Author: therawinformant

On Monday 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 that have just been given sell ratings are listed below.

Here’s why these brokers are bearish on these ASX 200 shares:

Afterpay Ltd (ASX: APT) 

According to a note out of UBS, its analysts have retained their sell rating and $25.00 price target on this payments company’s shares. It believes that Afterpay’s $800 million capital raising demonstrates the capital intensity of its business model. It feels this is something that the market is underestimating. In addition to this, the broker continues to believe that the company’s shares are overvalued at the current level. The Afterpay share price last closed at $68.00.

ASX Ltd (ASX: ASX)

Analysts at Citi have retained their sell rating and cut the price target on this stock exchange operator’s shares to $65.00. Although the broker is expecting ASX Ltd to have a strong second half, it appears concerned that FY 2021 will be a tough year. Especially given weakness in the derivatives market. In light of this, it continues to believe its shares are fully valued at the current level. The ASX Ltd share price is trading at $85.82 this afternoon.

Commonwealth Bank of Australia (ASX: CBA)

A note out of Morgan Stanley reveals that its analysts have retained their underweight rating but lifted the price target on this banking giant’s shares to $63.50. According to the note, the broker expects the Commonwealth Bank to be forced to almost halve its final dividend down to $1.30 per share. Looking ahead, its analysts believe the bank needs to adopt a major change of strategy over the medium term to drive growth. The CBA share price is trading at $71.71 at the time of writing.

More reading

• Where to invest $1,000 in ASX tech shares today
• Why these ASX tech shares should be on your radar
• 3 quality ASX shares to buy right now with $3,000
• 2 exotic ETFs for your ASX portfolio
• Why the CBA share price and other ASX banks could outperform in FY21

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

The post Leading brokers name 3 ASX 200 shares to sell today appeared first on Motley Fool Australia.

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NextDC Ltd (ASX: NXT) has been one of the many ASX tech shares to outperform in 2020.

While the S&P/ASX 200 Index (ASX: XJO) has slumped more than 10% lower this year, NextDC shares have rocketed 73% higher.

Some investors might think they’ve missed the boat on the Aussie data centre operator. Here’s why I think NextDC and 2 more ASX tech shares could actually be in the buy zone.

Why I think NextDC has more growth left in it

I think it’s worth mentioning that most tech shares are going to be trading at high price-to-earnings (P/E) ratios. That’s because investors are paying handsomely today for future expected growth.

For instance, NextDC reported revenue of $97.7 million in its February half-year results, but a net loss after tax of $4.9 million. That’s not unusual when investing in ASX tech shares. Despite this, I believe there is strong potential – I like NextDC for its strong revenue growth projections and increasing demand for data storage and security.

Cybersecurity and off-site data storage are two looming issues for Aussie businesses over the next decade or two. I think NextDC is already somewhat ahead of the curve with established sites across Melbourne, Sydney, Brisbane, Perth and Canberra.

A recent company update also indicated strong contracted commitment options after winning several material customer contracts in New South Wales. That caught the eye of leading broker Goldman Sachs which upped its price guidance for the NextDC share price to $11.10 per share. NextDC has already smashed through that target, with shares up to $11.34 today at the time of writing.

Clearly, there is strong momentum behind the ASX tech share right now. Given its significant expansion plans and growth potential, I think NextDC’s value may continue to climb higher. 

2 more ASX tech shares I’d like to buy today

It’s not just NextDC shares I’ve got my eye on. Despite climbing 16% higher this year, I like the look of Xero Limited (ASX: XRO) shares.

Xero offers a cloud-based accounting software platform for small and medium-sized businesses. That’s a particularly in-demand area at the moment given complexities around small business accounting amid the coronavirus crisis.

While the government stimulus programs have helped prop up the economy, it has also created a few headaches for small business accountants. That’s where Xero can continue to innovate and make the most of a strong market opportunity.

According to government statistics, small businesses account for 34% of industry value added (IVA) in Australia. This huge contribution to Australia’s GDP makes them a potentially lucrative market for Xero to continue to capture.

The ASX tech share reported some strong numbers in its 14 May full-year result. Xero’s subscriber numbers surged 467,000 during the year to 2.285 million while the company posted a net profit after tax of $3.3 million. Free cash flow jumped $20.7 million to $27.1 million for the year.

Those are some strong financials, despite flagging slowing subscriber additions due to COVID-19.

Finally, if you want to diversify across ASX tech shares, I’d consider an exchange-traded fund (ETF). An ASX-listed ETF can be an easy way to gain exposure to multiple tech companies.

The ETFS Morningstar Global Technology ETF (ASX: TECH) has caught my eye recently. The ASX tech ETF has a management fee of 0.45%, is not currency-hedged and has assets under management of $144.3 million as of 3 July 2020.

With top holdings like BroadCom Inc. (4.2%) and Microsoft Corp (4.0%), this ETF is an easy way to get exposure to other quality tech shares outside of the ASX.

More reading

• Leading brokers name 3 ASX 200 shares to sell today
• Why these ASX tech shares should be on your radar
• 3 quality ASX shares to buy right now with $3,000
• 2 exotic ETFs for your ASX portfolio
• Why the CBA share price and other ASX banks could outperform in FY21

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 ETFS Morningstar Global Technology ETF and Xero. 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 Where to invest $1,000 in ASX tech shares today appeared first on Motley Fool Australia.

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ASX tech shares are leading the share market comeback. Since its lowest point of the March crash, the S&P/ASX All Technology Index (ASX: XTX) has now risen by more than 90%. By comparison, the S&P/ASX 200 Index (INDEXASX: XJO) is up just 33% over the same period. Investors are devouring the technology sector as digital connections become more important than ever. With the rise of remote working and restrictions on travel, consumers and business have become increasingly reliant on technology. On that note, let’s take a look at two ASX technology shares that I think should be on your radar. 

2 ASX tech shares to watch

Megaport Ltd (ASX: MP1) 

Megaport is a leader in the network-as-a-service space. The company allows customers to connect to cloud services and data centres almost instantly by providing end-to-end network connections through data centres located across the globe. Megaport is partnered with Microsoft Azure, AWS, Google Cloud, IBM, Alibaba, and Oracle, allowing users to build connections to world-class cloud services. 

The Megaport share price dipped to a low of $6.74 in March but has since gained more than 100% to currently trade at $13.72. The company is seeing high growth rates across key financial metrics. Revenue increased 10% quarter-on-quarter to $15.19 million in March 2020, while monthly recurring revenue increased 19% to $5.4 million. Customer numbers grew to 1,777 at the end of March up from 1,679 at the end of December. 

I believe the surge in global demand for cloud services and connectivity solutions will continue to provide powerful tailwinds for this ASX tech share. Furthermore, the company plans to expand its sales team and go-to-market activities in a quest for greater market share. 

Volpara Health Technologies Ltd (ASX: VHT) 

Volpara provides breast imaging analytics that improve the early detection of breast cancer. Based in New Zealand, Volpara is a research, development and manufacturing company. Its software platform originated from a breakthrough in research surrounding medical physics and artificial intelligence at Oxford University. The company’s proprietary medical imaging technology underpins personalised, high quality breast cancer screening. 

The Volpara share price has recovered from its March low of 81 cents with shares currently trading at $1.49. Nonetheless, the company’s shares are yet to regain the highs of over $2 seen in late 2019. In its FY20 ending 31 March, Volpara achieved significant growth in annual recurring revenue (ARR) and market share. ARR grew 182% to reach $18 million while the company reported 27.1% market share in North America. Although not yet profitable, Volpara is expanding, having acquired Seattle-based MRS Systems Inc last year which broadened its offering to include lung cancer testing. 

Foolish takeaway

ASX tech shares are dominating the post-coronavirus market comeback. I believe these two tech shares show promising potential meaning they should be on your radar today.  

More reading

• Leading brokers name 3 ASX 200 shares to sell today
• Where to invest $1,000 in ASX tech shares today
• 3 quality ASX shares to buy right now with $3,000
• 2 exotic ETFs for your ASX portfolio
• Why the CBA share price and other ASX banks could outperform in FY21

Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of MEGAPORT FPO and VOLPARA FPO NZ. The Motley Fool Australia has recommended MEGAPORT FPO and VOLPARA FPO NZ. 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 these ASX tech shares should be on your radar appeared first on Motley Fool Australia.

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If you’re looking to invest $3,000 into the ASX right now, I believe that the 3 ASX shares listed below are all quality options.

All 3 have very different business models and operate in 3 very different industries. However, I believe that all are well placed to outperform the S&P/ASX 200 Index (ASX: XJO) over the next 5–10 years.

Blackmores Limited (ASX: BKL)

Blackmores recent financial performance has been disappointing, with the company’s operations in China in particular underperforming. This underperformance has been reflected in the Blackmores share price, which has struggled to rise higher over the past year.

However, Blackmores has seen a rise in demand for its immunity products during the coronavirus pandemic. It also plans to further accelerate its Asian expansion strategy, particularly in China. I remain optimistic about the potential of Blackmores’ Asian strategy, and I am particularly encouraged by the potential that the Indian market holds for the company.

With the Blackmores share price well down on its 12-month high in early February, I believe now could be a good time to purchase shares at a more favourable price.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) 

I am attracted to Soul Patts as an ASX share to invest due to its strong market diversification. Soul Patts has market exposure to a broad range of industries, including pharmacies, telecommunications and mining and building products. This diversification acts as a buffer to any market volatility.

In addition, Soul Patts has an enviable long-term track record of outperforming the S&P/ASX 200 Index (ASX: XJO).

Soul Patts also has an excellent management team and a very conservative balance sheet. This places it in an ideal position to snap up any investment opportunities that may come its way. I believe this growth story is set to continue for Soul Patts in the next few years ahead.

Soul Patts is also a strong dividend paying share. It currently pays a fully forward dividend yield of 3.0%.

Audinate Group Ltd (ASX: AD8)

ASX tech share Audinate specialises in audio networking solutions that are used in the production of a range of professional audio equipment. Its core solutions work by improving audio quality using ethernet or fibre optic cables. This thereby reduces the need for extra cabling and installation.

For the six months ended 31 December 2019, Audinate delivered a solid 14% increase in revenue to $16.1 million. It also saw a very strong 3.8% increase in its gross margin to 77.1%. Its earnings before interest, tax, depreciation and amortisation climbed 11% to $1.9 million. Also, unaudited revenue for its most recent quarter climbed by 14%.

I believe the growth story for Audinate is set to continue over the next few years. Its core solution currently dominates the audio market, providing a strong competitive barrier to new market competition.

More reading

• Leading brokers name 3 ASX 200 shares to sell today
• Where to invest $1,000 in ASX tech shares today
• Why these ASX tech shares should be on your radar
• 2 exotic ETFs for your ASX portfolio
• Why the CBA share price and other ASX banks could outperform in FY21

Phil Harpur owns shares of Blackmores Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AUDINATEGL FPO. The Motley Fool Australia owns shares of and has recommended Blackmores Limited. The Motley Fool Australia has recommended AUDINATEGL 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 quality ASX shares to buy right now with $3,000 appeared first on Motley Fool Australia.

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Exchange-traded funds (ETFs) are no longer a one-size-fits-all investment vehicle. The first ETFs available in Australia were plain old index funds — tracking benchmarks like the S&P/ASX 200 Index (ASX: XJO ) without too much fanfare.

But these days (much like the app store), if there’s a trend, asset class or industry to track, chances are there’s an ETF for that.

But with a plethora of choice out there, which ETFs should we choose for our portfolios? Well, if you’re looking to add some international exposure to your portfolio, I’ve found 2 exotic ETFs I think merit consideration.

iShares MSCI EAFE ETF (ASX: IVE)

Don’t let this acronym-replete name dissuade you. IVE tracks a basket of shares from Europe, Australia and the Far East (EAFE). Most of the international investing that Aussies tend to participate in revolves around the United States. While this is not necessarily a bad thing, I do think that America has its own set of unique challenges right now. Considering this, a bit of international diversification might not go astray in our portfolios.

IVE has its largest exposure (26% of the portfolio) to Japan with shares like Toyota. But the United Kingdom (at 14%), France (at 10.5%), Switzerland (10.2%) and Germany (9%) also feature heavily. Our own ASX shares make up around 6.4% of this ETF. Apart from Toyota, other companies that feature in IVE’s top 10 list include Nestle, Roche, Novartis, SAP and LVMH.

IVE has a management fee of 0.31% per annum, which I think is reasonable considering the geographical diversification it brings to the table.

ETFS Morningstar Global Technology ETF (ASX: TECH)

This tech-focused ETF (hence the ticker symbol) is one of my favourite exotic ETFs on the ASX. It aims to track a basket of tech-related companies that are selected by the reputable Morningstar group. It’s dominated by US companies (with 85.5% of the portfolio), but also features Japan, Germany and France in its exposures. TECH’s holdings are made up of both large and small tech companies. Microsoft is in the top 10, as is Fortinet, Splunk, ServiceNow and Intel.

Morningstar regularly updates and rebalances this index. Thus, you can have reasonable confidence that any company that stumbles or goes off the rails will be replaced with another up-and-comer. If you feel your portfolio doesn’t have sufficient exposure to the global technology sector, then TECH is a great way to easily remedy this situation. This ETF has a management fee of 0.45% per annum, which isn’t on the cheap side. However, since TECH has returned an average of 25.15% per annum over the past 3 years, personally I would consider this fee ‘worth it’.

More reading

• Why the CBA share price and other ASX banks could outperform in FY21
• Why CSL and these ASX 200 shares could be fantastic buy and hold options
• ASX 200 up 0.1%: Afterpay announces capital raising, big four banks lower ahead of RBA meeting
• Up 500%: Allegra Orthopaedics share price goes sky high following acquisition of patents
• 5 things to watch on the ASX 200 on Tuesday

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ETFS Morningstar Global Technology ETF. 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 2 exotic ETFs for your ASX portfolio appeared first on Motley Fool Australia.

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Buying ASX bank stocks may be less risky as you’d think as they aren’t about to fall off the fiscal cliff, according to one leading broker.

The fiscal cliff is the withdrawal of support measures offered during the COVID-19 pandemic come September. These include the government’s wage supplements as well as rent and loan repayment holidays.

Fears that consumers and businesses won’t be able to repay debts have weighed heavily on the banking sector, which is lagging the broader S&P/ASX 200 Index (Index:^AXJO).

Can CBA and other ASX banks outperform?

But there’s a chance for the Commonwealth Bank of Australia (ASX: CBA) share price, Westpac Banking Corp (ASX: WBC) share price, Australia and New Zealand Banking Group (ASX: ANZ) share price and National Australia Bank Ltd. (ASX: NAB) share price to play catch-up in FY21.

This fiscal cliff may turn out to be more of the molehill variety than a mountain, if Citigroup’s prediction is on the money.

Dividend revival for ASX banks

The broker drew on lessons learnt in New Zealand and is not only predicting that ASX banks will survive the fiscal cliff but will be in a better position to pay dividends in the near-term.

“With more severe stage 4 restrictions in place and nonessential life shuttered through April, the Kiwis took great sacrifice, but have emerged from all restrictions much faster than other countries,” said Citi.

This makes the NZ market an ideal place to study the impact of lockdowns its banking sector, particularly as NZ and Australia have so much in common.

Extending stimulus is key

The NZ experience shows that the Morrison government will need to keep supplementing wages even after the JobKeeper and JobSeeker programs expire in September. This is especially so if consumer spending is to make a V-shape recovery.

Mark your calendar for July 23 fellow Fools. That’s when the federal government will provide an update on this and other stimulus measures – and I’m keeping my fingers tightly crossed.

However, business confidence will take more time to repair although Citi thinks the disconnect is a matter of timing and not something more sinister.

ASX banks and the fiscal cliff

This isn’t to say there won’t be long lasting impacts from the coronavirus meltdown. Going forward, businesses will need to find new ways to cut costs as their operations will likely be stuck on a lower gear for longer.

“Like Australia, the focus in NZ is on the ‘fiscal cliff’ when the wage subsidy end,” added Citi.

“However, our takeaway this week is that while the cliff marks the end of ‘liquidity injection’, there remains a substantial excess of liquidity to draw down on and to cushion bad debts.”

Foolish takeaway

If our big banks do not need to make additional provisioning for bad debt, the sector will re-rate strongly.

This is particularly the case if the banks feel confident enough to restore some of their dividend cuts later this year.

More reading

• 2 exotic ETFs for your ASX portfolio
• Why CSL and these ASX 200 shares could be fantastic buy and hold options
• ASX 200 up 0.1%: Afterpay announces capital raising, big four banks lower ahead of RBA meeting
• Up 500%: Allegra Orthopaedics share price goes sky high following acquisition of patents
• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, National Australia Bank Limited, and Westpac Banking. 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.

The post Why the CBA share price and other ASX banks could outperform in FY21 appeared first on Motley Fool Australia.

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What happened?

The Australian Ethical Investment Ltd (ASX: AEF) share price has surged by more than 5% today. The fund manager updated its earnings guidance after better than expected returns in its Emerging Companies Fund has resulted in a performance fee.

Australian Ethical Investment advised that its Emerging Companies Fund returned almost 14%, after fees, for wholesale investors (investments over $25,000). This is compared to its benchmark index, S&P ASX Small Industrials, which returned negative 7.4%

As a result, a performance fee of $3.64 million, calculated as 20% of the fund’s one-year outperformance over its benchmark, was earned by Australian Ethical Investment. The performance fee and a proportionate increase in the contribution to the Australian Ethical Foundation adds to the expected underlying profit before tax (UPAT) that was announced on 22 June 2020.

The revised UPAT for FY2020 is now expected to be between $9 million and $9.5 million, which is an increase of over 40% from FY2019.

What does Australian Ethical Investment do?

Australian Ethical Investment provides investors an opportunity to invest in products that align with their values and provide competitive returns. Its investments are guided by the Australian Ethical Charter and  it structures its investing on three pillars, which are caring for the planet, people and animals.

Australian Ethical Investment currently has $3.92 billion in funds under management as of 31 May 2020 and a market cap sitting over $700 million.

The Australian Ethical share price has had a storming run from its $2 lows in mid-March up to its all-time highs of $9 in mid-June. The share price has since dropped away, but it is still up over 200% on its lows this year and currently sits at $6.68 per share.

More reading

• Why Australian Ethical, Magellan, St Barbara, & Sezzle shares are zooming higher
• Australia could be moving towards zero emissions, these are the green companies to buy
• Fund managers have been buying these ASX shares
• Why Altium, Australian Ethical, Flight Centre, & Transurban are dropping lower
• 2 high quality ASX shares to buy if the COVID-19 selloff gets worse

Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Australian Ethical Investment Ltd. The Motley Fool Australia has recommended Australian Ethical Investment 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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