Author: therawinformant

If I were going to buy one ASX share this week it would be technology business Citadel Group Ltd (ASX: CGL).

A quick overview of Citadel

Citadel describes itself as a software and services company. It says that it manages information in complex environments on an anywhere-anytime basis.

It has a variety of different clients and sectors.

Citadel provides software for the public and private health sector for pathology, oncology and anaesthetist billing and practice management. Citadel provides software for all levels of government as well as large enterprise. Education and defence are two other sectors that the company services.

Benefits of Citadel

There are a number of positives about the Citadel business model.

The ASX share is a software business. I think technology is the best industry to be invested in at the moment. It’s the sector that’s delivering a lot of the longer-term growth because of how the world is getting increasingly technological (particularly due to COVID-19).

Once a software business has made the software it’s fairly cheap just to deploy it to the client with little incremental costs.

I like that Citadel has contracts with its clients. Contracts gives Citadel agreed revenue during the course of the contract. One-off revenue could be quite unreliable during this period. 

Many of Citadel’s clients are defensive and lower-risk. Government clients are highly likely to be able to keep paying.

Wellbeing Software acquisition

Six months ago Citadel announced a company-changing acquisition for the ASX share. It announced the acquisition of Wellbeing Software, the UK market leading provider of radiology and maternity software that manages patient workflow and data. There are lots of reasons why this acquisition works so well. 

In the UK, at least one of Wellbeing’s software solutions is used in 81% of NHS Trusts across England. In 2019 in generated £16.6 million of revenue, £10.1 million of gross profit and £6.5 million of earnings before interest, tax, depreciation and amortisation (EBITDA). This year it was predicted to generate £18.7 million of revenue.

The acquisition made Citadel the market leader of radiology and maternity software in the UK with a market share of 59% and 23%. Wellbeing’s retention rate was 99% over the prior three years to the acquisition and the average relationship length was over 10 years for its top 10 customers.

Wellbeing increases the ASX share’s recurring revenue. Steady revenue is very attractive with a software business. Around 70% of Wellbeing’s revenue is recurring and it has an EBITDA margin of close to 40%.

One of the biggest advantages of the acquisition is the ability to cross-sell. Citadel can sell its existing software to Wellbeing’s large client base and it can also sell Wellbeing’s software to Citadel’s client base. It could also sell the entire healthcare software package to new clients and markets.

Why I think Citadel is a buy this week

The ASX share is still lower than it was before the COVID-19 crash. The Citadel share price is 15% lower than the level it was on 21 February 2020.

But I think Citadel looks like a very good buy. One earnings estimate puts Citadel’s earnings per share (EPS) at $0.33 for FY22. That means Citadel is currently trading at just 12x FY22’s estimated earnings.

I’m not sure what the next six or twelve months will bring for the ASX share. A few months ago the company said that there hadn’t been any major COVID-19 effects. I think over the next few years Citadel has plenty of growth potential with its defensive earnings and quality client base.

Citadel also pays a dividend, which is a nice way for shareholders to be rewarded for owning shares whilst they benefit over the long-term from earnings growth. It currently offers a grossed-up dividend yield of 3.9%. I’m not sure what will happen to the ASX share’s dividend this year, but I think it can grow over the longer-term.

More reading

• 3 ASX shares trading at crazy cheap prices
• 2 of the best ASX tech shares to buy and hold until 2025
• Insiders have been buying these ASX shares

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

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The ASX recorded modest gains last week with the S&P/ASX 200 (ASX: XJO) up 2%. With reporting season in full swing, the financial impact of the pandemic is being laid bare in profit and loss statements. Some companies have fared better than expected while others have benefitted from social changes wrought by the pandemic.  

The share market rallied on Friday with resilient results from National Australia Bank Ltd (ASX: NAB) pushing the big banks higher. NAB gained 7.4% last week, while Westpac Banking Corp (ASX: WBC) gained 7.6% and Australia and New Zealand Banking Group Limited (ASX: ANZ) rose 5.6%.  Commonwealth Bank of Australia (ASX: CBA) climbed a comparatively measly 0.3% after revealing an 11.3% decline in cash profits and slashing its dividend during the week. 

Afterpay Ltd (ASX: APT) rose to a new record high of $75.80 during the week, taking its gains since the March low to more than 750%. Mesoblast Limited (ASX: MSB) also hit a record high during the week after an advisory committee voted in favour of granting FDA approval for its treatment for graft versus host disease. On that note, let’s take a look at some of the best performing shares on the ASX last week. 

Phoslock Environmental Technologies Ltd (ASX: PET)

The Phoslock share price gained 20.51% last week to finish the week at 24 cents. The share price was recovering from a steep drop the week before when it fell to 20 cents after revealing a drop in revenues. Phoslock provides a unique water treatment developed by the CSIRO that removes excess phosphate from water. Phosphate is a key nutrient that causes damaging algal blooms. Phoslock’s technology is used to manage unhealthy waterways and promote healthy aquatic environments. 

Phoslock advised that flooding and COVID-19 have impacted on key projects in China and Europe. Nonetheless, Phoslock believes delayed projects will continue in due course and says its pipeline remains strong with a current contract value of $380 million. Many projects have been unaffected by disruptions, including the South Beijing canals. A trial has commenced on an area of Utah Lake in the United States, adding to Phoslock’s strong portfolio of treatments in the region. This provides a positive basis for confidence in developing US activity. 

Lovisa Holdings Ltd (ASX: LOV) 

The Lovisa share price gained 18.23% last week to close the week at $7.33. There was no news out of the fast-fashion jewellery and accessories retailer to prompt the price rise, with full year results due on 26 August. Lovisa has been forced to close 30 stores across Melbourne due to stage 4 COVID-19 restrictions. 19 stores in California and 2 stores in New York are also closed. Investors may be taking heart from the fact that all other Lovisa stores globally are open and trading, in addition to online stores around the world.  

Disruption to normal trading conditions throughout Q4 resulted in a significant reduction in sales for the period. Sales revenue for the full year ended 28 June 2020 was $237 million compared to $249 million in FY19. Comparable store sales for the period between stores reopening and the end of June were down 32.5%, with lowered demand for fashion accessories as people spend more time at home. Nonetheless, the online business was able to deliver 256% growth over the prior year during Q4, with trading websites now operational across most markets the company is represented in. 

Treasury Wine Estates Ltd (ASX: TWE) 

The Treasury Wine Estates share price climbed 17.58% last week to finish the week at $12.84. The share price was boosted on Thursday by the release of better than expected full year results as the company resets for the next phase of its journey. NPAT fell 25% to $315.8 million with earning per share down 26% to 43.9 cents. The result was driven by unfavourable volume and portfolio mixes during 2H FY20 resulting from COVID-19 impacts. Luxury sales were lower due to the closure of key channels and conditions in the US wine market were challenging. 

Treasury Wine declared a final dividend of 8 cents per share. Full year dividends of 28 cents per share were down 26% on the previous year. CEO Tim Ford said, “FY20 was a unique year for TWE, our industry and the markets within which we operate. Our ability to navigate the disruption of the COVID-19 pandemic and continue to deliver profitability and strong cash flow performance is representative of the fundamental strength of our global business.” 

Accent Group Ltd (ASX: AX1) 

The Accent Group share price rose 17.05% last week to close the week at $1.54. There was no news out of the footwear retailer to prompt the price rise, however investors may be buying ahead of expected strong full year results which are due for release on 26 August. Accent Group has advised it expects to report a strong result with FY20 earnings before interest, taxes, depreciation and amortisation (EBITDA) expected to be around 10% above the $108.9 million achieved in FY19. This is particularly impressive given the retailer was forced to close physical stores in Australia and New Zealand during lockdowns. 

Digital sales have surged since the onset of the pandemic, with Accent Group reporting a 150% increase in online sales between April and June. May was a record month for the digital channel with a new daily record of over $2 million during Click Frenzy. This was achieved at the same time as stores were open and trading. In June, digital sales represented 23% of total sales. Accent Group has built digital infrastructure that has ensured record customers and deliveries could be managed with significant capacity and scalability still available. 

CEO Daniel Agostinelli said, “The strong trading performance over the last 2 months driven by digital has been well ahead of expectations. It is clear that there has been a seismic and most likely enduring shift in consumer behaviour. With 18 websites and a leading digital capability Accent Group is capitalising on this trend. We will continue to drive digital growth as the number one priority in our company.”

More reading

• Take a look at last week’s worst performing ASX shares
• 5 things to watch on the ASX 200 on Monday
• Top brokers name 3 ASX shares to buy next week
• 5 things to watch on the ASX 200 next week
• These were the best performing ASX 200 shares last week

Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Accent Group. 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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On Friday the S&P/ASX 200 Index (ASX: XJO) finished a very positive week with a solid gain. The benchmark index rose 0.6% to 6,126.2 points.

Will the market be able to build on this on Monday? Here are five things to watch:

ASX futures pointing lower.

The benchmark ASX 200 looks set to start the week in the red. According to the latest SPI futures, the ASX 200 is poised to open the week 58 points or 0.95% lower on Monday. This follows a reasonably underwhelming finish to the week on Wall Street. On Friday the Dow Jones rose 0.1%, the S&P 500 was flat, and the Nasdaq index fell 0.2%.

Fortescue results, dividend on watch

The Fortescue Metals Group Limited (ASX: FMG) share price will be one to watch this morning when it releases its full year results. Expectations are high for the mining giant after record shipments, improving grades, and the sky-high iron ore price. Last week analysts at Macquarie suggested Fortescue could pay a dividend of ~$1.80 per share for FY 2020. This represents a 10% dividend yield.

Oil prices drop lower.

Energy producers such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) could start the week in the red after oil prices dropped lower. According to Bloomberg, on Friday night the WTI crude oil price fell 0.55% to US$42.01 a barrel and the Brent crude oil price dropped 0.4% to US$44.80 a barrel. Demand fears weighed on prices at the end of the week.

Gold price tumbles lower.

It could be a poor start to the week for gold miners such as Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) on Monday. According to CNBC, the spot gold price fell 1% to US$1,949.80 an ounce on Friday night. This led to the precious metal having its worst week in almost six months.

JB Hi-Fi result

The JB Hi-Fi Limited (ASX: JBH) share price will be on watch today when it releases its full year results. According to a note out of Goldman Sachs, its analysts expect the retailer to report sales of $8,026.6 million. This compares to its guidance of $7,860 million. The broker also expects earnings before interest and tax of $519.6 million for FY 2020. ($502.5 million on a pre-AASB16 basis.)

More reading

• 5 things to watch on the ASX 200 next week
• These were the best performing ASX 200 shares last week
• These were the worst performing ASX 200 shares last week
• ASX 200 rises 0.6%, Mesoblast soars
• Wage growth is plummeting – here are 3 ASX dividend shares to start a second income

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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At the small end of the Australian share market I believe there are a number of companies with the potential to grow materially in the future.

Four that I think have a lot of promise are listed below. Here’s why I think they should be on your watchlist:

Bigtincan Holdings Ltd (ASX: BTH)

Bigtincan is a fast-growing provider of sales enablement software. Sales enablement software provides businesses with the information, content, and tools that help sales teams sell more effectively. The company has experienced very strong demand for its platform in recent years from a number of major companies. These are spread across over 50 countries and a diverse range of industries and sectors.

ELMO Software Ltd (ASX: ELO)

ELMO is a cloud-based human resources and payroll software company. It provides a unified software platform which allows businesses to streamline a range of processes for employee administration, recruitment, learning, remuneration, and payroll. ELMO has a massive opportunity in the ANZ market and the option to expand internationally in the future thanks to its jurisdiction agnostic platform. Another positive is its mountain of cash which management plans to deploy in the near future to acquire complementary businesses.

Mach7 Technologies Ltd (ASX: M7T)

Another small cap to watch is Mach7. It is a medical imaging data management solutions provider. Mach7 uses software to create a clear and complete view of the patient. This software helps to inform diagnosis, reduce care delivery delays and costs, and improve patient outcomes. The company’s total addressable market is estimated to be US$2.75 billion.

Whispir (ASX: WSP)

A final small cap ASX share to watch is Whispir. It is a software-as-a-service communications workflow platform provider which automates interactions between businesses and people. The company has experienced very strong demand for its platform in 2020 and now has more than 500 enterprise clients. These include Disney and the Victorian Department of Health and Human Services. The latter is using the platform to interact with Victorians about coronavirus.

More reading

• These exciting ASX tech shares could be perfect buy and hold options
• Could these exciting ASX shares be future stars?
• These soaring tech shares are making savvy investors rich
• Are these ASX small cap shares heading for big things?
• 2 exciting ASX tech shares to buy and hold till 2025

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 BIGTINCAN FPO, Elmo Software, MACH7 FPO, and Whispir Ltd. The Motley Fool Australia has recommended BIGTINCAN FPO, Elmo Software, MACH7 FPO, and Whispir Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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There certainly are a large number of growth shares for investors to choose from on the ASX.

Three which I think are among the best the local market has on offer are named below. Here’s why I would buy them:

Appen Ltd (ASX: APX)

The first growth share I would buy is Appen. It is a leading developer of high-quality, human annotated datasets for machine learning and artificial intelligence (AI). Appen prepares the data for the models of some of the world’s biggest tech companies such as Microsoft and Facebook. It has also previously worked with Apple on its Siri virtual assistant. I feel this is a testament to the quality of its service, which bodes well for the future. Especially given the growing importance of AI and machine learning for big businesses and the billions and billions of dollars being invested in the space. 

NEXTDC Ltd (ASX: NXT)

Another top option for growth investors to consider is this innovative data centre-as-a-service provider. NEXTDC has been experiencing increasing demand for its centres in recent years thanks to the rise of cloud computing. So much so, the company’s customer numbers have grown at a compound annual growth rate (CAGR) of 21% over the last 4 years. Importantly, at the same time, its customers are using more and more services. Over the same period, its interconnections have grown at a CAGR of 31%. This has been driven by the increasing use of hybrid cloud and connectivity inside and outside its data centres due to customers expanding their ecosystems. Given that the shift to the cloud is continuing to accelerate, I believe NEXTDC is well-positioned to deliver strong earnings growth over the next decade. 

Xero Limited (ASX: XRO)

A final ASX growth share I would buy is Xero. The leading global provider of cloud-based business and accounting software is one of my favourite growth shares. This is due to its very positive long term outlook which is being underpinned by the shift to cloud-based solutions. This is supporting strong demand for its high quality and sticky platform, which is generating growing recurring revenues. Pleasingly, although the pandemic has hit small and medium sized businesses hard, it hasn’t stopped Xero from increasing its subscriber numbers. Since the start of April and through to 31 July, Xero recorded 96,000 net subscriber additions to its platform. This lifted its subscribers to a total of 2.38 million at the end of the period.

More reading

• How to turn $20,000 into $900,000 in 5 years with ASX shares
• Ryder share price rises 7% on strong full year report
• 2 important investing lessons you might have forgotten
• Brokers name 3 ASX shares to buy right now
• Why Baby Bunting, Evolution, Mesoblast, & Xero shares are zooming higher

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

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There’s a lot of speculation that Telstra Corporation Ltd (ASX: TLS) may have to cut its dividend in FY 2021 due to the impact of the pandemic on its earnings.

While I’m optimistic that a shift to a free cash flow-based dividend policy would allow for it to be maintained, there is no certainty that it will do this.

In light of this, I understand why some income investors are staying clear of Telstra right now.

If you would prefer to invest in dividend shares that are likely to grow in FY 2021, then you might want to consider the two listed below. Here’s why I like them:

Coles Group Ltd (ASX: COL)

The first ASX dividend share to consider buying is Coles. I think the supermarket giant is well-positioned for growth over the coming years thanks to its defensive qualities, expansion opportunities, and its long track record of same store sales growth. In respect to the latter, Coles has used its strong market position to deliver 50 consecutive quarters of same store sales growth.

And while it may struggle to outperform the third quarter panic buying of FY 2020 when it cycles it, I’m confident its future growth will still be very positive. Another positive is its focus on cost cutting and automation. This should support its margins and ultimately its earnings and dividend growth over the coming years. For now, based on the current Coles share price, I estimate that it offers investors a fully franked ~3.2% FY 2021 dividend.

Rural Funds Group (ASX: RFF)

Another ASX dividend share to buy is Rural Funds. I think the agriculture-focused property group is in a great position to continue growing its distribution at a solid rate over the next decade. This is thanks to its high quality portfolio of assets that are spread across several different industries. These include cattle, wine, and almond production. 

A big positive in my eyes is Rural Funds’ long term tenancy agreements. At the last count its weighted average lease expiry was ~11 years. And with rental increase built into these contracts, I feel its long term distribution growth looks very secure. This certainly looks to be the case for FY 2021, with management intending to grow its distribution by 4% to 11.28 cents per share. Based on the latest Rural Funds share price, this equates to a 5.2% yield.

More reading

• Top brokers name 3 ASX shares to buy next week
• 4 ASX shares to profit from booming ecommerce
• Important takeaways from the Telstra analyst call
• Telstra and 2 more ASX dividend shares I like in August
• Why I would buy Woolworths and this ASX share for a retirement portfolio

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED and 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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Is the Vanguard MSCI Index International Shares ETF (ASX: VGS) the best long-term investment?

A quick overview of Vanguard

Vanguard is one of the world’s leading providers of exchange-traded funds (ETFs). It aims to provide investment options at a low cost. The benefit of lower investment costs is that it increases the net returns for investors. Fees are one of the main factors that cause some fund managers’ net returns to be lower than the index over time. Not only do fund managers charge annual management fees but they also charge performance fees when they outperform.

The benefit of investing in an ETF is that you can invest in many businesses (or other assets) through a single investment. It’s simple and easy investing. 

Vanguard MSCI Index International Shares ETF

The aim of this particular ETF is to provide exposure to many of the world’s largest companies listed in major developed countries outside of Australia.

Holdings

The ETF is actually invested in around 1,550 holdings. That’s excellent diversification considering all of the quality companies that it’s invested in.

I’m sure you’ve heard of many, if not all, of its largest holdings: Apple, Microsoft, Amazon, Alphabet, Facebook, Johnson & Johnson, Nestle, Visa, Proctor & Gamble and JPMorgan Chase & Co.

It also owns plenty of other big, quality businesses you’ve probably heard of like Mastercard, Berkshire Hathaway, Nvidia, Paypal, Netflix, Adobe, Tesla, Walt Disney, Intel, Bank of America, Coca Cola, PepsiCo, Walmart, McDonalds and so on.

As you can tell from many of the names mentioned, US-listed businesses makes up the majority of this ETF. Indeed, the US makes up just over two thirds of Vanguard MSCI Index International Shares ETF.

But just because they’re listed in the US doesn’t mean the underlying earnings are from the US. Apple sells phones across the world. Facebook and Alphabet’s Google advertise across the world. Many of the holdings are truly global businesses.

In terms of industry diversification, I think it has an attractive allocation across different sectors. Around 22% is invested in IT businesses. It’s attractive to have the biggest allocation here because technology is the sector that’s delivering the most growth.

Other sectors that get an allocation of more than 10% are: healthcare, financials, consumer discretionary and industrials.

Fees

Vanguard charges an annual management fee of 0.18% per annum for Vanguard MSCI Index International Shares ETF.

That fee is a lot cheaper than most Australian fund managers that invest into overseas shares. However, it’s not the cheapest ETF out there. For example, Vanguard U.S. Total Market Shares Index ETF (ASX: VTS) has an annual management fee of just 0.03%. Fees are important, but it should be the net returns that should be the most important factor.

Returns

Vanguard MSCI Index International Shares ETF has suffered from the COVID-19 selloff. Industries like banks and airlines are still a long way below their peaks.

Over the past three years the ETF has returned an average of 11.7% per annum and over the past five years it has returned an average of 8.2% per annum. Not bad, but there have been other ETFs that have done a lot better.

Is Vanguard MSCI Index International Shares ETF a buy today?

The Australian dollar has strengthened against the US dollar, so it’s a better time to buy this ETF than in prior months considering over two thirds of the ETF is made up of US shares.

I think it’s the type of ETF that you could own as your only investment for your whole life. It’s very diversified, has low costs, it has a decent starting dividend yield of 2.25% and is likely to generate reasonable long-term capital growth.

If ETF investing was my focus then I’d be happy to invest in the ETF today. However, I’d also be interested in looking into BetaShares Global Quality Leaders ETF (ASX: QLTY) or Betashares Global Sustainability Leaders ETF (ASX: ETHI).

More reading

• Is now a good time to buy Magellan shares?
• 3 quality ASX shares for a beginner’s share portfolio
• These ASX ETFs could generate strong long term returns
• How to become a millionaire with ASX shares starting with $0
• Where to invest $3,000 in ASX shares right now

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF. 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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Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were bearish.

Three sell ratings that caught my eye are summarised below. Here’s why top brokers think investors ought to sell these shares next week:

Magellan Financial Group Ltd (ASX: MFG)

According to a note out of Morgan Stanley, its analysts have retained their underweight rating but lifted their price target on this fund manager’s shares slightly to $48.00. Although Magellan delivered a result largely in line with expectations and is looking to broaden its offering with new product launches, it isn’t enough for a change in rating. Morgan Stanley continues to believe that its shares are expensive in comparison to its global peers. The Magellan share price ended the week at $65.36.

Sonic Healthcare Limited (ASX: SHL)

Analysts at UBS have retained their sell rating and $28.00 price target on this healthcare company’s shares ahead of its full year results. According to the note, the broker expects Sonic Healthcare to deliver solid top line growth, but a 7% decline in earnings in FY 2020. And while it looks set to benefit from strong COVID-19 testing demand, it fears this may be offset by weakness in other areas. In light of this, it feels its shares are fully valued and retains its sell rating. Sonic Healthcare’s shares last traded at $34.03.

WiseTech Global Ltd (ASX: WTC)

A note out of Citi reveals that its analysts have downgraded this logistics solutions company’s shares to a sell rating with a reduced price target of $18.40. The broker made the move after revising its earnings estimates lower to reflect the challenging economic environment and slowing M&A activity. It expects this to weigh on its revenue growth in the near term. The WiseTech share price ended the week at $19.93.

More reading

• My favourite 3 ASX share reports of the week
• Is now a good time to buy Magellan shares?
• ASX 200 drifts 0.1% lower, CBA reports solid FY20 result
• Why the Magellan share price might be a post-earnings buy today
• Earnings season: Magellan share price climbs higher after positive annual report

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of WiseTech Global. The Motley Fool Australia has recommended Sonic Healthcare 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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Last week saw a large number of broker notes hitting the wires once again. Three buy ratings that caught my eye are summarised below.

Here’s why brokers think investors ought to buy them next week:

A2 Milk Company Ltd (ASX: A2M)

A note out of UBS reveals that its analysts have retained their buy rating and NZ$22.00 (A$20.25) price target on this fresh milk and infant formula company’s shares. According to the note, UBS believes a2 Milk could outperform the market’s expectations when it releases its results this month. It notes that demand for its infant formula has been particularly strong on Chinese ecommerce platforms. I think UBS is spot on and a2 Milk shares would be great long term options for investors.

Coles Group Ltd (ASX: COL)

Analysts at Citi have retained their buy rating and put a price target of $21.40 on this supermarket operator’s shares. According to the note, the broker believes that Coles is benefiting from very positive trading conditions. As a result, it expects the company to have a strong first half to FY 2021. In addition to this, although its shares trade at a premium to the market average, the broker believes this is deserved because of its defensive qualities and the stability of its earnings and dividend. I agree with Citi and would be a buyer of Coles shares.

Treasury Wine Estates Ltd (ASX: TWE)

According to a note out of the Macquarie equities desk, its analysts have upgraded this wine company’s shares to an outperform rating with a $14.90 price target. The broker made the move after Treasury Wine delivered a full year result in line with expectations. It was also pleased with its costs cutting plans and news that Chinese sales were rebounding. The latter gives the broker confidence in Treasury Wine’s medium term growth prospects. I think Macquarie makes some good points and it could be worth considering.

More reading

• 5 things to watch on the ASX 200 next week
• How to turn $20,000 into $900,000 in 5 years with ASX shares
• These were the best performing ASX 200 shares last week
• Why today is a great day to add to your ASX share portfolio
• Is the Charter Hall share price a buy, post-earnings?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates 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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