mr Buffett’s teacher and mentor for a time. Today, despite the fact Ben Graham died in 1976, Buffett still speaks very highly of him and cites his foundational work Security Analysis as one of the greatest books on investing ever written, even though it was penned back in 1934.

I have to admit, I haven’t read Security Analysis in full, although I have devoured a few of the seminal chapters.

A quote for the ages

But there is one of Benjamin Graham’s quotes that I think stands out above the rest. It’s a quote that I think all investors who want to build wealth through the share market should know, and even more importantly, understand. It goes like this:

The market is not a weighing machine, on which the value of each issue is recorded by an exact and impersonal mechanism, in accordance with its specific qualities. Rather should we say that the market is a voting machine, whereon countless individuals register choices which are the product partly of reason and partly of emotion. Hence the prices of common stocks are not carefully thought out computations, but the resultants of a welter of human reactions.

So perceptive was this quote, Buffett himself used a version of it in his 1993 letter to the shareholders of Berkshire Hathaway Inc (NYSE:BRK.A)(NYSE: BRK.B):

As Ben Graham said: ‘In the short-run, the market is a voting machine — reflecting a voter-registration test that requires only money, not intelligence or emotional stability — but in the long run, the market is a weighing machine.’

Ballots and scales

So what is it about this quote that makes it so helpful for ordinary investors like you or me? Well, I think the answer is perspective. It tells us what is happening on the markets on any given day — voting. It’s voting that has pushed up the Afterpay Ltd (ASX: APT) share price by 150% in 2020 so far. It’s voting that has condemned AMP Limited (ASX: AMP) to lose a third of its market capitalisation this year. And it’s voting that caused the American initial public offering (IPO) of Snowflake Inc (NYSE: SNOW) to spectacularly double last week. Over time, these moves will be ‘weighed’ by the market, and if they were based on fundamentals, the market will hold them true.

This quote helps us understand that it’s ok to ignore this ‘voting’ or noise and let the market do what it does best — weighing. As long as you buy good quality companies, and hang around long enough, the market will reward you for your patience. There might be some bumps, drops, corrections and crashes along the way. But if you make sound investing decisions and hold your nerve, Graham’s wisdom tells us things will normally work out in our favour. 

More reading

• Warren Buffett’s 3 best-performing stocks so far this year: Are they buys now?
• ASX 200 Weekly Wrap: ASX 200 snaps 4 week losing streak… just
• Aussies trading this US share 5700% more than Uber
• The Snowflake (NYSE:SNOW) share price is up 90% in two days
• Overwhelming demand made Warren Buffett-backed Snowflake the biggest software IPO ever

Sebastian Bowen 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 Berkshire Hathaway (B shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Snowflake Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares) and short January 2021 $200 puts on Berkshire Hathaway (B shares). The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Berkshire Hathaway (B shares). 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 Sezzle Inc (ASX: SZL) share price will be one to watch this morning after the release of an update.

What did Sezzle announce?

This morning the buy now pay later provider announced that it has formed a business partnership with Ally Lending.

It is the B2B2C lending arm of Ally Bank, the banking subsidiary of Ally Financial (NYSE: ALLY). Ally Financial is a leading digital financial services company with US$184.1 billion in assets.

Ally Lending enables monthly fixed-rate instalment-loan products that extend up to 60 months in length and US$40,000 per instalment plan through a fully digital application process.

What is the partnership?

According to the release, the partnership between Ally Lending and Sezzle will give Sezzle merchants and shoppers access to long term financing options.

Management believes this complements its existing short-term, interest-free offering, without adding any balance sheet impact to Sezzle.

Sezzle’s Executive Chairman and CEO, Charlie Youakim, commented: “Our collaboration with Ally Lending enhances our customer financing offerings, making it possible for consumers to better manage their finances. Ally’s dedication to its customers and commitment to innovation aligns with our own vision and culture – making this partnership a good fit for us.”

Ally Lending’s President, Hans Zandhuis, was pleased with the partnership and appears confident it will help consumers and businesses through the tough economic environment.

Mr Zandhuis commented: “We empathize with the economic situation millions of Americans now face. We’re proud to partner with Sezzle to offer budget-friendly, responsible financing options, so consumers can feel more secure when making the purchases they need.”

With the Sezzle share price down 45% from the 52-week high it reached less than a month ago, investors will no doubt be hopeful this news is the catalyst to recovering some of these declines.

More reading

• The Sezzle (ASX:SZL) share price is up 15% this week
• How an ASX share turns $100 into $1,000
• Why the Sezzle share price is zooming 8% higher today
• BNPL shares like Afterpay (ASX:APT) and Zip (ASX:Z1P) are soaring today. Here’s why
• The Sezzle (ASX:SZL) share price has now fallen 45% in 2 weeks as air continues to go out of the BNPL sector

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia has recommended Sezzle Inc. 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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Yesterday, the S&P/ASX 200 Index (ASX: XJO) made it 2 for 2 in terms of losses for this week so far, recording a 0.66% loss to end the day at 5,784 points. Since reaching a post-March high of 6,148 points on 10 June, the ASX 200 is now down 5.9% from those highs and at a 3-month low. If we keep going in this general direction, the ASX 200 might be looking at official ‘correction’ territory (a correction is normally defined as a 10% drop from the most recent high).

Things seem to be going that way too. The ASX 200 has been in a general downtrend for around a month now. The 6,000 point threshold that I previously described as a ‘rut’ the ASX 200 was stuck in has now been decisively broken. So, is this a healthy correction for ASX 200 shares, or might we be heading for a full-blown market crash (a fall of 20%+) and a new bear market?

ASX 200 shares: Correction or crash?

Corrections and crashes are rather nonsensical terms. It doesn’t really matter a whole lot to anyone if a ‘dip’ is 9.9% or 10%. Yet we give them different names anyway.

Regardless of the terminology, times like this can be scary for all of us investors. Seeing weeks or months worth of gains wiped out is never nice. It’s even less enjoyable to contemplate ASX 200 shares going back to anywhere near the levels they were in March and April.

Still, the moves we have been seeing recently were almost inevitable, in my view. The coronavirus pandemic is unfortunately still rampant, damaging confidence and running a wrecking ball through both the Australian and global economies. Budget deficits continue to climb to extraordinary and unprecedented levels, whilst the economic recovery in Australia is still struggling to get off the ground. We heard this week that Britain might be on the brink of going back into coronavirus lockdown, which has caused UK shares to plummet this week as well.

Add to that extraordinary tensions over in the United States leading up to November’s presidential election, exacerbated by the recent death of US Supreme Court Justice Ruth Bader Ginsburg, and we have a melting pot of uncertainty.

How to invest in this new world

So how does one possibly make long-term investments in this scary world right now? Well, I think the best path is to ignore the noise and focus on the companies you already own or plan to buy. It doesn’t mean much to Woolworths Group Ltd (ASX: WOW) for example, if the ASX 200 falls 1% on one day, what happens in Britain or how the US presidential election goes. If I owned Woolies shares, I would be thinking about how it plans to grow and thrive in a post-COVID world. Same for Afterpay Ltd (ASX: APT), Telstra Corporation Ltd (ASX: TLS) or any other company.

I’m still keeping more cash than usual around in case markets do happen to take a big tumble in the next few months. But I’m also trying not to let the noise of the markets get in the way of keeping the long term firmly in focus. That’s an attitude I think all ASX investors can employ as well, regardless of whether what we are seeing this week becomes a correction or a crash…. or not much at all.

More reading

• Why the Xero (ASX:XRO) share price can hit $100 again in 2020
• Is the Coles (ASX:COL) share price a buy after renewable energy deal?
• Why Mesoblast (ASX:MSB) and this ASX 200 share have doubled in value in 2020
• 5 things to watch on the ASX 200 on Wednesday
• The next ASX stock to be rocked by board shakeup after Rio Tinto (ASX:RIO)

Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO and Woolworths 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 Coles Group Ltd (ASX: COL) share price is one to watch after the Aussie supermarket group announced a new 10-year renewable energy deal.

What’s this renewable energy deal all about?

Coles has signed a new deal that will see more than 90% of its electricity needs in Queensland come from clean energy sources. The deal, announced with CleanCo yesterday, comes into play from July 2022.

Coles will purchase 400 gigawatt hours (GWh) of electricity generated from wind and solar farms across Queensland. That includes power from the Western Downs Green Power Hub which is set to become Australia’s largest solar farm once completed.

The announcement, made by Coles yesterday, will reduce Coles’ electricity carbon dioxide emissions nationally by an estimated 20%, or 240,000 tonnes per year.

Crucially, Coles’ involvement will also secure the development of these key energy projects and create 800 local jobs in Queensland.

This follows similar renewable energy commitments from rivals Woolworths Group Ltd (ASX: WOW) and Aldi.

Woolworths raised $400 million to install solar panels across its stores in 2019 with more than 140 stores getting their energy from those panels.

Aldi announced in August 2020 that it plans to use 100% renewable energy in its Australian operations by the end of 2021.

What does this mean for the Coles share price?

I think there are a couple of potential implications for the Coles share price.

For one thing, the Aussie company looks like a genuine environmental, sustainability and governance (ESG) investment. The more that Coles invests in renewable energy and cuts CO2 emissions, the more ESG investors could look to buy.

That would be a good thing for the Coles share price with more potential demand. There’s also the potential for the supermarket giant to slash its electricity costs and reduce operating expenses.

That could flow through to the company’s earnings and its bottom line. Higher net income could see higher earnings per share which is also a good thing for investors.

Foolish takeaway

Apart from being a great outcome for environmental reasons, yesterday’s announcement could have some important implications for the Coles share price.

More reading

• Why Mesoblast (ASX:MSB) and this ASX 200 share have doubled in value in 2020
• 5 things to watch on the ASX 200 on Wednesday
• Forget term deposits and buy Coles (ASX:COL) and this ASX dividend share
• The next ASX stock to be rocked by board shakeup after Rio Tinto (ASX:RIO)
• ASX 200 falls 0.7%, UK and travel shares drop

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths 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 Kathmandu Holdings Ltd (ASX: KMD) share price will be on watch this morning following the release of the retailer’s first full year results since its transformative acquisition of the Rip Curl business.

How did Kathmandu perform in FY 2020?

For the 12 months ending 31 July 2020, Kathmandu reported a 48.7% increase in sales to NZ$801.5 million. This was driven by a nine-month contribution from the Rip Curl business and strong online sales growth. The latter was up 63% over the 12 months to NZ$106.4 million.

Kathmandu’s sales would have been notably stronger had it not been for the coronavirus pandemic. Management estimates the COVID-19 impact to its sales to be ~NZ$135 million. This comprises NZ$80 million retail and NZ$55 million wholesale.

On an underlying basis, Kathmandu’s earnings before interest, tax, depreciation and amortisation (EBITDA) came in 15.3% lower to NZ$83.4 million. This excludes the impact of IFRS 16 and one-off transaction and abnormal costs.

Statutory net profit after tax was down sharply to NZ$8.9 million. However, this includes NZ$18 million of one-off transaction costs, NZ$4.6 million of restructuring costs, and a NZ$2.6 million impact from the implementation of the IFRS 16 leasing standard.

In light of this profit decline, the company will not be paying a final dividend.

“A transformational year.”

The company’s CEO, Xavier Simonet, notes that FY 2020 was a transformational year for Kathmandu.

He said: “It has been a transformational year for us with the acquisition of Rip Curl and we are pleased with its integration into the Group over the last nine months. Unfortunately the Group faced significant unexpected challenges with COVID-19 restrictions and lockdowns.”

“We took decisive action early to reduce costs, adjust the operating structure of the business, and raised $207 million of equity. These initiatives have resulted in a strong balance sheet and healthy inventory level, which position us well for the future,” he added.

Despite the challenges, Mr Simonet was pleased with the way the company was able to adjust to the new normal thanks to its omni-channel strategy.  

He explained: “Our omni-channel strategy and infrastructure capacity allowed us to rapidly scale up to meet the surge in online demand from March. In addition, following the easing of lockdown restrictions, we saw retail sales for Rip Curl and Kathmandu perform strongly in our core markets of Australasia, Europe and California, as consumers trended towards outdoor and recreation activities. Both Rip Curl and Kathmandu also enjoyed an exceptional post-lockdown winter sales performance in Australia and New Zealand.”

Outlook.

The company has had a mixed start to FY 2021 due to the COVID-19 pandemic.

Management advised that its performance has been impacted during the first seven weeks of FY 2021 due to Melbourne, Auckland, Hawaii, Bali, and airport store closures. This has led to a mixed same store sales performance over the period.

Though, it feels confident that demand will return to normal in these markets when stores reopen.

Mr Simonet commented: “Despite the challenges posed by COVID-19, the business remains strong financially and operationally. The balance sheet was significantly strengthened by the recent equity raise, our brands are well-positioned to capitalise on increased participation in outdoor, beach and surfing activities following the end of the lockdowns, and our investment into omni-channel capabilities allows us to quickly respond to shifts in consumer habits and strong growth in online demand.”

“Beyond the short-term impacts from lockdowns, our long-term strategy remains unchanged. Product innovation, brand differentiation, a key focus on sustainability, and a step change in digital transformation, will enable us to continue answering the needs of our customers and also inspiring them,” he concluded.

More reading

• Is the Coles (ASX:COL) share price a buy after renewable energy deal?
• 3 reasons I like the AGL Energy (ASX:AGL) share price today
• Why Mesoblast (ASX:MSB) and this ASX 200 share have doubled in value in 2020
• 2 stunning ASX growth shares to buy and hold
• 4 ASX shares rated as strong buys by brokers

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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AGL Energy Limited (ASX: AGL) shares have had a disappointing year. The AGL share price is down 32.9% this year and at a new 52-week low as the coronavirus pandemic has hammered industry revenues.

However, I still think the ASX energy share is in the buy zone at a certain price. Here are 3 reasons I like the AGL share price right now.

3 reasons I like the AGL share price

1. Non-cyclical earnings

One big reason I like ASX energy shares like AGL is for their non-cyclical earnings. Of course, times are tough right now but I see that as more of a function of pandemic restrictions than the business cycle.

Demand for energy is generally quite stable as households and businesses need to keep the lights on. It may be hard to see right now, but I like the AGL share price due to the non-cyclical earnings on offer.

2. Market position

AGL is one of the three big energy generators and retailers or ‘gentailers’ in Australia. The other two rivals are EnergyAustralia and Origin Energy Ltd (ASX: ORG).

These ‘big three’ hold immense market share and have historically controlled more than 60% of electricity generation capacity in New South Wales, South Australia and Victoria.

That means the AGL share price is underpinned by a very strong market position. Regulation is always a threat given the oligopoly-like market dynamics right now.

However, I think AGL will continue to be an industry leader. That puts it in a strong position to lead the charge on any changes like a push towards wind or solar.

3. Relative value

While on the subject of competitors, I like AGL based on its relative value.

The AGL share price currently trades at a price to earnings (P/E) ratio of 8.7x. That’s been pushed lower during the recent share price falls in 2020.

However, you’d expect to see the same across the board. That’s not entirely the case despite the Origin Energy share price falling 46.9% in 2020.

The Origin share price trades at a P/E ratio of 95.5x which could indicate that AGL is a good buy compared to its peers.

Foolish takeaway

The AGL share price has slumped lower and underperformed the S&P/ASX 200 Index (ASX: XJO) this year.

However, the ASX energy share could be moving into the buy zone in late 2020 after hitting a new 52-week low in yesterday’s trade.

More reading

• 5 ASX shares to avoid in October
• Why AGL Energy (ASX:AGL) and these ASX shares just hit new lows
• These were the worst performing ASX 200 shares last week
• 3 ASX shares that are trading at bargain prices
• Saudi oil price cut to hit ASX shares

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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I think it is fair to say that it has been a year to forget for the S&P/ASX 200 Index (ASX: XJO).

Since the start of the year, the benchmark index has lost 13.5% of its value.

The good news is that not all shares on the index have dropped lower this year. In fact, a couple of shares are not only beating the market, they have more than doubled in value in 2020.

Here’s why they are on fire this year:

Afterpay Ltd (ASX: APT)

The Afterpay share price is the best performer on the ASX 200 in 2020 with a whopping 161% gain. Impressively, this is despite the buy now pay later provider’s shares trading 20% lower than their 52-week high.

The catalyst for this strong gain has been the rapid growth in customer and underlying sales numbers during the pandemic. This has been driven by an acceleration in the shift to online shopping and the growing popularity of the payment method with consumers and merchants. Also getting investors excited is its expansion plans. Afterpay recently revealed plans to enter the European market and also has its eyes on the Asian market.

Mesoblast limited (ASX: MSB)

The Mesoblast share price is up 141% since the start of the year. Investors have been buying this biotechnology company’s shares due to positive developments relating to its remestemcel-L product candidate. Remestemcel-L is being developed as a treatment for paediatric steroid-resistance acute graft versus host disease (paediatric SR-aGvHD).

In August the company had a meeting with the Oncologic Drugs Advisory Committee (ODAC) of the U.S. FDA to discuss remestemcel-L as a potential treatment for paediatric SR-aGvHD. Pleasingly, after some initial doubts, the ODAC was supportive of remestemcel-L and gave it the thumbs up. While this doesn’t guarantee FDA approval, it’s a huge step forward. In addition to this, there is excitement around the company’s trials of remestemcel-L in ventilator-dependent COVID-19 patients with acute respiratory distress syndrome. Phase 3 trials are currently underway in Australia and the United States.

More reading

• Is the Coles (ASX:COL) share price a buy after renewable energy deal?
• 2 stunning ASX growth shares to buy and hold
• 5 things to watch on the ASX 200 on Wednesday
• The next ASX stock to be rocked by board shakeup after Rio Tinto (ASX:RIO)
• ASX 200 falls 0.7%, UK and travel shares drop

Motley Fool contributor James Mickleboro 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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Are you looking for growth shares that you can buy and hold? Then you might want to consider the two listed below.

I believe both have the potential to grow very strongly over the next decade and could provide market-beating returns for investors.

Here’s why I would buy these stunning ASX growth shares:

Afterpay Ltd (ASX: APT)

The first growth share I would buy is Afterpay. I think the buy now pay later giant would be a quality long term option thanks to its leading position in an industry growing rapidly. More and more consumers, particularly younger ones, are turning away from credit cards in favour of buy now pay later products. And while this has unsurprisingly led to increasing competition in the industry, I believe Afterpay’s first-mover advantage and strong brand have given it an almost unassailable lead. 

Another positive is that despite Afterpay’s incredible growth over the last few years, it is still barely even scratching at the surface of its overall market opportunity. The company has a $5 trillion opportunity in the United States market and has recently announced plans to expand into Europe and test the waters in Asia. If everything goes to plan, I believe Afterpay has the potential to become a giant of the payments industry in the future.

Appen Ltd (ASX: APX)

Another stunning ASX growth share that I would buy is Appen. It is the global leader in the development of high-quality, human-annotated training data for machine learning and artificial intelligence. It has over 1 million crowd-sourced workers globally collecting and labelling high volumes of image, text, speech, audio, and video data. This data is then used to build and improve artificial intelligence models.

Artificial intelligence is arguably the next big thing in technology. Unsurprisingly, this means that billions and billions of dollars are being invested into the space by businesses and governments. This bodes very well for Appen, given its leadership position in its field. As a result, I believe it is perfectly positioned to continue growing its earnings at a strong rate long into the future.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Is the Afterpay (ASX: APT) share price a buy? 
• Where to invest your BHP (ASX:BHP) dividends
• BrainChip (ASX:BRN) and Afterpay (ASX:APT) were among the most traded shares on the ASX last week
• ASX 200 down 0.9%: Tech shares push higher, gold miners sink, New Hope results

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 Altium. The Motley Fool Australia owns shares of and has recommended PUSHPAY FPO NZX. 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 four ASX shares I’m going to mention in this article are rated as ‘buys’ by several brokers.

It’s quite hard to find businesses that are both good businesses and trading at a good price. Even then, one person might say Commonwealth Bank of Australia (ASX: CBA) is a better choice and another could say that Transurban Group (ASX: TCL) is the right one.

Investment site MarketIndex regularly collates the ratings of brokers together to assess what the broker community collectively think are opportunities. Of course, this still isn’t a guarantee of success – they could all be herding together.

With that in mind, here are four ASX shares that brokers like:

Crown Resorts Ltd (ASX: CWN)

Crown is rated as a buy by at least nine analysts. It’s the owner and operator of two large casino entertainment complexes in Melbourne and Perth, with the Sydney complex currently under construction.

The casino business has been heavily affected by COVID-19. There have been lockdowns in Victoria which have severely hurt earnings. Even when Melbourne opens up again, there could still be a problem with international visitors being limited. That could mean VIPs won’t be able to make it back to the gaming tables of the ASX share for some time.

However, the Crown share price is still down almost 25% from the price it was at on 21 February 2020. So thid presents better value for investors to buy for the long-term. Crown Sydney is getting close to being finished too, which will be useful for its cashflow and long term earning power.

At the current Crown share price, it’s priced at 17x FY22’s estimated earnings.

Aristocrat Leisure Limited (ASX: ALL)

Aristocrat is a gambling machine and gaming business. There are at least 12 analysts who think that Aristocrat is a buy.

The ASX share was being affected by COVID-19 impacts as operators were closed for social distancing reasons. However, many of the locations are now open for business.

The Aristocrat share price has soared 89% higher since the low on 23 March 2020.

In the recent FY20 half-year result to 31 March 2020, the company said normalised net profit was down 14.2% to $305.9 million.

Thankfully the business had been investing in its digital offerings which can partially offset any lost activity because of COVID-19 restrictions.

At the current Aristocrat share price it’s trading at 18x FY22’s estimated earnings.

Star Entertainment Group Ltd (ASX: SGR)

Star is in a similar situation to Crown, although it doesn’t operate in a fully locked-down state like Crown Melbourne is. It’s rated as a buy by at least 12 analysts.

The ASX share has also been affected by COVID-19 and it saw its earnings fall heavily in the last few months of FY20. Statutory profit before significant items was down 91.9% to $18 million and including those significant items it reported a net loss of $95 million.

When the casino operator reported its result it gave a trading update for the first half of FY21. July domestic gaming revenue was around 80% of the level of the prior corresponding period, with margins similar to the prior corresponding period excluding jobkeeper. Star said it was materially cash flow positive after investments in July, enabling debt reduction.

The Star share price is down 29% since the pre-COVID-19 crash price. It’s currently trading at 17x FY22’s estimated earnings.

Brickworks Limited (ASX: BKW)

Brickworks is rated as a buy by at least six analysts.

The building products business could be one of the most promising industrial ASX shares right now. Construction has been hit by COVID-19 impacts, particularly with demand being hurt during the worst COVID-19 months.

I think that construction demand will return in 2021 as Australia exits the problems that COVID-19 has caused. Hopefully the US can also get through this COVID-19 period and that Brickworks’ US division can return to full activity sooner rather than later.

I like Brickworks other assets. Those assets are: a large position in investment house Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) and a 50% stake of an industrial property trust along with Goodman Group (ASX: GMG). They are defensive and generate reliable cashflow for Brickworks.

At the current Brickworks share price it’s priced at under 11x FY21’s estimated earnings.

More reading

• 3 ASX dividend shares to buy for 2021
• Macquarie says ASX value shares will outperform growth stocks from here
• Two ASX infrastructure shares to buy before the October budget
• ASX shares to buy for post COVID-19 profits
• Why everyone should have Brickworks (ASX:BKW) and 1 other ASX share

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On Tuesday the S&P/ASX 200 Index (ASX: XJO) was out of form again and dropped to a three-month low. The benchmark index fell 0.65% to 5,784.1 points.

Will the market be able to bounce back from this on Wednesday? Here are five things to watch:

ASX 200 futures pointing higher.

The ASX 200 index is expected to bounce back strongly on Wednesday. According to the latest SPI futures, the benchmark index is poised to storm 61 points or 1.06% higher at the open. This follows a very positive night of trade on Wall Street which saw the Dow Jones rise 0.5%, the S&P 500 climb 1.05%, and the Nasdaq index race 1.7% higher.

Tech share recovery to continue.

Australian tech shares such as Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO) look set to continue their recovery on Wednesday after the tech-focused Nasdaq index stormed higher overnight. The highlight on the Nasdaq was arguably the Amazon share price, which surged almost 6% higher. Investors appear to believe the tech rout is now over.

Oil prices rebound slightly.

It could be a better day of trade for energy producers such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) after oil prices rebounded from Monday night’s sizeable declines. According to Bloomberg, the WTI crude oil price is up 0.6% to US$39.55 a barrel and the Brent crude oil price has risen 0.6% to US$41.70 a barrel. Demand concerns have weighed on prices this week.

Gold price drops lower.

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) will be on watch this morning after the gold price softened further. According to CNBC, the spot gold price has fallen 0.3% to US$1,905.00 an ounce. The precious metal came under pressure after the U.S. dollar strengthened again.

News Corp given conviction buy rating.

The News Corp (ASX: NWS) share price could be heading a lot higher from here according to analysts at Goldman Sachs. They have reaffirmed their conviction buy rating and $26.70 price target on the media company’s shares. Goldman notes that News Corp has a constructive earnings outlook and plenty of valuation upside within its portfolio.

More reading

• 2 stunning ASX growth shares to buy and hold
• The next ASX stock to be rocked by board shakeup after Rio Tinto (ASX:RIO)
• ASX 200 falls 0.7%, UK and travel shares drop
• Telstra (ASX:TLS) share price is one of the latest ASX buy ideas from brokers
• Is the Afterpay (ASX: APT) share price 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 Xero. 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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