Category: Stock Market

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

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

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

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

Why are travel shares underperforming today?

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

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

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

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

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

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

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

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

More reading

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

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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

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

The investment thesis

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

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

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

The financial background

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

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

NFLX Operating Margin (TTM) data by YCharts

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

More reading

• 5 things to watch on the ASX 200 on Friday

Anders Bylund owns shares of Netflix. The Motley Fool owns shares of and recommends Netflix. The Motley Fool has a disclosure policy. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Netflix. The Motley Fool Australia has recommended Netflix. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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

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

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

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

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

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

More reading

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

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

The post Why Boral, Corporate Travel Management, United Malt, & Xero are dropping lower appeared first on Motley Fool Australia.

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

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

Energy, Gold and Mining Services sectors rally strongly

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

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

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

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

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

Further buying opportunities for long term investors

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

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

More reading

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

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

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

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

Projects driving growth

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

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

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

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

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

Further gold boom prospects

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

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

Foolish takeaway

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

More reading

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

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

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

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

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

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

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

Bumper growth

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

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

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

Firing on all cylinders

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

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

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

Trade war misses mark

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

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

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

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

Clearer skies ahead

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

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

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

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

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

More reading

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

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

The post Why the best performing ASX stock might have more room to run higher appeared first on Motley Fool Australia.

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At lunch the S&P/ASX 200 Index (ASX: XJO) has followed the lead of U.S. markets and is pushing higher. The benchmark index is currently up 0.8% to 5,370.2 points.

Here’s what has been happening on the market today:

Bank shares push higher.

Commonwealth Bank of Australia (ASX: CBA) and the rest of the big four banks are pushing higher on Friday. This follows a strong night of trade on Wall Street for U.S. banks. The best performer in the group today has been the Westpac Banking Corp (ASX: WBC) share price with a 1.1% gain.

Tech shares dropping lower.

The tech sector is having another off day on Friday. At lunch the S&P/ASX 200 Information Technology index is down 1.7% and acting as a drag on proceedings. Payments company Afterpay Ltd (ASX: APT) and cloud-based accounting software provider Xero Limited (ASX: XRO) are amongst the worst performers with 1% and 5% declines, respectively.

Gold miners charge higher.

One area of the market performing particularly strongly today has been the gold mining industry. At lunch the S&P/ASX All Ordinaries Gold index is up a solid 3.2% after the gold price hit a three-week high overnight. Evolution Mining Ltd (ASX: EVN) and St Barbara Ltd (ASX: SBM) shares have been positive performers with gains of 4% each.

Best and worst ASX 200 performers.

The best performer on the ASX 200 today has been the Graincorp Ltd (ASX: GNC) share price again with an 8% gain. This morning analysts at Macquarie retained their outperform rating and lifted the price target on its shares to $4.79. The worst performer has been Graincorp’s spun off malt business, United Malt Group Ltd (ASX: UMG). Its shares are down 7% after completing a $140 million institutional placement. The new shares were issued at $3.80 per share, representing an 11.4% discount to its last traded price.

Returns as of 7/4/2020

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of AFTERPAY T FPO and Xero. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More reading

• Where growth, income, and value investors can invest $5,000 today
• Want to invest like Warren Buffett? Buy and hold these ASX 200 shares
• Got $2,000? Here are 2 ASX 200 energy shares to buy today
• These ASX 200 shares just crashed to multi-year lows
• Forget CBA and buy these top ASX dividend shares

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The S&P/ASX 200 Index (ASX: XJO) is on course to end the week on a positive note. In late morning trade the benchmark index is up 0.7% to 5,365.2 points.

Four shares that have climbed more than most today are listed below. Here’s why they are zooming higher:

The Kogan.com Ltd (ASX: KGN) share price is up 4% to $8.91 after announcing a new acquisition. The ecommerce company has bought the intellectual property and goodwill of replica furniture and homewares retailer Matt Blatt for $4.4 million. Kogan will relaunch the business as an online-only offering. It expects the acquisition of Matt Blatt to give it a springboard from which to expand its reach in the furniture and homewares market.

The Macquarie Group Ltd (ASX: MQG) share price is up 2% to $105.10. The banking sector is on course to end the week on a high after their U.S. counterparts stormed higher overnight. In addition to this, investors may have been buying Macquarie’s shares before they trade ex-dividend on Monday. To be eligible for its upcoming final $1.80 per share dividend, investors need to be on the share registry at the close of play today.

The Newcrest Mining Limited (ASX: NCM) share price is up 3% to $29.85. Investors have been buying Newcrest and other gold miners after the price of the precious metal hit a three week high overnight. Traders were buying gold amid concerns that a trade war is brewing between the U.S. and China. The S&P/ASX All Ordinaries Gold index is up 3.2% at the time of writing.

The Santos Ltd (ASX: STO) share price is up 2% to $4.65. Santos and other energy shares have been performing strongly today after a spike in the oil price overnight. Oil prices pushed higher after data revealed that U.S. inventories had fallen more than expected last week.

More reading

• Big bounce in these ASX stocks may be over before it began
• Broker tips 10 ASX 200 shares for a post-coronavirus recovery
• 3 ASX shares to buy for growth and income
• Kogan.com share price on watch following acquisition news
• ASX small-cap sector rallies strongly during April

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd and Macquarie 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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