Category: Stock Market

Between 20 February and 23 March 2020 the S&P/ASX 200 Index (ASX: XJO) plummeted over 36%. Many ASX 200 shares have since rebounded considerably, however, and the index is now trading at around 5,590 points. Notwithstanding this partial recovery, current levels still represent a 22% discount to the February high.

Some of the biggest ASX 200 share price declines

Certain industries and individual ASX 200 shares have seen significantly greater declines than the index overall. Many of these declines were directly attributable to the economic fallout resulting from coronavirus. For example, with no certainty around international and domestic travel, it wasn’t surprising to see travel stocks like Sydney Airport Holdings Pty Ltd (ASX: SYD) down more significantly than the ASX 200 average.

Following are 2 further stocks that have garnered much attention for their colossal decline during the recent bear market. We’ll look at why they were down so much and where they are now. It’s interesting to observe the extent of these market swings which, in hindsight, often indicate that investors were overly pessimistic at the time. Having said that, only time will eventually tell whether those bears were, indeed, right or wrong.

Afterpay Ltd (ASX: APT)

There’s no denying Afterpay’s market darling status in recent years. For those growth investors savvy enough to jump on board, it has delivered highly impressive returns. During the bear market, Afterpay’s shares fell from $40.50 to $8.90, representing an immense 78% decline! 

As a highly valued, consumer facing company undergoing an international expansion, investors were concerned retail spending would fall off a cliff and fees wouldn’t be recoverable due to COVID-19 restrictions across Afterpay’s markets.

To date, however, investors’ fears surrounding the company are yet to materialise. Afterpay is helping both retailers and consumers weather the coronavirus restrictions via online sales and its share price hit an all-time high of $49 today. Currently trading at $48.14 at the time of writing, this represents a massive 441% above the 23 March low!

Webjet Limited (ASX: WEB)

With virtually no travel occurring either domestically or internationally, Webjet has seen its business fly away. Shares fell from $10.44 on 23 January to as low as $2.25 on 22 April. A 78% decline! 

Webjet went to the capital markets early, and at a significant 55% discount, in order to shore up its balance sheet. The company raised a combined $346 million from a retail and institutional capital raising at $1.70 per share. 

Since then, with COVID-19 restrictions slowly lifting, investors have been gradually bidding up the Webjet share price. Shares are currently trading at $4.12 each, an impressive 83% above last month’s low.

Foolish takeaway

When the market is facing angst and uncertainty, the likes of which we have experienced recently, many ASX 200 shares decline far more significantly than is warranted by their long-term fundamentals. This can provide amazing investment opportunities if you have the means and the stomach to be bullish while others are retreating in fear. 

More reading

• 3 strong ASX 200 shares to buy for a retirement portfolio
• Top brokers name the latest ASX 200 stocks to sell today
• 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

The post These ASX 200 share prices were cut in half. Where are they now? appeared first on Motley Fool Australia.

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

The figure of iron ore magnate Lang Hancock loomed large when I was a child in the Pilbara of Western Australia. In the mid-1970s, I had already seen my family and others build 6 towns and open a number of giant mine sites. I was convinced that anything was possible. During that time, Lang and Queensland Premier Joh Bjelke Petersen had a plan. They wanted a cross country rail line that would take iron ore to the east and coal to the west, with blast furnaces on each side. 

Lang’s view was that we were never going to be able to defend the country. So we had to make ourselves invaluable to every one of the nuclear powers. I still believe he was right. Today, this idea of self sufficiency matters more than ever.

Local steel

One look at the size of our iron ore industry and it becomes very clear just how important steel is globally. As post-pandemic stimulus spending starts to take hold, it is going to be even more important. 

BlueScope Steel Limited (ASX: BSL) has been diligently working away in the background of the Australian economy. This was in a period when its only competitor became insolvent and was acquired by foreign investors. 

The company has managed to achieve a cashflow compound annual growth rate (CAGR) of 15.6% over the past 10 years. At the same time, it has averaged a 4 year average return on capital employed (ROCE) of 13%, which is impressive. It is currently selling at an earnings yield of 18.36% (at the time of writing).

In my opinion the company is clearly undervalued and stands to gain if organisations start to source more steel locally.

Local energy

Australians have often wondered why a country that leads the world in LNG production, has 30% of recoverable uranium deposits and the 3rd largest coal deposits on the planet has such high electricity prices. Naturally, the Prime Minister’s Manufacturing Taskforce has quickly arrived at the truism that high energy and electricity costs are a barrier to growth in manufacturing.

Until a recent long term deal, this was a cornerstone of complaints from Tomago Aluminium, owned by CSR Limited (ASX: CSR). If the government acts on its promise to reduce layers of bureaucracy costs, the LNG producers stand to gain. 

This would include industry giant Woodside Petroleum Limited (ASX: WPL) and Origin Energy Ltd (ASX: ORG).

Local manufacturing

The true beneficiaries of local supply chains would be those companies already manufacturing at home. Of these I have always liked Reliance Worldwide Corporation Ltd (ASX: RWC). Reliance is involved in the design and manufacture of water flow, control and monitoring products and solutions. A lot of this company’s manufacturing plants are still located in Australia and New Zealand. I am hopeful cost reduction and a “buy Australian first” approach will benefit it too. 

More reading

• ASX 200 Weekly Wrap: ASX rallies on mining highs
• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 on Friday
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 construction share warns of bleak outlook for the sector

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 Reliance Worldwide Limited. The Motley Fool Australia has recommended Reliance Worldwide Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post 3 ASX sectors to benefit from local supply chains appeared first on Motley Fool Australia.

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

The Flight Centre Travel Group Ltd (ASX: FLT) share price and the Webjet Limited (ASX: WEB) share price are among the best performers on the market on Monday.

In afternoon trade their shares are up an impressive 12% and 14%, respectively.

Why are Flight Centre and Webjet shares zooming higher?

With no news out of either company, today’s gain could be in relation to speculation that a trans-Tasman travel bubble could soon be launched.

According to Nine Entertainment Co Holdings Ltd (ASX: NEC) News, New South Wales Premier Gladys Berejiklian has reconfirmed her support for a trans-Tasman bubble.

Premier Berejiklian wants this to happen sooner rather than later, commenting: “I’d like to see it happen this side of Christmas.”

And while Queensland Premier Annastacia Palaszczuk isn’t keen on opening her borders any time soon, Federal Tourism Minister Simon Birmingham suggested that these plans should not be held back by states.

Mr Birmingham told the Sydney Morning Herald that he wants Australia’s tourism industry to start its recovery from the pandemic with or without the support of the Queensland state government.

He said: “If New Zealand and some Australian states are ready and willing to progress, then the reluctance of other states to open up their domestic borders shouldn’t become an obstacle to progress.”

“The recovery of jobs and small businesses in some states shouldn’t be held back by the decisions of other state governments,” he added.

This potential travel bubble would be a big positive for travel booker such as Flight Centre and Webjet, as well as airline operators Qantas Airways Limited (ASX: QAN) and Air New Zealand Limited (ASX: AIZ).

While a full recovery will take some time, the sooner the market starts its slow recovery the better, as it will limit the cash burn these four companies are experiencing right now.

Should you invest?

While I am a big fan of Flight Centre and Webjet, I think their valuations are a little stretched right now. Especially when you factor in the dilution caused by their recent capital raisings.

However, patient investors might do well by holding onto their shares for the long term. But I’m going to be sitting this one out and focusing on other areas of the market which I think offer better value for money.

More reading

• ASX 200 up 1.7%: Flight Centre and Webjet rocket, Afterpay hits record high
• Why Afterpay, Flight Centre, TPG Telecom, & Western Areas are charging higher
• 5 ASX 200 winners and 4 losers of last week
• Why these ASX stocks will be under the spotlight on Monday
• Brokers name 3 ASX 200 shares to buy right now

Motley Fool contributor James Mickleboro 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 Why Flight Centre and Webjet shares are zooming higher today appeared first on Motley Fool Australia.

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

The Afterpay Ltd (ASX: APT) share price has continued its positive run and charged higher again on Monday.

At one stage the payments company’s shares were up as much as 10% to a new record high of $49.00.

Why is the Afterpay share price charging higher?

Investors have been buying Afterpay’s shares on Monday due to a combination of positive investor sentiment and the announcement of board changes.

In respect to the latter, this morning the company announced that Elana Rubin will become its Chair with immediate effect. She had been in the role on an interim basis but has been made permanent now.

Rubin will retire from the ME Bank board following its June 2020 meeting, but remain as a Non-Executive Director for Telstra Corporation Ltd (ASX: TLS) and Slater & Gordon Limited (ASX: SGH).

In addition to this, the company has appointed Sharon Rothstein as an Independent Non-Executive Director. She will formally join the board on 1 June 2020.

Rothstein is based in the United States and presently sits on the board of crowd sourced reviews business Yelp. She is also an Operating Partner at growth equity firm, Stripes Group.

What else is driving the Afterpay share price higher?

Investors have been buying the company’s shares this month after it provided a very positive update on its U.S. operations.

That update revealed that there are now more than five million active customers using its buy now pay later service in the country. This makes it the company’s largest geographic segment by some distance, despite it only launching there two years ago.

Impressively, more than one million new customers joined during a ten-week period at the height of the pandemic.

Nick Molnar, Co-Founder and U.S. CEO of Afterpay, commented: “At a time in which ecommerce has become the primary way people are shopping, there is a growing interest and demand among consumers to pay for things they want and need over time using their own money – instead of turning to expensive loans with interest, fees or revolving debt.”

Can its shares go higher?

I feel Afterpay’s shares are probably fully valued at this point. So, I wouldn’t recommend buying shares if you’re only making a short term investment.

But if you’re in for the long haul, then I certainly would be a buyer. I believe its global expansion and potential new product launches in the future will drive strong earnings growth and returns for investors over the next decade and beyond.

More reading

• ASX 200 up 1.7%: Flight Centre and Webjet rocket, Afterpay hits record high
• Should you invest $1,000 in Altium shares today?
• Why Afterpay, Flight Centre, TPG Telecom, & Western Areas are charging higher
• Why Afterpay and cohorts could confirm the economy bottomed in April
• How these 3 ASX financial shares have proved their doubters wrong

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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 The Afterpay share price just hit a new record high: Should you invest? appeared first on Motley Fool Australia.

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

Recent events indicate we are at the beginning of a silver bull market. The silver to gold ratio is larger than it has ever been in my lifetime. Industrial demand is starting to come back online, and the world is seeing increase industrial use for renewable assets and batteries. Also, I stack (or collect) precious metals and I cannot get any until July. 

Precious metals are not formed on earth. They come from the single most violent event in the universe, when a star goes supernova. They then land on earth and through geological processes end up in various types of deposits over millions of years. So not only are they rare on earth, they are some of the rarest metals in the universe!

I have been stacking precious metals for about 30 years now. In this time, I have learned two things about silver in particular.

First, it is very volatile. In US dollars, the gold price has rise by 11.4%, year to date (at the time of writing). Since the silver bull market started (around late April), the silver price in US dollars has risen 10.1% in a month. Second, it always seems to snap back to an average ratio. In the 48 years since 1970, it averaged 57:1. I buy gold when the ratio is close to average, and I buy silver when it is large. Today the ratio is ~103:1.

The silver bull market

South32 Ltd (ASX: S32) owns the silver and lead producing Cannington mine in Queensland. Cannington is one of the world’s largest and lowest cost silver mines. It produces 6% of the total world silver production. With an earnings yield of 13.6% at the time of writing, South32 appears to be selling cheap. For the 3 years it has been profitable it has achieved an average return on capital expended of 27%. This is a very good user of capital.

BHP Group Ltd (ASX: BHP) started out as a silver miner and still produces a lot of silver as a by-product. In FY2019, it produced around 2.9 Moz of silver. BHP is well placed across a range of commodities including the booming iron ore trade as well as future facing copper and nickel production. 

Of the major producers, Oz Minerals (ASX: OZL) processed approximately 630,421 ounces of silver in FY19 as a byproduct of its gold production. However, Sandfire Resources Ltd (ASX: SFR) is in the feasibility stage of a mineral deposit in Botswana with a known silver reserve of 14.6Moz. Its share price is likely to see a bump as the silver bull market takes hold.

Foolish Takeaway

Australia is well placed for the silver bull market – we have the third largest silver reserves on the planet. Our miners also have access to large deposits of silver across the world. We are very cost effective miners with a demonstrated capacity to bring production online quickly. 

More reading

• 3 commodity trends to watch this week
• ASX 200 Weekly Wrap: ASX rallies on mining highs
• Where to invest $5,000 in ASX 200 shares immediately
• Have $500 to invest? Then buy these 5 ASX 200 shares immediately
• ASX 200 drops 1% on Friday

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 4 ASX 200 shares for the silver bull market appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3eep3K5

I think investors need to be smart about which shares they buy at the moment.

The first wave of the coronavirus seems to be passing, but we haven’t seen the full economic pain of it yet. There could still be a second wave.

I think smart growth share investors with $2,000 should go for ideas that which long-term growth potential but could see growth accelerate due to the current situation.

If you have $2,000, I’d be looking at one of these smart share ideas:

Bubs Australia Ltd (ASX: BUB)

Bubs is one of the lucky businesses seeing its growth accelerate during this period. In the update for the third quarter to 31 March 2020, Bubs said its quarterly revenue of $19.7 million was up 67% on the prior corresponding period and up 36% on the previous quarter.

Customers are stocking up on Bubs products. The infant formula business recently announced another impressive distribution announcement which will see more products sold in more shops.

I was pleased to see that the company generated a positive operating cashflow of $2.3 million for the period and ended with a cash balance of $36.4 million. Positive cashflow is an important step for a small cap. 

It may be too bullish of me to expect it to follow in the exact footsteps of other ASX infant formula shares, but it’s making some very promising moves.

Magellan High Conviction Trust (ASX: MHH) 

Many of the world’s best businesses aren’t listed in Australia. You could look to invest in them directly, or you could invest in them indirectly. I like the idea of this listed investment trust (LIT) which is invested in around 10 of the best shares in the world. You don’t need to worry about which individual shares to own.

Its top five holdings include Alibaba, Alphabet, Microsoft, Starbucks and Tencent. It also owns Facebook. Apart from Starbucks, I think the other top four are clearly in a good position to keep earning strong profits during this difficult period because of their digital business models.

We can sometimes buy this LIT at a nice discount when its share price is less than its net asset value (NAV) per share). At the moment that discount is around 5%, not bad.

Pushpay Holdings Ltd (ASX: PPH)

Pushpay is another share I think that can be a strong performer over the next three years. It already has been very good since the start of May.

FY20 was a great result and the earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) is expected to jump again in FY21 by around 100%.

I expect electronic donations to US churches to rise significantly because of the coronavirus. I like that Pushpay’s app also allows those churches to livestream their services to people who can’t be there.

Pushpay is a great share to invest in because its margins are rapidly rising. It’s starting to generate good cashflow and there are still plenty of countries and (non-church) charitable sectors to expand into.

Foolish takeaway

I really like all three of these share ideas. At the current prices it’s hard to pick between them, though I’d put Bubs and Pushpay slightly higher. I think they all have very promising futures.

More reading

• 3 explosive ASX growth shares to buy
• 3 ASX shares that I’d invest $1,000 into EVERY month
• 2 ASX stocks that could replace cash
• Where growth, income, and value investors can invest right now
• 3 top ASX growth shares that could smash the market in the 2020s

The post The smartest shares to buy if you have $2,000 appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2X0sGxq