Author: therawinformant

The Afterpay Ltd (ASX: APT) share price was on form earlier today before fading in late trade.

At one stage the payments company’s shares were up as much as 5% to $54.63.

When its shares hit that level, it meant they were up a whopping 580% from the 52-week low they hit in March.

Why has the Afterpay share price been on fire over the last three months?

There have been a number of catalysts for the incredible rebound in the Afterpay share price since March.

The first was the resilience of its business model, which caught the market by surprise. Many investors were sure that Afterpay would struggle in a recession, but the company has proven them very wrong.

Not only has Afterpay continued to deliver explosive underlying sales growth, its bad debts have remained consistent.

I believe the low average transaction values and the flexibility of its business model are to thank for its strong bad debt performance. In respect to the latter, over the last few months Afterpay has required the first instalment upfront for purchases, with three payments to follow. I believe this has reduced the overall risk of each transaction without stifling its growth.

What else is supporting its share price?

Another key catalyst to its strong share price performance has been the emergence of Tencent Holdings on its share registry as a substantial shareholder.

Given how powerful Tencent is in Asia thanks to its massively popular WeChat app, it could potentially open up this key market to Afterpay in the future.

Combined with potential expansions onto mainland Europe and its rapidly growing U.S. business, Afterpay could continue its meteoric growth for a long time to come.

Speaking of its U.S. business, that was another driver of its strong share price rebound. A recent update revealed that it now has over 5 million active customers in the United States using its buy now pay later service.

Impressively, more than one million new customers started using its platform in the country during a 10-week period at the height of the pandemic.

And while 5 million active customers may sound like a large number, there is still a long runway for growth in the lucrative market. Rival Zip Co Ltd (ASX: Z1P) has just entered the United States via an acquisition and revealed that it estimates the retail market to be worth $5 trillion a year.

Should you buy Afterpay shares?

While its shares do trade at a significant premium to the market average and carry a lot of risk, I believe they could still be a great long term option for investors.

In light of this, I would still be a buyer of its shares if you’re prepared to make a buy and hold investment. Though, restricting your holding to a small part of your portfolio might be prudent given the risks.

More reading

• Got $5,000 spare? Consider Wesfarmers shares and these 2 other ASX companies
• Keep a watch on the Zip Co share price and 1 other ASX tech this June
• Sezzle shares and 2 other ASX techs soared up to 50% in the past 4 weeks
• The most explosive ASX tech shares you can buy today
• How I would build a balanced portfolio worth $100,000 with 10 ASX shares

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 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 The Afterpay share price is up 580% from its March low appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/37tC9Ry

Standard and Poor’s announced a big reshuffle to the key ASX indices that could see a number of ASX stocks outperform and underperform in the near-term.

The June quarterly rebalance includes a bigger than normal shake-up of the S&P benchmarks as the March rebalance was held over due to the COVID-19 crisis.

History shows us that index inclusions and exclusions tend to have an impact on the share prices of ASX stocks swept up in the changes.

The quarterly ASX anomaly

This seems to be unique to Australian shares and is called the “index effect”. This market anomaly could form a basis for some short-term trades for nimble investors.

The analysts at Macquarie Group Ltd (ASX: MQG) found that the stocks to be included in the S&P/ASX 100 (Index:^ATOI) (ASX:XTO) tend to underperform in the weeks before they are added to the index.

However, these stocks after two-weeks from their inclusion and the broker speculates this is due to selling from small cap fund managers.

Many of these funds have mandates that prevent them from owning stocks in the top 100 benchmark and are forced to sell.

Large caps that could outperform

This means the Nextdc Ltd (ASX: NXT) share price and Saracen Mineral Holdings Limited (ASX: SAR) share price could be heading higher soon as they are the latest to be added to the index.

They replace international shopping centre owner UNIBALWEST/IDR UNRESTR (ASX: URW) and miner Whitehaven Coal Ltd (ASX: WHC).

Interestingly, large caps that are dropped from the ASX 100 don’t generally come under much selling pressure, added the broker.

Different impact on ASX 200

However, the same can’t be said for the S&P/ASX 200 Index (Index:^AXJO).

“S&P/ASX 200 index additions have typically outperformed strongly in the weeks prior to the announcement of the changes,” said Macquarie.

“Stock performance has often peaked prior to implementation date. ASX 200 deletions have traditionally underperformed as they are removed.”

What this means is that it might be too late to buy ASX shares that are about to become part of the ASX 200 club as the index change comes into effect this Friday.

The ASX 200 stocks that could lag

On the other hand, those getting the boot could underperform from next week.

On that note, the six ASX 200 rejects are the ones to watch. These include aged care company Estia Health Ltd (ASX: EHE), investment platform Hub24 Ltd (ASX: HUB), online lottery group Jumbo Interactive Ltd (ASX: JIN), drug maker Mayne Pharma Group Ltd (ASX: MYX), miner Pilbara Minerals Ltd (ASX: PLS) and wealth manager Pinnacle Investment Management Group Ltd (ASX: PNI).

More reading

• Should you buy ASX shares during this market selloff?
• 3 Warren Buffett quotes to start your week off right
• Shares up? Haven’t you seen the economy?
• Got $5,000 spare? Consider Wesfarmers shares and these 2 other ASX companies
• These 5 ASX shares were last week’s worst performers

Brendon Lau owns shares of Macquarie Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Hub24 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 and Macquarie Group Limited. The Motley Fool Australia has recommended Hub24 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.

The post The ASX winners and losers from the latest S&P index shake-up appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2MUYMoC

Stating that every Aussie portfolio should hold ASX blue chip shares is a big call. But that’s how confident I am that the 2 blue chip ASX shares below will continue to be good investments well into the future.

There are no certainties in investing (apart from taxes, of course), but here’s why I think Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) and CSL Limited (ASX: CSL) would be the best shares for any ASX investor to buy and hold for the long-term.

Blue Chip 1) Soul Patts

Soul Patts is one of the oldest (and bluest) companies on the ASX – it was founded back in 1872 and listed on the stock exchange in 1903. Since then, the company has built an impeccable reputation for quality returns. It invests in a concentrated basket of quality ASX shares, which it aims to hold over the long-term. Right now, these include TPG Telecom Ltd (ASX: TPM), Brickworks Limited (ASX: BKW) and New Hope Corporation Limited (ASX: NHC). It has used this portfolio to pay a dividend every year since its inception, which includes the duration of the Great Depression and both World Wars. Soul Patts is also the only company that has delivered 20 years of uninterrupted dividend increases to its shareholders.

This ASX blue chip share won’t make you rich overnight, but I think it’s an essential share to own for any investor that desires a strong and robust long-term portfolio.

2) CSL

CSL shouldn’t be a stranger to any ASX investor these days. This asx blue chip share has managed to blow past all 4 of the ASX banks over the past 5 years to claim the crown of the ASX’s largest company. Today, CSL is a global blue chip healthcare giant, with two cutting edge divisions (Behring and Seqirus) that dominate the blood plasma and vaccine spaces respectively. Part of CSL’s success story is the focus the company has on Research and Development (R&D), which it invests heavily in every year. This long-term focus has been (and I think will continue to be) the secret to CSL’s remarkable success.

CSL resides in an evergreen industry, is still growing at a healthy rate, and has started paying a rapidly rising dividend. As such, I think CSL will continue to be a fantastic investment to hold for the long-term, and (I think) has a place in every ASX investors’ portfolio.

More reading

• These 5 ASX shares were last week’s best performers
• 3 ASX dividend shares to buy and replace a term deposit
• My ASX share for the week
• ASX 200 Weekly Wrap: ASX bears take control as market volatility returns
• Why I think that Soul Patts is the best long-term ASX share

Sebastian Bowen owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company 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 2 ASX blue chip shares I think every portfolio should hold appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/37voBVH

Between mid-February and late March, shares in SEEK Limited (ASX: SEK) fell by around 50% to $11.95. However, since then, SEEK has managed to regain most of this share price decline. The SEEK share price is currently trading at $19.29.

During the initial period of the coronavirus pandemic, investors became spooked due to the sharp fall-off in listing volumes. Billings were down by up to 60% during the week ending 29 March, across all regions.

However, lockdown restrictions are gradually easing across Australia and New Zealand. This is leading to increased investor confidence and rising ad volumes. Investors are becoming increasingly optimistic that the worst of the pandemic is now behind us.

Is the SEEK share price a buy right now?

Job ad volumes starting to rise

New job ads on SEEK are still down significantly on what they were during February and early March, before the full impact of the pandemic hit. However, there are early signs of job ad volume recovery. In SEEK’s latest employment monthly snapshot it revealed that new job ads posted on the Aussie employment platform during the fortnight ended 7 June, were up by a very sharp 60.6%. This represented a further increase on the previous three fortnights of 26.8%, 39.7% and 49.2% respectively.

The Australian market is bouncing back from the pandemic much faster than anticipated in late March. Australia and New Zealand have been two of the most successful countries globally in containing the coronavirus outbreak.

Sectors which are seeing strong growth over the past month in Australia include trades and services, healthcare and medical and hospitality and tourism. In addition, manufacturing, transport and logistics and education and training are all starting to see stronger demand.

July also looks promising. Job ad volumes have historically tended to ease off towards the end of the financial year (i.e. the end of June). July and August tend to then see an initial boost as hirers reaffirm their budgets.

Is the SEEK share price a buy?

Lockdown restrictions appear set to be further eased across Australia over the coming months. There also continues to be strong encouragement by the Australian Government for people to return to work. I think that it’s looking increasingly likely that employment ad volumes will continue to improve significantly over the next few months for SEEK. That is assuming there isn’t a second wave of the pandemic.

SEEK’s second biggest market, New Zealand, also looks set to follow a similar path towards recovery.

From a long-term perspective, I believe SEEK appears to be well positioned for continued growth in revenue and profitability. It has an entrenched and dominant position in its local Australian market and is also continuing to grow its international presence.

While SEEK’s share price has bounced back since late March, it is still well below the 12-month peak it saw in late January.

I therefore believe that the SEEK share price offers investors a reasonable buying opportunity right now.

In light of this, two other online classifieds ASX shares you might want to look are: Carsales.Com Ltd (ASX: CAR) and REA Group Limited (ASX: REA).

More reading

• 5 things to watch on the ASX 200 on Monday
• 3 five-star ASX shares I would buy today
• 3 of the best ASX 200 blue chip shares to buy today
• 3 ASX 200 shares I’d buy for 2020 and beyond
• What is the ASX impact of a fall in house prices?

Motley Fool contributor Phil Harpur owns shares of carsales.com Limited, REA Group Limited, and SEEK Limited. The Motley Fool Australia has recommended carsales.com Limited, REA Group Limited, and SEEK 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 Is the SEEK share price a buy right now? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2UI00b4

If you’re on the lookout for dividend shares for your retirement portfolio, then I think the three listed below could be worth considering.

All three have qualities that I think are attractive for retirees in search of both growth and income. Here’s why I would buy them:

BWP Trust (ASX: BWP)

The first ASX dividend share that I think retirees ought to consider buying is BWP. It is a real estate investment trust with a focus on commercial properties. The majority of the company’s assets are large format retailing properties which are leased to Wesfarmers Ltd (ASX: WES) operated Bunnings Warehouse. I think this is a great tenant to have and the risk of rental defaults and store closures is low in comparison to other areas of the retail sector. In light of this, I believe BWP is well-positioned to continue growing its income and distribution at a solid and predictable rate for a long time to come. I estimate that BWP will pay investors an 18.5 cents per share distribution in FY 2021. This means that its shares currently offer a forward 4.9% distribution yield. I believe this is very attractive for income-focused investors in this low interest rate environment.

Goodman Group (ASX: GMG)

Another dividend share to consider buying is Goodman Group. It shares may not offer the biggest yield, but I believe the integrated commercial and industrial property group could still be a top option for retirees. I estimate that Goodman will pay a distribution of approximately 32 cents per share in FY 2021. This represents a modest forward yield of approximately 2.2% based on its current share price. However, given its exposure to the structural tailwinds of the ecommerce market, I believe this distribution could grow strongly over the next decade and drive solid total returns for investors.

More reading

• Got $5,000 spare? Consider Wesfarmers shares and these 2 other ASX companies
• Why ASX, Domain, Tyro, & Wesfarmers shares are dropping lower
• ASX 200 Weekly Wrap: ASX bears take control as market volatility returns
• Why the Healius share price will be in the spotlight tomorrow morning
• 3 ASX blue chip shares that could give your portfolio a boost

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers 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 2 of the best ASX dividend shares for retirees to buy today appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/37sEcWc

The Ardent Leisure Group Ltd (ASX: ALG) share price is bouncing around today following news that the entertainment company has sold a stake in its Main Event business in the US.

Investors initially reacted positively to the news, sending Ardent shares flying 20.41% in early morning trade. However, it appears sentiment has turned, with the Ardent Leisure share price now trading 4.08% lower at the time of writing.

As its name suggests, Ardent is in the business of leisure and entertainment. It is the owner and operator of Gold Coast theme parks Dreamworld and WhiteWater World. And over in the US, Ardent owns a portfolio of family entertainment assets under the Main Event brand. Main Event offers activities like bowling, laser tag, and arcade games across 44 locations throughout North America.

Details of the transaction

This morning, Ardent revealed that US-based private investment firm, RedBird Capital Partners, will invest US$80 million to acquire a 24.2% interest in Main Event Entertainment.

The transaction values Main Event at an implied enterprise value (EV) of US$424 million and an EV/EBITDA multiple of 8x based on CY19 adjusted EBITDA.

As part of the transaction, RedBird has also been granted an option to acquire an additional 26.8% interest in Main Event at a future date. The option is exercisable between July 2022 and July 2024. Valuation will be based on normalised pro forma EBITDA at the time of exercising the option, subject to a minimum equity floor price.

According to Ardent, RedBird’s invested capital will be used exclusively to support Main Event. The funds provide Main Event with the financial support and flexibility to adapt to the current challenging macro environment. What’s more, the transaction provides Ardent with potential capital in the future in the event that the option is exercised.

The company noted there are no conditions to the transaction, nor shareholder approval. Therefore, the initial investment is expected to settle on 15 June 2020.

Along with the transaction news, Ardent revealed that Main Event has secured support from its lenders, including near-term covenant relief. It also stated that 28 of 44 Main Event centres have reopened following COVID-19 restrictions.

Management commentary

Commenting on the deal, Ardent chair Dr Gary Weiss said:

“We are excited by this new partnership with RedBird which not only reinforces Main Event’s financial strength and liquidity, but also provides a value-added strategic partner who can help drive the Company’s growth and expansion plans in the United States.”

Meanwhile, Gerry Cardinale, managing partner of RedBird, said, “we have witnessed firsthand Main Event’s growth as a leading brand in a resilient and fast growing family entertainment market. RedBird’s focus on building high-growth companies in sports and entertainment and expertise in delivering premier content to consumers will be highly complementary to the Main Event platform as it looks to expand throughout the country.”

More reading

• Leading fund manager names 4 ASX stocks set to benefit from a faster re-opening of the Australian economy

Motley Fool contributor Cathryn Goh 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 the Ardent Leisure share price is on the move today appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2Y1i2ad