Category: Stock Market

I think there are some ASX shares that look unstoppable. They could be worth holding for the next decade.

The next 12 months of share price movements is unpredictable. The next week is unpredictable. But when you give yourself and the business a long time, the ASX share could produce enormous growth.

Sometimes it just takes time for a growth share to grow into its valuation. When Facebook listed some investors thought it was expensive. Maybe it was. But now the share price is close to US$300.

A business like CSL Limited (ASX: CSL) has regularly been called expensive. It’s gone up a lot over the past five years.

With growth shares it’s important to think about where the profit will be in five years, not just in one year from now.

Businesses growing strongly now could keep rapidly growing revenue and profit. Today’s prices could seem very cheap in a decade from now.

I think these unstoppable ASX shares could be long-term buys:

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster has been one of the best-performing ASX shares since the COVID-19 crash. Since 23 March 2020 the Temple & Webster share price has gone up 496%.

I think the rise is largely justified. As an online retailer it is well positioned to help households buy furniture and homewares during the shift to online shopping.

The company was growing well before COVID-19, but the last six months of FY20 saw very strong trading.

In FY20 full year revenue was up 74% to $176.3 million, with the fourth quarter revenue rose by 130%. The business was cashflow positive and it grew earnings before interest, tax, depreciation and amortisation (EBITDA) by 467% to $8.5 million. Excluding an income tax benefit of $5.9 million, it also generated a net profit after tax (NPAT) of $6 million.

I think the ASX share is very scalable. Over the next decade it has a long growth runway. In FY21 to 27 August 2020 the company had seen year on year revenue growth of 161% with an EBITDA contribution of around $6 million for just two months.

At the current Temple & Webster share price it’s trading at 45x FY22’s estimated earnings.

City Chic Collective Ltd (ASX: CCX)

The plus-size women’s apparel, accessories and footwear retailer is doing a really good job of expanding its presence overseas.

In FY20 it reported that 42% of its global sales were in the northern hemisphere, up from 20% in FY19. FY20 saw sales revenue growth of 31% to $194.5 million.

I’m bullish about City Chic’s long-term prospects because of its global growth plans and its expanding online presence. In FY20 alone it saw online website growth of 113.5% compared to FY19. In FY20 online sales made up 65% of total sales, up from 44% in FY19.

The ASX share has a good chance of becoming a large player in the US after making a few acquisitions of financially distressed competitors. Catherines is the latest business that City Chic is looking to buy and turn into an online-only business. The US is a huge market and online fulfilment should have higher profit margins than having a national store network.

At the current City Chic share price it’s trading at 22x FY22’s estimated earnings.

Kogan.com Ltd (ASX: KGN)

Kogan.com is another business that has performed exceptionally well since the big crash. From 16 March 2020 to today, the Kogan.com share price has risen by 409%.

It’s another online business which has seen a massive increase in spending during this COVID-19 period. Not only does it sell a wide variety of retail products, but it also offers other services like insurance, superannuation and telecommunications.

In FY20, gross sales went up 39.3% to $768.9 million, gross profit rose 39.6% to $126.5 million, adjusted EBITDA climbed 57.6% to $49.7 million and NPAT grew 55.9% to $26.8 million. The second half of FY20 saw adjusted EBITDA grow by 74.1%.

July 2020 was an incredible month for the ecommerce ASX share – gross sales increased by 110%, gross profit grew 160% and Kogan.com generated more than $10 million of adjusted EBITDA.

If Kogan.com can convince more of its growing customer base to sign up to be members and use other services then its profit margins could steadily climb.

At the current Kogan.com share price it’s trading at 40x FY22’s estimated earnings after Friday’s decline.

Foolish takeaway

I think all three of these ASX shares look like they could be good buys today for their long-term growth potential. Low interest rates justify some of the higher prices we’re seeing. Kogan.com has the potential to become a much larger business if it can convert more of its retail customers to its other services. However, I’d be happy to buy all three at the current prices for the long-term.

More reading

• Every bull run has pullbacks. Why today’s share price falls are ‘healthy’
• Why Appen, Kogan, OZ Minerals, & ResMed shares are dropping lower
• Why the Afterpay share price crashed 9% lower today
• Is the Kogan.com share price a strong buy?
• Why a recession shouldn’t matter for the ASX share market

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd., Kogan.com ltd, and Temple & Webster Group Ltd. The Motley Fool Australia has recommended Kogan.com ltd and Temple & Webster Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The ASX’s newest index, the S&P/ASX All Technology Index (INDEXASX: XTX) is capping off an inaugural 6 months for the ages. Since it first listed back in February, the value of this index has climbed from approximately 1,800 points on listing to 2,340 today. Mind you, that period includes the majority of the March share market crash that hit the ASX earlier in the year.

Designed to give a more direct exposure to the tech shares on the ASX over the previously-used S&P/ASX 200 Information Technology Index (INDEXASX: XIJ), the All Technology Index has been buoyed by the massive outperformance of its top shares like Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO) over the past few months.

But according to reporting in today’s Australian Financial Review (AFR), this index is about to get another boost. Today heralds this index’s quarterly rebalancing (a process that all indices undergo periodically). And according to the AFR, the XTX is about to get 8 new members. This process will swell the index to a total market capitalisation of more than $143 billion, up from $110 billion at the last rebalancing.

None of the index’s current top 10 holdings are set to change. These include Afterpay as well as Xero, Seek Limited (ASX: SEK), Computershare Limited (ASX: CPU) and REA Group Limited (ASX: REA).

Joining the index will be Dicker Data Ltd (ASX: DDR), Brainchip Holdings Ltd (ASX: BRN), Envirosuit Ltd (ASX: EVS), Mach7 Technologies Ltd (ASX: M7T), Novonix Ltd (ASX: NVX), Splitit Ltd (ASX: SPT), Sezzle Inc (ASX: SZL) and Whispir Ltd (ASX: WSP).

Is ASX tech a buy today?

Since the XTX is an index, you can’t buy shares in it directly. But luckily, you can buy shares in an exchange-traded fund (ETF) that tracks this index. The BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC) does just that, holding all 50 companies (soon to be 58). Thus, if you are interested in getting a slice of the action from the ASX tech space, this ETF is a great place to start.

I do think the ‘tech sector’ has run a bit in recent months, especially since ATEC units have appreciated 27.7% since first listing back in March. But I’m also bullish on the Aussie tech sector in general, and so I think this ETF would make a great long-term investment, especially for a passive investor. As the index rebalances, it prunes out the losers and adds to the winners, which I think is a great advantage for the tech space in particular. ATEC does charge a management fee of 0.48% per annum, something to keep in mind.

More reading

• ASX 200 plunges 3.1%, Afterpay suffers
• The Envirosuite share price dropped 5% today. Here’s why
• The best dividend shares to buy today
• 3 ASX growth shares to buy after the market selloff
• Why the Transurban share price is outperforming today

Sebastian Bowen 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 MACH7 FPO and Whispir Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended MACH7 FPO, REA Group Limited, SEEK Limited, Sezzle Inc, and Whispir Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) dropped by 3.06% today to 5,925 points.

The sell-off started overseas with the NASDAQ falling by around 5%. Shares like Apple and Microsoft fell by 8% and 6.2% respectively. The broader S&P 500 Index dropped 3.5%. 

ASX 200 shares sold off

There was widespread selling in the ASX 200 today.

The worst affected shares were the high growth technology shares. The WiseTech Global Ltd (ASX: WTC) share price fell 7.3%, the Appen Ltd (ASX: APX) share price dropped 7.1%, the Nextdc Ltd (ASX: NXT) share price declined 6.8% and the Afterpay Ltd (ASX: APT) share price sank by 6.7%.

Australia’s biggest ASX 200 businesses weren’t immune to the falls. The Australia and New Zealand Banking Group (ASX: ANZ) share price dropped 3%, the BHP Group Ltd (ASX: BHP) share price fell 3.8%, the Commonwealth Bank of Australia (ASX: CBA) share price declined 2.1% and the Westpac Banking Corp (ASX: WBC) share price dropped 3%.

Fortescue Metals Group Limited (ASX: FMG)

Today it was announced that Fortescue would be entering the ASX 20, but the mining giant also released some market sensitive news as well.

It has received approval from WA to increase the material handling capacity of its Herb Elliot Port facility from 175 million tonnes per annum to 210mtpa on a staged basis. This includes 22mtpa of magnetite concentrate, which will be produced from the Iron Bridge magnetite operations with the first ore to be shipped from Iron Bridge in mid-2022.

The revised licence utilises the capacity of Fortescue’s existing port infrastructure, comprising five berths and three ship loaders and supports the company’s FY21 iron ore shipments guidance of 175mt to 180mt.

Elizabeth Gains, CEO of Fortescue, said: “Fortescue’s port operations are world leading and we have continually demonstrated our capacity to optimise the efficiency and productivity of our port infrastructure to deliver iron ore to our customers.

“We will continue to ensure that Fortescue remains a significant long-term contributor to the state and national economies through growth and development of our iron ore assets, job creation and investment.”

Fortescue also said it would ensure no net increase of dust emissions from the increase of throughput of the port by installing and implementing additional controls.

Index changes

There were a number of changes announced for the S&P/ASX Indices today, which will be implemented later this month.

Coles Group Limited (ASX: COL) and Fortescue made it into the ASX 20, with Scentre Group (ASX: SCG) and Suncorp Group Ltd (ASX: SUN) being demoted.

There were no changes in the ASX 50. In the ASX 100, Appen Ltd (ASX: APX) and Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) will join the index with Cimic Group Ltd (ASX: CIM) and Virgin Money UK PLC (ASX: VUK) getting kicked out.

The ASX 200 also saw numerous changes. Auckland International Airport Limited (ASX: AIA), AUB Group Ltd (ASX: AUB), Ramelius Resources Limited (ASX: RMS), Westgold Resources Ltd (ASX: WGX) and Zip Co Ltd (ASX: Z1P) will make it into the ASX 200.

Leaving the ASX 200 were the following: McMillan Shakespeare Limited (ASX: MMS), New Hope Corporation Limited (ASX: NHC), Ooh!Media Limited (ASX: OML), Orocobre Limited (ASX: ORE) and Southern Cross Media Group Limited (ASX: SXL).

S&P Dow Jones Indices said that these changes would be effective at the open of trading on 21 September 2020.

More reading

• ASX All Technology Index swells with new additions
• Buy these beaten down ASX 200 shares after the market selloff
• The best dividend shares to buy today
• Insiders have been buying Fortescue and this ASX share
• Top brokers are urging you to buy these ASX stocks in this market meltdown

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of WiseTech Global and ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO, Appen Ltd, and COLESGROUP DEF SET. The Motley Fool Australia has recommended oOh!Media Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Envirosuite Ltd (ASX: EVS) share price dropped lower today, down 4.88% to 20 cents. This came after the company answered investor questions arising from a series of briefings recently. In addition, it was announced that Envirosuite would be added to the S&P ASX All Technology Index (ASX: XTX). The index was down 5.17% at the time of writing.

Envirosuite provides solutions for the monitoring and management of environmental challenges. It has been listed on the ASX since 2008.

What were investors told?

Envirosuite CEO Peter White and CFO Matthew Patterson answered questions from shareholders and analysts about the company.

Investors were told Envirosuite had a steadily growing sales pipeline of more than $30 million. This did not include China which is on track for $10 million in sales by December 2020 as previously announced.

Envirosuite’s plans to move toward profitability over the next 9 months were outlined in the briefing notes. These include a cost reduction of $8 million and plans to realise operating synergies with the EMS business worth $3 million. Profitability also had been affected by one-off non cash costs incurred in the previous year, the executives noted.

When asked if the company’s proposals and conversions were increasing, they said: “With positive feedback loops we’re continually evaluating our pipeline and the effectiveness of our sales activities to increase conversion along the entire sales cycle.”

The executives said the company’s growth target was based on a business as usual compound growth rate of 20% per year with new acquisitions potentially adding to that growth.

Despite 65% of the company’s revenue being from airports, the company portfolio has been resilient through COVID-19 with a churn rate of 1.5%.

Investors were told the company had an addressable market in the tens of billions per year. In addition, the company had clearly identified potential revenue of $2.3 billion.

The company reported a gross margin of 31% but management was working to reduce operating costs through automation.

The executives said they did not anticipate a need for further capital raisings.

About the Envirosuite share price

In the 2020 financial year, Envirosuite had revenue of $24 million, 75% of which was recurring. Envirosuite had earnings before interest, tax, depreciation and amortisation (EBITDA) of -$15,136 in FY20 compared to -$10,313 in FY19.

In August, Envirosuite announced it had acquired technology that could reduce water treatment plant costs by up to 35%. It paid total consideration of $1.35 million for the acquisition.

The Envirosuite share price is up 185.71% from its 52-week low of 7 cents. It has fallen 9.09% since the beginning of the year. The Envirosuite share price is up 53.85% since this time last year.

More reading

• ASX All Technology Index swells with new additions
• Envirosuite share price flat after FY20 results
• Envirosuite share price surges 14% following sales update
• What sent the Envirosuite share price soaring 11% today?

Motley Fool contributor Chris Chitty 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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Although today’s market selloff has been disappointing, every cloud has a silver lining.

The silver lining on today’s selloff is that it has pulled down some quality ASX shares to attractive levels.

Two beaten down ASX 200 shares that I would buy are listed below. Here’s why I think today’s selloff has created a buying opportunity:

Appen Ltd (ASX: APX)

The Appen share price ended the day 7% lower on Friday. This latest decline means that the shares of the leading developer of high-quality, human annotated datasets for machine learning and artificial intelligence (AI) markets are now down 25% from their 52-week high. And while this still means they trade at a premium of 37x estimated FY 2021 earnings, I believe this is great value given its very positive long term growth prospects.

This is because spending on machine learning and AI is expected to grow materially over the next decade. I believe this puts Appen in a perfect position to grow its earnings at a strong rate during the 2020s. Overall, I feel this could make Appen shares market-beaters over the long term.

CSL Limited (ASX: CSL)

The CSL share price was out of form and tumbled 4% lower to $279.05 on Friday. As a result, the biopharmaceutical company’s shares are now trading approximately 19% below their 52-week high. I think this is a buying opportunity for investors that are looking for long term investment options.

I believe CSL is one of the most outstanding shares on the Australian share market and capable of growing its earnings at a solid rate over the next decade. Especially given the quality of its therapies and vaccines, its growing plasma collection network, and its lucrative R&D pipeline. The latter has therapies under development which have the potential to generate billions of dollars in sales in the future if they make it to market.

More reading

• I love volatile ASX share market days like today
• Why the Transurban share price is outperforming today
• Why Appen, Kogan, OZ Minerals, & ResMed shares are dropping lower
• ASX 200 down 2.75%: Afterpay & Appen sink lower, SKYCITY pushes higher
• Why the Afterpay share price crashed 9% lower today

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

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The IGO Ltd (ASX: IGO) share price dropped more than 4% today as the company reported details of a deal with Boadicea Resources Ltd (ASX: BOA). The agreement is to secure key ground positions along the Fraser Range. The IGO share price closed 4.40% lower at $4.35 although this is likely as a result of today’s sharp drop in the All Ordinaries Index (ASX: XAO) index.

What does IGO do?

IGO is an exploration and mining company with a portfolio of operating and exploration assets across Australia. The company also has an exploration joint venture in Greenland for copper, nickel, and other minerals. 

IGO’s major operations are the 100% owned Nova nickel copper cobalt operation and the Tropicana Gold Mine joint venture in which it has a 30% interest. IGO shares have been listed on the ASX since 2002.

What is the deal for?

IGO Newsearch, a wholly owned subsidiary of IGO, has entered into an agreement with Boadicea to secure key ground positions along the Fraser Range, including the tenement immediately along a strike from the Nova Operation. The agreement involves Boadicea granting IGO the exclusive right to explore nine Fraser Range tenements for 5 years.

Under the deal, IGO must pay $5.5 million up front, with a $1.5 million subscription to purchase 2.35 million shares of Boadicea at 24 cents a share. IGO must pay an additional $50 million conditional on the company making a discovery and declaring a JORC Resource during the 5-year period. Finally, IGO will grant Boadicea a 0.75% Net Smelter Return Royalty to be paid on all revenues associated with mineral production from the tenure.

IGO CEO Peter Bradford said:

“As the dominant landholder along the Fraser Range and the operator of the Nova Operation, IGO maintains a strong conviction for the potential of the region to host multiple nickel copper sulphide deposits.”

He noted that IGO was keen to explore this area for repetitions of Nova style nickel copper cobalt mineralisation that have been found nearby.

Foolish Takeaway

The IGO share price has been falling sharply since late July. This is in spite of a strong FY2020 report that saw a rebound in its share price. Shareholders will be hoping that this deal can catapult the IGO share price higher, although it must be noted the deal is subject to BOA shareholder approval.

More reading

• De Grey share price rockets 17% higher on new gold find
• Gentrack share price higher on announcement of new CEO
• The Mosaic Brands share price surges 21% on lease deal
• Optimists 1, Pessimists 0
• ASX 200 Weekly Wrap: Earnings drag ASX back to reality

Motley Fool contributor Daniel Ewing 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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The month after reporting season in August can be a great time to choose which companies to invest in. Trawling through half-year and full-year reports will give you a good financial snapshot of the company you may be looking to buy in.

As Warren Buffett once said, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

Here are my top 2 dividend shares that I would be happy to pick up today.

Dicker Data Ltd (ASX: DDR)

This leading Australian wholesale and distributor of computer hardware and software has been a great option for investors looking for frequent and reliable dividends.

The company has defied market conditions and soared during COVID-19 thanks to the ongoing demand for its products and services. Since March, the Dicker Data share price has jumped from $3.90 to $7.36 at the time of writing. That’s a return of 88% in the last 6 months, not including the quarterly dividend the company pays.

For the past 12 months, Dicker Data has paid out 38 cents for every 1 share held to its investors. That represents a fully-franked 5.1% dividend yield.

The company has been growing its vendor agreements while at the same time diversifying its revenue by reducing the reliance on its tier 1 clients. Last month, Dicker Data booked more than $1 billion in revenue, a record for the wholesale and distributor business.

To support further growth, the company’s new distribution centre is expected to be completed at the end of the year. The warehouse space will increase 80% to 23,500 sq metres in the first stage, with an additional 20,000 sq meters approved  in a second stage.

I think that Dicker Data is a great dividend share to add to your portfolio.

Fortescue Metals Group Limited (ASX: FMG)

As one of the world’s largest iron ore producers, the Fortescue share price has skyrocketed in recent times. In 2016, Fortescue hit a multi-year low of $1.62 amid an oversupply of iron ore that dragged market prices down.

Today, the Fortescue share price is fetching $17.53, at the time of writing. This year alone, Fortescue rewarded shareholders with dividends of $1.76. That’s a 108% pay-out of an initial investment in just 12 months had you invested 4 years ago.

Of course, the record share price and dividends handed to investors come on the back of the rising spot price of iron ore. However, the company has made inroads in amplifying its profit through cost cutting measures and debt reduction.

I believe that the iron ore mine still has a lot of runway left. The company boasts the worlds’ lowest cost position on extracting and refining iron ore, and has invested in its expansion plans on the Eliwana Mine and Rail project, and Iron Bridge Magnetite project.

Thus, with a dividend yield of 11.1%, the Fortescue share price is a solid buy for investors seeking shareholder value and dividend growth.

More reading

• Insiders have been buying Fortescue and this ASX share
• Fortescue share price drops lower despite positive update
• Why you should buy ASX copper miners in this market meltdown
• Quarterly rebalance: Coles and Fortescue added to ASX 20, Zip joins the ASX 200
• The one type of ASX company that outperforms all others

Motley Fool contributor Aaron Teboneras owns shares of Dicker Data Limited. The Motley Fool Australia owns shares of and has recommended Dicker Data 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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2020 has been a tough year to choose shares as a beginner investor. We had one of the worst S&P/ASX 200 Index (ASX: XJO) market crashes in history this year in March, followed by one of the strongest bull markets the ASX has seen. You might be painfully put off investing or delusionally exuberant in equal measure.

Rather than chasing ‘hot stocks’ like Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P), I think beginner investors are far better buying steady, long-term focused shares instead. These might not be as exciting as some other options on the ASX menu, but I think there’s less chance of getting heartburn all the same. On that note, here are some ASX shares I think are perfect for beginner investors to ‘cut their teeth’ on.

2 ASX shares perfect for beginners

Argo Investments Limited (ASX: ARG)

Argo is a listed investment company (LIC) that is one of the oldest on the ASX, having started life back in 1946. Since then, Argo has honed a reputation as a solid, reliable company with its shareholders’ interests at heart. It invests in a large and diversified portfolio of ASX blue chip shares and pays out a sturdy and substantial dividend. Some of its top holdings include CSL Limited (ASX: CSL), Macquarie Group Ltd (ASX: MQG), BHP Group Ltd (ASX: BHP) and Wesfarmers Ltd (ASX: WES). On current prices, Argo’s dividend equates to a trailing yield of 4%, or 5.71% grossed up with Argo’s full franking. With such a robust history, diversified portfolio and substantial dividend yield, I think Argo is a perfect share for a beginner in 2020.

2) iShares Global 100 ETF (ASX: IOO)

This exchange-traded fund (ETF) is another ASX investment that I think would make a perfect share for a beginner. Its premise is relatively simple: IOO holds 100 of the largest companies in the world, all hailing from advanced economies like the United States, Canada, the United Kingdom and Japan. Some of its top holdings include the FAANG stocks like Apple Inc. (NASDAQ: AAPL) and Amazon.com Inc. (NASDAQ: AMZN), as well as other famous names like Toyota, Nike Inc. (NYSE: NKE), Microsoft Corporation (NASDAQ: MSFT) and Nestle.

I think this ASX share is perfect for a beginner as it is highly diversified and only holds robust, large companies with global presences and powerful brands. IOO has returned an average of 13.1% per annum over the past 10 years and offers a trailing dividend yield of 1.47% as well.

Foolish takeaway

Both of these shares, I believe, would make perfect shares for a beginner investor. Argo focuses exclusively on Australian shares, whereas IOO is a globally focused fund. You could choose your preference or hold both in your beginner portfolio with no trepidation at all, in my opinion.

More reading

• Argo share price rises following profit slump

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Nike. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon, Apple, Microsoft, and Nike. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and ZIPCOLTD FPO and recommends the following options: long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short January 2022 $1940 calls on Amazon, and long January 2022 $1920 calls on Amazon. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO and Wesfarmers Limited. The Motley Fool Australia has recommended Amazon, Apple, and Nike. 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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Every so often, I like to take a look to see which shares have experienced meaningful insider buying.

This is because insider buying is often regarded as a bullish indicator, as few people know a company and its intrinsic value better than its own directors.

A number of shares have reported meaningful insider buying this week. Here are a couple which have caught my eye:

Fortescue Metals Group Limited (ASX: FMG)

A change of director’s interest notice reveals that one of this iron ore producer’s non-executive directors has been buying shares recently. According to the notice, Ya-Qin Zhang picked up 12,000 shares through an on-market trade on 27 August. The director paid a total of $230,040 for the shares, which equates to an average of $19.17 per share.

This was just a fraction short of its record high of $19.56, which appears to indicate that the director is confident in Fortescue’s future and sees value in its shares at the current level. And with the spot iron ore price currently fetching ~US$126 a tonne, I would have to agree. Fortescue looks likely to generate bumper free cash flows again in FY 2021. This could mean more generous dividends for shareholders. As a result, I think this could make it a great option for income investors.

Inghams Group Ltd (ASX: ING)

This poultry producer has experienced a large amount of insider buying this month. According to a series of notices, no less than five of the company’s directors have been increasing their holdings through on-market trades. The two largest purchases came from non-executive director Michael Ihlein and chairman Peter Bush.

Mr Ihlein picked up 45,455 shares on 1 September for an average of $3.29 and Mr Bush paid an average of $3.21 for 50,000 shares a day later. This represents total considerations of $149,546.95 and $160,500, respectively. Judging by these purchases, it would appear as though Inghams’ directors believe the worst is over for the company after a difficult 12 months.

More reading

• The best dividend shares to buy today
• Fortescue share price drops lower despite positive update
• Why you should buy ASX copper miners in this market meltdown
• Quarterly rebalance: Coles and Fortescue added to ASX 20, Zip joins the ASX 200
• The one type of ASX company that outperforms all others

Motley Fool contributor James Mickleboro 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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The Redbubble Ltd (ASX: RBL) share price has soared an astounding 759% from its low in late March. But, like much of the wider share market, the Redbubble share price is today falling sharply lower.

Redbubble is an online marketplace that allows independent artists to connect with customers and fulfil orders through print on demand technology. 

The online retailer has been a clear winner during the COVID-19 pandemic. With consumer spending patterns changing, Redbubble has seen enormous growth in its online marketplace.

This growth has been reflected in the Redbubble share price. However, given its meteoric rise, many investors may now be questioning the sustainability of such a run.

How has Redbubble performed?

In late August, the company reported an impressive performance for FY20 which resulted in the Redbubble share price edging higher.

The company’s annual report was highlighted by a 36% lift in sales revenue for the full-year of $416 million. Redbubble also reported operating earnings before interest, tax, depreciation and amortisation (EBITDA) of $5.1 million. This represented a $7 million turnaround from the company’s $2 million deficit in FY19.

According to Redbubble, the surge in sales revenue was attributed to consumer demand for face masks. Mask sales accounted for $12.1 million in revenue.

Redbubble was also a haven for artists and small-businesses impacted by the pandemic. As a result, the company doubled its number of selling artists to 511,000 for FY20.

Is Redbubble’s growth sustainable?

As a result of securing more independent artists, Redbubble believes that more customers will be attracted to the platform. The company has a global supply chain, with over 60 product offerings including stickers, t-shirts, art and home décor.

In FY20, Redbubble also managed to improve its marketing efficiency and reduce operating expenditure. If the company is able to retain artists and drive repeat customers, it should be able to retain its rate of growth.

In addition, Redbubble has a few structural tailwinds in its favour. These include the emergence of the ‘stay at home’ economy and irreversible shift to online shopping. A recent note from broker Morgan Stanley has reiterated this outlook for Redbubble.

Is today’s Redbubble share price a buy?

The Redbubble share price has, historically, been correlated with an accelerating and decelerating growth profile.

Despite reporting substantial growth, the company still reported a net loss for FY20. As a result, I can’t justify Redbubble’s current share price based on its recent performance. This is despite the Redbubble share price falling 9.6% lower to currently trade at $3.95, at the time of writing.

The fact that mask sales were a key driver in sales revenue also makes me question how sustainable the company’s future growth is. No doubt, Redbubble does have the opportunity to take advantage of structural tailwinds post-pandemic. However, I believe the company needs to see repeat business consistently in order to justify its current valuation.

More reading

• Why the Afterpay share price crashed 9% lower today
• Why Redbubble and this ASX share just stormed to record highs
• Why Afterpay, IOOF, Redbubble, & Zip shares are dropping lower
• Why it makes sense to invest in ASX tech shares
• Why Lendlease, Redbubble, SeaLink, & Starpharma shares are pushing higher

Motley Fool contributor Nikhil Gangaram 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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