Category: Stock Market

Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were bearish.

Three sell ratings that caught my eye are summarised below. Here’s why top brokers think investors ought to sell these shares next week:

Commonwealth Bank of Australia (ASX: CBA)

According to a note out of Goldman Sachs, its analysts have retained their sell rating but lifted their price target on this bank’s shares slightly to $56.40. Goldman notes that Commonwealth Bank’s third quarter cash earnings of $1.3 billion is running well short of its second half expectations because of provisions. In light of this and its weakening balance sheet, the broker sees little reason that its shares should trade at such a premium to its peers and has reiterated its sell rating. The Commonwealth Bank share price ended the week at $59.60.

Stockland Corporation Ltd (ASX: SGP)

A note out of Citi reveals that its analysts have retained their sell rating on this property company’s shares. According to the note, the broker is concerned that its key residential and retail segments are facing headwinds from the pandemic. It notes that Stockland’s residential segment has seen a sharp decline in deposits and its retail portfolio is experiencing speciality sales declines. The Stockland share price was trading at $2.70 on Friday.

Xero Limited (ASX: XRO)

Analysts at UBS have retained their sell rating and lowly $58.50 price target on this business and accounting software provider’s shares. According to the note, Xero’s maiden profit in FY 2020 fell short of its expectations. In addition to this, while it feels its growth strategy is sound, it believes there is uncertainty around its short term prospects. Furthermore, it feels the risk/reward on offer on a long term basis is unfavourable at these levels. Xero’s shares ended the week at $75.32.

More reading

• Why BHP is an ASX 200 dividend share to buy today
• Top brokers name 3 ASX shares to buy next week
• What to watch on the ASX 200 next week
• Are rental yields better than dividend yields?
• These were the best performing ASX 200 shares last week

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 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 Top brokers name 3 ASX 200 shares to sell next week appeared first on Motley Fool Australia.

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Building an ASX portfolio of shares with a value of a million dollars is hard, yet doable. What you need is the right mindset, the right investments, the right amount of time and the secret ingredient of compound interest!

Let’s get into the nuts and bolts of a million-dollar portfolio.

The path to a million

If you were building a portfolio with monthly $1,000 contributions, it would take just over 61 years to accumulate a million-dollar portfolio if you used term deposits and savings accounts that pay a 1% interest rate.

But that’s where ASX shares come in.

See, by investing in growth assets like shares, you can get a return that’s far above what a high-interest bank account will provide these days.

Let’s take a simple ASX index fund like the Vanguard Australian Shares Index ETF (ASX: VAS). This exchange-traded fund (ETF) has delivered an average return of 7.63% per annum since its inception in 2009.

Investing your $1,000 a month in this ETF will shorten these 61 years to just 26.5 years if we assume the same rate of return and reinvest all dividends.

But let’s say you learn all about investing, take some of the lessons we Fools try and divulge for good investing practice and manage to invest for a higher return than a broad market ETF – let’s say we’re aiming for a 10% return per annum.

Then, the 26.5 years will be whittled down to 22.5.

If you manage an exceptional 15% per annum? It’s 17.5 years, and on and on it goes.

Now you can understand how the great Warren Buffett became a billionaire over his life by managing a compounded rate of return above 20% per annum!

How hard is it to beat the market?

Of course, beating the market over 20 years is difficult – most ASX investors don’t manage it. But if you find great companies, invest in them at a great price (or even just a good price), and don’t do anything silly (like sell the shares in a crash), you can do it.

And you don’t even need to find too many winners – just one can be enough to propel an ASX portfolio to market-beating returns. Warren Buffett has 99% of his capital in just one company (Berkshire Hathaway), after all.

And that’s how you can build a $1,000,000 ASX share portfolio by investing $1,000 a month.

It’s no summer project, that’s for sure! Your success with investing will dictate just how long it will take. But for investors with the ambition and the patience, it can be done.

More reading

• Why a buy and hold strategy for ASX shares is best
• The smartest ASX shares to buy if you have $2,000
• Want to become wealthy? Do this one thing
• 3 ASX dividend shares for income investors to buy next week
• Here’s why the laziest ASX investors end up the richest

Motley Fool contributor Sebastian Bowen 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 Here’s how to create a $1 million ASX portfolio by investing $1,000 a month appeared first on Motley Fool Australia.

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With the cash rate at a record low of 0.25% and some tipping it to go even lower, the interest rates on offer with term deposits and savings accounts look set to stay lower for longer.

In light of this, I believe income investors ought to consider investing in some of the high quality dividend shares on the ASX for income.

Three that I would buy are listed below:

Dicker Data Ltd (ASX: DDR)

I think this distributor of information technology products would be a good option. It has been a very strong performer during the pandemic and recently reported a 36.3% increase in first quarter net profit before tax to $18.4 million. This has been driven partly by increasing demand for software and hardware to support working from home initiatives. As a result of this strong performance, the company advised that it plans to pay a fully franked dividend of 35.5 cents per share in FY 2020. This will be up 31% year on year and represents a fully franked 5.1% yield.

Transurban Group (ASX: TCL)

If you’re not in immediate need of income, then this toll road operator could be a good option. Due to the sharp reduction in traffic volumes on its roads during the pandemic, I suspect Transurban could scrap its final distribution in FY 2020. However, I feel it is worth being patient and expect its distributions to recover over the coming years as traffic volumes eventually normalise. I estimate that its shares offer investors distribution yields of 3.3% and 4.5% in FY 2021 and FY 2022, respectively. 

Wesfarmers Ltd (ASX: WES)

Wesfarmers is one of Australia’s leading conglomerates and the company behind countless recognisable brands. These include Bunnings, Kmart, Target, online retailer Catch, and Officeworks. The company also has exposure to the chemicals and industrials industries through a wide range of businesses. Combined, I believe Wesfarmers is well-positioned to grow its earnings and dividends at a solid rate over the coming years. At present I estimate that its shares offer a forward fully franked ~4% dividend yield.

More reading

• 2 quality ASX dividend shares for retirement income
• Where growth, income, and value investors can invest $5,000 today
• 2 exciting ASX tech shares to buy right now
• Losers of Virgin Australia’s potential nationalisation
• 3 top ASX dividend shares you can buy today for income

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited. The Motley Fool Australia owns shares of Transurban Group and Wesfarmers 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 top ASX dividend shares to buy next week appeared first on Motley Fool Australia.

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I think that having a little bit of exposure to the small side of the market can be a positive for a portfolio.

This is because even blue chip companies such as Ramsay Health Care Limited (ASX: RHC) were small caps at one stage.

Anyone that bought Ramsay’s shares in the early days and held onto them will have generated exceptionally strong returns.

And although not all small caps will be success stories, there are a few that I feel have a good chance of going onto bigger and better things.

Three small ASX cap shares worth watching very closely are as follows:

Audinate Group Limited (ASX: AD8)

Audinate is a digital audio-visual networking technologies provider. It has achieved very strong sales growth in recent years thanks to the increasing demand for its Dante product. This award-winning audio over IP networking solution is being used widely across the professional live sound, commercial installation, broadcast, and recording industries globally. While the pandemic will inevitably impact its sales greatly, I believe its growth will accelerate once the crisis passes.

ELMO Software Ltd (ASX: ELO)

ELMO Software is a fast-growing cloud-based human resources and payroll software company. It provides a unified platform that allows users to streamline processes for employee administration, recruitment, on-boarding, learning, performance, remuneration, compliance training and payroll. It has been a strong performer over the last few years and I expect more of the same in FY 2020 and beyond. ELMO recently released its third quarter update and revealed quarterly cash receipts of $13.3 million. This was up an impressive 39.4% on the prior corresponding period. It brought its 12-month trailing cash receipts to $56.2 million, up 42.3% on the 12 months to March 2019.

Volpara Health Technologies Ltd (ASX: VHT)

A third small cap share to look at is Volpara Health Technologies. It is a provider of healthcare software that leverages artificial intelligence imaging algorithms to assist with the early detection of breast and lung cancer. It has been growing at a very strong rate over the last few years thanks to its increasing market share in North America. And due to the growing popularity of its software with radiologists and recent acquisitions, I expect this positive form to continue for the foreseeable future.

More reading

• 3 ASX healthcare shares to buy for strong long-term growth
• The next ASX sector in a post COVID-19 earnings upgrade cycle
• 2 of the best ASX 200 healthcare shares to buy for the long term
• Why Altium, ELMO, Suncorp, & Webjet shares are sinking lower
• 3 exciting ASX healthcare shares to watch in the 2020s

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 and recommends Elmo Software. The Motley Fool Australia owns shares of and has recommended AUDINATEGL FPO and VOLPARA FPO NZ. The Motley Fool Australia has recommended Elmo Software and Ramsay Health Care 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 These small cap ASX shares could be stars of the future appeared first on Motley Fool Australia.

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I am particularly interested in the ASX healthcare sector due to the growing number of high-quality companies that are now listed, many of which have seen strong share price growth over the past 5 years.

In addition, I believe the demand for healthcare services is only going to grow over the next decade due to an ageing global population and continuing advances in healthcare treatments and technology.

With that in mind, here are 3 of my top picks in the ASX healthcare space right now:

Ramsay Health Care Limited (ASX: RHC)

Over the past decade, global private hospital provider Ramsay has experienced strong revenue growth from its existing facilities, as well as growing through acquisitions and expanding into new markets. It has now achieved considerable size and scale, which therefore spreads its operating costs and provides it with a distinct competitive advantage in negotiations with health insurers.

Ramsay has been impacted by the ban on non-essential surgeries across the countries in which it operates. However, with elective surgeries beginning to recommence in Australia, and with other markets likely to soon follow, it may merge from its troubles faster than anticipated.

As one of the largest hospital providers in the world, with operations across 11 countries, I believe that Ramsay is well-positioned to capitalise on the growing need for healthcare services over the next decade.

Cochlear Limited (ASX: COH)

Cochlear has been significantly impacted by the coronavirus crisis as elective surgeries, such as those for cochlear implants, have been deferred across a number of countries in which it operates. This led to Cochlear raising $880 million from an institutional placement in late March.

However, with the Cochlear share price taking a significant hit over the past few months, and the hope that elective surgeries may soon commence across a number of its markets, I believe now could be a good buying opportunity.

As the proportion of the global population over the age of 65 continues to increase, I think the demand for hearing products and solutions over the next few decades will only rise.

ResMed Inc (ASX: RMD)

ResMed has evolved over the last 30 years to become one of the world’s leading sleep treatment companies. It is now a major US-based global company, employing more than 7,00 people worldwide.

The company’s healthcare devices and cloud-based software solutions target sleep apnea and other respiratory conditions. Its global scale and breadth now provide it with a distinct advantage over its competitors. The company recently recorded an impressive 47% increase in net income during the third quarter of FY 2020.

I believe that the strong demand for ResMed’s products is likely to continue over the next decade, driven by the largely untapped market of sleep apnea sufferers globally.

More reading

• The next ASX sector in a post COVID-19 earnings upgrade cycle
• Got $3,000 to invest? Here are 2 fantastic ASX 200 shares to buy right now
• 2 of the best ASX 200 healthcare shares to buy for the long term
• Leading brokers name 3 ASX shares to sell today
• Why CSR, Kogan, Premier Investments, & ResMed shares are storming higher

Phil Harpur owns shares of Cochlear Ltd. and ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. The Motley Fool Australia has recommended Cochlear Ltd., Ramsay Health Care Limited, and ResMed Inc. 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 healthcare shares to buy for strong long-term growth appeared first on Motley Fool Australia.

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Many S&P/ASX 200 Index (ASX: XJO) dividend shares are on sale right now. Investors have been spooked by the recent bear market and the economic outlook remains a little cloudy.

However, that means share prices may be disconnected from the underlying value of many companies. In fact, an article in the Australian Financial Review indicates that retail investors were busy buying and selling in February and March.

Now, smart investors know when to hold and when to fold. A period of unprecedented volatility that smashed shares is not the time to fold.

Having said that, here’s one ASX 200 dividend share that could be in the buy zone today.

One ASX 200 dividend share to buy today

I like the look of BHP Group Ltd (ASX: BHP) right now. I think the Aussie large-cap has a lot going for it and could be in the buy zone.

BHP shares have slumped 19.11% lower so far this year. That’s a pretty big fall for a company of BHP’s size. The Aussie iron ore miner currently boasts a market capitalisation of $148 billion, which means when it moves, the ASX 200 moves.

Apart from the size factor, BHP is a solid ASX 200 dividend share. The mining group’s shares are yielding 6.73% right now, although I wouldn’t count on that being maintained.

The current environment is making companies wary of spending additional cash. While shareholders still want to be paid, maintaining business stability throughout the next 6 to 12 months is critical.

You may be wondering why you’d buy an ASX 200 dividend share that may slash its dividend. I think the key here is to remember that us Fools invest for the long-term.

The BHP share price has been hammered in 2020 but I think the fundamental environment looks OK. China’s economy is picking back up and we could see a boost to Aussie infrastructure to help mitigate the impacts of a likely recession.

That means BHP could be an absolute steal for its current $31.67 per share valuation.

More reading

• What to watch on the ASX 200 next week
• Are rental yields better than dividend yields?
• These were the best performing ASX 200 shares last week
• Buy these ASX 200 shares for your kids today
• Why a buy and hold strategy for ASX shares is best

Motley Fool contributor Ken Hall 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 Why BHP is an ASX 200 dividend share to buy today appeared first on Motley Fool Australia.

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Last week saw a large number of broker notes hitting the wires once again. Three buy ratings that caught my eye are summarised below.

Here’s why brokers think investors ought to buy them next week:

CSL Limited (ASX: CSL)

According to a note out of UBS, its analysts have retained their buy rating and $342.00 price target on this biotherapeutics company’s shares. The broker remains positive on CSL despite reducing its earnings forecasts slightly to account for a decline in plasma collections between April and June because of the pandemic. Outside this, the broker doesn’t expect a meaningful decline in demand for its therapies during the pandemic due their life-saving nature. I agree with UBS and believe it would be a top option for investors.

Sealink Travel Group Ltd (ASX: SLK)

Analysts at Ord Minnett have retained their buy rating and $5.25 price target on this travel company’s shares. According to the note, the broker believes that SeaLink is well positioned to benefit from the recovery in domestic travel. And although it has downgraded its earnings estimates materially for the next couple of years, it believes these could be upgraded in the coming months as Australia opens up again. While I agree with Ord Minnett, I would like to see how the reopening of Australia goes before investing.  

Xero Limited (ASX: XRO)

A note out of Morgan Stanley reveals that its analysts have retained their overweight rating and $80.00 price target on this business and accounting software provider’s shares. It was pleased with Xero’s strong sales and EBITDA growth in FY 2020. And while it acknowledges that subscriber additions could soften during the pandemic, it remains upbeat on the future and believes the recent share price weakness is a buying opportunity for investors. I agree and feel Xero is a great long term investment option.

More reading

• How to earn $50,000 of passive income with ASX shares
• Why a buy and hold strategy for ASX shares is best
• Should you invest in super or your ASX share portfolio?
• ASX 200 finishes up 1.4%, gold miner share prices surge
• Brokers name 3 ASX 200 shares to buy 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. and Xero. 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 Top brokers name 3 ASX shares to buy next week appeared first on Motley Fool Australia.

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If I had $50,000 to invest I’d definitely want to consider investing it. I’d think about putting all of it into exchange-traded funds (ETFs).

ETFs can be great way to invest in a diverse group of shares. Some of the best ones have very low fees. You can’t go wrong with a choice like iShares S&P 500 ETF (ASX: IVV).

But I like the idea of going for slightly different ETFs. I’d want ones that provide something a bit different to the typical American or Australian focused ones.

Here are three ETFs I’d invest $50,000 into:

iShares S&P Global 100 (ASX: IOO) – $25,000 

I think this might be one of the best way to invest in global shares. The US share market has plenty of high quality of businesses, many of the best in the world. But not every great business gets included in those American ETFs.

This offering by Blackrock’s iShares invests in 100 of the largest across the world. Yes, you get exposure to Microsoft, Alphabet, Amazon and so on. But America may not always have the best large caps to own. European shares like Nestle, Novartis, LVMH, Siemens and SAP could be worth holding. Asian shares like Samsung, Toyota and Sony could also be worth holding.

Power often gets consolidated at the top, this investment will mean you’re always invested in those giants from across the world, not just from one region.

Betashares FTSE 100 ETF (ASX: F100) – $15,000 

If you go for this ETF you’ll be investing in plenty of global businesses that just happen to be listed on the London Stock Exchange. I think the largest shares are pretty defensive against the coronavirus impacts.

There are pharmaceuticals (Astrazeneca and GlaxoSmithKline), alcohol (Diageo) and consumer products (Unilever and Reckitt Benckiser), there are also shares from industries like mining (Rio Tinto and BHP), electricity distribution (National Grid), a telco (Vodafone) and a supermarket (Tesco).

One of the main reasons I’m attracted to this ETF is because you get exposure to a share market that is somewhat similar to Australia’s and very different in other ways. At the end of April 200 this BetaShares offering had a trailing dividend yield of almost 6%, though this will probably reduce if there are more dividend cuts.

Vanguard FTSE Asia ex Japan Shares Index ETF (ASX: VAE) – $10,000 

Asia is home to a number of very promising businesses that are hard to get exposure to through most other types of investments. This ETF is a good way to get all that exposure through a single investment. I’m talking about shares like Alibaba, Tencent, Samsung, Ping An Insurance and Taiwan Semiconductor Manufacturing.

It’s good to be invested in the Asian region. Particularly places like China, Hong Kong, Taiwan and South Korea. Those countries were seeing good middle class wealth growth at a nice pace before the coronavirus came along.

On the numbers side of things, it’s attractive for several different reasons. It has over 1,200 holdings, a dividend yield of 3%, a p/e ratio of 12.3x and a return on equity (ROE) of 14.75%. 

Foolish takeaway

I’d love to invest in each of these ETFs right now, particularly due to the lower share prices in the current environment. Investing this way takes much less effort than going for individual shares. 

More reading

• ASX shares can help millennials retire before their parents
• Got $5,000 to spend? Here are 5 ASX shares you can buy today
• 2 ETFs for easy investing and good returns
• How to build good wealth with small investments
• How to make a $1 million share portfolio by investing $1,000 a month

Motley Fool contributor Tristan Harrison 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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