Author: therawinformant

The Atomos Ltd (ASX: AMS) share price is up 27.4% since Friday’s closing bell. That far outpaces the 1.2% gain for the All Ordinaries Index (ASX: XAO) over that same time.

The global software and hardware technology company’s share price was savaged by the COVID-19 market selloff in February and March. From 25 February to its low on 19 March, the Atomos share price plunged 75%.

Since that low, Atomos shares have gained an impressive 80%. Although that’s not nearly enough to recoup its losses earlier in 2020. Year-to-date, the Atomos share price is still down 61%.

At its current share price of 54 cents per share, Atomos has a market cap of $117 million.

What does Atomos do?

Atomos is an Australian-based software and hardware technology company. It develops and markets products involved with video monitoring, processing and recording technologies.

Atomos was founded in 2010 after it created the world’s first video monitor-recorder. This enabled users to alter the quality of the editing and production output of their video camera at a lower cost. Today Atomos works with some of the biggest names of technology providers including Apple, Adobe, Sony, Canon, JVC Kenwood, Nikon, FUJIFILM and Panasonic.

What’s driving Atomos’ huge weekly share price gain?

Atomos released a business trading update on 30 July. While that saw the Atomos share price jump 5.6% higher on the day, it lost ground heading into last Friday, falling 12.5% from 31 July to 7 August.

There was no specific news out of Atomos that would drive its 28% share price rise this week. I expect investors are realising the shares may have been oversold earlier this year. That’s particularly relevant with the rapid rise of video streaming as much of the world shifts to working, shopping and socialising from home during the pandemic lockdowns.

In its 30 July update, Atomos did cite that the video market in July had started to open up and was showing positive signs. There may well be other positive signs emerging in the market that warrant this week’s share price gains.

The Atomos share price is likely also benefitting from the broader rally in technology shares. Overnight the tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) closed up 2.1%, less than 1% off its record high set last week.

More reading

• Atomos share price surges 5% despite 17% revenue slump

Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Atomos Ltd. 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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Although the market has bounced back strongly from its March low, a number of popular shares are still trading materially lower than their 52-week highs.

Two beaten down ASX shares which I think investors ought to consider buying are listed below. Here’s why they could prove to be bargain buys:

IDP Education Ltd (ASX: IEL)

The IDP Education share price has been sold off in 2020 and is down 45.7% from its 52-week high. As a leading provider of international student placement services and English language testing services, IDP Education’s business has been impacted greatly by the pandemic. While this is likely to lead to very soft results in FY 2020 and FY 2021, I expect the company to bounce back strongly once conditions return to normal.

Especially given how surveys on prospective students suggest that plans to continue pursuing a higher level of education remains the case for the majority of students. This deferral of volumes is expected to result in a build-up of the student pipeline when markets reopen. And with such a strong balance sheet following its equity raising, IDP Education looks better positioned than most to navigate these tough trading conditions.

Jumbo Interactive (ASX: JIN)

The Jumbo share price is down a massive 58% from its 52-week high. The online lottery ticket seller and operator of the Oz Lotteries website has come under pressure over the last 12 months due to its slowing growth and amended reseller agreement with Tabcorp Holdings Limited (ASX: TAH).

The slowdown in its growth is due management’s focus on investing in its growth. And the Tabcorp agreement may be on less favourable terms, but provides a lot of stability and allows management to focus on the international expansion of its Powered by Jumbo SaaS business. This business has enormous potential and is looking to win a slice of the US$303 billion global lottery market. Management notes that just 7% of this market is online at the moment, but is likely to make the shift in the future.

More reading

• Why I would buy ResMed and these ASX growth shares
• 3 mid cap ASX shares that could generate strong long term returns
• Leading brokers name 3 ASX shares to buy today
• 5 things to watch on the ASX 200 on Monday
• 3 stellar mid cap ASX shares to 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 Idp Education Pty Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive 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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On Wednesday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three ASX shares that have just been given sell ratings by brokers are listed below.

Here’s why these brokers are bearish on them:

Commonwealth Bank of Australia (ASX: CBA)

According to a note out of Morgan Stanley, its analysts have retained their underperform rating and cut the price target on this banking giant’s shares to $62.00. This follows the release of a full year result which fell a touch short of Morgan Stanley’s expectations. And while it was pleasantly surprised by its credit quality, it remains concerned that this could deteriorate. In addition to this, the broker suspects that APRA could continue to place restrictions on dividend payments in 2021. In light of this, it continues to believe its shares are overvalued at the current level. The CBA share price is trading at $72.45 this afternoon.

Computershare Limited (ASX: CPU)

A note out of Citi reveals that its analysts have retained their sell rating and $12.00 price target on this share registry company’s shares following its results release. Although its result was in line with expectations, the broker believes its outlook remains weak due to a number of headwinds in the UK and United States. As a result, it holds firm with its sell rating. The Computershare share price is changing hands for $13.10 on Thursday.

Transurban Group (ASX: TCL)

Analysts at Credit Suisse have retained their underperform rating but lifted the price target on this toll road operator’s shares to $12.60. According to the note, Transurban’s full year result fell short of its forecasts due to weak toll prices and soft traffic volumes. Unfortunately for shareholders, the broker expects it to be a few years until Transurban’s dividend recovers to previous levels. Because of this and the tough trading conditions it is facing, it appears to believe its shares are overvalued at the current level. The Transurban share price is trading at $13.41 this afternoon.

More reading

• Telstra just announced its dividend! Are Telstra shares now a buy?
• Why AGL, Breville, CBA, & Telstra shares are dropping lower today
• ASX 200 drifts 0.1% lower, CBA reports solid FY20 result
• How did the CBA FY 2020 result compare with expectations?
• Fund managers have been buying these ASX shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban 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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The Osprey Medical Inc (ASX: OSP) share price is today surging higher after it was announced that the company has received European CE Marking approval for its core European product.

At the time of writing, the Osprey Medical share price is up 8.57% to 3.8 cents.

What Osprey Medical does

Osprey Medical aims to make heart imaging procedures safer for patients with poor kidney function. The company’s core technologies originated from research conducted by Dr David Kaye at Melbourne’s Baker Institute. Its proprietary dye reduction and monitoring technologies are designed to help physicians minimise dye usage and monitor the dose levels of dye real time throughout the procedure.

Osprey’s flagship product is its DyeVert system. The company recently announced a strategic alliance with US giant GE Healthcare to distribute the product.

What does the approval mean?

The CE Marking approval for its DyeVert Power XT device means the product can now be marketed and sold across Europe. Europe is a core market for Osprey and a significant player in the global power injector market. The DyeVert Power XT device is expected to form a core product in the portfolio that is being commercialised by GE Healthcare.

Osprey Medical president and CEO, Mike McCormick commented: “We are delighted to have received CE Mark approval for our Power XT device.”

“The approval was a critical building block in our European roll-out and the timing is perfect, following the strategic alliance formed with GE Healthcare in July,” he added.

Clinical and operations update

In addition to the CE market approval, an important peer-reviewed manuscript was published by Dr Carlo Briguori. This study further validates the effectiveness of Osprey’s DyeVert technology at improving patient outcomes and lowering hospital cost.

The Osprey Medical share price was also driven higher following an update on the partnership with GE Healthcare. Osprey has confirmed the agreement is expected to contribute materially to Osprey’s revenue over the 4-year contracted period. The deal also aids increased diversification for the company as it adds to the company’s sales outside the US. Under the agreement, Osprey’s products will be distributed across Europe, Russia, the Middle East, Africa, Central Asia and Turkey.

Foolish takeaway

The Osprey Medical share price has been on a tear since the announcement of its agreement with GE Healthcare and is currently up 280% since its lows in late July. However, the company is still suffering at the hands of COVID-19 and seeing material declines in sales revenues. Despite this, Osprey is still poised for growth, as the deal is forecast to add 40% in revenue by 2024.

More reading

• Osprey Medical inks new deal with GE Healthcare

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

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The De Gray Mining Limited (ASX: DEG) share price bolted more than 11% this morning after the company released promising drilling results.

What were the results?

Earlier today De Gray Mining provided the market with a drilling update from the Aquila and Crow Zones at the company’s Hemi Gold Discovery.

Drilling results from the Aquila Zone reported minimisation extending to 400 vertical meters. Additional highlights included;

• 39m @ 1.3g/t Au from 389.0m including 8m @ 2.8g/t from 415m in
• 10.2m @ 2.5g/t Au from 254.0m in HERC111D
• 5.0m @ 3.3g/t Au from 407.7m in HERC105D
• 6.0m @ 1.7g/t Au from 268.0m in HERC110D
• 2.0m @ 7.1g/t Au from 211.0m in HERC100D

RC Drilling results from the Crow Zone identified a new lode, with mineralisation identified to over 400 meters. Additional highlights from the zone included;

• 6m @ 2g/t Au from 41m in HERC202, and 16m @ 1.5g/t Au from 72m and 23m @ 2.8g/t Au from 95m (incl 3m @ 8.9g/t Au from 104m)
• 9m @ 3.9g/t Au from 138m in HERC207 (incl 2m @ 14.7g/t Au from 138m)
• 4m @ 4.1g/t Au from 420.0m in HERC111D, and 6.0m @ 1.9g/t Au from 445.0m

De Gray’s management noted that the Hemi Gold Discovery site continues build, with encouraging results from the Aquila and Crow Zones.

More on De Gray Mining

De Gray is a mining company based in Western Australia that focuses on gold exploration and development activities. The company has 100% ownership of the Mallina Gold Project in the Pilbara region which is also the site of the Hemi Gold Project.

The Hemi Project is made up of zones including Aquila, Brolga, Brolga South and Crow. In late April, De Gray completed a $31.2 million capital raising to fund the ongoing exploration of the Hemi Project.

In response, the De Gray Mining share price has rallied more than 200% since late April, with the company has also benefiting from the surging spot gold price.

Foolish Takeaway

The De Gray Mining share price is trading more than 8% higher at the time of writing at around 78 cents. The company’s shares have been sold-down slightly after hitting an intra-day high of 82 cents earlier today.

More reading

• De Gray Mining share price lifts on strong results
• De Grey share price rising following mine extensions
• Azure Minerals share price rockets 24% on acquisition news
• Why De Grey, Openpay, Woodside, & Zip shares are dropping lower

Motley Fool contributor Nikhil Gangaram 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 AMP Limited (ASX: AMP) share price surged to a high of more than 11% this morning despite the wealth manager announcing a 42% plunge in profits.

Underlying profit fell to $149 million in 1H20, down from $256 million in 1H19, due to the impacts of the coronavirus pandemic. 

COVID-19 bites into AMP earnings

AMP reported that earnings across its businesses were affected by COVID-19. The Australian wealth management business saw a 42.7% decline in earnings as funds flowed out of the business thanks to the Government’s early release of superannuation scheme. 

Cash outflows were $4.4 billion during the half, with the exit of some corporate superannuation mandates also impacting cash flow by $1.3 billion. Assets under management decreased by 10%, reflecting the impact of COVID-19 on investment markets.

AMP Bank earnings dropped 29.6% with a credit loss provision of $24 million to manage potential mortgage defaults related to COVID-19. During the half, the bank continued to grow its mortgage book and retail deposits despite the uncertainty and strong competition. The residential mortgage book increased 2.9% to $20.5 billion.

AMP says credit quality remains strong with mortgages in arrears representing 0.78% of the mortgage book.

Earnings fell 40% in the AMP Capital business which saw a reduction in sponsor capital valuations and transaction fees. A 39% decline in performance and transaction fees was reported due to the slowdown in transaction activity during the pandemic. 

Capital position and dividend

AMP remains well-capitalised with $1.4 billion in surplus capital above target requirements. As a result, the company has announced a series of capital management initiatives to return $544 million to shareholders.

$344 million will be returned via a special dividend of 10 cents a share, fully franked. Up to $200 million will be returned via an on-market share buy-back. This indicates the wealth manager considers its shares good value, which may account for today’s share price increase. Nonetheless, AMP said that following the payment of the special dividend, it did not expect to declare a final FY20 dividend. 

What’s next for AMP earnings? 

Following the sale of its AMP Life business, AMP is focused on delivering transformational strategy and navigating the current uncertain economic environment.

CEO Francesco De Ferrari said, “We expect conditions to remain challenging. However, we also see opportunities emerging over the longer term as we transform AMP to be a simpler client-led and growth-oriented business.” 

More reading

• ASX down 0.55%: Telstra maintains its dividend, Treasury Wine shoots higher, AMP’s special dividend
• Why AMP, Premier Investments, QBE, & Treasury Wine shares are storming higher
• Top brokers name 3 ASX shares to sell today
• Why you should buy ASX shares in this resilient market
• AMP and 2 other ASX 200 shares to watch this week

Motley Fool contributor Kate O’Brien 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 tech rally is dead!

Long live the tech rally!

In an article I penned yesterday, I shared 3 of my favourite Warren Buffett investing adages. I won’t rehash all of that today.

But part of one of Buffett’s investing pearls is that you should think long-term, and ignore the ups and downs. That’s great advice. Not only will you sleep better, you’ll almost certainly make more money in the share market over time.

What got me thinking about this particular Buffett mantra was an article in Bloomberg yesterday. One which wholly ignored this advice, and may well have scared some trigger-happy investors into selling their shares in big technology companies like Facebook, Inc. (NASDAQ: FB) and Amazon.com, Inc. (NASDAQ: AMZN).

Here’s the relevant excerpt from the Bloomberg article:

An oddity is occurring as the stock market grinds back to an all-time high: Big tech is getting left behind.

A risk-on rotation rippling across markets has the tech-heavy Nasdaq 100 flirting with a third straight loss — which would be its longest slide since March…

Risking hypocrisy…

At risk of hypocrisy by focusing on the daily moves here, I can’t help but point out that yesterday (overnight Aussie time) the NASDAQ-100 (INDEXNASDAQ: NDX) gained 2.6%. That puts the Nasdaq 100 — comprised of the 100 largest companies on the broader tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) — less than 1% below last Thursday’s all-time high.

And some of the biggest of the big tech shares led the way. Amazon’s share price gained 2.7%. And Facebook’s share price closed up 1.5%.

Perhaps the biggest story in the big tech space is Tesla Inc (NASDAQ: TSLA).

Following its announcement for a planned five-for-one stock split, the Tesla share price rocketed 13.1% by Wednesday’s closing bell in US markets. In after-hours trading, Tesla shares are up another 0.7% at time of writing. And this is a company with a US$290 billion (AU$406 billion) market cap we’re talking about.

Year-to-date, the Tesla share price is up 261%. And if you’d bought Tesla shares back on 2 July 2010 you’d be sitting on a gain of 7,998%.

Pity the short sellers!

ASX tech share prices soaring

It’s not just the US tech companies seeing their share prices rocket.

Australia’s leading tech shares leapt out of the starting gate this morning, continuing their march higher.

Now obviously not every ASX tech share is seeing its share price rocket. But a look at this morning’s performance of the BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC) gives us a good indication of how the sector is performing.

And with ATEC’s share price up 1.3% at the time of writing, it looks to be doing quite well.

If you’re not familiar with ATEC, the exchange traded fund (ETF) holds some of Australia’s largest tech companies. It only recently began trading on the ASX, launching on 6 March. You’re probably aware that wasn’t the best time to launch a new ETF, as the broader market was in freefall at the time. And indeed, ATEC’s share price fell 34% by 23 March.

Reflecting the strength of the Australian tech companies it holds, ATEC’s share price is up 86% since its 23 March low. That’s easily enough to cover its losses from its first few weeks, with the share price now up 22% since its inception.

That’s the broader market.

Now let’s focus in on one of the ASX’s shining tech stars. Namely, Whispir (ASX: WSP).

Whispir is a software-as-a-service (SaaS) company. It provides a communications workflow platform for businesses to automate their interactions with customers and other stakeholders. A service that’s clearly seen booming demand in the age of social distancing and remote working.

In intraday trading, the Whispir share price is up 3.8%. Year-to-date the share price is up more than 160%. And that comes despite its precipitous share price plunge of 56% from 21 February though 23 March. If you were lucky enough to buy shares on 23 March, by the way, you’d be sitting on a gain of 472% today.

Whispir’s sky-high potential wasn’t lost on the Motley Fool’s own Anirban Mahanti. He recommended members of his Extreme Opportunities service buy shares of Whispir back on 11 September 2019, less than 3 months after it started trading on the ASX.

Members who followed Anirban’s advice and bought shares at $1.41 would, at time of writing, be sitting on a gain of 186%. That is if they kept their focus on the long-term and didn’t join in the panic selling in February and March.

With all the recent share price gains in technology shares, you’ll hear some bears saying they couldn’t possibly go much higher. But then the bears have been saying that for years.

So long as you’ve got a longer-term investment horizon, I believe there should be far more share price gains to be had in Australian and international tech shares.

More reading

• Stock split watch: Could Amazon be next?
• Is BetaShares Australia 200 ETF the best ASX ETF?
• ASX investors have been buying these international shares
• Tesla plans five-for-one stock split
• Why Tesla stock jumped 32.5% in July

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Bernd Struben 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 Amazon, Facebook, Tesla, and Whispir Ltd and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia has recommended Amazon, Facebook, 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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The Fiji Kava Ltd (ASX: FIJ) share price soared 89.66% higher this morning to reach an intraday high of 16.5 cents. This came before the Fiji Kava share price pulled back to 12.5 cents and was placed in a trading pause, pending a further announcement. The commotion resulted from the company’s announcement it has signed a major agreement with BioCeuticals, a company owned by Blackmores Limited (ASX: BKL).

Fiji Kava produces natural ‘noble kava’ products for the complementary and alternative medicine market which is estimated to exceed US$210 billion by 2026 globally. It is focused on providing an alternative to prescription medications to promote sleep, soothe and calm the nerves, support muscle relaxation and relax the mind. The products are Theapeutic Goods Administration (TGA) and Food and Drug Administration (FDA) compliant.

Major agreement highlights

Fiji Kava has announced a non-exclusive licence agreement with BioCeuticals to develop a co-branded product for release in Australia and New Zealand. It will see BioCeuticals use the noble kava extract for its AnxioCalm product. AnxioCalm is a herbal medicine to support symptomatic relief of mild anxiety, tension and stress.

In addition, AnxioCalm products will be co-branded with Fiji Kava’s ‘Authentic Fiji Kava’ trademark on each product sold. It will be made available through BioCeuticals’ extensive network of qualified healthcare practitioners across Australia and New Zealand.

The agreement follows progress being made on Fiji Kava’s commercial strategy to grow the availability of its Fijian noble kava. It now has cornerstone retail agreements with Coles Group Ltd (ASX: COL) supermarkets in Australia, Green Cross Pharmacy in New Zealand and has also expanded its eCommerce presence on Amazon.com in the United States. Additionally, it is exploring opportunities to access Chinese marketplaces.

Fiji Kava will supply BioCeuticals with noble kava via its agreement with Pathway International.

CEO comments

Understandably, Fiji Kava founder and CEO, Zane Yoshida, was pleased and said:

“This is another milestone for the company that will not only increase the availability of our noble kava in Australia and New Zealand, but is another strong endorsement by a leading healthcare provider of the quality and uniqueness of our Fijian noble kava…

Fiji Kava will continue to scale-up its production in Fiji to produce required inventory to meet the growing demand from the BioCeuticals licence agreement and other recent business development advancements such as ranging in Coles Supermarkets nationally”.

About the Fiji Kava share price

Before the pause in trade, the Fiji Kava share price was trading at 12.5 cents, representing a 43.68% increase in today’s trade. It has a market capitalisation of around $12 million.

More reading

• Brokers have upgraded 3 ASX shares to the buy zone. Here’s why
• Coles shares vs Woolworths shares. Which is a better buy?
• 2 safe and strong ASX dividend shares to buy during the COVID-19 crisis
• Top ASX dividend shares to buy in August 2020
• Why the Coles share price just hit a new record high

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Matthew Donald 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 Amazon and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia owns shares of and has recommended Blackmores Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool Australia has recommended Amazon. 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 profit reporting run has barely begun but ASX coal and energy stocks are already facing a new challenge in the upcoming AGM season.

A group of more than 100 shareholders in Whitehaven Coal Ltd (ASX: WHC) have filed a resolution to get the miner to shutter its business, reported the Australian Broadcasting Corporation (ABC).

The group, which is led by activist shareholder Market Forces, will put the question to Whitehaven shareholders at the miner’s next annual general meeting.

It wants management to close down its operations and return the capital to shareholders.

Resolution for revolution

The Whitehaven share price is already under considerable pressure from the COVID-19 fallout and is trading close to a four-year low.

While no one expects the resolution to pass with a majority vote (not even Market Forces), it doesn’t have to to get the desired effect.

By persistently putting the question of climate change in front of the company, management will have to think more deeply about this issue.

Threat to coal assets

Activist shareholders argue that there is a risk that Whitehaven’s assets will be worth little as “stranded assets”. These are assets that no one wants as the world moves away from fossil fuel.

Whitehaven dismisses the risk and have pointed out that their coal is primarily used in steel production.

Australia must love steel as we’ve built the country on the back of iron ore exports like the likes of Rio Tinto Limited (ASX: RIO) and BHP Group Ltd (ASX: BHP).

Coal indispensable to iron ore?

You need carbon to make steel and the carbon comes from coal. But some experts point out that there are available technologies to manufacture steel without coal.

The debate over the risk of stranded assets wont’ be settled at Whitehaven’s AGM. But this won’t stop Market Forces from lodging similar motions with New Hope Corporation Limited (ASX: NHC), Beach Energy Ltd (ASX: BPT) and Cooper Energy Ltd. (ASX: COE).

New Hope is a coal miner, while the other two are oil and gas companies.

Fossil fuel risks growing

Activist shareholders are unlikely to stop with there. They are plotting their move on the industry titans like Woodside Petroleum Limited (ASX: WPL) and Santos Ltd (ASX: STO).

ASX energy companies are already under pressure from the global recession triggered by COVID-19. Demand for oil have plunged due to the partial shutdown of major economies to control the outbreak.

This is forcing energy giants to announce large asset write downs. These aren’t quite stranded assets just yet, but it’s hard to see what can break the industry out of the entrenched downtrend.

More reading

• 5 things to watch on the ASX 200 on Thursday
• The BHP share price is up 10% in a month: Is it too late to invest?
• 5 things to watch on the ASX 200 on Wednesday
• Broker sees top returns for iron ore miners BHP and Rio
• Has the ASX 200 finally taken off?

Motley Fool contributor Brendon Lau owns shares of BHP Billiton Limited and Rio Tinto Ltd. 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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With reporting season in full swing, Australia’s leading broker houses are exceptionally busy. Many have updated their analysis coverage on blue-chip ASX companies ahead of full-year FY20 results.

Three brokers are bullish on these 3 ASX shares in particular. Here’s why.

Appen Ltd (ASX: APX)

UBS has placed a price target of $41 and a ‘buy’ rating on the tech darling, suggesting a 10% upside on the current price of $36.22 at the time of writing. Its previous target was as low as $32 for the company.

The broker is optimistic about the outlook of the AI industry generally. It sees Appen’s recent hiring activity as a positive indication of progress in its North American business development.

It was also buoyed by the news from Appen’s previous earnings guidance that it was stepping up investment in its supply chains. UBS sees the company’s continuation of this aggressive investment strategy throughout COVID-19 as a strong sign of high confidence.

The UBS broker forecasts earnings per share of 66.5 cents for FY20, and a further upscale of 92.5 cents in FY21 alongside an increased dividend.

Appen will report full-year performance on 27 August, but having reached a record high share price of $38.47 last month, I expect this ASX share to continue to outperform.

Downer EDI Limited (ASX: DOW) 

Having reported a statutory net loss after tax of $150 million in FY20 as part of yesterday’s full-year results, Credit Suisse still believes the jack of all trades contractor will outperform moving forward.

According to the broker, Downer’s FY20 results didn’t contain any surprises in terms of operating income and net profit. And Credit Suisse is impressed by the company’s urban services operations and exposure to government contract work for FY21.

A target price of $4.70 was placed on the ASX share, with an FY21 dividend yield of approximately 4.5% and earnings per share of 30 cents expected over the next 12 months.

Downer’s shares are trading at $4.30 at the time of writing, suggesting a 10% upside based upon the broker’s forecast.

Coles Group (ASX: COL)

Citi has placed a target price for the supermarket giant of $21.40, representing a 13% increase from its current share price of just a nudge under $19.

The broker sees Coles as a ‘buy’, spurred by buoyant trading conditions for the grocery business that it believes will continue for at least the next 6 months.

In addition to the high likelihood of elevated sales growth, Citi asserts that the earnings and dividend stability of Coles is a major tailwind for the company.

Coles will announce results for the full FY20 year on 18 August, but the broker expects an FY21 dividend yield of 3.2% and a 5% growth of earnings per share over the 12 months to 72 cents.

More reading

• Coles shares vs Woolworths shares. Which is a better buy?
• 2 safe and strong ASX dividend shares to buy during the COVID-19 crisis
• Is BetaShares Australia 200 ETF the best ASX ETF?
• Whatever happened to WAAAX shares?
• 3 stellar ASX tech shares to buy for the long term

Motley Fool contributor Toby Thomas owns shares of Appen Ltd and Downer EDI Ltd. The Motley Fool Australia owns shares of Appen Ltd 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.

The post Brokers have upgraded 3 ASX shares to the buy zone. Here’s why appeared first on Motley Fool Australia.

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