Category: Stock Market

If you’re a fan of growth shares like I am, then you’re in luck because there’s a good number of quality companies trading on the Australian share market that I believe are capable of growing their earnings at a strong rate over the next decade.

Three that I would consider buying this month are listed below. Here’s why I like them:

Aristocrat Leisure Limited (ASX: ALL)

One of my favourite growth shares on the local market is Aristocrat Leisure. I’m a big fan of the gaming technology company due to the quality of its core business and the strong growth potential of its digital business. The latter business has millions of daily active users generating significant recurring revenues. Due to new releases and the growing popularity of social and mobile gaming, I expect it to generate strong recurring revenue growth in the 2020s. This should drive strong profit growth over the medium term and help propel the Aristocrat Leisure higher.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

Although this pizza chain operator’s performance over the last few years has been a little mixed, I believe its long term outlook is increasingly positive. This is because management intends to grow its global store network by 7% to 9% per annum for the next 3 to 5 years. Combined with its same store sales growth target of 3% to 6% per annum over the same period, this should lead to strong profit growth. If it delivers on these targets, then I suspect that the Domino’s share price will be a market beater through to 2025.

Nanosonics Ltd (ASX: NAN)

A final growth share to buy is Nanosonics. It is the infection prevention specialist behind the popular trophon EPR disinfection system for ultrasound probes. I’m a big fan of the company due to the quality of the product and the recurring revenues it generates from consumables sales. Given its massive market opportunity and management’s plan to launch several new products targeting unmet needs in the near term, I believe Nanosonics is well-positioned to continue its strong growth for many years to come.

More reading

• Why Adbri, Domino’s, Event, & Viva Energy shares are dropping lower
• 3 innovative ASX shares to buy
• Should you buy the beaten down shares of Aristocrat Leisure and Flight Centre?
• Why Domino’s and these ASX 200 shares have just hit new highs
• Bring your portfolio to life with these stellar ASX healthcare shares

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 Nanosonics Limited. The Motley Fool Australia has recommended Domino’s Pizza Enterprises Limited and Nanosonics 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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A record surge in COVID-19 cases in Victoria forced the state to reimpose stage three lockdowns and this impacted on several ASX stocks.

The Victorian premier Daniel Andrews announced the bad news late this afternoon after Victoria recorded 191 cases of coronavirus overnight with most of these cases stemming from unknown sources.

The lockdown, which encompasses all of metropolitan Melbourne and the Mitchell Shire, is a devasting blow to businesses and the Victorian economy.

ASX shares in lockdown blues

The news knocked the wind out of the S&P/ASX 200 Index (Index:^AXJO) with the benchmark closing flat after spending most of the day in the black.

ASX big bank stocks contributed to the weakness, particularly the Melbourne headquartered institutions. The National Australia Bank Ltd. (ASX: NAB) share price slumped 1.9% to $18.34 and the Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price lost 1.6% to $18.81.

But even their Sydney HQ-ed counterparts didn’t far well. The Westpac Banking Corp (ASX: WBC) share price also declined 1.6% to $18.16, while the Commonwealth Bank of Australia (ASX: CBA) share price dipped 0.3% to $71.24.

Late selling pressure

It’s worth noting that most of the selling in the banks came in the last 30 minutes of trade. I suspect we will see further pressure on the sector tomorrow.

The return of stage three restrictions could exacerbate the bank’s bad debt problem as mortgagees and businesses in the state face renewed financial pressure.

The market had only priced in the impact of the first COVID-19 shutdown and no one knows yet how to quantify the impact from this new six-week restriction.

What you can expect though is further broker downgrades for some sectors ahead of the reporting season.

ASX shares benefiting from Victorian lockdown

On the flipside, several ASX companies saw their share price jump in the closing moments of trade today. The uncertainty left investors scrambling to buy ASX stocks that will either benefit from the pandemic or won’t be impacted by the dark COVID cloud.

One beneficiary is the Ansell Limited (ASX: ANN) share price. The disposable glove maker’s shares jumped 1.3% to close near its intraday high at $37.92.

Perhaps investors are counting on a fresh wave of panic buying at our supermarkets too. The Woolworths Group Ltd (ASX: WOW) share price and Coles Group Ltd (ASX: COL) share price saw a late surge in buying interest.

But investing based on what the coronavirus does or doesn’t do is not a winning strategy. Just as in the last market meltdown, staying calm and keeping an eye out for quality stocks being dumped is the right thing to do.

More reading

• Why brokers have just downgraded BHP and these ASX stocks today
• These 2 ASX medical shares are on the rise after major announcements
• You’re probably a customer of these 3 ASX shares. Should you own them too?
• Here’s what ASX investors need to know about the RBA’s rate decision today
• Why retirees should buy Coles and Telstra shares for income

Motley Fool contributor Brendon Lau owns shares of Ansell Ltd., Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, National Australia Bank Limited, Westpac Banking, and Woolworths Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool Australia has recommended Ansell 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 WiseTech Global Ltd (ASX: WTC) share price has been a quiet performer on the ASX boards over the past week. Since the start of July, WiseTech shares are up nearly 15% to $22.15 at the time of writing. We’re not yet back to the pre-market crash levels of ~$30 per share, but this global logistical solutions company is still up more than 110% from the lows we saw in March.

Why is the WiseTech share price climbing?

There hasn’t been any major news out of the company in July so far, so it’s not entirely clear why the WiseTech share price is so decisively in investors’ good books right now. The company did announce last Friday that around 21,000 shares were being released from escrow as a result of a recent acquisition. But this event was more likely to create selling pressure than buying pressure, if anything.

I think these moves are just the market ‘getting over’ the fact that WiseTech CEO Richard White recently offloaded around 2.5 million shares (worth around $46 million). The market generally hates insider selling — especially from founders. And $46 million isn’t an insignificant pile of chips to take off the table (although it pales against some other recent instances of insider selling). When Mr White’s sale was announced, WiseTech shares fell more than 6%. But the increases over the last week mean the Wisetech share price has now recovered from that news and then some.

Are WiseTech shares a buy today?

WiseTech is a good company in my view. I think it’s really found a winner with its CargoWise software solutions. I also think the company has a promising growth runway ahead if it can keep making smart acquisitions. What’s more, WiseTech shares remain significantly below the sky-high prices they were trading at last year. At one point in September, the WiseTech share price reached as high as $38.80.

But that in itself doesn’t mean today’s share price of $22.15 is automatically a bargain, of course. Even at the current valuation, I still have some concerns. WiseTech’s current price-to-earnings (P/E) ratio is still sitting at 77.04 – a long way from the current S&P/ASX 200 Index (ASX: XJO) average of ~17. It also has a price-to-sales (P/S) ratio of more than 16, which I would regard as extremely high.

Foolish takeaway

I accept that WiseTech’s business model can distort these conventional valuation metrics somewhat. But I’m still not convinced there is much value in the WiseTech share price right now. As such, I think there are better growth opportunities out there and I’ll be sitting on the sidelines for this one.

More reading

• Why Lovisa, PointsBet, Transurban, & WiseTech shares are racing higher
• What’s next for WAAAX shares?
• Should ASX investors be worried about insider selling?
• Why Avita, Brickworks, Fisher & Paykel Healthcare, & WiseTech Global are tumbling lower
• ASX 200 up 1.2%: Big four banks rebound, WiseTech CEO dumps shares, Collins Foods impresses

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of WiseTech Global. 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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Last week, the S&P/ASX 200 Index (ASX: XJO) and All Ordinaries (ASX: XAO) both cracked the 6,000 point mark with ease. With markets continuing to defy odds and seemingly ignoring economic woes, here are 3 ASX 200 shares you could consider buying in July. 

1. Tyro Payments Ltd (ASX: TYR) 

The Tyro Payments share price struggled to make headway in late June. Increasing fears of a second wave of COVID-19, particularly in Victoria, and escalating lockdown measures could be the main drivers of this share price slump. These impact on policy decisions such as expanding restaurant dine-in capacity and allowing stadiums to reopen. This, in turn, could slow the return of normal business activity which is vital for Tyro’s EFTPOS terminal turnover.  

The company has committed to providing the market with weekly transaction value updates. By the end of FY20, Tyro delivered a 15% increase in transactions compared to FY19. From 1 July to 3 July, transaction values were up a significant 40% on the prior corresponding period. I believe Tyro’s numbers are reflecting Australia’s pent-up consumer demand and a slow but steady return to normal. As such, I’m confident the combination of recovering economic activity, a move away from cash and Tyro’s competitive pricing makes it a strong ASX 200 stock to consider buying this month. 

2. Pointsbet Holdings Ltd (ASX: PBH) 

The Pointsbet business has been performing strongly despite the significant disruption of COVID-19 to key sporting leagues such as the NRL, AFL and NBA. The company had previously announced an agreement in Australia to become the exclusive wagering partner for Fox Sports AFL during the 2020 season. Pointbet’s continued strong performance has also been driven by a shift to online gambling, increase in racing turnover and an improvement in the company’s overall product offering leading to a greater share of wallet from existing clients. 

The United States market represents a significant opportunity as more states continue to legalise sports betting. I believe Pointsbet is in a strong position to continue growing its market share and presence in a number of US states. The planned recommencement of key sports such as the NBA, MLB and PGA should also help restore confidence in the Pointsbet share price. 

3. EML Payments Ltd (ASX: EML) 

EML follows a similar narrative to Tyro with improving economic activity and the gradual reopening of shopping malls across various countries. There are many reasons EML could represent a leading ASX 200 recovery stock to buy in July. 

EML’s acquisition of Prepaid Financial Services (PFS) has reduced the company’s dependence on gift cards (particularly shopping centre gift cards) for revenue. EML’s general purpose reloadable (GPR) business, which includes products such as salary packaging, digital banking products and gaming, now represents more than 50% of its revenues. This is the first time in the company’s history that it is deriving the majority of its revenue from GPR programs. The renegotiated acquisition terms of PFS now places EML in a better capital position with $125m in cash as at 30 April 2020. I believe an improvement in economic activity and the company’s strong balance sheet make it a strong buy case at today’s prices.

More reading

• Why Electro Optic Systems, Mayne Pharma, Tyro, & WAM Leaders are racing higher
• 10 more top broker ASX share picks for FY21
• ASX 200 closes 0.4% higher, Cochlear share price up 6%
• Why Lovisa, PointsBet, Transurban, & WiseTech shares are racing higher
• PointsBet share price zooms 5% higher on Detroit Tigers deal

Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Pointsbet Holdings Ltd and Tyro Payments. The Motley Fool Australia owns shares of and has recommended Emerchants Limited. The Motley Fool Australia has recommended 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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If you don’t currently have sufficient funds to invest across a large number of different shares, then exchange traded funds (ETFs) could be the answer.

ETFs allow you to invest in a particular theme, index, or industry through just a single investment.

There are countless ETFs out there for investors to choose from, but three of my favourites are listed below. Here’s why I like them:

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

The BetaShares Asia Technology Tigers ETF could be a top option for ASX investors. This fund tracks the performance of an index of the 50 largest technology and online retail companies that have their main area of business in Asia (excluding Japan). These companies are among the fastest-growing in the region and look exceptionally well-positioned to be market-beaters over the next decade. Among its biggest holdings you’ll find the likes of Alibaba, Baidu, JD.com, and Tencent.

BetaShares NASDAQ 100 ETF (ASX: NDQ)

Another exchange traded fund which I think has the potential to outperform the ASX 200 is the BetaShares NASDAQ 100 ETF. As you might have guessed from its name, this exchange traded fund gives investors exposure to the 100 largest businesses on Wall Street’s technology-focused NASDAQ index. As a result, through a single investment investors will be getting a slice of tech behemoths such as Amazon, Apple, Alphabet, Facebook, Microsoft, and Netflix. Other notable holdings include Starbucks, Tesla, and Zoom.  

iShares Global Healthcare ETF (ASX: IXJ)

A final exchange traded fund to consider buying is the iShares Global Healthcare ETF. I think this is a great option for investors that are looking for exposure to the healthcare sector. This is because this exchange traded fund gives investors access to many of the biggest and brightest healthcare companies in the world. This includes CSL Ltd (ASX: CSL), Johnson & Johnson, Novartis, Ramsay Health Care Limited (ASX: RHC), and Sanofi. Given the positive outlook for the healthcare sector over the next couple of decades due to ageing populations and increased chronic disease, I believe it could provide strong returns for investors,

More reading

• Why I sold this ASX ETF last week
• Where to invest $20,000 into ASX shares for market-beating returns
• Where to invest $10,000 into ASX shares in July
• Where I would invest $10,000 into ASX shares in FY 2021
• Here are 2 easy ways to invest in quality international shares on the ASX

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 BETANASDAQ ETF UNITS and CSL Ltd. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS, Ramsay Health Care Limited, and Sonic Healthcare 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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On Tuesday, the Magellan Financial Group Ltd (ASX: MFG) share price has risen by more than 3% to $64.39 per share at the time of writing. The share price gains came off the back of Magellan’s most recent funds under management update. 

What was in the announcement?

The announcement detailed Magellan Financial Group’s most recent funds under management. In June, Magellan saw net fund inflows of $249 million. This included net retail inflows of $173 million along with net institutional inflows of $76 million.

The group reported that its average funds under management were $95.5 billion for the year ended June 30 2020. This was a 26% increase on the year ended 30 June 2019, which saw average funds under management of $75.8 billion.

The announcement also revealed that in July, Magellan will pay distributions of approximately $650 million. This will be reflected in the next month’s funds under management announcement. 

The company estimates that it will receive performance fees of approximately $81 million for the year ended 30 June 2020.

How has Magellan performed recently?

Magellan Financial Group is a fund manager that invests in global equities and global infrastructure. It has offices in Australia, New Zealand and the US and manages more than $97 billion. Magellan has 34 experienced investment professionals on its staff.

Magellan invests in what it names “the world’s best companies”. It has over 10 listed and unlisted equities and infrastructure funds.

In June, Magellan launched its fourth ETF product, the Airlie Australian Share Fund, which is intended to bring together the features of an unlisted fund and active ETF into a single unit in a single fund.

Magellan now has over $2.5 billion in ETF funds under management and 35,000 ETF unit holders.

For the half year to 31 December 2019, Magellan had a net profit after tax of $216.8 million. This was a 12.8% increase on the same period in the prior year. Performance fees for the half year to December 2019 were $41.7 million.

The Magellan share price is up 110% from its 52 week low of $30.10. It has returned nearly 9% since the beginning of the year and is up 17.87% since this time in 2019.

More reading

• Why Australian Ethical, Magellan, St Barbara, & Sezzle shares are zooming higher
• 5 things to watch on the ASX 200 on Friday
• This ASX fund manager is still ultra-bearish on shares
• How I’d build a $100,000 portfolio for ASX dividend shares
• Top brokers name 3 ASX shares to sell right now

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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The BHP Group Ltd (ASX: BHP) share price is rallying even after a broker downgrade, although the same can’t be said for two other ASX stocks that got the chop.

Shares in the Big Australian jumped 1.8% during lunch time trade to $36.29 when the S&P/ASX 200 Index (Index:^AXJO) climbed 0.7%.

Its outperformance comes despite Credit Suisse’s move to lower its recommendation on the UK and ASX-listed miner to “neutral” from “outperform”.

Well positioned but fully priced

It’s the strength of its balance sheet and the relatively positive outlook for iron ore that is probably keeping investors onside. Such qualities are hard to find in an increasingly uncertain world due to the COVID-19 outbreak.

But Credit Suisse doesn’t believe these positive attributes are enough to keep the stock as a “buy” after the recent rally in the BHP share price.

“We still regard BHP’s balance sheet as being robust and see little risk to dividends with FY20E yields at 5%,” said the broker.

“However, we think yields are no longer attractive enough to serve as a trigger to push the stock price higher.”

Credit Suisse’s price target on BHP is $37 a share.

Unconstructive headwinds

But the Lendlease Group (ASX: LLC) share price wasn’t quite as lucky. Shares in the engineering and construction group tumbled 2.8% to $12.31 at the time of writing after JP Morgan cut its recommendation to “neutral” from “overweight” today.

The broker pared its enthusiasm for the stock as it believes its construction division is likely to face earnings headwinds.

“Lendlease last week recognized a A$260m EBITDA loss (JPMe) in 2H20 for construction,” said JP Morgan.

“We revise down our forecast construction earnings, assuming lower-than-normal productivity for the next six months, a decline in backlog revenue for the next two years, as market-wide construction in resi and commercial is assumed to decline (typically 50% of book), and some moderation in segment margins.”

The broker’s 12-month price target on the stock is $13.50 a share.

Makings of a poor trade

Another stock to fall on a downgrade is the ASX Ltd (ASX: ASX) share price, which fell 0.9% to $86.59.

UBS cut its rating on the stock to “sell” from “neutral” after shares in our share market operator outperformed and has recovered all its losses from the COVID-19 bear market.

The stock was lifted by an increase in share trading activity from retail investors and a large number of capital raisings.

“Despite this, ASX’s key Derivatives segment has been an area of weakness with volumes -12% on pcp in 2H (June -28%) with our Futures volume regression analysis pointing to further growth headwinds into FY21E (UBSe +0% in FY21E),” said UBS.

“Given delays to its CHESS replacement (now slated April-22), project spend may remain elevated near term.

“While ASX offers a defensive 2.6% dividend yield, its 33.7x 12mth forward PE (UBSe) is at odds with its more moderate medium-term growth outlook.”

The broker’s price target on the stock is $75 a share.

More reading

• These 2 ASX medical shares are on the rise after major announcements
• Here’s what ASX investors need to know about the RBA’s rate decision today
• Leading brokers name 3 ASX 200 shares to sell today
• Where to invest $1,000 in ASX tech shares today
• Why these ASX tech shares should be on your radar

Motley Fool contributor Brendon Lau owns shares of BHP Billiton Limited. 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 brokers have just downgraded BHP and these ASX stocks today appeared first on Motley Fool Australia.

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ASX medical shares have been in the spotlight lately, with 2 dropping major announcements yesterday. Mesoblast Limited (ASX: MSB) and Mayne Pharma Group Ltd (ASX: MYX) both saw share price bounces yesterday following their announcements, which look set to expand distribution of their products. 

What did Mesoblast announce?

Mesoblast announced its stem cell medicine Remestemcel-L will be available for compassionate use to treat children with COVID-19 in the United States. The product will be made available under an expanded access protocol, which allows patients with an immediately life threatening condition to gain access to an investigational medical product. 

Remestemcel-L will be used to treat COVID-19-infected children with complications of multisystem inflammatory syndrome (MIS). It has previously been used in children with graft versus host disease which provides a body of safety and efficacy data. This data suggested the product might be of therapeutic benefit in patients with MIS. The use of the treatment in children extends the potential application of this stem cell therapy beyond adults with severe acute respiratory distress syndrome. 

The Mesoblast share price was up over 11% yesterday following the announcement, although today it has dropped back by 3.47% to $3.62 per share at the time of writing. Recent rises in the Mesoblast share price have led to it joining the S&P/ASX 200 Index (ASX: XJO) in the most recent quarterly rebalance. The company reported in June that Remestemcel-L led to improved outcomes in patients with inflammatory lung diseases. 

What did Mayne Pharma announce?

Yesterday, Mayne Pharma announced a new supply agreement for US generic oral contraceptive products. The agreement covers 13 products, including 5 not previously marketed by Mayne Pharma. Four of the additional products are FDA approved and include generic equivalents of the 2 highest prescribed oral contraceptive products in the US. 

Mayne Pharma reports that the annual US market sales for the 5 new products are US$500 million. Investors approved of the deal, sending the Mayne Pharma share price nearly 4% higher yesterday and another 2.82% higher today to 44 cents per share. 

Commenting on the deal, CEO Scott Richards said: “this transaction expands our women’s health portfolio and secures supply on more favourable terms.”

Mayne has been seeking to optimise its supply network to improve product costs and add complementary generic products. This latest agreement ticks both those boxes. 

Foolish takeaway

ASX medical shares Mesoblast and Mayne Pharma are making promising advancements in their respective markets, which investors are betting will lead to long-term results. 

More reading

• Why brokers have just downgraded BHP and these ASX stocks today
• Here’s what ASX investors need to know about the RBA’s rate decision today
• Leading brokers name 3 ASX 200 shares to sell today
• Where to invest $1,000 in ASX tech shares today
• Why these ASX tech shares should be on your radar

Motley Fool contributor Kate O’Brien owns shares of Mayne Pharma Group Limited. 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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