Author: therawinformant

A V-shaped market recovery following COVID-19 is less likely than “rolling Ws”, says Liz Ann Sonders, Chief Investment Strategist at Charles Schwab.

Sonders recently shared her thoughts on the COVID-19 market performance and outlook via an article on the Charles Schwab website. 

Disconnect between the share market and economy  

Sonders stated that the No. 1 question she is fielding lately relates to the “disconnect between the stock market and the economy.” 

Certainly, the disconnect is present in the Australian share market too, with the Australian Financial Review (AFR) reporting on 3 June that the ASX 200 remained “unfazed by recession talk as it hit a three-month high.” 

The market participants’ rose-tinted outlook prompted JPMorgan Asset Management’s Global Market Strategist, Kerry Craig to infer that, “if the economic data remains weak for the moment, markets are likely to continue to discount that as being backward looking.” 

However, Craig identified a risk; that markets are “pricing in a lot of good news that might not materialise in the second half of the year.” 

Indeed, the S&P/ASX 200 Index (INDEXASX: XJO) is currently trading largely flat, with Victoria reinstating certain restrictions amid second-wave fears. 

Related to Craig’s worry, Sonders stated that second half will grant: “clarity on the depth of the economic contraction via both the second quarter earnings season… and the initial read on second quarter real gross domestic product.”  

The upcoming earnings season and updated gross domestic product figures may very well send the markets on a W-shaped rollercoaster. 

Shares lead the economy

Investigating recession data post-Second World War, Sonders found that, with the exception of 2001, “the stock market’s peaks and troughs have pre-dated the economy’s peaks and troughs.” 

Sonders further stated that there is a “fairly consistent history of the stock market’s peaks and troughs coming at or before the peaks and troughs in the economy.” 

This, for Sonders, confirms the view that “the stock market is a leading economic indicator.” 

Sonders also mused that she will closely monitor investor sentiment, “near-term market peaks and troughs are often defined more by investor emotions than economic data.” 

Takeaways for ASX 200 

NAB’s own CEO, Ross McEwan echoed Sonders’s thoughts on the shape of the recovery, with the AFR releasing an article titled: “McEwan backs more stimulus, tips W-shaped recovery.” 

A W-shaped recovery will require a more circumspect investing approach and a sturdy constitution to handle the likely-lively ride ahead. 

In an important caveat, JPMorgan’s Kerry Craig offered the following:

“If we’re heading for weaker growth and lower inflation, investors need to look for companies that can protect margins long-term, hence security selection is more important right now than the top down macro narrative.”

Sonders herself concluded that “the stock market probably got a bit ahead of itself in pricing in a V-shaped recovery.”

The positive news about flattened curves across the globe and encouraging headlines regarding vaccines may have spurred the V-shape recovery thesis. 

Therefore, Sonders thinks that “stocks may continue to be at the mercy of virus-related news — in both directions.”

More reading

• Where to invest $10,000 in ASX 200 shares for 2030
• Ready to invest $5,000? I’d buy these ASX dividend shares today
• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 finishes higher, Woolworths gives update
• Invest like Warren Buffett by buying and holding these ASX 200 shares

Motley Fool contributor Kiryll Prakapenka 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 Alphabet soup: Is the ASX 200 in for a V-shaped COVID recovery or rolling Ws? appeared first on Motley Fool Australia.

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2020 has been a crazy ride for many ASX 200 share investors.

The S&P/ASX 200 Index (ASX: XJO) is down 10.6% in 2020 thanks largely to the steep bear market over February and March. 

It’s true that investing in the share market isn’t for everyone. There are a lot of factors that should be considered before diving into ASX 200 shares and one of them is time.

I believe if you’re not investing for at least the next 7 to 10 years, it may not be wise to buy right now.

But if you’re looking to invest for the next decade or more, here are a few shares I would buy with $10,000 today.

Where to invest $10,000 in ASX 200 shares for 2030

I like a couple of blue-chip shares in the current market.

The first one I’m looking at right now is Fortescue Metals Group Limited (ASX: FMG).

The Fortescue share price is up 32.7% this year and more than 600% in the last 5 years.

The Aussie iron ore miner could be set for a big decade of growth in the 2020s. I think a strong relationship with China and growing sales to India could be the key to success for Fortescue in the decade ahead.

Combine this with a potential infrastructure boom in the short to medium-term, and Fortescue is one ASX 200 share definitely worth watching right now.

A2 Milk Company Ltd (ASX: A2M) is another ASX blue-chip on my radar.

Just like Fortescue, this dual listed dairy share has seen strong growth over recent years. In fact, the A2 Milk share price has rocketed 26% higher in 2020 alone.

A2 Milk is looking to expand internationally and not just throughout Asia. On top of the lucrative Chinese market, the company is looking to establish a foothold with the brand in Canada.

If A2 Milk can execute on its strategy over the next 10 years, I think it could be worth much more than its current $13.4 billion valuation.

But, it’s not only the blue-chips that I’ve got my eye on. I also like the look of ASX 200 growth shares like Xero Limited (ASX: XRO).

Xero is a leading accounting software provider that targets small and medium enterprises (SMEs). More innovation and a rise in small business participation could be a good thing for Xero sales in the coming years.

If Xero can continue its market domination, then who knows where this Aussie tech share’s price will be in 10 years’ time.

More reading

• Alphabet soup: Is the ASX 200 in for a V-shaped COVID recovery or rolling Ws?
• Ready to invest $5,000? I’d buy these ASX dividend shares today
• How ASX 200 shares like Xero could help you retire early
• Best growth shares to buy with $4,000
• 5 things to watch on the ASX 200 on Wednesday

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 Xero. The Motley Fool Australia owns shares of A2 Milk. 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 $10,000 in ASX 200 shares for 2030 appeared first on Motley Fool Australia.

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You might be eyeing the current market as an opportunity to buy some cheap ASX dividend shares.

The S&P/ASX 200 Index (ASX: XJO) is down 10.5% since the start of the year, which could mean there are some bargain buys.

However, I think it’s easier said than done to find undervalued shares. There are a lot of smart investors out there hunting for bargains.

Here are a few of the ASX dividend shares that I would consider investing in today.

Why Telstra is on my ASX dividend share watchlist

I think Telstra Corporation Ltd (ASX: TLS) shares are worth a look right now.

Telstra has been an ASX dividend share staple for a number of years now, although it’s true that there have been some steep share price declines and dividend cuts to Telstra shares in recent years.

That means the Aussie telco may not be the reliable income share it has been in the past, but I still think there could be some long-term value. Telstra is currently yielding 3.1%, which would be a handy portfolio boost in the current times.

Of course, dividend yields could be misleading right now, but I think Telstra’s future dividend payment prospects remain bright, particularly given its emerging position as a potential leader in the 5G network space. That could be the key to the Aussie telco gaining back market share (and earnings) it has lost to the NBN.

Are ASX bank shares worth a look?

Out of the ASX banks, I think Macquarie Group Ltd (ASX: MQG) could be a solid ASX dividend share to buy.

The Macquarie share price is down 11.8% this year and in my opinion could be an undervalued prospect, given its 3.5% dividend yield. Recent ASX bank dividend cuts don’t bode well for strong income in 2020, but there’s a chance Macquarie could maintain its distributions.

If Macquarie’s investment teams can capitalise on the current market volatility, that could pave the way for a strong half-year earnings result. Higher earnings often means more free cash flow, which is good news for investors holding out hope for half-year dividend payment.

Can this ASX dividend share outperform in 2020?

JB Hi-Fi Limited (ASX: JBH) is one ASX dividend share, in particular, that I think could outperform in the next 12 months.

The JB Hi-Fi share price is up 10% in 2020 but it could be set to climb higher if it continues its strong sales trajectory.

More Aussies working from home has been a big factor behind the recent share price move.

JB Hi-Fi’s electronics sales have skyrocketed in recent months but I think there’s more potential growth on the way. If we see a sustained shift towards a more remote working model, that could see more Aussies upgrade their home setups.

It’s certainly not a long-term trend, but any short-term sales boost is welcome in the current market. More sales means higher earnings and that could mean JB Hi-Fi maintains its distributions, while other top companies are forced to make cuts.

That would be good news for JB Hi-Fi and its investors, who could pick up a 3.6% dividend yield today.

Foolish takeaway

These are just a few of the ASX dividend shares that I think could be good value buys for income alongside some potential capital gains.

More reading

• Alphabet soup: Is the ASX 200 in for a V-shaped COVID recovery or rolling Ws?
• Where to invest $10,000 in ASX 200 shares for 2030
• Why I think the Telstra share price could hit $4 in 2020
• Is the Macquarie share price a buy?
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited and 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 Ready to invest $5,000? I’d buy these ASX dividend shares today appeared first on Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) is on form again on Wednesday and on course to record a decent gain. At the time of writing the benchmark index is up almost 0.4% to 5,976.7 points.

Four shares that are climbing more than most today are listed below. Here’s why they are storming higher:

The Afterpay Ltd (ASX: APT) share price is up 3% to $60.93. Investors have been buying the payments company’s shares after it released an update on its UK business. According to the update, the Clearpay business has reached 1 million active customers after one year of operation in the country. Pleasingly, management notes that UK customers are using its service more frequently than its US customers were after one year in that market.

The APA Group (ASX: APA) share price has risen over 2.5% to $11.59. Investors have been buying the energy company’s shares after it revealed its distribution plans. APA announced an estimated final distribution of 27 cents per security for the second half. This brings its full year distribution to 50 cents per security, up 6.4% on FY 2019’s payout.

The Evolution Mining Ltd (ASX: EVN) share price has jumped 4% to $5.48. Investors have been buying the gold miner’s shares today after the gold price hit its highest level since late in 2012. Evolution is just one of a number of gold miners charging higher. So much so, the S&P/ASX All Ordinaries Gold index is up 2.5% at the time of writing.

The Sonic Healthcare Limited (ASX: SHL) share price has climbed almost 4% to $30.03. Investors have been buying the healthcare company’s shares after it released a trading update. That update revealed that its performance rebounded strongly in May and June following weakness in March and April. As a result, management revealed that it is in a position to provide guidance again. It now expects its EBITDA to be broadly flat in FY 2020.

More reading

• Sonic Healthcare share price pushes higher on FY 2020 guidance update
• Coronavirus second wave potential could drive investment portfolio changes
• Best growth shares to buy with $4,000
• 5 things to watch on the ASX 200 on Wednesday
• Afterpay share price on watch after reaching 1 million UK customers

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

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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to continue its positive run. At the time of writing the benchmark index is up 0.3% to 5,973.6 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

The AMP Limited (ASX: AMP) share price is down over 2% to $1.86. The financial services company’s shares were solid performers on Tuesday after announcing the receipt of the final regulatory approval required for the sale of its life business to Resolution Life. This morning analysts at Morgan Stanley responded to the news by holding firm with their equal weight rating and $1.40 price target.

The Qantas Airways Limited (ASX: QAN) share price has fallen 2% to $4.22. Investors may have been selling the airline operator’s shares amid concerns over another spike in coronavirus cases in Victoria. If it isn’t brought under control soon, there are worries it could delay the recovery in the domestic travel market.

The Qube Holdings Ltd (ASX: QUB) share price is down by 2.5% to $2.84. This morning analysts at Morgans downgraded Qube’s shares to a reduce rating with a $2.45 price target. It appears to believe the company’s shares are overvalued after a strong gain over the last few months. Qube’s shares are up a massive 59% since this time in March.

The Transurban Group (ASX: TCL) share price is down over 1% to $14.62. This decline may have been driven by a broker note out of UBS this morning. According to the note, the broker has downgraded the toll road operator’s shares to a neutral rating with a $14.85 price target. UBS made the move on valuation grounds after a strong rebound in its share price over the last couple of months.

More reading

• My 3 high-yield ASX dividend shares to buy now
• Coronavirus second wave potential could drive investment portfolio changes
• Forget term deposits! These ASX dividend shares are better
• ASX 200 finishes higher, Woolworths gives update
• Why the AMP share price is up 9% today

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 Sonic Healthcare Limited (ASX: SHL) share price is pushing higher on Wednesday after the release of a trading update.

At the time of writing the healthcare company’s shares are up almost 3% to $29.76.

What did Sonic Healthcare announce?

After withdrawing its FY 2020 guidance in March because of the pandemic, this morning the company revealed that it is now in a position to provide guidance once again.

Management notes that its trading results in March and April were substantially below forecast, but things have picked up since then. In May, its performance was stronger than expected and in June this positive trend has continued.

As a result of the above, the company expects to report statutory earnings before interest, tax, depreciation, and amortisation (EBITDA) at a similar to level to what it achieved in FY 2019 (excluding the impact of the new lease accounting standard AASB 16). In FY 2019 Sonic reported statutory EBITDA of $1.075 billion.

Sonic’s CEO, Dr Colin Goldschmidt, was pleased with the way the company performed during the crisis.

He commented: “Sonic’s global leadership teams have responded magnificently to the Covid crisis, making use of established executive experience, trusted culture, team spirit and wide-open Sonic collaboration channels at national and international level.”

“Our leaders have shown great flexibility and have adapted rapidly to an entirely new operating environment. Sonic continues to play a crucial frontline role in combating the pandemic, with our laboratories in Australia, the USA and Europe testing thousands of patients per day for Covid-19,” he added.

What about FY 2021?

Due to the uncertainty caused by the pandemic, Sonic advised that it is not in a position to provide guidance for FY 2021 at this time. Though, it does intend to provide a further update with the FY 2020 results release in August 2020.

More reading

• Why Afterpay, APA, Evolution, & Sonic shares are storming higher
• Top brokers are urging you to buy these 3 ASX stocks today
• Top brokers just upgraded these ASX 200 shares today
• Why the Healius share price will be in the spotlight tomorrow morning
• Why Costa, Freedom Foods, Sonic, & Westpac shares are tumbling lower

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

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Buying and holding ASX 200 shares can be a powerful way to build wealth and retire early.

If equities are to form a crucial part of your retirement plans, obviously selecting the right shares to buy today is extremely important.

For example, the Xero Limited (ASX: XRO) share price has rocketed more than 400% higher over the last 5 years. Xero is a leading Australian tech company with a specialist, easy-to-use accounting software platform.

If you’re a long-term investor in this ASX 200 tech share, you’d be sitting on a tidy capital gain right now.

But Xero isn’t the only company with long-term growth potential on my radar. Here are a couple of my other favourite picks in the current market.

ASX 200 shares that could help you retire early

I like the look of NextDC Limited (ASX: NXT) for its potential growth trajectory.

The NextDC share price is up 51.7% this year alone and 333.9% in the last 5 years. Whilst this could mean NextDC has been overbought, I still think there’s further growth ahead for this Aussie data centre operator.

NextDC is a leader in the Australian data storage and security space. The ASX 200 tech share has been surging in 2020 as demand for its services has increased.

NextDC posted a $4.9 million half-year loss in February as it continues to re-invest in the business and fuel expansion plans.

It’s a risky play, but one that could have a big payoff if successful in the decades ahead.

Outside of the tech sector, I also like the prospects of Polynovo Ltd (ASX: PNV) right now.

Polynovo is an ASX 200 company that specialises in the treatment of burns and which also produces other biotechnology solutions. 

The Polynovo share price is up an impressive 2,644% in the last 5 years including a 25.4% gain in 2020.

I think despite these gains, Polynovo shares could be set for more growth over the next decade. 

Polynovo’s NovoSorb product is already active in an addressable $1.5 billion market, but planned applications for hernia devices and breast implants could boost this towards the $7.5 billion mark.

That leaves a lot of potential growth for the ASX 200 biotech share if it can execute its strategy and capture a larger market share.

Foolish takeaway

These are just a couple of ASX 200 growth shares on my radar for building a comfortable retirement. As always, it’s important to consider your own investment horizon and lifestyle goals when it comes to purchasing shares. Also, ensure you maintain a balanced portfolio to help maximise your return whilst minimising your risk exposure.

More reading

• Where to invest $10,000 in ASX 200 shares for 2030
• Why this fund manager believes PolyNovo shares are undervalued
• Best growth shares to buy with $4,000
• How to try and beat the market with ASX shares
• ASX 200 Weekly Wrap: ASX back in the green

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 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.

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