Author: therawinformant

When you’re young and first start investing you might focus more on growth shares that offer strong potential returns like Afterpay Ltd (ASX: APT) or Zip Co Ltd (ASX: Z1P).

This is because if things don’t go to plan with these investments, you have plenty of time to recover from your losses.

But as you enter retirement, I feel the prudent thing to do is to limit these investments to just a very small part of your portfolio and focus on shares that offer income and capital preservation.

With that in mind, two shares which I think are great for retirees right now are as follows:

Goodman Group (ASX: GMG)

I think Goodman Group could be a good option for retirees. It is an integrated commercial and industrial property group which owns, develops and manages industrial real estate in 17 countries. This includes warehouses, large scale logistics facilities, and business and office parks.

Goodman Group has made some very smart investments over the last decade. This was particularly the case with its decision to gain exposure to the structural tailwinds of the ecommerce market. It has direct relationships with some of the biggest operators such as Amazon and Walmart. Given how quickly online shopping is growing, these assets are likely to be in demand for a long time to come and should underpin solid earnings and distribution growth over the next decade.

Telstra Corporation Ltd (ASX: TLS)

Telstra is the undisputed leader in the telco sector with a massive 18.5 million retail mobile services and 3.7 million retail bundle and data services. While the last few years have been difficult for the company because of the NBN rollout, it is making very strong progress with its T22 strategy. Based on its half year update, the company is well on its way to simplifying its business, cutting costs materially, and carving out a leadership position in 5G.

And with FY 2021 expected to be the peak year of the NBN headwind, I feel that a return to growth is on the card in the near future. In the meantime, I’m optimistic that its dividend is sustainable at 16 cents per share and no further dividend cuts are necessary. If this proves accurate, then Telstra’s shares offer a generous fully franked forward 5% dividend yield at present.

More reading

• 4 top ASX 200 shares for blue chip investors
• Why I’d buy and hold Telstra shares for a decade
• Does 5G’s potential make the Telstra share price a long-term buy?
• 3 blue chip ASX dividend shares to buy right now
• Why high yield dividend shares can be detrimental to your wealth

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 and has recommended Telstra Limited. 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 2 ASX 50 shares to buy for your retirement portfolio appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2T9osRQ

The S&P/ASX 200 Index (ASX: XJO) is back in the green today, posting a rise of 0.81% at the time of writing to 5,371 points.

We have now put the lows we saw for the ASX 200 in March (under 4,500 points) well and truly in the rear-view mirror but even so, we remain a long way from the all-time highs we saw in February where the ASX 200 was above 7,150 points. It will take a lot to get back to those levels.

Even though the broader market is still significantly down, there are some ASX shares sitting at 52-week highs as we speak. Here are 5 of them:

Pushpay Holdings Ltd (ASX: PPH)

Pushpay is a payments company that is developing digital solutions to adapt the old ‘pass the hat around’ fundraising models that many organisations (like churches and charities) still rely on. One of the consequences of the coronavirus pandemic is a decisive move away from physical cash payments and clearly the market is viewing Pushpay as a winner here. Its shares made a new all-time high of $6.63 earlier today.

Evolution Mining Ltd (ASX: EVN)

Gold often goes up in value when there is a lot of uncertainty in the markets and investors have an increased appetite for ‘safe-haven’ assets. As a physical, rare and precious metal, the tangibility of gold is proving a massive drawcard for investors right now as money printing and quantitative easing become a seemingly permanent fixture of US monetary policy.

As such, the gold price is approaching record highs in US dollar terms and is at record highs in Aussie dollar terms, which is why miners of the yellow metal are in high demand right now. Evolution is one of those miners and today, Evolution shares are asking a fresh 52-week high of $5.70.

Saracen Mineral Holdings Limited (ASX: SAR)

Saracen is another ASX gold miner and has been rising for the same reasons discussed above for Evolution. Today, Saracen shares made a new 52-week and all-time high of $4.98.

Ramelius Resources Limited (ASX: RMS)

Ramelius is yet another gold miner that is benefitting from the high price of the yellow metal. Its shares hit a new 52-week high of $1.54 today. It’s not quite an all-time high for Ramelius, but its certainly the highest share price seen for this gold miner since at least 2011.

Foolish takeaway

Just because a company is at a 52-week high doesn’t mean it’s a good buy today. It could well be the start of a long journey upwards for a particular ASX share, but on the other hand, it could be the peak before a decline – it can be hard to know. If you’re thinking of buying any one of these shares, just be careful that you are making a prudent investment and not just jumping on a bandwagon.

More reading

• Brokers name 3 ASX 200 shares to buy today
• Leading fund manager sees good ASX buying opportunities
• 6 ASX shares driving the Australian gold boom
• Why the best performing ASX stock might have more room to run higher
• ASX 200 up 0.8%: Big four banks push higher but Xero tumbles lower

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended PUSHPAY FPO NZX. 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 4 ASX shares are at 52-week highs. Time to invest? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2Lwx5le

Australia’s top brokers have been busy adjusting their estimates and recommendations again, leading to the release of a large number of broker notes this week.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

BHP Group Ltd (ASX: BHP)

According to a note out of UBS, its analysts have upgraded this mining giant’s shares to a buy rating with a $38.00 price target. The broker made the move largely on valuation grounds after a sizeable decline in its share price over the last three months. It believes this is a buying opportunity and notes that BHP is well-placed to continue paying strong dividends through the pandemic. The broker also sees the easing of lockdowns globally as a big positive. I agree with UBS on BHP and would be a buyer of its shares.

Commonwealth Bank of Australia (ASX: CBA)

Analysts at Citi have retained their buy rating and $68.75 price target on this banking giant’s shares following its third quarter update. Commonwealth Bank’s profits are running short of the broker’s expectations for the second half. However, it notes this is due to a $1.5 billion COVID-19 provision. And while the broker appears doubtful on its final dividend and has downgraded its CET1 ratio forecast, it still sees value in its shares at this level. I think Citi is spot on with this assessment and feel Commonwealth Bank’s shares are very attractively priced.

Xero Limited (ASX: XRO)

A note out of Credit Suisse reveals that its analysts have retained their outperform rating and lifted the price target on this business and accounting software provider’s shares to $88.00. Credit Suisse was pleased with Xero’s performance in FY 2020 and notes that it delivered a quality full year result. And while it has downgraded its estimates for FY 2021 slightly to reflect the impact of the pandemic, it remains very positive on its long term growth prospects. I would have to agree with Credit Suisse and feel its recent share price weakness is a buying opportunity.

More reading

• Why Boral, Corporate Travel Management, United Malt, & Xero are dropping lower
• Why the best performing ASX stock might have more room to run higher
• ASX 200 up 0.8%: Big four banks push higher but Xero tumbles lower
• Where growth, income, and value investors can invest $5,000 today
• Want to invest like Warren Buffett? Buy and hold these ASX 200 shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Xero. 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 Brokers name 3 ASX 200 shares to buy today appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3bzuy4g

You can be paid huge amounts of cash to own the ASX dividend shares in this article in your portfolio.

If you’re trying to generate income then the RBA’s official interest rate of 0.25% isn’t going to do much for you unless you’re just protecting capital though the coronavirus crisis.

But there are some ASX dividend shares which will handsomely reward you for owning them over the years:

WAM Research Limited (ASX: WAX) 

WAM Research has a grossed-up dividend yield of 11.1%. It has increased its dividend every year since the GFC. There are few shares that could have provided as much dividend income to investors over the past 10 years. I think it’s one of the best ASX dividend shares.

It’s a listed investment company (LIC) that invests in undervalued small and medium businesses. It has generated lots of profit in the past, which allows the LIC to steadily pay out a growing fully franked dividend.

One pleasing factor is that it usually holds a high cash balance for downside protection and opportunities.

Naos Emerging Opportunities Company Ltd (ASX: NCC) 

Naos Emerging Opportunities Company has a grossed-up dividend yield of 13.8%. It hasn’t decreased its dividend in its fairly short existence. Recently it has been maintaining the dividend, but there was a string of increases before that. With such a high yield, just maintaining the dividend would be great from this ASX dividend share.

Naos is another LIC that invests in shares with market capitalisations under $250 million. It’s finding those shares that are undiscovered to the rest of the market. It’s then able to turn some of those capital gains into a solid dividend. Those small caps hopefully have a lot of growth potential.

Fortescue Metals Group Limited (ASX: FMG) 

Australian resource shares are known for being decent ASX dividend shares through the cycle. In the good times they are dividend cash machines.

As long as the China-Australia relationship remains amicable then Fortescue should be able to keep generating solid returns and paying those big dividends.

It currently offers a trailing grossed-up dividend yield of 11.5%. That’s a very solid yield in the current world.

Which ASX dividend share to buy

Fortescue’s yield does look attractive, but you’re up for commodity risks if you go for that one. It’s hard to pick a winner of the other two ASX dividend shares. WAM Research is trading at a sizeable premium to its net assets, though I like the cash position and added diversification that WAM Research’s portfolio has.

More reading

• Goldman Sachs names 5 reasons iron ore prices won’t crash
• Looking for dividend income? Try these 3 ASX shares
• Why CBA, CSR, Fortescue, & Northern Star shares are pushing higher
• Why high yield dividend shares can be detrimental to your wealth
• These were the top 10 ASX 200 shares over the last year

Motley Fool contributor Tristan Harrison 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 Get paid huge amounts of cash to own these ASX dividend shares appeared first on Motley Fool Australia.

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

The S&P/ASX 200 Index (ASX: XJO) may be storming higher on Friday, but not all shares are doing the same.

One area of the market that is missing out on today’s rebound is the travel sector.

Here’s a snapshot of the sector at the time of writing:

• The Corporate Travel Management Ltd (ASX: CTD) share price is down 3%.
• The Flight Centre Travel Group Ltd (ASX: FLT) share price is 1.5% lower.
• The Qantas Airways Limited (ASX: QAN) share price is down 1%.
• The Webjet Limited (ASX: WEB) share price is down over 0.5%.

Why are travel shares underperforming today?

Today’s underperformance appears to have been sparked by comments out of the International Air Transport Association (IATA).

On Thursday the trade association for the world’s airlines warned that the impact of the pandemic on air travel was likely to be felt for many years to come.

In fact, the IATA estimates that passenger traffic won’t rebound to pre-crisis levels until at least 2023. This would be a blow for the likes of airline operators such as Qantas and travel bookers such as Flight Centre.

Though, the IATA’s director general and CEO, Alexandre de Juniac, told CNBC that he is optimistic that more planes will be in the skies in the next six weeks.

He said: “We are asking governments to have a phased approach to restart the industry and to fly again. We are aiming at reopening and boosting the domestic market by end of the second quarter, and opening the regional or continental markets — such as Europe, North America or Asia-Pacific — by the third quarter, and intercontinental in the fall.”

Mr de Juniac also revealed that he is against the idea of 14-day quarantine periods for travellers upon arrival. Given how this is arguably the length of a typical holiday, tourism markets are likely to struggle with restrictions of this nature in place.

He explained: “We are advocating with governments not to implement quarantine measures that will retain people for two weeks that will arrive anywhere. We think that it is useless provided we have implemented the health and sanitary controls that we are discussing with governments. It is absolutely key for the tourist industry which is so important for so many countries in Europe.”

It certainly looks like it will be an eventful few months for Australian travel shares. 

More reading

• Why Boral, Corporate Travel Management, United Malt, & Xero are dropping lower
• Broker tips 10 ASX 200 shares for a post-coronavirus recovery
• Why Beach, CBA, Qantas, & Xero shares are dropping lower
• Are ASX travel shares like Qantas great value?
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group 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 Qantas, Webjet and these ASX travel shares are dropping lower today appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3bzjWTc

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Video-streaming veteran Netflix (NASDAQ: NFLX) is trading near all-time highs right now, currently fetching $440 per share. Jefferies analyst Alex Giaimo sees more gains ahead. Giaimo opened coverage of Netflix on Thursday with a buy rating and a price target of $520 per share.

The investment thesis

The analyst cited three main reasons to own Netflix shares today:

• This company’s addressable market is “vastly underappreciated.”
• Improving profit margins will lead to sustainable free cash flows over time.
• Netflix has proven its “ability to create value” in a rapidly changing market.

Giaimo expects year-over-year subscriber growth to remain in double-digit percentages until 2023 alongside a relatively stable penetration of the domestic market. His model assumes Netflix will widen its international household penetration from 18% to 28%, addressing a global market of roughly 850 million broadband households. Meeting the analyst firm’s targets would give Netflix approximately 285 million subscribers in 2023, up from 183 million paid memberships today.

The financial background

Netflix has been consuming a lot of cash in recent years due to the high up-front costs of producing a lot of original content. Management has said that 2019 should be the peak of Netflix’s cash burn, topping out at $3.1 billion. Since content production efforts have ground to a halt under COVID-19 lockdown policies, Netflix expects to consume roughly $1 billion of free cash in 2020, followed by larger content production expenses in 2021.

The key to unlocking positive cash flows is indeed found in wider profit margins. Here’s how Netflix’s operating margins and cash profit margins have developed over the last three years:

NFLX Operating Margin (TTM) data by YCharts

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• 5 things to watch on the ASX 200 on Friday

Anders Bylund owns shares of Netflix. The Motley Fool owns shares of and recommends Netflix. The Motley Fool has a disclosure policy. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Netflix. The Motley Fool Australia has recommended Netflix. 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 Will Netflix Be a $520 Stock? appeared first on Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

from Motley Fool Australia https://ift.tt/2WW563T

In afternoon trade the S&P/ASX 200 Index (ASX: XJO) remains on course to end the week on a high. At the time of writing the benchmark index is up 0.8% to 5,372.5 points.

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

The Boral Limited (ASX: BLD) share price is down 3% to $2.50. Investors have been selling the building products company’s shares following the release of a trading update. Boral revealed that revenues are down in most businesses in the first four months of the second half relative to the prior corresponding period. This is largely due to volume and cost pressures associated with bushfires in Australia in January followed by COVID-19 impacts more broadly. EBITDA margins for the period January to April 2020 are tracking ~3-5% lower than in the first half.

The Corporate Travel Management Ltd (ASX: CTD) share price is down 3% to $10.31. This decline may have been driven by comments out of the International Air Transport Association. It estimates that passenger traffic won’t rebound to pre-crisis levels until at least 2023.

The United Malt Group Ltd (ASX: UMG) share price has fallen 7% to $3.99. United Malt’s shares have come under pressure after completing a $140 million institutional placement. The malt business raised the funds at $3.80 per share, representing an 11.4% discount to its last traded price. The proceeds will be used to strengthen its balance sheet and provide financial and operational flexibility.

The Xero Limited (ASX: XRO) share price is down 4.5% to $76.32. This decline may have been driven by a broker note out of Macquarie this morning. According to the note, the broker has downgraded the accounting software provider’s shares to a neutral rating and cut the price target on them to $75.00. It made the move due to the uncertainty being caused by the pandemic.

More reading

• ASX 200 up 0.8%: Big four banks push higher but Xero tumbles lower
• ASX construction shares feel impacts of COVID-19 shutdowns
• Where growth, income, and value investors can invest $5,000 today
• Is the Xero share price a buy?
• ASX 200 drops 1.7%, Xero reports a profit

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. The Motley Fool Australia owns shares of Xero. 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 Boral, Corporate Travel Management, United Malt, & Xero are dropping lower appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2Z6Y92C

The Australian share market saw particularly strong gains during April, with the S&P/ASX 300 Index (ASX: XKO) up by 9.0%.

Investment fund manager Perennial commented in its latest monthly report that the ASX market rally in April was across a broad industry base, with the resources sector performing particularly strongly.

Energy, Gold and Mining Services sectors rally strongly

Energy was the best performing sector during April, up by an impressive 25%, driven by strong optimism in relation to the outlook of the oil price. Leading the charge in this sector included: Santos Ltd (ASX: STO) shares up by 44% during the month, Woodside Petroleum Limited (ASX: WPL) up by 23% and Origin Energy Ltd (ASX: ORG) up by 27%. These strong rises were on the back of a strong sell-off in the energy sector during March due to a sharp fall in demand.

Perennial noted that gold shares also performed very strongly, driven by further increases in the gold price, with Evolution Mining Ltd (ASX: EVN) shares up by 34% during April, and St Barbara Ltd (ASX: SBM) and Northern Star Resources Ltd (ASX: NST) both up by 22%. Mining services companies Perenti Global Ltd (ASX: PRN) and Seven Group Holdings Ltd (ASX: SVW) also both saw strong gains.

Early signs of a post-coronavirus recovery could provide further share price boost

The Australian Government’s quick response (and that of many other countries) to the crisis, including monetary easing and fiscal stimulus, will no doubt lessen the blow of the crisis on both the local and global economy.

Also, Perennial pointed out that it is growing increasingly more apparent that the steps taken to limit the spread of the coronavirus in Australia have been more successful than in most other developed nations. This provides Australia with the opportunity to fire up its economy sooner than most. It also positions Australia well to lead other nations in terms of this return to normal economic activity.

Further buying opportunities for long term investors

The federal government’s 3-step plan to reopen Australia last week, which aims to see the majority of Australian businesses re-opened by the end of July, will lead the path forward in this respect and I feel this could lead further share price growth in the ASX in the months ahead.

On a further positive note, with the recent share price falls since February, a significant amount of the downside in the market has now already been factored into current market prices. Also, despite the strong rally in April, there are still opportunities for long-term investors to buy quality companies at more attractive prices.

More reading

• 6 ASX shares driving the Australian gold boom
• ASX 200 up 0.8%: Big four banks push higher but Xero tumbles lower
• Why Kogan, Macquarie, Newcrest, & Santos shares are zooming higher
• Big bounce in these ASX stocks may be over before it began
• Got $2,000? Here are 2 ASX 200 energy shares to buy today

Motley Fool contributor Phil Harpur 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 Leading fund manager sees good ASX buying opportunities appeared first on Motley Fool Australia.

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

As the gold boom continues, Australia is set to overtake China as the world’s top gold-producing nation, according to a report by Resources Monitor. Additionally, a separate report by Fitch Solutions, as reported by Australian Mining, predicted an increase in national gold output to 13.3 million ounces by 2029. 

Australian gold miners are cost-effective producers. Evolution Mining Ltd (ASX: EVN) touted the potential reduction of the all-in sustaining cost (AISC) when acquiring Red Lake.  

Projects driving growth

The Fitch Solutions report ranked Australia second after Canada in terms of growth projects and developments. 

For several reasons, Cadia mine is the jewel in the crown for Newcrest Mining Limited (ASX: NCM). For instance, it was the largest gold producer of 2019 with a full-year production of 871,246 ounces. The company is planning to push its plant to 33 million tonnes total throughput per year. And then to 35 million tonnes.

The company has an AISC of US$827 and a recently announced gold streaming acquisition will help keep AISC low. I believe Newcrest will be one of the great historic gold companies within the decade. Newcrest is trading at a price-to-earnings (P/E) ratio of 26.61.

Saracen Mineral Holdings Limited (ASX: SAR) is upgrading its Carouse Dam from 2.4Mtpa of mill throughout to 3.2Mtpa. In addition, Saracen has shown it is a well-managed company. It is consistently one of the largest-traded gold shares on the ASX by volume. Saracen has an AISC of $1,133 and it is trading at a P/E ratio of 36.77 at the time of writing.

Regis Resources Limited (ASX: RRL) is bringing on the McPhillamys project. The company claims this is Australia’s largest remaining orebody via open pit technology. Regis has an AISC of $1,174 and it is currently trading at a P/E of 14.69.

Further gold boom prospects

Current planned expansions are not the only Australian gold boom prospects. The gold industry also has a number of high prospect exploration projects and feasibility studies underway.

This includes the Havieron Pilbara exploration by Newcrest, the Yamarna Terrane of the eastern Yilgarn by Gold Road Resources (ASX: GOR), the Red 5 Limited (ASX: RED) King of the Hills gold deposit, and the high-grade 2.2 million ounce deposit by Bellevue Gold Ltd (ASX: BGL).

Foolish takeaway

The gold miners of Australia have worked hard to earn a reputation as efficient producers. The gold price in Australian dollars remains at all-time high levels and it appears likely to stay that way for the medium term. I do not think the COVID-19 pandemic, economic uncertainty and global trade issues are likely to subside soon.

More reading

• Leading fund manager sees good ASX buying opportunities
• ASX 200 up 0.8%: Big four banks push higher but Xero tumbles lower
• Why Kogan, Macquarie, Newcrest, & Santos shares are zooming higher
• 5 things to watch on the ASX 200 on Friday
• Why Breville, Graincorp, Mesoblast, & Newcrest shares are charging higher

Motley Fool contributor Daryl Mather 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 6 ASX shares driving the Australian gold boom appeared first on Motley Fool Australia.

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

The Graincorp Ltd (ASX: GNC) share price is rallying for the second day and is topping the charts!

Shares in the grain handler jumped 8.5% to $3.98 in morning trade. This makes it the best performer on the S&P/ASX 200 Index (Index:^AXJO) with gold miner Silver Lake Resources Limited. (ASX: SLR) a distant second.

Graincorp’s gains comes on top of yesterday’s near 12% run after it posted a better than expected first half profit result.

The brightening outlook for agribusinesses is also giving Elders Ltd (ASX: ELD) a lift with the stock jumping 5% to $9.52 at the time of writing. Elders is expected to report its earnings on Monday.

The question facing investors is whether it’s too late to buy Graincorp shares.

Bumper growth

The good news is there is quite a bit of space for the stock to climb before hitting fair value, according to the analysts at Macquarie Group Ltd (ASX: MQG).

Graincorp’s interim net profit from continuing operations of $27 million is well ahead of Macquarie’s estimates of $18 million.

What’s more, all the group’s divisions, including its processing business, were performing better than the broker expected.

Firing on all cylinders

“Processing reported EBITDA of $23m, stronger than our $11m forecast,” said Macquarie.

“Oilseed crush margins have recovered strongly due to increased ECA canola supply and stronger oil and meal demand/pricing.”

The good times may continue to roll on into the second half, thanks in no small part to the recent wet weather along the east coast.

Trade war misses mark

Even the diplomatic spat between China and Australia doesn’t faze Macquarie. China threatened to buy fewer Australian exports in retaliation to Prime Minister Scott Morrison’s call for an independent investigation on the origins of COVID-19.

Tensions escalated when China formally threatened to slap a 80% tariff on Australian barley and suspended the import licenses of four of our abattoirs.

But Graincorp may not be as impacted by the potential barley tariff as some investors might have thought.

This is because 88% of Aussie barley exports come from Western Australia and Graincorp is an east coast centric business, explained Macquarie.

Clearer skies ahead

“GNC is planning for higher grain exports in 2H20 (exports generally higher margin vs domestic),” said the broker.

“Oilseed crush margins are expected to remain favourable in the second half due to prevailing canola oil and meal values.

“Favourable soil moisture levels across large parts of eastern Australia have supported widespread planting for the FY21 crop.”

What’s more, Graincorp is tipped to restart paying dividends in FY21 after a three-year break.

Macquarie is urging investors to buy the stock and its price target is set at $4.79 a share. This leaves Graincorp with a 23% potential upside over the next 12 months, if forecast dividends are included.

More reading

• ASX 200 up 0.8%: Big four banks push higher but Xero tumbles lower
• Want to invest like Warren Buffett? Buy and hold these ASX 200 shares
• Got $2,000? Here are 2 ASX 200 energy shares to buy today
• These ASX 200 shares just crashed to multi-year lows
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Elders 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 best performing ASX stock might have more room to run higher appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/367mVRF