Author: therawinformant

I’m a big believer in taking small actions to help frame your mindset for larger ones. Whether it’s making your bed in the morning or starting your week off reading quotes from Berkshire Hathaway Inc. (NYSE: BRK.A)(NYSE: BRK.B) Warren Buffett, I find small successes can feed into large ones.

Of the above examples, I’m more of a fan of the latter (although I find no issue with a made bed). Buffett is not only one of the greatest investors of all time, but he’s also one of the best investing educators. I think all ASX investors can learn something from a man with such an interesting and successful life.

So drawing from the comprehensive list of Buffett quotes that our Fool colleagues over in the US have knocked up, here are 3 Warren Buffett quotes to help you start your week off right!

Quote 1

“I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.”

This is a quote I love, especially its opening line, “I never attempt to make money on the stock market”. Buffett sees making money only as a consequence of successful investing – you get the horse right and the cart follows.

Viewing ASX shares through this mindset is a great way to think about investing in my view. Too often, hopeful investors get distracted by the day-to-day ructions of the share market and forget that real investing, Buffett-style, is about acquiring ownership of quality companies – not trading ticker symbols.

If you truly want to adopt this mindset, try imagining holding your ASX shares for the next 5 years and assess how comfortable it makes you!

Quote 2

“Success in investing doesn’t correlate with IQ … what you need is the temperament to control the urges that get other people into trouble in investing.”

Too often, people are put off from investing in shares because they think it’s something only ‘smart people’ do. But Buffett disproved this notion with just one line here, highlighting that successful investors are more likely to be emotionally detached than smart.

As Warren Buffett rightly points out, most aspiring investors slip up by acting with emotion – either selling their shares in a market crash out of fear, or buying overvalued shares out of greed. Mastering these emotions is the best way to invest successfully, not by getting 5 PhDs from university.

Quote 3

“Cash … is to a business as oxygen is to an individual: never thought about when it is present, the only thing in mind when it is absent.”

Here Buffett is talking about the importance of buying companies that invest their cash prudently and aim to never be caught short. The only thing that can really bankrupt a company is debt, at the end of the day. And no one really cares about debt until there’s a crisis. A company’s cash levels and debt burden should be the first things you look at when assessing a potential investment.

I also think this quote can be translated into your own cash position. Right now, the S&P/ASX 200 Index (ASX: XJO) is motoring along just fine. But if there happens to be another market crash in 2020, you’ll regret not putting aside some cash for any ASX shares that might go on sale.

More reading

• Shares up? Haven’t you seen the economy?
• These 5 ASX shares were last week’s worst performers
• Why the Reliance Worldwide share price is outperforming today
• Leading brokers name 3 ASX 200 shares to buy right now
• These 5 ASX shares were last week’s best performers

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 and recommends Berkshire Hathaway (B shares) and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short June 2020 $205 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares). 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 Warren Buffett quotes to start your week off right appeared first on Motley Fool Australia.

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I keep getting the same question, and hearing the same comments, from amateurs and professionals alike.

“How can shares be up, when the economy is still struggling?”

It is, on the surface, a reasonable, even sensible question.

But it misunderstands both the economy and the sharemarket on two fundamental levels.

First:

Humans tend to think market falls are almost always justified, but rises are to be viewed with scepticism.

To wit:

Few people say “The S&P/ASX 200 Index (ASX: XJO) shouldn’t be at 5,812 points!”

They say “How can the market be up 28%???”

Again, a reasonable question on the surface. But it misses one fundamental point:

Up 28% from where?

See, the starting point matters.

If you’re going to ask “Should the market be up 28% from March 23?”, logic dictates that you have to also ask “Should the market have fallen 38% in the first place?”

Let’s simplify it:

Should someone increase their bodyweight by 5%?

You’re already instinctively saying “It depends where you started”.

Fair to say I’m not as svelte as I should be. Today, putting on 5% of my bodyweight would be a bad idea.

But in November 2018, after spending a couple of weeks with severe pneumonia, I left hospital at 68kg. Putting on 5% of my bodyweight at that point was a very good idea.

See, the starting point matters.

Should the ASX be up 28%? No-one can say for sure.

But at the same time, you can also ask: “Should the ASX be down 13% for the year?”.

Because both are true: We’re down 13% since December 31 AND we’re up 28% since March 23.

Let’s take another lens:

What if, instead of falling 38% between Feb 20 and March 23, the market had fallen 50% or 70%? Or if it was actually UP 10%.

A subsequent 28% gain from any of those points would have us in a very different position today.

So ‘up 28%’ is all-but useless as a basis for assessment.

Actually, scrap that. It’s not ‘all-but’ useless. It’s completely bloody useless.

If you hear anyone talk about it, without putting it into context with either prior falls and/or some sort of P/E ratio (or similar), you should probably ignore them.

They’re falling into a simple but dangerous trap: assuming some arbitrary past point was an accurate basis for comparison.

It’s understandable (but wrong) for amateurs. It’s all but unforgivable for the pros.

… yet it’s still only half of the ways in which people misunderstand the situation we’re in.

The second is conflating the economy and the stock market.

Or, more specifically, conflating current share prices and current/recent past economic data.

Let’s start by looking at shares.

If you buy shares in, say, Woolworths Group Ltd (ASX: WOW) today, I assume you’re doing it for a couple of reasons:

First, I assume you think it’ll continue to make money in future (buying shares in a company you expect to go bankrupt would be a strange way to try to make a quid).

Second, I assume you want to get a share of those future profits by way of dividends, and a rising share price.

Notice both of those sentences have the word ‘future’ in them?

See, here’s the thing: If you bought Woolies on the day the ASX hit its 2020 highs, you’d have paid around $43 per share.

But this year’s earnings will probably be somewhere around $1.30 per share, and they’ll pay out around $1 in dividends.

I don’t know about you, but I’m not paying $43 to get $1 back.

If my investment in Woolies is to work out, they have to keep earning profits well into the future, ideally increasing over time.

How far into the future? Well the algebra is painful unless you’re a nerd, but essentially into eternity, but we (rightly) care more about today’s earnings than profits in the year 2084, so we ‘discount’ those to allow for the fact we have to wait so long.

Let’s say you want a 10% annual return, and Woolies will earn $1.30 each year.

Right now, in the first year of our investment, $1.30 is worth, well, $1.30.

In year 2, we discount that $1.30 by our 10% requirement and say “$1.30 in a year’s time is worth $1.17 to me today ($1.30 minus 10% ($0.13) = $1.17.).

In year 3, the $1.30 we’ll get is worth $1.05, and so on.

We add it all up and — in a perfectly efficient market — we’d get to the $36 share price.

But here’s where we need to compare the present and the future.

Yes, the economy is in recession. Unemployment may well peak at over 10%. Things — right now — are grim.

And let’s say Woolies’ profit gets completely wiped out by COVID-19. It won’t, of course, but let’s pretend.

And let’s say that it goes back to normal in 2021.

How much less should we pay for Woolies shares?

Using the maths above, we know Woolies was selling for $43 in February.

And if we’re not earning anything this year, we’ll miss out on our $1.30.

But next year’s earnings will still come in, as will every year after that.

If the full future earnings added up to $43, then taking out this year’s earnings (only) means we should only want to pay $41.70 ($43 – $1.30).

The shares should have fallen by 3%.

Okay, let’s say we’re really, really pessimistic. Let’s say it doesn’t make money in 2020 OR 2021.

Now the shares should sell for $43 – $1.30 – $1.17 (the discounted value of the second year’s profits).

So now we’ll pay only $40.50.

And, hey presto, today Woolies shares are selling for…

No, not $40.50.

Around $36.

Huh?

Exactly.

Now, as I said before, there’s no reason why the February 20 price was ‘right’, and the current price is ‘wrong’.

As I wrote last week, the market doesn’t know what it’s doing, either.

But a fall of 38% in share prices from Feb 20 to March 23 would have meant somewhere around 5 years of profits being wiped out.

A pandemic is bad, but 5 years? I don’t think so.

Which brings me back nicely to my point:

Yes, the economy is in a funk. It might take months — maybe even a year or two — to get back to normal.

And yes, that’s awful for the people and businesses involved.

But the share market isn’t (completely) stupid.

If you think Woolies was worth $43 in February, even in a worst case scenario where two years worth of profits go down the drain, it’d only be worth 10-15% less, because share prices — by their very nature — are the sum total of not just 2020 and 2021’s profits, but of every year from here on!

Get it?

Even if the market expects the next couple of years to be terrible, there was almost no logical reason — short of huge numbers of ASX companies going broke — for a fall approaching 40%.

Yep, markets overreact. It’s what they do, and what makes investing so emotionally taxing.

But if they’re going to overreact, it’s almost perfectly logical that we see decent-sized gains when it wakes up to itself.

That doesn’t always happen quickly, of course — no-one predicted the speed of this recovery.

But it’s why I was saying — during and after the worst of the falls — that I expected long-term investors to do well, buying quality companies (or an index-based ETF) at those levels.

More falls ahead? Maybe. No idea. (No-one else knows either).

After all, if the market can emotionally overreact by that much, why would you pretend you knew what it was going to do next.

Instead, looking out long term, Australia’s listed companies will do just fine. Economic activity will, I’m almost certain, return to pre-pandemic levels. I expect company profits to do the same.

(I’m not allowed to express things as certainties under ASIC rules, and that’s fair enough. But my entire wealth outside our home and cars is in the stock market, so I’m walking the talk.)

Should the market be up 28% from its lows? Because it’s an arbitrary number with no justification of the ‘then’ or ‘now’ valuations, the only answer is a casual shrug of the shoulders.

But what should be clear, by now, is that there’s no reason shares should be thrown out with the bathwater, just because the economy is currently in a rough patch.

Let’s put it another way, to finish off:

If I owned a cafe that was making $1,000 a week in profit in January, should I sell that cafe today for 40% less, just because last week’s profits were $600?

Of course not, because the customers will return, and I’ll be back making maybe $900 or $950 a week in a few months’ time.

Yet that’s what the stock market did with shares in March, and why, when it comes to its senses, we see share prices recover, even though the economy is still struggling.

Fool on!

More reading

• 3 Warren Buffett quotes to start your week off right
• These 5 ASX shares were last week’s worst performers
• Why the Reliance Worldwide share price is outperforming today
• Leading brokers name 3 ASX 200 shares to buy right now
• These 5 ASX shares were last week’s best performers

Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Woolworths 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 Shares up? Haven’t you seen the economy? appeared first on Motley Fool Australia.

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If I had $5,000 to invest today, my first choice would be ASX shares. And my 3 best picks would be Macquarie Group Ltd (ASX: MQG), Zip Co Ltd (ASX: Z1P) and Wesfarmers Ltd (ASX: WES) shares.

Why? Well, I’m not really in the mood to buy gold or bitcoin, and $5,000 won’t get me much in the way of property. Plus, with interest rates near zero, the money isn’t going anywhere but backwards sitting in the bank.

That leaves ASX shares as the best option. So here’s why I would pick these shares for a $5,000 investment this week.

Macquarie shares

With the big 4 ASX banks demonstrating high volatility and minimal income potential these days, I think a better bet is the ASX’s ‘fifth bank’, Macquarie. Although this ASX financial does offer conventional banking products like loans and bank accounts, its real business lies in asset management and investment banking.

That gives Macquarie a lot less direct exposure to the economy than a bank like Westpac Banking Corp (ASX: WBC), which I think is a useful characteristic to have in these uncertain times. It also sets up Macquarie for a lot of growth in the years ahead, as its performance over the past decade can attest to.

On current prices, Macquarie shares are offering a trailing dividend yield of 3.7%.

Zip Co shares

This ASX share is a little more speculative but has been making investors very happy of late. Zip Co is the ‘underdog’ of the buy now, pay later movement which always seems to be in the shadow of its arch-rival Afterpay Ltd (ASX: APT). However, this company is growing rapidly in its own right and its share price is up more than 400% since mid-March.

Zip Co is in the middle of a powerful tailwind towards cashless payments and has been making all the right moves of late. I would happily invest $5,000 in this company today on the confidence that it will be a lot bigger in a few years’ time.

Wesfarmers shares

In my opinion, Wesfarmers is one of the steadiest and safest shares on the ASX. It owns a staggering portfolio of some of Australia’s most well-known retail brands, including Kmart, Bunnings, Officeworks, and Target. It also owns a ~5% stake in Coles Group Ltd (ASX: COL) as well as various other industrial side-hustles.

Wesfarmers might not be as cheap today as they have been in the not-too-distant past, but I still think this company offers a solid long-term investment case at current prices. You can expect a trailing dividend yield of 3.69% from Wesfarmers shares today, which also comes fully franked.

More reading

• 2 of the best ASX dividend shares for retirees to buy today
• Keep a watch on the Zip Co share price and 1 other ASX tech this June
• Why ASX, Domain, Tyro, & Wesfarmers shares are dropping lower
• Sezzle shares and 2 other ASX techs soared up to 50% in the past 4 weeks
• ASX winners and losers from last week

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 ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO, COLESGROUP DEF SET, and 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 Got $5,000 spare? Consider Wesfarmers shares and these 2 other ASX companies appeared first on Motley Fool Australia.

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The post-COVID-19 rally came to a halt last week as the Australian share market fell. The S&P/ASX 200 Index (ASX: XJO) dropped 2.5% to finish the week at 5847.8. The 4-day trading week started positively, with the ASX following the US market higher. But early gains were erased later in the week as the US Federal Reserve Chairman warned economic recovery could take significant time. 

In just over 2 months, the coronavirus pandemic took the United States from the lowest unemployment rate in 50 years to the highest in 90 years. The Australian unemployment rate hit 6.2% last month, above the 5.9% jobless peak during the Global Financial Crisis. 

Fears of a second wave of infections both domestically and abroad caused investors to take a more risk averse approach. Travel shares were hit hard with Webjet Limited (ASX: WEB) shares falling 12%, Flight Centre Travel Group Ltd (ASX: FLT) shares down 7.1%, and Corporate Travel Management Ltd (ASX: CTD) shares down 4.4%. 

Let’s take a look at the 5 ASX shares with the biggest share price losses last week. 

Unibail-Rodamco-Westfield (ASX: URW)

Shares in Unibail fell 14.2% last week to finish the week at $4.55. The property company was removed from the S&P/ASX 100 last week following the quarterly rebalance of the S&P/ASX indexes. 

Unibail operates shopping centres, offices, and convention and exhibition centres across Europe, the US, and UK. It was heavily impacted by coronavirus lockdowns, which forced the closure of many properties. Properties are reopening as restrictions ease, but fears of a second wave of infections could have shaken investors. 

Earlier this month, Unibail announced that 65 of its 90 shopping centres have reopened as a result of eased restrictions. The company expects to have 87% of its shopping centres open by mid June following openings in Spain and London. 

In Germany and Austria, where shopping centres have been open since late April and early May, footfall is at or above 80% of levels the prior year. COVID-19 had a limited effect on the group’s March quarter turnover as rents are paid quarterly in advance in most of Europe and monthly in the US. The impact of the epidemic will be felt in the current quarter and may be significant. 

Estia Health Ltd (ASX: EHE)

Estia Health shares fell 13.7% last week to close at $1.415. Estia was dropped from the ASX 200 as part of the quarterly rebalance. The aged care provider abandoned earnings guidance at the onset of the coronavirus crisis and enacted measures to manage the risk. 

Estia operates 69 aged care homes across NSW, Victoria, Queensland and South Australia. In its latest trading update, Estia reported none of its residents had tested positive for coronavirus. Occupancy initially fell during the early stages of the COVID-19 lockdown, falling from 93.8% on 17 March to 91.7% on 26 April where it has stabilised. 

Government temporary funding is expected to contribute approximately $1.2 million to revenue in FY20. The government has also announced a one-off payment to residential aged care providers of either $900 or $1,350 (depending on location) for each resident. This is expected to contribute $5.2 million in additional revenue. 

The company is continuing to see increases in staff costs, Personal Protective Equipment, and medical supply costs. Several refurbishment and development projects have been deferred in order to manage capital. 

Southern Cross Media Group Ltd (ASX: SXL) 

Shares in Southern Cross Media fell 13% last week to finish the week at 20 cents. The radio broadcaster’s shares are down around 80% over the past year. Weak advertising markets and the onset of COVID-19 have taken their toll. 

Southern Cross completed a $169 million capital raising in May, with proceeds used to pay down debt. The capital raising was conducted at just 9 cents a share, compared to the 90 cents Southern Cross was trading at a year prior. 

The broadcaster has instituted sweeping cost reductions with $40 – $45 million in operating expenditure savings to be realised in CY20. Capital expenditure is being reduced by $3–6 million over FY20 and FY21. The FY20 interim dividend was cancelled and no final dividend will be paid. 

Following the receipt of the full proceeds of the capital raising, Southern Cross Media’s net debt stood at $161.8 million in early May. Southern Cross managed to achieve positive earnings before interest, tax, depreciation and amortisation (EBITDA) in April, with revenue declines partially offset by operating cost reductions. Southern Cross Media has, however, warned however that bad and doubtful debt provisions could reach $5 million in H2 FY20. 

Mayne Pharma Group Ltd (ASX: MYX) 

Mayne Pharma Group shares fell 12.9% last week to finish the week at 40.5 cents. Mayne Pharma was another ASX share removed from the S&P/ASX 200 in the quarterly rebalance. The drug maker has, nonetheless, regained 100% from its March low of 20 cents per share. 

The pharmaceutical company had a disappointing first half performance which saw revenues decline 17%. EBITDA fell 47% to $34.6 million. A net loss after tax of $17.5 million was also reported, driven by lower earnings and restructuring costs. 

Mayne Pharma has faced strong competition on its key generic products. The US generic market has been challenging with aggressive contracting behaviours driving price deflation. The company has been focused on reducing its cost base and rationalising its generic portfolio. Annualised savings of $20 million have so far been recorded. 

Orocobre Limited (ASX: ORE)

Shares in Orocobre fell 12.9% last week to close the week at $2.44. There was no news out of the lithium miner last week to prompt the price fall, however lithium markets are expected to remain subdued as global economies recover from the pandemic. 

Lithium is a key component in batteries used to power electric vehicles. Lithium prices plummeted last year due to oversupply and slowing growth in electric vehicles. Orocobre’s Olaroz lithium facility stopped production during the March quarter due to Argentinian COVID-19 restrictions. The shutdown, combined with planned maintenance, resulted in 21 days of lost production. 

Production for the quarter was down 11% on the prior corresponding period, due to the shutdown. March quarter product pricing was also below that of the December quarter with continuing weak demand and aggressive competitor behaviour. Sales revenue was down 32%, QoQ, to US$12.1 million.

More reading

• Why the Reliance Worldwide share price is outperforming today
• Leading brokers name 3 ASX 200 shares to buy right now
• These are last week’s best performing ASX shares
• ASX 200 down 0.3%: Big four banks mixed & Healius rockets on medical centre sale
• One often overlooked tax tip that could save you thousands

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.

The post These 5 ASX shares were last week’s worst performers appeared first on Motley Fool Australia.

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The Reliance Worldwide Corporation Ltd (ASX: RWC) share price is defying the market drop today after a top broker upgraded the stock.

Shares in the plumbing products supplier jumped 2.7% during lunch time trade to $3.05 when the S&P/ASX 200 Index (Index:^AXJO) shed 0.7% of its value.

The broader market weakness is driven by growing fears of a second wave of COVID-19 infections with new cases popping up in a food market in China.

Reliance upgrade

But this new risk factor is unlikely to change the bullish view on the stock by the analysts at Credit Suisse.

The broker upgraded Reliance to “outperform” from “neutral” following its survey of US contractors. What the broker discovered was that the outlook for the sector is a lot brighter than what it was expecting.

Credit Suisse thought that the repair and remodel (R&R) segment would be hard hit by the coronavirus shutdown. Households would be afraid of inviting contractors into their homes to quote on jobs or undertake projects.

But that thesis was proven to be either incorrect or very short-lived.

Unexpected jump in home renovations

“[The survey] complied by our US team is now showing a positive 3-month outlook, having improved materially in May,” said Credit Suisse.

“Our industry discussions also suggest that initial reticence over inviting contractors onto premises has been overwhelmed by increased WFH [work-from-home] usage related maintenance and ‘nesting’ behaviour.”

Weakness in the UK

However, the group’s UK operations may not experience a rapid rebound. There are mixed readings from the region with up to 65% of construction sites shut in May.

Since then, around 80% of sites have reopened and hardware retailers like Kingfisher have reported double-digit like-for-like sales growth.

On the other hand, suppliers like Grafton reported a 50% drop in UK distribution sales for May due to restricted trading.

Not all bad news

The broker expects Reliance’s sales in Europe, Middle East and Africa (EMEA) to be down 20% to 30% in the current period.

The good news is that this sets a low bar for FY21. Even if lacklustre trading conditions prevail, Reliance should still be able to post a 2% increase in EMEA sales in the next financial year.

The broker’s 12-month price target on the stock is $3.25 a share.

Reliance isn’t the only building related stock to be in the spotlight today. The Boral Limited (ASX: BLD) share price jumped 5.5% to $3.67 at the time of writing as it announced that Zlatko Todorcevski will take over as CEO from Mike Kane.

More reading

• These 5 ASX shares were last week’s worst performers
• Leading brokers name 3 ASX 200 shares to buy right now
• These are last week’s best performing ASX shares
• ASX 200 down 0.3%: Big four banks mixed & Healius rockets on medical centre sale
• One often overlooked tax tip that could save you thousands

Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Reliance Worldwide Limited. The Motley Fool Australia has recommended Reliance Worldwide 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 Why the Reliance Worldwide share price is outperforming today appeared first on Motley Fool Australia.

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With so many shares to choose from on the S&P/ASX 200 Index (ASX: XJO), it can be hard to decide which ones to buy.

The good news is that brokers across the country are doing a lot of the hard work for you.

Three top shares that leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

Appen Ltd (ASX: APX)

According to a note out of the Macquarie equities desk, its analysts have commenced coverage on this artificial intelligence company’s shares with an outperform rating and $38.00 price target. The broker believes that Appen’s Relevance segment has a sizeable opportunity in a fragmented and growing data preparation market. I agree with Macquarie and believe Appen is one of the best buy and hold options for investors.

IDP Education Ltd (ASX: IEL)

Analysts at Morgan Stanley have retained their overweight rating and $17.50 price target on this student placement and language testing company’s shares. Although the broker acknowledges that there is a lot of uncertainty due to the pandemic, it appears to believe the company will be in a stronger position once the crisis passes. I think that Morgan Stanley is spot on and believe IDP Education could be a great long term investment.

Seven Group Holdings Ltd (ASX: SVW)

A note out of Goldman Sachs reveals that its analysts have reiterated their buy rating and lifted their price target on this diversified investment company’s shares to $21.00. The broker is a fan of Seven Group due to an attractive combination of near-term earnings resiliency and longer-term cyclical growth. It notes that the company is benefiting from healthy mining activity and better than expected construction activity. While it isn’t a share which I’m a big fan of, I think that Goldman makes some very good points. This could make it worth taking a closer look.

More reading

• These 5 ASX shares were last week’s worst performers
• Why the Reliance Worldwide share price is outperforming today
• These are last week’s best performing ASX shares
• ASX 200 down 0.3%: Big four banks mixed & Healius rockets on medical centre sale
• One often overlooked tax tip that could save you thousands

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 Idp Education Pty Ltd. The Motley Fool Australia owns shares of Appen 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 Leading brokers name 3 ASX 200 shares to buy right now appeared first on Motley Fool Australia.

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The post coronavirus rally came to a halt last week as the S&P/ASX 200 (ASX: XJO) fell 2.5%, finishing the week at 5,847.8. The shortened trading week started positively, following the US market higher on Tuesday. But gains were erased later in the week as the US Federal Reserve Chair warned economic recovery could take significant time. 

The coronavirus pandemic took the US from the lowest unemployment rate in 50 years to the highest in 90 years over just 2 months. In Australia, the unemployment rate hit 6.2% last month, above the 5.9% jobless peak during the Global Financial Crisis. 

Fears of a second wave of infections both at home and in the United States caused investors to take a bearish stance. Travel shares were hit hard with Webjet Limited (ASX: WEB) shares falling 12%, Flight Centre Travel Group Ltd (ASX: FLT) shares down 7.1%, and Corporate Travel Management Ltd (ASX: CTD) shares down 4.4%. 

Bank shares were also in the firing line following their strong May rally, with all 4 major banks losing ground. Investors retreated to safe haven in gold shares which recorded modest gains. Below we’ll take a look at the 5 best performing ASX shares with the top share price gains last week. 

IPH Limited (ASX: IPH)

Shares in IPH rose 6.6% to $7.61, making it one of the best performing ASX shares for the week. This followed the announcement that subsidiary AJ Park would acquire New Zealand intellectual property firm, Baldwins. 

IPH’s services include the protection, commercialization, enforcement, and management of intellectual property. IPH was the first intellectual property firm to list on the ASX in 2014. The share price has more than tripled since the IPO and it’s become the leading IP services firm in the Asia Pacific region. 

The Baldwins acquisition will give the merged businesses greater depth. IPH will focus on quality rather than quantity when it comes to acquisitions. The acquisition should add around $2 million to annual EBITDA, positively impacting enterprise value. 

TPG Telecom Limited (ASX: TPM)

TPG Telecom shares rose 3.9% last week to finish the week at $8.20. The company announced a special dividend, expected to be between 49 cents and 52 cents per share. Although, this is subject to its proposed merger proceeding. 

TPG plans to merge with Vodafone via a scheme of arrangement. Its shareholders are due to vote on the scheme on 24 June. The merger will combine complementary network infrastructure and is expected to generate cost and capital expenditure synergies. 

Vodafone CEO Inaki Berroeta said:

“Through its increased strength and scale, the merger is expected to deliver stronger returns to shareholders than either business could achieve on a standalone basis.”

Under the scheme, Vodafone will acquire 100% of TPG shares. Following completion, Vodafone shareholders will own 50.1% of the merged group and TPG shareholders 49.9%. If TPG shareholders vote for the scheme it will become effective on 29 June. 

Mineral Resources Limited (ASX: MIN)

Also among the best performing ASX shares last week were Mineral Resources. Shares in the company rose 3.8% to close the week at $20.44. The company shared no news to prompt the price increase, but it may benefit from the strong rise in iron ore prices. 

Mineral Resources provides mining services to clients throughout Western Australia and the Northern Territory. It operates mining sites in the Pilbara and Goldfields regions and ships product through Utah Point and Esperance. Its iron ore assets comprise known deposits and prospective targets across the Pilbara and Yilgarn regions. 

In the quarter containing March, Mineral Resources produced 3.4 million wet metric tonnes of iron ore, a 28% increase over the prior corresponding period. The mining services business performed strongly with second-half mining services EBITDA expected to be similar to the first half ($172 million). 

Coca-Cola Amatil Ltd (ASX: CCL)

Coca-Cola Amatil shares gained 3.7% last week to finish the week at $9.14. Nonetheless, shares remain well down from their February peak of over $13. The beverage company’s peak trading times of Easter, ANZAC Day, and Ramadan were adversely impacted by the April lockdown measures. The April volume of beverages sold was down 33%. 

Widespread outlet closures and restricted trading impacted margins and immediate consumption channels, with volume transitioning to lower margin channels. The adverse impact on earnings and cash flow has been partially mitigated by tightened cost management and reduced capital expenditure. 

Trade improved marginally in May thanks to easing in restrictions with volumes in the first 3 weeks down 26% on the prior corresponding period. Coca-Cola gained market share across Australia, Indonesia, and New Zealand over the lockdown period. 

Managing Director Alison Watkins said:

“We are confident that our strong balance sheet, ample liquidity, robust cash flows, and solid credit ratings place us in a strong position financially and operationally to trade through this period and emerge a stronger and better business.”

Newcrest Mining Limited (ASX: NCM)

Newcrest Mining shares rose 3.6% last week to reach $30.09 on Friday. The gold miner benefitted from the flight to safe-haven assets in the latter part of the week. Newcrest released an exploration update last week revealing strong drilling results at the Havieron and Red Chris Projects. 

CEO Sandeep Biswas said,

“We are excited by the drilling results at Havieron and Red Chris. At Havieron we have returned our best drill result to date and with the step out drilling result we see real potential to further expand this orebody. Getting underground is now the priority and we continue to progress the work to commence decline development by the end of this calendar year or early 2021.”

Newcrest recently completed its $200 million share purchase plan following a $1 billion institutional placement in April. Newcrest will use these funds to ensure the strength of its balance sheet and fund future growth options. The company’s FY20 guidance has not been impacted by COVID-19, likely part of the reason why it was among the best performing ASX shares last week. The company expects to produce 2,100 – 2,200koz of gold along with 140 – 145kt of copper during the financial year. 

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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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