Category: Stock Market

I’ve been keeping a close eye on what substantial shareholders have been doing recently.

Substantial shareholders are shareholders that hold 5% or more of a company’s shares. These tend to be large investors, asset managers, and investment funds. These shareholders are obliged to update the market when they make any changes to their holdings.

As a result, I feel investors should look to use these notices to their advantage. After all, they show where the smart money is going.

Two notices that have caught my eye are summarised below:

Mayne Pharma Group Ltd (ASX: MYX)

According to a notice of initial substantial holder, Lazard Asset Management Pacific Co. has been buying this pharmaceutical company’s shares over the last three months. It picked up its first parcel of shares at the end of February and made its most recent purchase on Thursday with a ~$890,000 investment. This final purchase took its holding to a total of 84,379,755 shares, which represents a 5.03% stake in the company.

Mayne Pharma’s shares have fallen heavily over the last few years due to incredibly tough trading conditions in the generic drugs market. Lazard may believe the company is over the worst of it now and could return to growth in the near future.

Megaport Ltd (ASX: MP1)

Another notice of initial substantial holder reveals that Commonwealth Bank of Australia (ASX: CBA) has become a substantial holder of this elasticity connectivity and network services provider. The banking giant and its subsidiaries have been building a position over the last few months and now own a total of 7,811,384 shares. This equates to a 5.1% stake in the company.

Megaport’s shares have been on fire over the last 12 months thanks to its explosive recurring revenue growth. This has led to them generating a return of over 130% for shareholders. Judging by its purchases, Commonwealth Bank appears to believe there are more strong returns to come in the future.  

More reading

• ASX 200 Weekly Wrap: ASX rallies on mining highs
• 3 high yield ASX dividend shares to buy right now
• How $1,000 can be enough to change your money mindset
• Is Afterpay an ASX blue chip of tomorrow?
• 2 ASX 200 dividend shares to buy for income in 2021

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 MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT 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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Dollar-cost averaging (DCA) is an investing strategy commonly prescribed for the ‘average’ investor on the street. It involves putting a consistent amount of money into an ASX share or portfolio of shares at a consistent interval over time (e.g. $100 a week), with no regard to the underlying price. In this way, you can get an averaged price without having to worry about timing the right entry point, which can be an emotionally fraught exercise.

Of course, this only works if you have a quality company that rises in value over time. Anyone who tried dollar-cost averaging into say AMP Limited (ASX: AMP) over the last decade would have been throwing money away.

So with that in mind, here are 3 ASX shares that I think are perfect for a DCA strategy.

Vanguard Australian Shares Index ETF (ASX: VAS)

This exchange-traded fund (ETF) is perfect for a DCA strategy. That’s because it holds not 1, but 300 of the largest companies on the ASX. It’s impossible to figure out whether an index fund like VAS is truly overvalued or undervalued at any one point, because you would have to do pricing analysis on all 300 companies.

Thus, a far easier way of successfully investing in a basket of companies like this would be to employ DCA. Losing companies are eventually weeded out and rising stars are added to over time. Index funds like VAS have historically always risen and made new highs (despite some volatility in between), and therefore I think this type of investment will serve you well under a DCA strategy.

Washington H. Soul Pattinson & Co Ltd (ASX: SOL)

‘Soul Patts’ is a company that acts as an investor in its own right. It does so by buying other ASX shares and building its own investment portfolio outside its old core business of operating pharmacies. Today, Soul Patts has large stakes in a diverse range of Aussie companies, including TPG Telecom Ltd (ASX: TPM), Brickworks Limited (ASX: BKW), New Hope Corporation Limited (ASX: NHC) and BKI Investment Co Ltd (ASX: BKI).

Thus, I think this company is a great alternative to an ASX index fund like VAS – which some investors might not like due to the heavy exposure to ASX banks and miners. It has a proud history of growth, including an unbeatable 20-year streak of increasing its dividends. As such, I think it’s a great company to employ a DCA strategy into.

More reading

• 2 quality ASX shares to buy for long-term growth
• Replace your term deposit with these dividend shares
• My ASX share for the week
• How to retire early using ASX shares
• Where to invest $1,000 in ASX ETFs today

Motley Fool contributor Sebastian Bowen owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The National Australia Bank Ltd. (ASX: NAB) share price closed today’s trade at $15.75.

Sure, this share price isn’t quite as low as the levels we saw in March when NAB shares reached $13.20. But it’s still not far from a level that, until March, we hadn’t seen this century. That’s right, you have to go back to 1996 to find a time when NAB shares plumbed the depths they found 2 months ago.

Even during the global financial crisis, which hit bank shares particularly harshly, NAB shares didn’t see a share price with a 13 at the beginning.

So we already know this ASX bank has been a lousy investment over the past two and a half decades, even with the healthy dividends NAB used to pay. It’s not often you can say you bought a company that went backwards over 25 years.

But it’s still one of the largest companies in Australia, has a virtual government guarantee and a formidable market share in the ASX financials sector.

So is the NAB share price in the buy zone today?

Are NAB shares in the bargain bin?

Well, the first thing to note is that no one should be expecting much in the way of dividend payments in 2020.

Yes, unlike NAB’s compatriots Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group Limited (ASX: ANZ), NAB will be paying a 30 cents per share interim dividend in July.

But NAB’s past payments make this look like a pittance. Shareholders were treated to an annual dividend of $1.98 per share in 2018. Last year, investors received $1.66 per share in payments. This year, it looks as though NAB shareholders will be lucky to receive 60 cents per share. That’s a 66.7% cut over 2 years – although I’m not blaming NAB entirely for this, due to the impacts of the coronavirus on the economy.

Still, if an investor bought in at the current NAB share price, this new dividend would translate into an annualised yield of 3.8%, which isn’t really anything to write home about.

However, these dividends are likely to recover somewhat over time. It’s hard to say how much though – that depends on consumers returning to the credit markets in the months and years ahead, as well as what interest rates end up doing.

One investor who’s bullish on NAB shares is Nab’s own CEO, Ross McEwan. Mr McEwan recently picked up 47,500 shares worth around $731,500 (at the time) earlier this month. It’s always nice seeing a CEO put their money where their mouth is.

Foolish takeaway

In time, I think the NAB share price will recover from the lows we see today. However, I’m not in a rush to add to my existing NAB shares alongside Mr McEwan, even at these depths. There’s a lot of uncertainty in the future of the ASX banks, and I’m not confident that the heavy headwinds the sector is facing have a clear end in sight. Thus, I think there are better places to put your money in this market.

More reading

• These are the latest ASX shares to be upgraded by brokers to buy
• ASX 200 up 1.7%: Flight Centre and Webjet rocket, Afterpay hits record high
• ASX 200 Weekly Wrap: ASX rallies on mining highs
• Where to invest $5,000 in ASX 200 shares immediately
• Is the NAB share price a buy today?

Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited. 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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The S&P/ASX 200 Index (ASX: XJO) jumped higher today, it rose by more than 2% to 5,616 points.

Whilst the country continues to argue about the $60 billion jobkeeper miscalculation, Treasurer Josh Frydenberg spoke to the ABC to say that the travel sector could receive more support because of the ongoing lockout of international tourists.

ASX travel shares jump

As you can imagine, the potential for support of the travel industry was warmly greeted by investors of ASX travel shares.

The top performers within the ASX 200 were travel shares. The Webjet Limited (ASX: WEB) share price rocketed 15.6% higher and the Flight Centre Travel Group Ltd (ASX: FLT) share price grew 15.2%.

Other travel shares also rose. The Qantas Airways Limited (ASX: QAN) share price went up 7.2% and the Sydney Airport Holdings Pty Ltd (ASX: SYD) share price climbed 3.9%.

Afterpay Ltd (ASX: APT) hits new heights

Last week the ASX 200 buy now, pay later business announced that it had reached 5 million active customers in the US, adding one million customers during this period.

Investors can’t get enough of the company with the Afterpay share price rising by almost 9% to another all-time high today.

Today saw the Afterpay share price finish at $48.50. It has been a huge turnaround from a few weeks ago when the share price was as low as $8.90.

Court win for IOOF Holdings Ltd (ASX: IFL)

ASX 200 financials business IOOF announced that it has reached an agreement for the class action with no order as to costs. IOOF won’t be paying anything to the plaintiff, the lawyers (Quinn Emanuel) or the litigation funder (Regency).

The company said it was very pleased with the outcome.

More reading

• Top brokers name the latest ASX 200 stocks to sell today
• These ASX 200 share prices were cut in half. Where are they now?
• Why Flight Centre and Webjet shares are zooming higher today
• The Afterpay share price just hit a new record high: Should you invest?
• Leading brokers name 3 ASX 200 shares to buy right now

Motley Fool contributor Tristan Harrison 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 owns shares of AFTERPAY T FPO. 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.

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The S&P/ASX 200 Index (Index:^AXJO) may have jumped by more than 20% since hitting the bear market low in March, but there are still value buys to be had.

Speculation that the federal government has another $60 billion to use as stimulus due to its forecasting bungle is triggering excitement.

It was originally thought that the Morrison government’s JobKeeper program would cost $130 billion proved to be well off the mark – but in a good way.

The extra support for our economy could keep our market well supported as we head into the new financial year, and it isn’t too late to buy these ASX shares as brokers have only just upgraded them to “buy”.

Good connection

The latest stock to be upgraded by Morgans is the TPG Telecom Ltd (ASX: TPM) share price as the broker mulled over its looming merger with Vodafone Australia.

“On a stand-alone basis and in constant accounting terms, EBITDA [earnings before interest, tax, depreciation and amortisation] for both TPM and Vodafone is in decline,” said Morgans.

“So, this merger is all about the economies of scale required to have a profitable and free cash generative #3 player.”

Upside from synergies

It’s worth noting that David Teoh, who will be the chairman of the merged entity, has a strong track record of achieving cost savings.

“We see the largest area of cost saving as TPM using mobile to partially bypass the NBN,” added Morgans.

“Without mobile, TPM would pay ~$1bn pa to the NBN, so the ability to bypass some of this using wireless technologies will likely save $150m pa in the medium term.”

While the broker is forced to guess what the capex requirement is for the group, Morgans believes the new entity will be able to generate around $800 million a year in free cash flow.

Morgans lifted its rating on the stock to “add” from “hold” with a price target of $9.14 a share.

The stock to bank on

Meanwhile, the National Australia Bank Ltd. (ASX: NAB) share price got a boost after Bell Potter upgraded the stock to “buy” from “hold”.

The stock had been under pressure due to its larger exposure to small and medium business lending. Many of these businesses are expected to fold due to the COVID-19 shutdown.

But despite the risks, the stock is now looking too cheap to ignore, according to Bell Potter.

Risks are priced in

“Looking past the COVID-19 noise, NAB exhibited good operational resilience in 1H20,” said the broker.

“Business and Private Banking cash earnings were stable due to solid lending volumes, steady NIM [net interest margin], cost discipline, better impairment outcomes and higher asset productivity.”

Bell Potter was also impressed with management’s cost discipline as underlying expenses were flat at $4.1 billion with NAB forecasting around $1 billion in extra savings by the end of this financial year.

Bell Potter lifted its price target on the stock to $17.30 from $17 a share.

More reading

• NAB’s CEO is buying shares at decade low prices. Should you take the hint?
• 3 strong ASX 200 shares to buy for a retirement portfolio
• Top brokers name the latest ASX 200 stocks to sell today
• These ASX 200 share prices were cut in half. Where are they now?
• Leading brokers name 3 ASX 200 shares to buy right now

Motley Fool contributor Brendon Lau owns shares of National Australia Bank Limited and TPG Telecom Limited. 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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The ANZ region may only have a small tech sector in comparison to the United States, Europe, and China, but it is home to a good number of quality companies which I believe are worthy of a spot in most portfolios.

Three of my favourites are listed below. Here’s why I like them:

Altium Limited (ASX: ALU)

Altium is easily one of my favourite tech shares on the Australian share market. It is a software-as-a-service company that provides an award-winning printed circuit board (PCB) design platform. PCBs are the small boards you find in almost all electronic devices. Given the proliferation of electronics, demand for its software has been growing at a very strong rate in recent years. The good news is that management doesn’t expect this demand to ease any time soon. In FY 2020 it expects to have 50,000 software subscriptions. It is then targeting market domination and 100,000 subscriptions by FY 2025. Given the quality of its software and its leadership position in the industry, I believe Altium will achieve its goals.

Bigtincan Holdings Ltd (ASX: BTH)

Another tech share to consider buying is Bigtincan. It is a provider of enterprise mobility software that enables sales and service organisations to increase sales win rates. It has a number of blue chip clients using its software, which I believe is a testament to its quality. One of these is Australia and New Zealand Banking Group (ASX: ANZ). The banking giant has been able to streamline its processes for capturing client information through the use of tablets and a custom Bigtincan build. Bigtincan revealed that this cutting-edge approach to optimising its frontline workers’ processes has helped the bank differentiate itself and increase customer satisfaction. With demand growing strongly, Bigtincan is expecting another strong result in FY 2020. It expects to deliver a 30% to 40% increase in organic revenue growth despite the pandemic.

Xero Limited (ASX: XRO)

A final tech share to consider buying is this cloud-based business and accounting software provider. It has been growing at an explosive rate over the last few years thanks to the rapid adoption of its software by small businesses across the globe. The good news is that management estimates that less than 20% of the global English-speaking target market is using cloud-based accounting software at present. Given the overwhelming benefits of cloud-based software over alternatives like an Excel spreadsheet, I believe more and more businesses will make the switch in the coming years. This should provide Xero with a significant runway for growth over the next decade.

More reading

• Should you invest $1,000 in Altium shares today?
• 3 ASX dividend shares to buy today
• 3 ASX 200 growth shares I want to buy for my portfolio
• How to make a $50,000 passive income with ASX shares
• Have $500 to invest? Then buy these 5 ASX 200 shares immediately

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 Xero. The Motley Fool Australia owns shares of and has recommended BIGTINCAN FPO. The Motley Fool Australia owns shares of Altium. 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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