Author: therawinformant

In morning trade on Friday the Super Retail Group Ltd (ASX: SUL) share price is storming higher. This follows the release of an update on its expectations for FY 2020.

At the time of writing the retailer’s shares are up 12% to $9.07.

How did Super Retail perform in FY 2020?

Super Retail revealed that its sales rebounded strongly during final quarter following the easing of COVID-19 restrictions.

Following a 26.2% decline in monthly like-for-like sales in April, monthly like-for-like sales increased by 26.5% in May. Pleasingly, this positive trading momentum continued in June with an increase in monthly like-for-like sales of 27.7% compared to the prior corresponding period.

As a result, Super Retail recorded like-for-like sales growth of 3.6% and total sales growth of 4.2% in FY 2020. Total revenue is expected to be approximately $2.82 billion.

What were the drivers of its sales growth?

The Supercheap Auto business was the star of the show in FY 2020. It recorded a 6.3% increase in like-for-like sales and a 7.6% jump in total sales.

This was supported by its Rebel business, which delivered like-for-like sales growth of 2.7% and a 3.3% increase in total sales.

Also performing positively was the BCF business. It delivered 3% like-for-like sales growth and a 4% lift in total sales.

Management advised that these businesses benefited from a significant uplift in domestic tourism and travel, personal fitness, and outdoor leisure activities.

However, not all of Super Retail’s businesses performed as positively. The Macpac business was out of form and recorded a 9.1% decline in like-for-like sales and a 5% reduction in total sales.

What about its earnings?

Super Retail expects its pro forma segment earnings before interest, tax, depreciation, and amortisation (EBITDA) to be between $327 million and $328 million in FY 2020. This compares to FY 2019’s segment EBITDA of $315 million.

Whereas pro forma segment earnings before interest and tax (EBIT) is expected to be between $235 million and $236 million. This will be an increase from $228 million in FY 2019.

And on the bottom line, pro forma normalised net profit after tax is expected to be between $153 million and $154 million. This compares to FY 2019’s net profit after tax of $153 million.

Management advised that these pro forma figures exclude one-off pre-tax abnormal items of approximately $54 million. These items include the remediation of team member underpayments, the exit of certain non-core businesses, support office restructure costs, and the accelerated write down of certain assets.

Super Retail Group CEO and Managing Director Anthony Heraghty said: “Given the volatile trading environment, we are very pleased with these results.”

“The Group’s omni-retail channel business strategy has enabled our businesses to adapt quickly to changing consumer behaviour during COVID-19 and delivered a resilient trading performance. We look forward to updating the market with further detail on our 2019/20 financial results at our full year results presentation,” he concluded.

More reading

• Should you buy ASX retail shares in July?
• What the latest economic data could mean for ASX 200 shares
• Is the Super Retail share price cheap today?
• ASX 200 down 0.5%: Sydney Airport and South32 updates, HUB24 delivers record Q4
• Why outperforming ASX retail stocks could be running out of puff

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

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Altium Limited (ASX: ALU) is a top ASX tech share.

The Altium share price has edged 3.2% lower this year but remains up 638.4% in the last 5 years.

There’s no doubt the coronavirus pandemic has hurt the company’s valuation. Investors were spooked in March with demand and supply-side concerns.

Altium is set to report its full-year result on Monday 17 August. But does that mean now is your last chance to snap up this top ‘WAAAX’ share for a cheap price?

Why the Altium share price could be good value

I can’t think of an earnings season with as much uncertainty as the one ahead.

Much of the February results are now rendered irrelevant by the pandemic. That means ASX share prices could be more dislocated than ever.

I think the fluctuating AUD–USD exchange rate could also be a factor. Altium has significant US earnings, which means the impact on the August full-year result is worth watching.

Altium’s 14 July trading update gave me some confidence ahead of August. The company achieved a record 17% growth in its subscription base with over 50,000 subscribers. Revenue growth came in at 10% to US$189 million despite the pandemic.

What about the long-term outlook?

The long-term thesis for Altium does remain largely intact, in my view. Altium wants to be a leader and innovator in the printed circuit board (PCB) industry.

I think it has a strong competitive advantage and a high-quality product. The company’s addressable market also remains large and I think if anything design software demand will continue to grow.

Is there any downside?

Unfortunately, yes. If investing in Altium shares was all upside then everyone would be doing it.

I think Altium ticks all the boxes in terms of market position and future potential.

The big downside here is that Altium shares trade at an enormous price-to-earnings (P/E) ratio. As of Thursday’s close, the Altium share price traded at a 59.4 multiple. That means you’re paying a lot today for potential growth in the future.

If Altium continues to kick strategic and financial goals, then that may not be an issue. However, one stumble along the way could result in a big share price drop, like we’ve seen with Nearmap Ltd (ASX: NEA) in recent times.

Foolish takeaway

I do think Altium shares could be headed higher in August. However, I think patience is key for long-term investors and I wouldn’t be rushing to buy just yet.

More reading

• These could be outstanding buy and hold options for ASX investors
• 2 ASX shares to buy and 2 to avoid as deflation bites
• WAAAX or FAANG? Which ASX tech shares to buy in 2020
• 3 of the best ASX tech shares to buy and hold until 2030
• WAAAX shares see mixed recovery from COVID-19

Ken Hall 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’s parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. The Motley Fool Australia has recommended Nearmap 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 are some quality exchange-traded funds (ETFs) that I’d buy for my portfolio.

I think ETFs are a good choice for people who have little interest in researching shares and want diversification.

However, I think ASX ETFs like Vanguard Australian Shares Index ETF (ASX: VAS) are too heavily invested in ASX banks (and miners).

But these quality ETFs are attractive to me:

Vanguard FTSE Asia ex Japan Shares Index ETF (ASX: VAE)

Vanguard is a world-leading provider of low-cost ETFs. Vanguard’s owners are its investors – Vanguard shares the profit by lowering costs as low as possible.

This particular ETF is invested in Asian shares. It’s actually invested in over 1,300 Asian shares. That’s a lot of diversification in from one ETF. But it does offer exposure to big businesses like Alibaba, Tencent, Taiwan Semiconductor Manufacturing, Samsung, AIA, Meituan Dianping, China Construction Bank, Reliance Industries, Ping An Insurance and Hong Kong Exchanges & Clearing.

The management fee is 0.40% per annum, which is pretty cheap as an investor in Asian shares.

The benefit of investing in Asia is that the region is growing much faster economically than other regions. More wealth for citizens should translate into long-term performance of the businesses located there. Particularly ones that provide middle class services like insurance, travel, entertainment and so on. 

However, investors may not want too much of an exposure to this ETF if you’re worried about China-related risks.

Betashares FTSE 100 ETF (ASX: F100)

The UK share market has suffered during COVID-19 just like other share markets around the world. This ETF is invested in the 100 largest businesses on the London Stock Exchange. I think 100 holdings is enough to provide very good diversification

The FTSE is somewhat like the ASX, it even has Rio Tinto among its biggest holdings. I actually like the diversification offered by the FTSE 100 more than the ASX 100. The ASX is too focused on banks and miners in my opinion.

These are some of this ETF’s biggest holdings: Astrazeneca (pharmaceutical), GlaxoSmithKline (pharmaceutical), HSBC (global bank), Diageo (global alcohol company), British American Tobacco, BP (energy), Unilever (global consumer products), Royal Dutch Shell (energy) and Reckitt Benckiser (global consumer products).

So don’t think of this as a UK economy ETF, it is largely international businesses which happen to be listed on the London Stock Exchange.

The UK share market has had a tough few years due to Brexit. But I think it could rebound quite hard after COVID-19 subsides.

One bonus with this ETF is the dividend yield. This year’s dividends will be reduced because of the economic impacts, but in normal years it may pay a pretty good dividend. Even now it offers a dividend yield of around 4.4%.

BetaShares charges 0.45% per annum for this investment option.

Betashares Global Sustainability Leaders ETF (ASX: ETHI)

‘Ethical’ investing could mean different things to different people. Some ethical options just exclude things like weapons manufacturers. Others may exclude gambling. Do oil companies count as unethical?

This ETF invests in businesses which are described as ‘climate leaders’. It excludes the industries I mentioned and more. Also excluded are: uranium and nuclear energy, alcohol, junk food, pornography, a material level of exposure to the destruction of valuable environments, human rights and supply chain concerns and lack of board diversity.

You may think that excluding that many different companies may reduce returns. But it hasn’t. The ETF was launched in January 2017. It has returned an average of 20.7% per annum (after fees) since inception to 30 June 2020. Over the past year it has returned 26.37%. I think that’s great. 

I’m sure you’re interested about what shares make it into this ethical line-up, yet can make such good returns. Its top 10 holdings are: Apple, Mastercard, Visa, Nvidia, Home Depot, Adobe, PayPal, Toyota, Netflix and ASML.

I think that’s a high quality list of names that is pretty diversified. They’re leaders in their respective industries. I believe they could be long-term performers.

Ethical doesn’t have to mean lower returns. Indeed, it seems to have produced strong returns. The ETF owns around 200 businesses, so it also offers very good diversification.

Foolish takeaway

I like all three of these ETFs. For income investors I’d go for the UK ETF and for growth I’d go for the ethical ETF. I think they could be long-term holdings for your portfolio. 

More reading

• How to turn $20,000 into $100,000 with ASX ETF shares
• Is it time to dollar-cost average into ASX shares?
• How to become a millionaire with ASX shares starting with $0
• 5 simple steps to financial independence
• 3 ETFs for simple wealth building

Motley Fool contributor Tristan Harrison 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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Well, August is just around the corner and will mark the 6th month of the coronavirus dominating the news and our lives. The past 6 months have certainly been an interesting time for investing. Since 30 January, the S&P/ASX 200 Index (ASX: XJO) has seen the following values: 7,162 points, 4,546 points and 6,051 points (yesterday’s close). Talk about a rollercoaster.

But, wish as we might, the coronavirus pandemic isn’t going away anytime soon. So how does one invest in this new paradigm? We will have to disregard some old assumptions, to be sure. Amongst many things, the pandemic has certainly yanked some changes forward, such as the transition away from cash. The world just isn’t the same as it was just 6 months ago.

So, with this in mind, here is one ASX share that I think qualifies as a ‘coronavirus share’ — meaning a share that I think is well placed to thrive in this Brave New World.

Enter Nine Entertainment Co Holdings Ltd (ASX: NEC)

Nine is a media conglomerate these days, owning the eponymous Channel Nine network (plus the bevvy of sister channels like 9Go and 9Gem), the 9Now streaming platform as well as the old Fairfax Media newspapers and associated websites (including the Sydney Morning Herald, The Age and the Australian Financial Review), the Macquarie Radio network and the Stan streaming platform.

It also retains a significant portion of online property lister Domain Holdings Australia Ltd (ASX: DHG)’s shares. Now, everyone knows that newspapers aren’t exactly a growth area in today’s modern world. Ditto with traditional live TV channels.

But I think Nine is still poised for growth in a post-COVID world. Lockdowns across the world have famously boosted the prospects of Netflix shares, which are up 46.9% year to date. But Nine’s Stan is a direct rival to Netflix. When Nine last reported its earnings back in February (for the 6 months to 31 December 2019), it told us that it now has more than 1.8 million Stan subscribers. Further, it also told us that around 40% of its earnings are now being sourced from its digital platforms.

Foolish takeaway

Due to this growth, as well as the company’s broad and diversified portfolio of media assets, I think Nine is exceptionally well-placed to thrive in a post-COVID world. As such, it is my top ‘coronavirus’ share going into August. On its current share price of $1.42 per share, I also argue that the Nine share price is looking relatively cheap, still close to 30% off of its pre-COVID highs.

More reading

• 5 things to watch on the ASX 200 on Friday
• Coles and Wesfarmers share prices reach for new highs. Should you invest?
• ASX 200 rises 0.75%, Fortescue impresses and Macquarie remains robust
• 3 underperforming ASX 200 stocks that could beat earnings expectations
• A dirt-cheap ASX dividend share to add to your portfolio today

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

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The AMP Limited (ASX: AMP) share price will be on watch on Friday after the release of its profit guidance for the first half of FY 2020.

What did AMP announce?

Although its results are still being finalised and remain subject to audit review, at this point AMP expects to report underlying profit for retained businesses in the order of $140 million to $150 million.

AMP’s retained businesses include its Australian wealth management, AMP Bank, AMP Capital, and New Zealand wealth management businesses.

According to the release, the company’s results have been impacted by a range of factors including market volatility and a credit loss provision in AMP Bank.

AMP advised that it has also prioritised servicing clients throughout this period. This includes temporarily increasing resources, as well as maintaining business resilience, which has resulted in additional costs.

Also weighing on its performance has been the impact of the pandemic on the pace of investment spend. This includes its cost reduction program.

Nevertheless, management advised that it remains committed to delivering $300 million of annual run-rate cost savings and its transformation investment of $1 billion to $1.3 billion.

The company also provided an update on its remediation program. It remains on track and is expected to be 80% complete by the end of FY 2020.

“A strong and resilient business.”

AMP’s Chief Executive, Francesco De Ferrari, commented: “AMP has taken decisive action to support clients and employees and maintain a strong and resilient business, as COVID-19 continues to impact investment markets and the broader economy.”

Mr De Ferrari appears cautiously optimistic on the future.

He explained: “Our strong capital position and liquidity have positioned us well to respond, though our first half results have been impacted by the market volatility. The pandemic has presented many challenges but has not distracted us from our mission to transform AMP into a simpler, client-led, growth orientated business.”

“In the first half, we have made significant progress in delivering our strategy including completing the highly complex sale of AMP Life which simplifies our portfolio and sets us up well for the future,” he concluded.

More reading

• Is the NIB, AMP or BWP share price a strong buy?
• Broker warns Afterpay and these ASX stocks are caught in an overcrowded trade
• 5 things to watch on the ASX 200 on Tuesday

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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The Orocobre Limited (ASX: ORE) share price closed yesterday’s trade flat, despite the lithium miner revealing the impact of COVID-19 on its operations in the quarter ended June 2020.

COVID-19 restrictions meant the miner’s Olaroz lithium facility was closed for several weeks from late March. Upon reopening, operating rates were lower, partly due to the company’s bio-security protocol. Production for the quarter of 2,511 tonnes was down 27% on the prior corresponding period. 

Despite COVID-19 disruptions, Orocobre managed to achieve its lowest cash cost of sales for 3 years at US$3,920 a tonne in the quarter. But sales volumes were impacted by COVID-19, falling 36% quarter-on-quarter to 1,601 tonnes. Sales revenue fell even further, down 48% from the previous quarter to US$6.3 million.

Orocobre reported a realised average price of US$3,913 a tonne for the quarter.

Projects pushed back 

Orocobre’s expansion of the Olaroz facility was also significantly impacted by COVID-19, with construction ceasing for approximately a month. Site works continue to be limited and construction has only progressed slightly since March to approximately 40% of completion.

Construction of the Naraha Lithium Hydroxide Plant continued throughout the period, however deliveries are expected to be delayed due to COVID-19. Orocobre reports that this will likely push back completion by approximately 2 months. 

Market outlook

Orocobre reported that in China, demand for electric vehicles (the majority of which run on lithium batteries) has been largely subdued despite the extension of the country’s subsidy program. Weak global demand and a build up of product inventory saw aggressive sales prices by some producers that were seeking to maintain cash flow, minimise unit costs, or grow market share. Higher-cost Chinese conversion plants began to idle facilities or moderate production. 

The miner also noted that widespread delays in lithium expansion projects from a number of producers were announced during the quarter. This reflected a combination of market conditions, limitations on workforce availability, and lower plant and equipment availability. 

Electric vehicle (EV) manufacturers were buoyed by signals the European Union would use “green” industries as the platform for economic recovery, post-COVID. Two of the largest automobile markets in Europe, Germany and France, have increased EV subsidies by 50% and 17%, respectively. This brings some EV sale prices in line with internal combustion engine equivalents. Sales in both markets grew 100% year-on-year in May reflecting the impact of these subsidies on consumer appetite. 

Foolish takeaway

While the lithium market suffered a setback due to COVID-19, Orocobre says the long-term outlook remains positive and continues to be reinforced by increased government regulation and funding.

The Orocobre share price is currently sitting at $3.08 per share, which is 9.6% up, year to date, and a 9.22% gain on this time last year.

More reading

• HUB24 and 2 more ASX 200 shares to watch this week
• These are the 10 most shorted shares on the ASX
• These were the ASX 200’s biggest share gainers last week
• ASX 200 Weekly Wrap: ASX has week of high volatility
• 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 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 August reporting season has already begun with some companies starting to report this week and next. However, the majority of companies will start to report in week 3, beginning on 10 August.

So in reality, you have a week to decide which ASX shares to buy to position yourself for the greatest impact.  

Some ASX shares are obvious. Companies like Kogan.com Ltd (ASX: KGN) and Temple & Webster Group Ltd (ASX: TPW) have already given very positive market updates. It is also pretty clear that iron ore and gold companies are likely to report strong FY20 results. 

Nonetheless, I believe there are a few ASX shares which the market has oversold that could see a more significant share price rise. Here are the top 2 ASX shares I think will outperform during the reporting season.

Australian real estate investment trusts 

I am expecting a couple of Australian real estate investment trusts (A-REITs) to do well during reporting season, but my favourite share in this space right now is Centuria Office REIT (ASX: COF).

On the ASX today, Centuria Office is the largest listed pure-play office A-REIT. I believe the long average lease life of office A-REITs has provided resilience during the coronavirus lockdowns. In the case of Centuria Office, its lease term is 5.1 years.

Furthermore, it is trading at a market capitalisation that is just under half of its net tangible asset value. Therefore, theoretically, if you purchased the entire company, you could sell its assets for an immediate profit. In addition, the company has a trailing 12-month dividend yield of 9.3%.

Lastly, the company recently went ex-dividend. Income investors regularly purchase companies to capture the dividend, and then sell it off after the ASX share goes ex-dividend. So right now, the share price is lower than it normally is. 

Online ASX shares

An ASX share I think is going to do well during earnings season is Jumbo Interactive Ltd (ASX: JIN), which is an online lottery business. I think the current noise around the buy now, pay later sector is overshadowing this growth share.

Jumbo has 3 potential paths to generate revenue. First, via charities. Charities do not need a license to sell lottery tickets. Second, via LotteryWest, the West Australian lottery commission. These negotiations are continuing. Third, under license from Tabcorp Holdings Limited (ASX: TAH). Jumbo and Tabcorp recently completed a negotiation that took their agreement from 2023 through to 2030, albeit with increased fees.

While this is a good share on many fronts, I think it will do well in reporting season for the following reason: In normal time, the company sells 26.7% of all lottery sales online, while newsagents and kiosks sell the remainder. As such, in my opinion there is a high likelihood of increases in revenue for Jumbo due to the coronavirus lockdown.

Foolish takeaway

On closer inspection, Centuria Office and Jumbo have characteristics that I believe have enabled them to sail under the radar during the coronavirus pandemic. I expect both of them to surprise on the upside in a reporting season that will likely be marked with a lot of missed targets. 

More reading

• Why these ASX mid cap shares could smash the market over the next 5 years
• Is now the time to buy the Jumbo Interactive share price?
• 2 hidden ASX shares to benefit from coronavirus
• Why UBS thinks now is the time to be buying this underperforming ASX 200 stock
• 4 trends to invest in before August earnings season

Daryl Mather owns shares of Centuria Office REIT. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and Temple & Webster Group 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. The Motley Fool Australia has recommended Kogan.com ltd and Temple & Webster 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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