Stock Pick

Category: Stock Market

  • Japan’s Hottest Stock Is Tiny Maker of $40 Million Chip Machines

    Japan’s Hottest Stock Is Tiny Maker of $40 Million Chip Machines(Bloomberg) — The list of Intel Corp.’s annual supplier award winners tends to read like a who’s-who of the semiconductor industry’s biggest names. This year, it included a little-known Japanese company whose machines have become indispensable in the race to improve semiconductors and whose stock has been rocketing up as a result.Lasertec Corp. is the world’s only maker of testing machines required to verify chip designs for the nascent extreme ultraviolet lithography (or EUV) method of chipmaking. In 2017, Lasertec solved a key piece of the EUV puzzle when it created a machine that can inspect blank EUV masks for internal flaws. Last September, it cleared another milestone by unveiling equipment that can do the same for stencils with chip designs already printed on them. This March, Intel gave the tiny Yokohama-based company an award for innovation, its first after decades of doing business together.“That’s a major milestone for us,” Lasertec President Osamu Okabayashi said in an interview. “It means a lot to be recognized this way as a supplier.”The company’s stock has soared more than 520% since the start of 2019, more than twice the gain of the second-best-performing security in the benchmark Topix index. That includes an increase of more than 50% this year.Intel declined to say if it was buying EUV equipment from Lasertec, which already supplies test gear to its rivals Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co. The three chip fabricators are the only ones so far to announce EUV plans, because the technology is so complex and expensive. Okabayashi would only say that his company has “two or more” EUV customers.“This can be read as a sign that Lasertec’s tools are indispensable to Intel’s EUV roadmap.” said Damian Thong, an analyst at Macquarie Group Ltd.Read more: Japan’s Star Electronics Stock Will Be Vital to Intel, SamsungEUV is just entering the mass production phase after two decades in development, but investors are already betting Lasertec will be one of the key beneficiaries. The move to EUV overcomes key hurdles to shrinking manufacturing geometries of semiconductors, allowing more and smaller transistors to be crammed onto silicon. It promises to unleash another wave of gadgets that are slimmer, cheaper and more powerful.Last month, Lasertec raised its annual order forecast for the second time this year to 85 billion yen ($789 million) in the period ending June, nearly double the amount it received in fiscal 2019. The company is headed for the fourth straight year of record revenue and profits. Sales will climb 39% to 40 billion yen and profit will jump 76%, according to its estimates. And that’s likely to be just the beginning.Samsung earlier this month said it is building a 5-nanometer fabrication facility that will use EUV to make processors for applications ranging from 5G networking to high-performance computing from the second half of next year. Taiwan’s TSMC is pushing ahead with plans to adopt 3-nanometer lithography mass production in 2022 and announced plans to build an advanced fab in the U.S. Intel’s first product made using EUV is expected late next year.Their primary focus is on so-called logic processors, used to power devices and networking applications, but the new manufacturing technique will eventually filter through into the production of DRAM and other memory chips.Read more: Samsung Takes Another Step in $116 Billion Plan to Take on TSMC“Logic makers will be first to adopt EUV, with memory makers following later,” Okabayashi said. “The real volume of orders will come when they reach mass production stage. Right now it’s 7- and 5-nanometer chips. 3-nanometer is still in development stage.”Okabayashi expects each customer will probably need several of his testers, which could cost well over $40 million apiece and take as long as two years to build. A chipmaker would need at least one machine in its mask shop to make sure the stencils come out right. Another would go into a wafer fab to keep an eye on the microscopic wear and tear that result from concentrated light being projected repeatedly through the chip design stencils.“Lasertec is still trying to get a feel for this market and how big it can be,” Macquarie’s Thong said. “Their stock is moving on expectation of future orders. But there is little actual visibility on the scale of this market, so Lasertec retains a lot of capacity for surprise.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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  • The one sector that could experience a V-shape COVID-19 recovery

    Share price recovery chart

    There’s one sector that’s springing back to life from the COVID-19 pandemic – and no it isn’t residential property.

    Sales volumes for homes may be on the increase, but that doesn’t constitute a recovery as prices can (and are likely) to fall even as the number of transactions grow.

    This is because turnover is primarily driven by first home buyers, and this segment alone cannot do the heavy lifting as local and international investors flee the market.

    If there is one group of shares on the S&P/ASX 200 Index (Index:^AXJO) that will experience the much-touted but elusive V-shape recovery, it’s transport, according to the analysts at Macquarie Group Ltd (ASX: MQG).

    Revving for V-day

    This rebound is happening happening right before our eyes. The traffic around the local streets around my neighbourhood have been steadily increasing over the past few weeks – even before the lockdown restrictions were eased.

    We won’t need to wait for Transurban Group (ASX: TCL) to provide its quarterly traffic update before getting excited.

    Private cars vs. public transport

    Macquarie believes that commuters would much prefer the safety of driving their own cars than to risk catching coronavirus on public transport. This includes flying on the likes of Qantas Airways Limited (ASX: QAN).

    “A change in car use behaviour could be a tailwind for car sales,” said the broker.

    “There is no recovery in official data yet. But Google Searches for new and used cars have risen rapidly in recent weeks and this could signal material pent-up demand for new and used car dealers.”

    This will be great news for auto dealership group AP Eagers Ltd (ASX: APE), which was already battling slumping car sales well before we even named the dreaded pandemic.

    Hertz crashes recovery party

    However, the collapse of the car rental industry, which sent Hertz Global Holdings Inc scurrying into bankruptcy protection, may be a new headwind.

    Hertz is likely to be forced to sell most of its automobiles to raise much needed cash, according to CNN. It’s rivals like Avis Budget Group Inc. may be better placed financially, but they too could be forced to downsize their fleet.

    The report was focused on the US market but a similar trend could emerge here where relatively new vehicles are put on the market at discount prices. That won’t be good news for new or used car dealers.

    ASX shares best placed to benefit

    Macquarie’s analysis didn’t dwell on the impact of the car rental market, but it coincidentally picked three transport-linked stocks to buy that aren’t car dealers.

    These stocks won’t be impacted by rental car liquidations, and may even benefit!

    These are aftermarket auto parts group Bapcor Ltd (ASX: BAP), online car classifieds group Carsales.Com Ltd (ASX: CAR) and Transurban.

    One “All In” ASX Buy Alert, that could be one of our greatest discoveries

    Investing expert Scott Phillips has just named what he believes is the #1 Top “Buy Alert” after stumbling upon a little-owned opportunity he believes could be one of the greatest discoveries of his 25 years as a professional investor.

    This under-the-radar ASX recommendation is virtually unknown among individual investors, and no wonder.

    What it offers is an utterly unique strategy to position yourself to potentially profit alongside some of the world’s biggest and most powerful tech companies.

    Potential returns of 1X, 2X and even 3X are all in play. Best of all, you could hold onto this little-known equity for DECADES to come.

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    Motley Fool contributor Brendon Lau owns shares of Macquarie Group Limited. Connect with me on Twitter @brenlau.

    The Motley Fool Australia owns shares of and has recommended Bapcor and Macquarie Group Limited. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool Australia has recommended carsales.com 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 The one sector that could experience a V-shape COVID-19 recovery appeared first on Motley Fool Australia.

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  • Could low oil prices and domestic flights make the Qantas share price a buy?

    share price higher

    The airline industry has buckled itself in for turbulent times amidst the coronavirus pandemic. Virgin Australia Holdings Ltd (ASX: VAH) has tragically tumbled into voluntary administration. Qantas Airways Limited (ASX: QAN) has continued to strengthen its ability to deal with the impacts of the coronavirus through increasing its liquidity position and employee stand downs. Could the recent recovery of the Qantas share price and its leading position in the market make it a buying opportunity? 

    What has been priced in? 

    It’s a very important question. Whether it is the broader S&P/ASX 200 Index (ASX: XJO) and All Ordinaries (ASX: XAO), or individual shares, has the market priced in a recovery before it has even happened? Or do asset prices reflect a more pessimistic outlook? 

    The newly announced easing of lockdown measures is a reflection of Australia’s improved coronavirus situation. Some changes that Victorians can look forward to on 1 June include overnight stays allowed at private residences, accommodation, campgrounds and caravan parks, community sport and a suite of leisure-related activities reopening. New South Wales residents will also be able to travel and holiday anywhere within the state. 

    Unfortunately, this does not mean that people will boarding planes. But it does show that there is a light at the end of the tunnel. If sectors such as sports, recreation, community spaces and retail can open successfully without a second wave of infections, then we can look forward to further easing measures in the coming months. This easing will no doubt include domestic travel. 

    Domestic flights

    Qantas’ domestic flights have been a key driver of its earnings. In 1H20, domestic flights delivered an underlying EBIT of $645 million compared to group international underlying EBIT of $162 million. My key concern is if domestic travel was allowed, are consumers eager to travel or still cautious about going outside? 

    The Australian Financial Review (AFR) reports that Australia’s biggest hotel operator, Accor, has started to see new bookings exceed cancellations. The AFR quotes Accor’s chief operating officer Simon McGrath as saying that its main booking platform, pre-pandemic, would “bring in about $1.6 million in bookings a day. That got back down to $100,000 but this week it went up to $400,000 to $500,000 a day.” 

    Will cheap oil help? 

    Oil has made a significant recovery following its absurd dip to -US$40 a barrel. Current prices are approximately US$33, which is still down 40% since March and down 50% since January. 

    Qantas’ first half FY20 fuel expense accounted for $1.975 billion of $8.564 billion total expenditure, or approximately 23%. I believe a combination of significant employee stand downs and cheaper oil prices should see improved margins should domestic flights continue. 

    Foolish takeaway

    Potential pent-up domestic travel demand, cheaper oil prices and much leaner business could be driving factors of a Qantas share price recovery. While much is still unknown today, I would rather be for, than against a Qantas share price recovery. 

    There are many misunderstood or hidden gems like Qantas that could experience a swift share price recovery following easing lockdown measures. Check out our free report for cheap ASX shares that are ready to recover.

    5 cheap stocks that could be the biggest winners of the stock market crash

    Investing expert Scott Phillips has just named what he believes are the 5 cheapest and best stocks to buy right now.

    Courtesy of the crashing stock market, these 5 companies are suddenly trading at significant discounts to their recent highs… creating what could be incredible opportunities for bargain-hungry investors.

    Simply click here to scoop up your FREE copy and discover the names of all 5 cheap shares to buy now… before the next stock market rally.

    See the 5 stocks

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    Motley Fool contributor Lina Lim 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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  • Benjamin Netanyahu’s Corruption Charges, Explained

    Benjamin Netanyahu’s Corruption Charges, ExplainedIsrael is divided over the trial of Prime Minister Benjamin Netanyahu, who faces corruption charges including allegedly accepting gifts such as champagne, cigars and jewelry. WSJ’s Dov Lieber explains. Photo: Gali Tibbon/Associated Press

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  • Is $1,000 in Scentre shares a good investment?

    retail shares

    Scentre Group (ASX: SCG) shares surged 3.57% higher yesterday as the S&P/ASX 200 Index (ASX: XJO) climbed 2.16%. But can Scentre continue to outperform in 2020 and is it worth investing $1,000 into the ASX REIT right now?

    Why is the Scentre share price climbing higher?

    There were no announcements from the Aussie REIT in yesterday’s trade. That makes me think it’s due to investor optimism about an Aussie retail sector rebound in 2020.

    Coronavirus restrictions are starting to ease around the country, which is good news for landlords. More foot traffic in shopping centres means more earnings for tenants and stable rental payments for Scentre.

    Scentre shares surged higher and are now valued at $2.32 per share. It wasn’t just Scentre on the move yesterday, with the Stockland Corporation Ltd (ASX: SGP) share price also jumping a solid 4.23% higher.

    But for all the positive sentiment, will Aussie REITs really bounce back in 2020?

    Why ASX REITs could be in the buy zone

    One argument is that the retail sector could strengthen in 2020. Aussies have been cooped up at home and could relish the chance to get back to brick-and-mortar retail stores.

    However, the pandemic isn’t going away overnight. That means that even with the easing of restrictions, many people are doing it tough right now. Shopping centres rely on discretionary spending to prop up many tenants.

    That means that a reduction in spending could be bad news for Scentre shares. Government stimulus measures have propped up the economy in the short-term but the medium to long-term impact remains unknown.

    Foolish takeaway

    I think Scentre will continue to be a strong ASX dividend share in the decades to come. However, the short-term outlook is a little more uncertain.

    If you’re bullish on real estate or retail, Scentre or Stockland shares could be a great buy – both have been hammered in 2020 and could be absolute bargains, but I do think they’re a speculative buy.

    If a top ASX dividend share is what you’re after then this top pick could be for you!

    NEW: Expert names top dividend stock for 2020 (free report)

    When our resident dividend expert Edward Vesely has a stock tip, it can pay to listen. After all, he’s the investing genius that runs Motley Fool Dividend Investor, the newsletter service that has picked huge winners like Dicker Data (+92%), SDI Limited (+53%) and National Storage (+35%).*

    Edward has just named what he believes is the number one ASX dividend stock to buy for 2020.

    This fully franked “under the radar” company is currently trading more than 24% below its all-time high and paying a 6.7% grossed-up dividend.

    The name of this dividend dynamo and the full investment case is revealed in this brand new free report.

    But you will have to hurry — history has shown it can pay dividends to get in early to some of Edward’s stock picks, and this dividend stock is already on the move.

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    Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Scentre 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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  • Hong Kong Finance Has a Security Blanket

    Hong Kong Finance Has a Security Blanket(Bloomberg Opinion) — China’s decision to impose a national security law on Hong Kong has spurred speculation of capital flight and an erosion of the city’s status as an international financial center. As a venue for share offerings, at least, the near-term future is looking bright. For that, the territory can thank worsening U.S.-China relations.U.S.-listed Chinese technology companies are lining up to sell stock in Hong Kong, seeking refuge from an environment that has become increasingly less hospitable. Nasdaq-traded JD.com Inc. and NetEase Inc. are planning secondary listings in the city next month, following a trail blazed by Alibaba Group Holding Ltd. in November. Optimism that more companies will join them drove shares of Hong Kong’s exchange operator up more than 6% on Monday.There’s every reason to expect these stock offerings to do well, and push Hong Kong back up the rankings of the world’s largest fundraising centers. So far this year, the city is the sixth-largest market by capital raised. It topped the table for the whole of 2019 when New York-listed Alibaba sold $13 billion of stock, underscoring the existence of a strong local investor base for China’s most successful companies.The reception for Alibaba suggests that Asian institutional investors want to be able to trade China’s leading enterprises in their own time zone. JD and NetEase are also among the nation’s technology champions. Beijing-based JD competes with Alibaba in e-commerce, while Hangzhou-based NetEase is behind some of the most popular mobile games in China. Beyond these two, search-engine operator Baidu Inc. is considering delisting from Nasdaq and moving to an exchange nearer home, Reuters reported last week. The coronavirus has exacerbated tensions between Washington and Beijing, while scandals such as fabricated sales at Luckin Coffee Inc. have spurred politicians to push for tighter regulation, giving Chinese companies an incentive to list elsewhere.Hong Kong is an obvious choice. The city burnished its appeal for U.S.-traded companies last week when the compiler of the city’s benchmark Hang Seng Index said it would change its rules to admit secondary listings and companies with dual-class share structures. Stocks that join the benchmark can expect inflows from passive investors such as exchange-traded funds that track the index.Citigroup Inc. reckons that 23 of the 249 Chinese stocks traded in the U.S. meet Hong Kong’s criteria for a secondary listing, which require companies to have a market value of $5.2 billion or, alternatively, a combination of $129 million in annual sales and a $1.3 billion market cap. JD tops the group with a value of $73 billion.An even more alluring prize would be inclusion of secondary listings in Hong Kong’s stock-trading links with the Shanghai and Shenzhen exchanges, which would enable mainland Chinese investors to buy these shares. Alibaba wasn’t included in the stock connect, to the disappointment of some investors. China’s government could yet decide to make this happen.It’s a reminder that Beijing has levers at its disposal to help shore up Hong Kong’s economy and financial industry, which accounts for a fifth of the city’s gross domestic product — as it did after the SARS epidemic in 2003, when half a million people demonstrated against the Hong Kong government’s first, aborted attempt to introduce national security legislation. Hong Kong Exchanges & Clearing Ltd. surged the most in 18 months Monday even as unrest returned to the city. Listing of American depositary receipts may double the exchange operator’s revenue, Morgan Stanley said. The Hang Seng Index, meanwhile, stabilized after slumping 5.6% on Friday.An exodus of businesses, people and capital may yet imperil Hong Kong’s role as an international financial center. The IPO outlook suggests that, rather than a sudden demise, that’s likely to be a long drawn-out process.  This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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  • Where to invest $5,000 in ASX growth shares today

    Growing stack of coins on top of wooden blocks spelling out '2020', future wealth, asx future

    Many ASX growth shares have rocketed higher despite the bear market in 2020. The S&P/ASX 200 Index (ASX: XJO) has slumped 16.60% lower this year while many top tech and healthcare shares have surged.

    But with all the craziness in the share market right now it can be hard to know what to buy. Here are a few top ASX growth shares that I’m keeping an eye on in the year ahead.

    Where to invest $5,000 in ASX growth shares today

    One ASX healthcare share I like the look of is Polynovo Ltd (ASX: PNV). Polynovo shares are up 45.99% this year and more than 100% since 23 March. Those are some impressive growth numbers and in my opinion the Aussie biotech group could charge higher.

    Polynovo’s NovoSorb BTM product is seeing strong sales, which is underpinning its share price growth. I think the breakthrough burns treatment could see strong demand in the medical sector and Polynovo is certainly on my watchlist.

    Another ASX growth share to watch is A2 Milk Company Ltd (ASX: A2M). A2 Milk shares have rocketed 3,708% higher in the last 5 years and are continuing to climb in 2020.

    Strong supermarket sales have been good news for suppliers like a2 Milk. The Kiwi company plans to expand into Canada, which should open up further growth channels beyond this year.

    It’s hard to ignore the tech sector when talking about ASX growth shares. I still like the look of NextDC Ltd (ASX: NXT) shares despite rocketing higher in 2020.

    Strong demand for data storage and security is good news for NextDC. With a move towards more working from home looking likely in Australia, NextDC shares could climb in the coming years.

    Given its strong balance sheet and strategic expansion plans, I think this ASX tech share could be a potential ASX top 5o company in no time.

    Foolish takeaway

    There are ASX growth shares to buy in all kinds of sectors. I think the keys right now are stable earnings prospects and strong balance sheets to weather the storm in 2020.

    Here are a few more ASX shares with strong growth prospects in 2020!

    NEW! 5 Cheap Stocks With Massive Upside Potential

    Our experts at The Motley Fool have just released a FREE report detailing 5 shares you can buy now to take advantage of the much cheaper share prices on offer.

    One is a diversified conglomerate trading 40% off it’s all-time high, all while offering a fully franked dividend yield of over 3%…

    Another is a former stock market darling that is one of Australia’s most popular and iconic businesses. Trading at a significant discount to its 52-week high, not only does this stock offer massive upside potential, but it also trades on an attractive fully franked dividend yield of almost 4%.

    Plus, this free report highlights 3 more cheap bets that could position you to profit in 2020 and beyond.

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    Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

    The post Where to invest $5,000 in ASX growth shares today appeared first on Motley Fool Australia.

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  • Why launching astronauts to space via SpaceX’s crew capsule is a big deal

    Why launching astronauts to space via SpaceX's crew capsule is a big dealThe first astronaut spaceflight launch from US soil in almost a decade is ready for liftoff this Wednesday.

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  • 5 ASX 200 10-bagger shares of the decade

    Dividends

    A 10-bagger share increases in value by at least 10 times its purchase price. At the moment everyone is pretty excited about the Afterpay Ltd (ASX: APT) share price. Yesterday alone, it rose by 8.96% to new highs. In fact, if you had purchased Afterpay on its IPO, you would have seen your investment increase in value more than 15 times. At the time of writing, the Afterpay share price had a compound annual growth rate (CAGR) of 285.5% in just under 3 years. 

    Unfortunately, most of us aren’t smart enough or lucky enough to pick great shares at IPO. The 5 ASX 200 shares below would all have turned $10,000 into at least $100,000 over the past decade. Many of them had listed way before 2010. 

    5 top 10-bagger shares

    Jumbo Interactive Ltd (ASX: JIN) is a lottery retailer in Australia, selling games under agreement with government licensed lottery operator Tatts Group. Unlike previous lottery resellers, Jumbo Interactive sells via the internet. The company considers itself to be a software engineering company first and foremost. The company became a 10-bagger share when it opened its software to be licensed by lottery sellers globally. Since 2010, its share price has grown just over 31 times. 

    Appen Ltd (ASX: APX) provides or improves data used for the development of machine learning and artificial intelligence products. It works with some of the world’s leading technology companies. This has included working with Apple Inc. on its voice assistant “Siri”. Since listing in 2015, this company has grown over 54 times. 

    Magellan Financial Group Ltd (ASX: MFG) is the definition of compound growth. Smart investing in US growth shares has given this company a massive CAGR of 52.4% over the past 10 years. Its share price today is 66.6 times larger than on 1 January 2010. An investment of $10,000 at that time would now be worth ~$656,000. It holds significant stakes in some of the worlds largest companies and has done so since very early in their growth. These have included Apple, Facebook, Alphabet (Google) and business software giant SAP. 

    Altium Limited (ASX: ALU) is, I think, one of the truly spectacular performers on the ASX across many areas. This company is not a 10-bagger share, it is a 100-bagger. It sells PC-based electronics design software for engineers who design printed circuit boards. Over the 10 years in question, it has achieved compound annual growth rates (CAGR) across sales, earnings per share, and equity growth well in excess of 10%. With a share price CAGR of 65%, Altium would have grown a 2010 investment just over 146 times.

    The big one

    The dominant share across the past decade has of course been gold miner Northern Star Resources Ltd (ASX: NST). If you had invested $10,000 with Northern Star on 1 January 2010 it would be worth over $4,700,000 today (at the time of writing). A growth rate of 479 times is the stuff that dreams are made of. The current high gold price has helped in during 2020. Still, most of its share price growth happened between 2014 and February, 2020 – a period entirely pre-pandemic. 

    The company’s secret formula has been to buy well, increase the gold reserves, increase the production and profitability, and divest itself of poorly performing assets quickly. 

    Foolish takeaway

    This decade’s 10-bagger shares are likely to have many characteristics of these companies. They will likely be technology focused or technology adaptors and productive users of capital, consistently improving revenue and profits. I do not think that many of these companies have finished their growth stages yet.

    For example, Northern Star clearly has global domination in its sights. Altium has a 10-year track record of excellent growth with no signs of stopping. And Magellan is run by one of the most respected investors the nation has ever produced. 

    Check out our free report to see what next decade’s 10-baggers might be.

    5 cheap stocks that could be the biggest winners of the stock market crash

    Investing expert Scott Phillips has just named what he believes are the 5 cheapest and best stocks to buy right now.

    Courtesy of the crashing stock market, these 5 companies are suddenly trading at significant discounts to their recent highs… creating what could be incredible opportunities for bargain-hungry investors.

    Simply click here to scoop up your FREE copy and discover the names of all 5 cheap shares to buy now… before the next stock market rally.

    See the 5 stocks

    More reading

    Daryl Mather 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 Jumbo Interactive Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO, Altium, and Appen Ltd. The Motley Fool Australia has recommended Jumbo Interactive Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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  • Is it too early to buy Webjet shares?

    Qantas, travel, plane,

    It’s been a wild start to 2020 for Webjet Limited (ASX: WEB) and other ASX travel shares amid the coronavirus pandemic. Countries have shutdown incoming air traffic while even domestic borders remain shut to most travellers.

    That’s bad for the travel business. Airlines are struggling and it makes sense that many of the other industry players are too. 

    But, the Webjet and Flight Centre Travel Group Ltd (ASX: FLT) share prices both rocketed higher yesterday. You might be wondering if it’s too early or too late to buy ASX travel shares. Here’s how I see the current market valuations playing out in 2020.

    What’s going on with ASX travel shares?

    It’s pretty obvious why the Aussie travel shares got sold down by investors in February and March. The situation looked pretty bleak for the industry for most of 2020, if not beyond.

    But what’s causing double-digit share price moves right now? Webjet shares closed yesterday 15.56% higher at $4.16 per share while Flight Centre jumped 15.23% to $13.01 per share.

    There were no major announcements from either ASX travel share on Monday. However, there is intense speculation that a trans-Tasman travel bubble could happen sooner rather than later.

    That means these booking groups, as well as the airlines like Air New Zealand Limited (ASX: AIZ), could benefit from increased traffic.

    On top of that, domestic travel restrictions are beginning to ease which could be a much-needed earnings boost for Webjet and Flight Centre.

    Is it too early to buy Webjet shares?

    Many investors are wary of false positives in the current market. While the ASX travel share rocketed higher yesterday, I’d be thinking if it’s too early rather than too late to buy.

    Personally, I think it’s still to early to buy Webjet shares. There’s plenty of uncertainty facing the travel industry and no one knows what 2020 or 2021 look like in terms of traffic.

    Even if borders do start to open, many people have lost their jobs and may not be able to afford to travel, or be comfortable with travelling.

    That means the current valuation is a little too high for my liking. However, Webjet shares could be back in the buy zone if things start to get a little clearer this year.

    For a few cheap ASX shares to buy today, check out these top picks today!

    NEW! 5 Cheap Stocks With Massive Upside Potential

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    Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended 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 Is it too early to buy Webjet shares? appeared first on Motley Fool Australia.

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