Category: Stock Market

Another strong performance in today’s afternoon trade has seen the Goodman Group (ASX: GMG) share price edge as high as $16.82, which marks a new record for Australia’s largest real estate investment trust (REIT).

Although its shares have softened slightly, closing the day at $16.59, investors have been piling into this company since it bottomed out at $9.60 earlier in March. So what’s spurring the Goodman share price to new heights and is it too late for prospective investors to jump in?

What’s driving the Goodman share price upward

For the most part, REITs and property shares have been heavily battered this year. This has been in large part due to fears that COVID-19 may profoundly de-value commercial property, as more people substitute the office to work from home.

Goodman appears to be the outlier to this downward trend, shrugging off these concerns principally due to the exposure of its asset portfolio to warehouses and large-scale logistics facilities.

Although it boasts total assets under management of $55 billion across 395 properties globally (as of March 2020), the market appears most impressed by its prospects for growth in the industrial property space with its largest client, e-commerce juggernaut Amazon.com (NASDAQ: AMZN).

On 11 June, it was announced that Goodman had inked a new deal with Amazon for a new 16,300 square metre warehouse in Brisbane. In addition, on 30 June, Goodman entered into a partnership with Brickworks Limited (ASX: BKW) to jointly secure a long-term lease with Amazon at Oakdale West in Sydney.

Amazon’s entrance into the Australian market and the growth of e-commerce more broadly is a significant tailwind for Goodman’s future performance prospects. This US giant and other domestic competitors such as Kogan.com (ASX: KGN) clearly see the importance of bolstering their warehousing capabilities as retail shopping heads online, and Goodman is a key beneficiary by offering such services.

Is it too late to buy in?

If we’re going solely off the ‘buy low, sell high’ mantra, Goodman is probably a watchlist item for many at this point, just because it’s at its most expensive level ever. In support of this view, the company’s price-to-earnings (P/E) ratio of 21 is higher than competitors such as Charter Hall Group (ASX: CHC), with a P/E of 19, and Centuria Industrial REIT (ASX: CIP), with a P/E of 12. This high P/E is undoubtedly due to the future expectations of Goodman’s financial performance being priced in by the market.

Notwithstanding the Goodman share price being somewhat expensive, I still see a lot of upside for prospective investors with a medium- to long-term outlook.

For one thing, the company has managed to maintain both its earnings and distribution guidance for FY20 despite the challenging environment presented by COVID-19. In its Q3 FY20 update to the market in May, Goodman affirmed operating earnings per share of 57.3 cents, equivalent to an 11% increase relative to FY19.

This operational update also revealed the company has $4.8 billion of development work in progress and 97.5% of occupancy rates being maintained. These types of metrics further illustrate the resilience of this business to continue to outperform throughout an otherwise difficult period.

Since that update, the addition of Amazon’s long-term commitment to collaborating with Goodman will certainly have positive ramifications for the company’s FY21 outlook when it reports full-year FY20 earnings on 13 August.

Foolish takeaway

Those investors diving into Goodman at its share price apex may be paying a premium based on its current P/E ratio, but I think this REIT has a tremendous runway for earnings growth potential over the coming years.

E-commerce isn’t going to be slowing down anytime soon, and at the end of the day retailers like Amazon and Kogan are always going to need some immensely large warehouse spaces to fulfil customer demand for goods. I see the Goodman share price continuing to benefit from retail moving online and the unprecedented demand for industrial warehousing this trend facilitates.

More reading

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• Why you should buy into this booming ASX retail sector today
• ASX investors have been buying Tesla and these international shares
• 3 of the best ASX tech shares to buy and hold until 2030
• Latest ASX entrant mixes BNPL with eCommerce

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Toby Thomas 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 Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and recommends the following options: 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 Brickworks. The Motley Fool Australia has recommended Amazon and Kogan.com 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 Treasury Wine Estates Ltd (ASX: TWE) share price will be one to watch in August when it releases its full year results.

With the wine company’s shares down 44% from their 52-week high, shareholders will no doubt be hoping a better than expected result will get its shares heading back in the right direction.

What is the market expecting from Treasury Wine?

Ahead of the release of the Treasury Wine full year result on 13 August, I thought I would take a look to see what the market is expecting from it.

According to a note out of Goldman Sachs, it is forecasting group sales of $2,646.9 million in FY 2020.

This is slightly ahead of the analyst consensus estimate of $2,620.4 million and down 6.5% from FY 2019’s group sales of $2,831.6 million.

The broker expects this to be driven by volume declines across much of the business and offset slightly by increases in average revenue per case.

In respect to earnings, the broker is forecasting EBITS of $538.1 million for FY 2020. While this is 1.4% higher than the consensus estimate of $530.8 million, it will be a 21% reduction on FY 2019’s $681.4 million.

The Americas segment is expected to be the main drag on its earnings this year. Goldman is forecasting a 36.9% decline in Americas EBITS to $147.4 million in FY 2020.

Will there be a dividend?

Both Goldman Sachs and the market are expecting Treasury Wine to pay its shareholders a final dividend, albeit a heavily reduced one.

Goldman estimates that the company will declare a 7 cents per share fully franked final dividend. Whereas the consensus estimate is for a final dividend of 8 cents per share. This is down from 20 cents per share from the prior corresponding period.

Should you invest?

While I think that Treasury Wine could be a good long term investment option for patient investors, Goldman Sachs is sitting on the fence.

It has reiterated its neutral rating and $10.10 price target on Treasury Wine’s shares.

More reading

• 2 ASX shares I would buy for growth and income today
• Is the Treasury Wine share price a buy?
• Why the Digital Wine Ventures share price is surging today
• How you can take advantage of the surging Australian dollar
• 2 ASX shares to buy during ‘Dry July’

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates 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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ASX gold shares. They’re quickly becoming the gift that keeps on giving in 2020.

Much of the success for ASX gold shares like St Barbara Ltd (ASX: SBM) is due to the coronavirus pandemic.

The global and domestic viral outbreaks have spooked investors and crimped economic growth. Faced with the prospect of a removed government safety net and higher unemployment, investors have flocked to gold as a safe-haven asset.

That fear has pushed global gold prices to an all-time high as of Tuesday. Gold was trading at US$1,963 (A$2,745) per ounce which is good news for ASX gold shares.

But does the soaring gold price mean it’s too late to join the party in 2020?

Should you buy ASX gold shares?

Let’s look at how some of the big Aussie gold miners have performed on the ASX in 2020.

The St Barbara share price is up 28.6% in 2020 and is trading at a price-to-earnings (P/E) ratio of 20.59.

It’s been a similar story for fellow miner Northern Star Resources Ltd (ASX: NST) this year. The Northern Star share price has rocketed 36.8% higher but trades at a higher P/E ratio of 50.5.

Then there’s Saracen Mineral Holdings Limited (ASX: SAR). The Saracen Mineral share price has surged 86.4% and trades at a P/E ratio of 46.2.

This has proven to be the pick of the ASX gold shares so far this year. I do like the Saracen business as it churns out consistent cash flow versus the speculation involved in many other (smaller) ASX companies.

Saracen boasts a market capitalisation of $6.84 billion compared to St Barbara ($2.48 billion) and Northern Star ($11.53 billion).

Saracen is also a 50% owner of the Super Pit gold mine in Kalgoorlie, Western Australia alongside Northern Star.

Given the surge in gold prices over recent months, that November 2019 transaction looks like an absolute steal.

What results can we expect in August?

I’m expecting some strong earnings figures from the ASX gold miners in their August results.

Given the gold price surged in March, I think that leaves a full quarter of potential sales at those higher prices.

That’s good news for investors who are hoping for some strong dividends to go with the recent capital gains.

Is it too late to buy ASX gold shares?

The current uncertainty and market volatility could continue for some time, so I don’t think it’s too late to buy ASX gold shares.

In saying that, I don’t think it’s wise to start investing with a short-term mindset.

ASX gold shares can have their place in a well-diversified portfolio and as a tactical hedge. However, I think the long-term portfolio fit still needs to make sense before buying.

More reading

• Why GUD, IGO, Nitro Software, & St Barbara shares are dropping lower
• ASX 200 flat: Big four banks higher, St Barbara and IGO sinks on Q4 updates
• St Barbara share price tumbles lower on Q4 update and FY 2021 guidance
• 5 things to watch on the ASX 200 on Wednesday
• Don’t be blinded by gold fever…consider these ASX dividend shares instead

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.

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Short-sellers are upping their bearish bets against a number of ASX stocks as we head into the reporting season.

This may provide insights to the S&P/ASX 200 Index (Index:^AXJO) that may release disappointing news when their release their profit results.

Short-sellers tend to be more sophisticated than retail investors, so it can pay to keep an eye on what they are doing, particularly ahead of a market inflection point.

What is short-selling

For those who are unsure what short-selling is, it’s where a trader borrows a stock to sell on market with the hope of buying it back at a lower price later. This allows the trader, or short-seller, to profit from the difference.

ASIC puts out daily updates on the stocks that are being short-sold, but the data is always a week behind.

The part of ASIC’s report I find more interesting is not stocks that are most shorted at any given time, but the change in the short position (called short-interest). This tells me which are the new ASX targets being stalked by short-sellers.

Biggest increase in shorts before the reporting season

The stock that’s saw the biggest increase in short-interest since the start of July is the KIRKLAND/IDR UNRESTR (ASX: KLA) share price.

The Canadian-based gold miner didn’t have any of its stock short-sold up until two weeks ago. Now the percentage of its ASX shares that are in the hands of short-sellers stand at 10.29%.

How short-sellers are playing the BNPL sector

The second most targeted stock is the Zip Co Ltd (ASX: Z1P) share price. The BNPL star saw the proportion of its stock being shorted jump by 245 basis points (2.45 percentage points) to 7.67%.

That’s a big increase in shorts and comes as short-interest in its bigger rival, the Afterpay Ltd (ASX: APT) share price, fell 58 basis points to just 0.87%.

This may indicate that short-sellers are anticipating good results from Afterpay and are using Zip Co as a hedge. It’s a popular trading strategy to go long (meaning buy) on the strongest stock in a sector and short its weaker rivals.

Other favourite short-selling targets

The stock that saw the third biggest increase in shorts this month is the Electro Optic Systems Hldg Ltd (ASX: EOS) share price.

Short-interest in the weapon systems company jumped 221 basis points to 3.98% this month, although total short-interest in EOS is still relatively low.

Other notable stocks that are attracting short-sellers include the Pointsbet Holdings Ltd (ASX: PBH) share price and Webjet Limited (ASX: WEB) share price.

Some brokers believe the Pointsbet share price has overshot on the upside, while the rolling COVID-19 shutdown of parts of Australia will clip Webjet’s wings.

More reading

• Warning! ASX investors might be turning away from the share market
• ASX big banks stocks outperform even as APRA caps dividends
• WAAAX or FAANG? Which ASX tech shares to buy in 2020
• Xero and 1 other ASX growth share to watch in August
• ASX 200 flat: Big four banks higher, St Barbara and IGO sinks on Q4 updates

Brendon Lau owns shares of Webjet Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Electro Optic Systems Holdings Limited, Pointsbet Holdings Ltd, and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Electro Optic Systems Holdings Limited and Pointsbet Holdings 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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Netflix Inc (NASDAQ: NFLX) has come a long way since its days of mailing you rented DVDs. (Though it still does offer this service).

Listed on the tech heavy Nasdaq Inc (NASDAQ: NDAQ), Netflix now has a market capitalisation of US$215.4 billion (AS$301.7 billion). And its streaming services are now available in 190 countries.

Netflix shares weren’t immune to the wider market sell off during the initial onset of COVID-19. The Netflix share price dropped 22.1% from 4 March to 16 March. Since that low, however, it’s up 65.5%. And year to date, it has gained 48.1%.

But Netflix likely has a lot more growth ahead.

Netflix shares offer a big moat

Even before the pandemic saw much of the world forced to stay at home for weeks on end, Netflix was growing rapidly. And with the world growing wealthier and ever more people gaining access to TVs, that trend looks likely to continue.

The company’s massive offerings and market dominance provide a large defensive moat any would-be competitors need to ford. As such, I believe it’s unlikely any start-ups will offer serious rivalry in the foreseeable future.

That leaves competitors like Foxtel and Stan, owned by Nine Entertainment Co Holdings Ltd (ASX: NEC) in Australia, and HBO in the United States to fight it out.

Today’s international share nomination goes to…Netflix

If you’ve spent any time scrolling through the Netflix content menu, you’ll know it has a heck of a lot of material to watch on demand. More than any of us will ever likely watch in our lifetimes.

But beyond the vast quantity of streaming videos, Netflix is also providing great quality. At least according to the judges at this year’s prestigious Emmy Awards.

Yesterday (Aussie time), Netflix beat HBO for the second time in three years, receiving 160 Emmy nominations compared to 107 for HBO.

With high quality and an ever growing quantity of shows available at affordable prices, Netflix is one international share you may want to consider adding to your portfolio.

A note on international shares

Not everyone is comfortable buying international shares like Netflix. While it’s become much simpler and cheaper in recent years, there are a few other aspects you need to consider. Currency fluctuations are chief among them.

If the US dollar falls against the Aussie, as it has been doing in recent weeks, it would see your Aussie dollar returns increase once you sell your shares. But if the greenback rises, it will diminish your gains or increase your losses.

More reading

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Bernd Struben 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 Netflix. The Motley Fool Australia has recommended Netflix and Nine Entertainment Co. Holdings 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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Have you taken a look at the interest rates on your savings accounts recently? Right now, the majority of savings accounts offered by the big four banks come with base rates of just 0.05%.

That means that if you had $1 million sitting in one of these accounts, you would only earn interest of $5,000 a year.

Because of this, I continue to believe that it is better to put your money to work in the share market, rather than leave it to earn just paltry interest in an account.

If I had $5,000 in a savings account and no immediate use for it, I would consider investing it into one of these ASX shares:

Appen Ltd (ASX: APX)

The first ASX share to consider investing $5,000 into is Appen. It is the global leader in the development of high-quality, human-annotated training data for machine learning and artificial intelligence. Its team of 1 million+ crowd-sourced workers allows the company to collect and label high volumes of data used to build and improve artificial intelligence models for some of the biggest technology companies in the world. This includes the likes of Facebook, Microsoft, and Apple.

Due to the growing importance of artificial intelligence and machine learning and Appen’s leadership position in its field, I believe it is well-placed to capture the increasing demand and deliver strong earnings growth long into the future.

Pushpay Holdings Ltd (ASX: PPH)

Another ASX share to invest $5,000 into is Pushpay. It is a donor management system provider with a focus on the faith sector. Pushpay’s innovative solutions simplify engagement, payments, and administration, allowing users to increase participation and build stronger relationships with their communities.

Pushpay has been growing at a very strong rate in recent years and FY 2020 was no exception. In FY 2020 the company delivered a 39% increase in total processing volume to US$5 billion and a 33% increase in operating revenue to US$127.5 million. Pleasingly, this strong growth is expected to continue in FY 2021, with management forecasting its operating earnings to double. After which, it is aiming to capture a 50% share of the medium and large church segments in the future. This represents a US$1 billion revenue opportunity.

More reading

• Are ASX tech shares the only way to protect your portfolio against the coronavirus?
• 3 of the best ASX tech shares to buy and hold until 2030
• 3 unstoppable ASX shares to buy right now
• WAAAX shares see mixed recovery from COVID-19
• Pushpay and 1 other 5-star ASX share to buy right now

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 PUSHPAY FPO NZX. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended PUSHPAY FPO NZX. 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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