Author: therawinformant

Is the Transurban Group (ASX: TCL) share price a buy with traffic returning to the roads around Australia’s capital cities?

Life is starting to return to normal around Australia and one of those elements is that road traffic is starting to return.

The last couple of months have been tough for Transurban. There’s a reason why the Transurban share price fell 38% in around a month. Traffic was expected to fall heavily and it did.

In the week of 26 April 2020 Transurban saw a 44% decline of traffic across its entire network because of the coronavirus. But restrictions are starting to lift and schools are opening up again.

Is the Transurban share price a buy?

Since that low on 19 March 2020 the Transurban share price has actually risen 37.6% so it has recovered more than half of the lost ground.

Will it keep going and get back to its pre-coronavirus level? There’s two big factors to consider.

The first is that interest rates are now incredibly low. That should, theoretically, push asset prices up higher than they would have otherwise been. This should help boost Transurban’s fair value share price. 

But most importantly – what are the traffic numbers going to be over the next 12 months? Will there continue to be a big reduction of traffic with people working at home? Other drivers may want to save a few dollars and avoid toll roads if they’re being cautious with spending.

Or will life somehow miraculously get back to normal before the end of 2020?

Obviously these considerations are very important for the Transurban share price and traffic is key for the Transurban distribution.

Foolish takeaway

At this stage it’s hard to say which way things are going to go for Transurban and its traffic numbers. That’s why I’m happy to leave it on the sidelines for now.

More reading

• ASX 200 Weekly Wrap: Gold miners help edge ASX ever higher
• 3 top ASX dividend shares to buy next week
• 2 high quality ASX dividend shares for patient investors to buy now
• In a post-COVID world, could Australia be the next superpower?
• 3 ASX 200 pandemic winners and 3 losers

Motley Fool contributor Tristan Harrison 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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Despite still trading lower than its 52-week high, the Newcrest Mining Limited (ASX: NCM) share price has been climbing higher in 2020 as investors flock to ASX 200 gold shares. But while investors have been snapping up the Aussie gold miner, is it still in the buy zone?

Why the ASX 200 gold miner’s shares are soaring

While the S&P/ASX 200 Index (ASX: XJO) is down 16.83% this year, Newcrest’s value has surged 5.79%. That means the Aussie gold miner has outperformed the ASX 200 benchmark by an impressive 22.62% in 2020.

The main factor driving the Newcrest Mining share price higher is the global gold price. The value of gold has surged this year amid the COVID-19 pandemic, rising geopolitical tensions and an oil price war.

Investors don’t like uncertainty, and there’s been plenty of that in 2020. This means the gold price has reached multi-year highs above the US$1,750 per ounce mark on the back of strong demand. That’s good news for the Newcrest Mining share price which has climbed to $32.00 per share.

Is the Newcrest Mining share price in the buy zone?

Newcrest is a solid large-cap ASX share at the best of times. It’s worth $25.9 billion at the moment and is well inside the ASX50. However, the perceived safety of gold has supported the gold miner’s share price so far this year.

Having said that, I won’t be buying Newcrest shares. While the Aussie gold miner could continue to outperform this year, I like to invest for the long-term. It’s easy to get distracted by short-term share price movements, but it pays to remember your investment strategy and avoid the day-to-day noise.

Foolish takeaway

There are plenty of investors looking to invest in ASX gold shares right now. While a soaring gold price could support the Newcrest Mining share price in the short-term, buying shares only makes sense as part of a longer-term investment strategy.

More reading

• Are ASX bank shares worth buying despite dividend cuts?
• 5 things to watch on the ASX 200 on Wednesday
• Top brokers pick the latest ASX stocks to buy today
• Here’s why the Fortescue share price hit an all-time high today
• Is the ASX 200 getting too far ahead of itself?

Motley Fool contributor Ken Hall 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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Some shares are still trading at crazy cheap prices because of the coronavirus. I think it’s worth considering if they are buys today or not.

The best time to buy shares is when they’re at much cheaper prices, which is what has happened to plenty of businesses.

Here are three shares at crazy cheap prices that could be worth looking at:

Challenger Ltd (ASX: CGF) 

The Challenger share price is down 57% from where it was at 21 February 2020. The annuity provider has seen a painful hit, but the company is still predicting that it can hit its profit before tax guidance in FY20 which is reassuring.

Over the long-term I do think that the lower interest rates could be harmful to Challenger as it needs to generate a return to pay the annuities. A lot of its investments are currently in bonds, which are earning a very small return. But the demographics are still in its favour. 

At the current crazy cheap share price Challenger offers a trailing grossed-up dividend yield of 11.4%.

Brickworks Limited (ASX: BKW) 

The Brickworks share price is down 34% since 20 February 2020. I think this is a crazy cheap price for a reliable share that has already been around for many decades.

Construction is clearly going to be affected this year as projects finish and new ones are delayed (or cancelled). However, I believe this is just a shorter-term problem and projects will return sometime next year.

In the meantime, Brickworks receives reliable cashflow from its other assets being its ‘investments’ division and 50% stake in an industrial property trust which should be able to fund the grossed-up dividend yield of 6.25% fore the foreseeable future.

Costa Group Holdings Ltd (ASX: CGC)

The Costa share price is down 38% from a year ago. The drought and other one-off issues caused a lot of hurt to Australia’s biggest horticultural player.

I think a share price under $3 is a crazy cheap price considering food prices are rising and Costa continues to have attractive global growth aspirations.

There has even been a bit more rain recently which could help the company as well. Whilst it doesn’t have a large dividend, it is still paying one which hopefully shows the confidence of the board in the company’s future.

Foolish takeaway

I think each of these shares are trading at crazy cheap prices for what profit they may be generating in two or three years. If I had to pick one of the three it would be Brickworks for its defensive assets and US growth prospects.

More reading

• Is the ASX 200 getting too far ahead of itself?
• 3 Warren Buffett ASX dividend shares to buy right now
• 3 ASX 200 dividend shares I’d buy today
• The 5 ASX shares that were last week’s biggest fallers
• Meet the ASX 200 company that just posted a 90% surge in profit

Motley Fool contributor Tristan Harrison owns shares of COSTA GRP FPO. The Motley Fool Australia owns shares of and has recommended Brickworks, Challenger Limited, and COSTA GRP 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.

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ASX bank shares have been tumbling lower in 2020, but could they be back in the buy zone?

Why are ASX bank shares trading cheaply today?

The biggest factor hammering the S&P/ASX 200 Index (ASX: XJO) lower in 2020 is the coronavirus pandemic. COVID-19 has brought the global economy to a standstill as borders have shutdown and people have been forced indoors.

But the Aussie banks have been hit particularly hard this year. In fact, ASX banking shares are underperforming the benchmark index by some margin as loan impairments rise and dividends are slashed.

Initially, APRA was putting pressure on the banks to conserve cash in the current environment. However, investors are now wondering if earnings could suffer and dividends could continue to fall due to lower profits as well.

Is it a good time to buy?

All of these headwinds have spooked investors into selling off the banks in droves. However, the fact is that the ASX bank shares like Commonwealth Bank of Australia (ASX: CBA) remain a pillar of the Aussie economy. While there is the rise of neobanks threatening their business model, many Aussie banks are actually backing their own horses in this race.

For instance, National Australia Bank Ltd. (ASX: NAB) is behind UBank while Bendigo and Adelaide Bank Ltd (ASX: BEN) supports Up. This could mean the increasing popularity of neobanks might not be the death sentence for ASX bank shares that many expect.

Furthermore, despite softer earnings, CBA still posted a half-year cash profit of $4.5 billion. COVID-19 will pass and I think we could see Aussie banks continue to pay strong dividends, albeit at lower levels, well into the future.

Foolish takeaway

No one knows where the ASX 200 is headed in 2020. However, I think the ASX bank shares are still high-quality companies with strong earnings potential. This could mean now is a good time to buy your favourite bank’s shares at a discounted price.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Top brokers pick the latest ASX stocks to buy today
• Is it time to buy ASX banks?
• Here’s why the Fortescue share price hit an all-time high today
• Is the ASX 200 getting too far ahead of itself?

Motley Fool contributor Ken Hall 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 Are ASX bank shares worth buying despite dividend cuts? appeared first on Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) has been on strong form over the last few trading days, which has led to a number of shares storming higher.

A few shares have even climbed so much they have just hit record highs.

Three shares which are flying high right now are listed below. Here’s why they just hit record highs:

Ansell Limited (ASX: ANN)

The Ansell share price reached a record high of $35.00 on Tuesday. Investors have been fighting to get hold of the health and safety products company’s shares due to the increasing demand it is experiencing during the pandemic. This has particularly been the case for its hand and body protection solutions which offer protection from infective agents. In light of this strong demand, the company was able to reaffirm its guidance. It expects earnings per share in the range of 112 US cents to 122 US cents in FY 2020.

Fortescue Metals Group Limited (ASX: FMG)

The Fortescue Metals share price jumped to a record high of $13.95 yesterday. Investors have been buying the iron ore producer’s shares due to the resilience of the price of the steel making ingredient during the pandemic. With the iron ore price at this level and Fortescue on track for record shipments this year, the miner looks well-placed to deliver bumper profits and free cash flows. This is likely to lead to the company rewarding shareholders with generous dividends and potentially share buybacks.

Pushpay Holdings Ltd (ASX: PPH)

The Pushpay share price stormed to a record high of $6.80 on Tuesday. The donor management system provider’s shares have been racing higher since the release of its full year results earlier this month. Investors were impressed with Pushpay’s 1,506% increase in EBITDAF to US$25.1 million and its very positive guidance for FY 2021. Management expects its EBITDAF to grow 91.2% to 107% next year. But perhaps even better is the company’s longer term ambition of winning a 50% share of the medium to large church market. This represents a US$1 billion revenue opportunity, which is materially more than FY 2020’s operating revenue of US$127.5 million.

More reading

• Here’s why the Fortescue share price hit an all-time high today
• 3 fantastic ASX shares to buy now to get rich later
• Macquarie picks the best stocks to buy for the post COVID-19 rebound
• Could ASX 200 iron ore shares save the Australian economy?
• 3 ASX shares that will have strong dividends in 2020

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