Author: therawinformant

The Openpay Group Ltd (ASX: OPY) share price plunged 11.4% lower in Wednesday’s trade. That’s a big drop for an ASX share that surged 35% higher on Monday and a further 10.3% on Tuesday.

So, despite all the craziness in the market right now, here are 3 factors that are good for the Openpay share price.

1. There’s strong momentum behind buy now, pay later shares

It’s not just the Openpay share price rocketing higher right now. The Afterpay Ltd (ASX: APT) share price has slumped 5.5% this week but is still up 132% for the year.

It’s been a similar story for fellow BNPL rival Zip Co Ltd (ASX: Z1P). The Zip Co share price has fallen 16.2% from its record high at the start of the week but is still up 85.6% in 2020.

Clearly, investors have been piling into the Aussie BNPL shares lately. I think that means there could be a strong momentum factor at play right now. Given this week’s downwards moves for its rivals, that could be good news for the Openpay share price.

2. Afterpay’s share price multiples are astronomical

While Afterpay remains the largest ASX BNPL company by market capitalisation, it’s also very expensive.

It’s important to note that Afterpay hasn’t actually turned a profit. That means investors are speculating on future growth rather than relying on current dividends.

As a result, it’s better to use a price to sales (P/S) ratio to evaluate the Afterpay share price. Yahoo Finance has Afterpay trading at a P/S ratio of 57.1 right now compared to 25.2 for Openpay.

According to a recent article in the AFR, Afterpay’s P/S ratio is even higher than other global tech stocks like Netflix, Telsa, Uber, Spotify, and Snapchat. 

3. The Openpay share price is underpinned by strong growth

Clearly investors have been keen to snap up BNPL shares this year. However, Openpay has continued to thrive despite the coronavirus pandemic hitting the economy hard.

The Openpay share price surged in early trade yesterday before plummeting 11.4% lower at $3.88 per share. That’s despite a quarterly business update headlined by record growth in a number of headline growth metrics. 

Some of the key numbers from the update are listed below:

• Active plan numbers up 229% relative to prior corresponding period (pcp)
• Active customer numbers up 141% relative to pcp
• Active merchants up 52% relative to pcp
• Total transaction value up 98.2% to $192.8 million for FY20
• Net bad debts down to 2.9% compared to 4.7% in Q3 FY20
• Cash on hand of $70.1 million as at quarter-end

Will I be buying Openpay shares?

These are just a few reasons why the Openpay share price could be a better relative buy compared to Afterpay right now.

Investors are starting to call BNPL shares a ‘bubble’. I agree that there are plenty of reasons to be wary of investing in the industry right now.

The reaction to yesterday’s record growth numbers gives an indication of just how much is expected from the BNPL shares. I personally want to see more positive cash flow before buying in in the current market.

More reading

• ASX 200 jumps almost 2% today, Afterpay rises
• 3 things millennial investors should do in this ASX bull market
• Broker warns Afterpay and these ASX stocks are caught in an overcrowded trade
• Why these are the top performing ASX 200 shares over the past year
• Why Afterpay, ELMO, Oil Search, & Paradigm shares are racing higher

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

The post 3 reasons the Openpay share price is better than Afterpay appeared first on Motley Fool Australia.

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Unfortunately for savers and income investors, interest rates look set to stay at these ultra-low levels for some time to come.

The good news is that there are plenty of ASX dividend shares which will help you overcome these low rates.

But which ones should you buy? Two top ASX dividend shares I would buy today are listed below. Here’s why I like them:

BHP Group Ltd (ASX: BHP)

If you don’t mind investing in the resources sector, then I think this mining giant would be a great dividend share to buy. I’m a big fan of the Big Australian and believe it is well-positioned to generate strong free cash flows in FY 2020 and FY 2021. This is thanks to its low cost operations and favourable commodity prices. The latter is particularly the case for iron ore, which is currently trading above ~US$110 a tonne. As a comparison, BHP’s full year cost guidance is just US$13-14 per tonne at its Western Australia Iron Ore operation.

Looking ahead, I think the future is very positive as well. This is due to BHP having a number of growth opportunities which could create a lot of value for shareholders down the line. Based on the current BHP share price, I estimate that its shares offer investors a forward fully franked ~5% dividend yield.

Commonwealth Bank of Australia (ASX: CBA)

Investors that don’t have exposure to the banking sector might want to consider an investment in Commonwealth Bank. The shares of Australia’s largest bank are down 20% from their high and are trading at an attractive level for patient investors. And while times are certainly hard right now, I’m optimistic the worst is now behind the bank and the coronavirus provisions it has made are more than sufficient.

Furthermore, while I still expect a dividend cut in FY 2021, I don’t believe the cut will be as bad as some expect. I continue to forecast a fully franked dividend in the region of ~$3.70 per share next year. This would be a generous 5.1% dividend yield based on the latest Commonwealth Bank share price.

More reading

• Broker warns Afterpay and these ASX stocks are caught in an overcrowded trade
• Could Fortescue and BHP shares climb higher in 2020?
• Is the BHP share price about to surge?
• Biggest dividend cuts in 10 years to hit ASX investors next month
• This could be a problem for the Afterpay share price

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.

The post Why I would buy BHP and CBA shares for dividends appeared first on Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) was well and truly on form on Wednesday and stormed notably higher. The benchmark index jumped 1.9% to 6,052.9 points.

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

ASX 200 expected to rise again.

The ASX 200 index looks set to continue its positive run on Thursday. According to the latest SPI futures, the ASX 200 is poised to open the day 22 points or 0.35% higher this morning. This follows another solid night of trade on Wall Street which saw the Dow Jones rise 0.9%, the S&P 500 jump 0.9%, and the Nasdaq climb 0.6%. Promising coronavirus vaccine news helped drive markets higher.

Moderna vaccine update.

U.S. markets charged higher overnight after biotech company Moderna provided an update on its coronavirus vaccine. According to CNBC, peer reviewed data published by the New England Journal of Medicine showed Moderna’s coronavirus vaccine produced a robust immune response in all 45 patients in its early stage human trial. This gave stocks directly tied to an economic reopening a real boost.

Oil prices jump.

It could be a good day for energy producers Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) after oil prices jumped higher. According to Bloomberg, the WTI crude oil price is up 1.8% to US$41.00 a barrel and the Brent crude oil price has risen 1.7% to US$43.64 a barrel. A combination of the vaccine news and a stronger than expected inventory draw in the United States helped drive oil prices higher.

Gold price flat.

It looks set to be a mixed day for gold miners such as Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) after another flat night of trade for the precious metal. According to CNBC, the spot gold price is unchanged at US$1,813.40 an ounce. The aforementioned vaccine news appears to have offset rising tensions between the U.S. and China.

Telstra rated as a buy.

Analysts at Goldman Sachs have been busy looking at how the second wave might impact Telstra Corporation Ltd (ASX: TLS). While it notes that its productivity plans may be delayed, it sees upside risk to medium term earnings. In light of this, the broker has held firm with its conviction buy rating and lifted its price target on the Telstra share price slightly to $4.10.

More reading

• ASX 200 jumps almost 2% today, Afterpay rises
• The dangers of investing in managed funds
• Why I would buy these blue chip ASX 200 shares this week
• Broker warns Afterpay and these ASX stocks are caught in an overcrowded trade
• Is the Xero share price heading to $100?

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

The post 5 things to watch on the ASX 200 on Thursday appeared first on Motley Fool Australia.

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