The shock move by the Reserve Bank of Australia (RBA) chief to link migration to wages could set the scene for the Aussie to race higher.

ASX investors should pay attention. This development isn’t only relevant to currency traders looking to make a buck from betting on exchange rates.

RBA Governor Philip Lowe’s comments about how COVID-19 border closures are supporting a jobs boom took many by surprise.

Are investors underestimating the Australian dollar?

This is the first time in living memory that any RBA boss has made this connection, reported the Australian Financial Review.  

This is a big deal because it could indicate that the market is underestimating the Aussie battler. The Australian dollar is trading near its lowest level in 2021 at around US74.9 cents as traders believe the US Federal Reserve will lift interest rates before the RBA.

Dr Lowe reiterated the central bank’s view that the cash rate will not rise until 2024 when the Fed is tipped to lift theirs the year before.

Shuttered borders fuel the Aussie dollar rebound

But if the lack of skilled migrants does drive up wages, it will force the hand of the RBA to lift rates much sooner than expected.

Hints of this inflationary pressure will probably start to show in a few short months. This, combined with the belief that net migration will not return to pre-COVID levels for many years, will be enough to lure the Aussie bulls out from cover.

I won’t be surprised to see the Australian dollar running up towards US80 cents!

How the exchange rate will impact on ASX shares

This will create a headwind for the S&P/ASX 200 Index (Index:^AXJO) on two key levels. Most of the larger ASX shares sell products and services in US dollars. The stronger Aussie will reduce their profits when earnings are converted into the local currency. And lower earnings mean less dividends too!

The second point of friction is the inverse relationship between interest rates and ASX share valuations. In general terms, rising rates reduces the appeal of shares to investors.

Big Australia may have little impact on wage growth

But it isn’t all bad news. While Dr Lowe sees the link between the lack of migration and wage increases, not all economists agree.

They believe that wage pressure stems more from loose monetary policy and government stimulus than border closures.

And here’s the rub. Experts do not know how much of our labour tightness is due to fiscal and monetary policies and how much is due to migration.

How lack of migrants will hurt our economy instead

Goldman Sachs economist Andrew Boak thinks migration is only a marginal factor in the inflation debate, reported the AFR.

“At an aggregate level we see only modest upward pressure on wages given most industries have little reliance on migrant workers,” said Boak.

“Moreover, industries that produce goods and services typically demanded by temporary visa holders – for example education services and accommodation services – are likely to experience headwinds to demand and wages growth so long as international borders remain shut.”

Foolish takeaway

This leads me to the final point – while ASX investors should be conscious about what’s happening to the Aussie dollar, they shouldn’t base their investment decision based on where they think the exchange rate is going.

Not even the experts seem to know. What hope in heaven do the rest of us have?

The post Why the Australian dollar may be set to surge and how it will impact on ASX shares appeared first on The Motley Fool Australia.

More reading

• 3 growing small cap ASX shares to watch
• Are these 2 high-flying ASX shares buys?
• Up 36%, why the BHP (ASX:BHP) share price has beaten the ASX 200 in the last year
• Top brokers name 3 ASX shares to buy next week
• Top brokers name 3 ASX shares to sell next week

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Investing in the small side of the share market carries significantly more risk than other areas. However, if your risk tolerance allows for it, having a bit of exposure to this side of the market could be a good thing for a balanced portfolio.

With that in mind, here are three small cap ASX shares that could be worth watching closely:

Adore Beauty Group Limited (ASX: ABY)

The first small cap to watch is Adore Beauty. It is Australia’s leading online beauty retailer. Adore Beauty has been growing strongly during FY 2021 and recently revealed that it expects to report full year revenue growth of 43% to 47%. And while its growth is likely to moderate in FY 2022 as its cycles significantly strong sales growth during the pandemic, its future remains very positive. This is thanks to its leadership position and the structural shift online for beauty sales. Online penetration rates are still much lower than other categories and compared to other Western markets.

BlueBet Holdings Ltd (ASX: BBT)

BlueBet is a mobile-first online wagering provider. It allows users to bet on all Australian and international racing and sports through its website and app. BlueBet has been growing very strongly thanks to the increasing popularity of mobile sports betting. This led to the company doubling its customer numbers to ~90,000 over the last 12 months, underpinning a 63% increase in wagering turnover to $266.3 million in 2020. This is forecast to grow a further 47% to $390.3 million in 2021. Positively, management is confident that this trend can continue and believes it is well positioned to substantially grow its current ~1.2% share of the market in Australia. It is also on the verge of expanding into the massive US market.

Serko Ltd (ASX: SKO)

A final small cap to watch is this online travel booking and expense management provider. While times have been hard because of the pandemic, the company recently revealed significant improvements in its performance. And while it isn’t anticipating a full recovery for another year, management believes it is well-placed to benefit when it does. This is due to the increasing popularity of its offering, its game-changing Booking.com deal, and favourable industry trends brought about by the pandemic. The latter is supported by its Zeno product, which has a number of product capabilities to address the challenges of post-pandemic business travel.

The post 3 growing small cap ASX shares to watch appeared first on The Motley Fool Australia.

More reading

• What’s up with the BlueBet (ASX:BBT) share price?
• The one thing ASX IPO losers have in common
• 2 exciting small cap ASX shares you should be watching closely
• Why the Pushpay (ASX:PPH) share price is under pressure
• 2 impressive ASX shares that could be buys in July 2021

Motley Fool contributor 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 has recommended Serko Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group Limited. The Motley Fool Australia has recommended Serko Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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A few ASX shares have produced extremely strong total shareholder returns. They’re high-flyers – but could they be worth thinking about?

COVID-19 has been a very strange time. Some businesses have seen their share prices boom.

But are those strong ASX share performers still good potential investments?

City Chic Collective Ltd (ASX: CCX)

City Chic is one of the world’s leading businesses when it comes to plus-size clothes and footwear for women. It operates through a number of different brands and businesses including City Chic, CCX, Avenue, Hips & Curves, Evans and Hips & Curves.

Over the last year, the City Chic share price has gone up by 55% – and a year ago wasn’t from the bottom of the COVID-19 crash.

City Chic reported that it is seeing growth despite all the impacts of COVID-19. In the first six months of FY21, it saw comparable sales growth of 20.8% excluding Victorian store closures, or 12.7% including store closures.

Half-year sales revenue went up 13.5% to $119 million. Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) increased 21.8%, with the EBITDA margin rising from 18.2% to 19.6%.

‘Normalised operating cashflow’ increased 25.7% to $21.5 million. Statutory net profit grew 24.8% to $13.1 million.

The ASX share is no longer just a bricks and mortar network in Australia. Around 45% of sales were from the northern hemisphere in HY21 and the business said overall online sales grew by 42% (representing 73% of total sales).  

Despite that profit growth, the broker Citi thinks that the City Chic share price is valued at 53x FY21’s estimated earnings.

Citi currently has a neutral rating on City Chic because of the valuation, though the e-commerce exposure is a good factor of the business. The price target is $4.30.

The broker is expecting more profit growth into FY22. On Citi’s numbers, the City Chic share price is valued at 33x FY22’s estimated earnings.

Pro Medicus Ltd (ASX: PME)

Pro Medicus describes itself as a leading healthcare informatics company. It provides a full range of medical imaging software and services to hospitals, imaging centres and health care groups around the world. It provides a highly scalable platform that can be deployed in both public and private cloud environments.

Over the last year the Pro Medicus share price has risen by around 130%.

Revenue and profit didn’t rise quite as much as that in the last result – HY21 revenue grew 7.8% and net profit grew 12.4% to $13.5 million. The ASX share’s underlying profit before tax went up 25.9% to $18.76 million. The strengthening Australian dollar dampened the growth figures in Australian dollar terms.

In the first half of FY21, Pro Medicus reported one of the highest earnings before interest and tax (EBIT) margins on the ASX – 59%. The company is debt free and has been winning large contracts in both North America and Europe.

One of its latest wins was the 8-year, $14 million deal with The University of Vermont Health Network, further extending its US academic institution footprint.

Morgans doesn’t think the Pro Medicus share price can stay this high, as it may have been boosted by shorters exiting their positions. It has a sell rating on the ASX share.

The broker has a price target of $49.69 on Pro Medicus. At the current Pro Medicus share price, Morgans predicts it’s valued at 134x FY22’s estimated earnings.

The post Are these 2 high-flying ASX shares buys? appeared first on The Motley Fool Australia.

More reading

• Here’s how some of the top ASX SaaS shares performed in FY21
• How these top ASX biotech shares performed in FY21
• ASX company boss finally exits after 98% wiped off share price
• These were the best performing ASX 200 shares in June
• Pro Medicus (ASX:PME) share price eyes all-time high

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The BHP Group Ltd (ASX: BHP) share price has been a stellar performer over the last 12 months. The Australian-based mining giant outpaced the S&P/ASX 200 Index (ASX: XJO) by around 14% when looking at 1-year returns.

Although the BHP share price slipped on Friday, it isn’t far from reaching its all-time high of $51.82 achieved in May. At the market close, the mining company’s shares were trading at $49.48.

What’s moving the BHP share price?

Investors have continued to snap up the world’s largest mining company’s shares on the back of rising iron ore prices.

BHP has been busy capitalising on the strong price of the steel-making ingredient, pumping out record year-to-date production. The company reported 188.3 million tonnes of iron ore produced, a 4% lift when compared to March 2020. Current FY21 guidance of the metallic iron is estimated to come around at 245 million tonnes to 255 million tonnes.

Meanwhile, the iron ore price has skyrocketed to US$216.32 per tonne, closing in its record-high of $218.38 in December 2020. The rise has provided bumper profits for BHP, producing the steel-making material at a cash cost of less than US$15.00 per tonne.

What about the Chinese demand?

It’s no secret that China has taken punitive economic measures after Australia called for an inquiry into the origin of COVID-19. In the period since, China has imposed tariffs or restrictions on Australian coal, barley, wine, red meat, cotton, timber, and even lobsters.

However, China’s reliance on Australian iron ore is well known, with the country buying around 60% of the commodity from us last year. This equates to more than $80 billion, with a large portion of that going into BHP’s coffers.

Reports have surfaced that China is focusing on promoting domestic production, as well as exploiting untapped deposits in Africa. Fortunately for Australia and BHP, this is easier said than done. Based on the sheer scale of Chinese demand, this would take at least a number of years to produce anything near the iron ore it currently receives.

What do the brokers think?

After reporting its third-quarter results in April, a number of brokers rated the company with varying price points.

Global investment house Goldman Sachs raised its price target for BHP by 1.3% to $54.20. Macquarie followed suit to also increase its rating by 3% to $63.00.

The most recent broker note came from Morgan Stanley two weeks ago, which has initiated a price of $50.70 for the mining outfit.

BHP share price snapshot

The BHP share price has gone from strength to strength over the past year, rising around 36%. The company’s share price is in the upper end of its 52-week range of $33.73 to $51.82.

On valuation grounds, BHP commands a market capitalisation of roughly $145 billion, with approximately 2.9 billion shares on issue.

The post Up 36%, why the BHP (ASX:BHP) share price has beaten the ASX 200 in the last year appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• Can the ASX 200 hit 8,000 points by the end of the year?
• Mining shares in the ASX 200 might unearth US$26b worth of dividends
• The BHP Group share price is rising again — so where to from here?
• Here’s what leading brokers are saying about the BHP (ASX:BHP) share price in July 2021.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Last week saw a 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:

Bega Cheese Ltd (ASX: BGA)

According to a note out of Morgans, its analysts have retained their add rating but trimmed their price target on this diversified food company’s shares to $6.35. Morgans has downgraded its earnings estimates to reflect the fact that Bega and rivals are overpaying for milk due to intense competition for supplies. However, it feels this is more than reflected in the current share price. As a result, it sees this as a potential buying opportunity for investors. The Bega share price ended the week at $5.39.

Netwealth Group Ltd (ASX: NWL)

A note out of Macquarie reveals that its analysts have retained their outperform rating and lifted their price target on this investment platform provider’s shares to $18.25. This follows the release of its fourth quarter update last week. Macquarie notes that Netwealth outperformed its guidance in FY 2021 with inflows of $9.8 billion. The broker believes that this strong flow momentum continues to support its thesis despite elevated valuation metrics. The Netwealth share price was fetching $16.03 at Friday’s close.

TPG Telecom Ltd (ASX: TPG)

Analysts at Morgan Stanley have retained their overweight rating and $9.50 price target on this telco giant’s shares. According to the note, the broker suspects that a potential sale of its towers or other infrastructure assets a la Telstra Corporation Ltd (ASX: TLS) could be a positive catalyst for the TPG share price. Outside this, it continues to see a lot of value in its shares at the current level. The TPG share price was trading notably lower than Morgan Stanley’s price target at $6.21 on Friday afternoon.

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

More reading

• Why A2 Milk and Bega shares are looking so tasty now: analyst
• 5 things to watch on the ASX 200 on Friday
• Netwealth (ASX:NWL) share price up 5% on quarterly update
• ASX 200 Weekly Wrap: ASX finishes FY21 on a high
• Why the Telstra (ASX:TLS) share price outlook suddenly improved last week

Motley Fool contributor 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 has recommended Netwealth. The Motley Fool Australia owns shares of and has recommended Netwealth and Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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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:

A2 Milk Company Ltd (ASX: A2M)

Analysts at Credit Suisse have retained their underperform rating but lifted their price target on this infant formula company’s shares to $5.50. The broker has lifted its price target to reflect slightly better than expected infant formula demand, which has resulted in an increase to its earnings estimates. Nevertheless, these estimates are still below consensus. UBS has concerns over the daigou channel and the lack of differentiation for its English label products. The A2 Milk share price was trading at $7.20 at Friday’s close.

Commonwealth Bank of Australia (ASX: CBA)

According to a note out of Morgans, its analysts have retained their reduce rating but increased their price target on this banking giant’s shares to $76.00. While Morgans is positive on the banking sector and is forecasting improvements in CBA’s return on equity and significant capital management, it isn’t enough for a change of rating. The broker continues to believe that the bank’s shares are expensive and therefore retains its reduce rating. The CBA share price ended the week at $98.59.

Macquarie Group Ltd (ASX: MQG)

A note out of Citi reveals that its analysts have retained their sell rating and $140.00 price target on this investment bank’s shares. This follows news that Macquarie has signed an agreement to acquire the global equities and fixed income business of AMP Ltd (ASX: AMP). Citi sees this as a signal that Macquarie is intending to build global scale in public markets. And while it sees positives from the deal and further opportunities to deploy excess capital, it feels its valuation is stretched and suspects the market is expecting too much from the company in respect to its earnings. The Macquarie share price was trading at $154.19.

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

More reading

• These were the best performing ASX 200 shares last week
• Why A2 Milk and Bega shares are looking so tasty now: analyst
• Brokers name 3 ASX shares to buy today
• ASX 200 midday update: Afterpay & CBA sink, Viva Energy jumps
• Why this leading fund manager is backing better times ahead for the Macquarie (ASX:MQG) share price

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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It’s hard to believe another financial year has come and gone. Yet my calendar insists it’s so.

With that in mind, we bring you the 5 best performing ASX transport shares of the 2021 financial year (FY21).

As a benchmark to their performance, we use the All Ordinaries Index (ASX: XAO). From 1 July 2020 through to 30 June 2021, the All Ords gained 25%.

FY21 was a tough year for ASX transport shares, with many suffering from COVID driven border closures and social distancing measures. As you’ll see below, only 1 of our 5 top performers beat the benchmark.

Alliance Aviation Services Ltd (ASX: AQZ)

Topping the list – and the only ASX transport share to outperform the All Ords in FY21 – is Alliance Aviation Services. The company finished the year up 53.2% at $4.55 per share.

Based in Queensland, Alliance Aviation provides aircraft charter and group travel, including services to fly in, fly out (FIFO) workers in remote regions. Unlike larger airlines dependent on international and interstate travel, the company saw increased demand from the range of issues thrown up by the global pandemic.

With just under 160.5 million shares in circulation, Alliance Aviation has a market cap of $690.1 million. The company pays a 2.7% dividend yield, fully franked.

Qantas Airways Ltd (ASX: QAN)

The second best ASX transport share for the year, with a share price gain of 20.4%, is Qantas.

Founded in Queensland back in 1920, Qantas is the world’s third oldest airline still in operation. It runs 2 complementary airline brands – Qantas and Jetstar – offering regional, domestic and international services.

Despite international travel virtually grounded in FY21, and even much of its interstate routes jeopardised by rolling state border closures, investors appear to have faith in the airline’s longer-term value.

Qantas finished the year trading at $4.66 per share with a market cap of $9.1 billion. The airline pays a 3.1% dividend yield, 100% franked.

Air New Zealand Ltd (ASX: AIZ)

Coming in at number 3, we have Air New Zealand, which saw its share price lift 14.4% over the financial year gone by.

Founded in 1940, the company operates domestic and international services. It listed on the ASX in 1997 and is dual listed on the New Zealand Stock Exchange under the ticker (NZE: AIR).

While underperforming the benchmark, as with Qantas, investors appear to believe the ASX travel share has a strong future ahead of it once the pandemic is finally brought under control.

Air New Zealand ended FY21 at $1.44 per share with a market cap of $1.7 billion. It pays a hefty 7.3% dividend yield, unfranked.

Auckland International Airport Ltd (ASX: AIA)

Making the list as the fourth best performing ASX travel share is Auckland Airport, with shares closing up 13.2% in FY21.

As with our number 3 performer, Auckland Airport is also dual listed on the New Zealand Stock Exchange under the ticker (NZE: AIA). The company listed on the ASX in 1999, and with a market cap of $10.5 billion, it is among the largest listed companies in New Zealand.

Auckland Airport closed on 30 June at $6.76 per share. It pays a dividend yield of 1.4%, 43% franked.

Qube Holdings Ltd (ASX: QUB)

Finally, coming in at number 5, is Qube Holdings, which finished off the year with shares up 10.5%.

Now Qube differs from our first 4 ASX travel shares as the company’s not primarily involved with moving people, but rather things. Among its activities, Qube handles road and rail transport, and it has a 50% holding of Patrick Terminals, among the largest container terminal operators in Australia.

Qube finished FY21 with a share price of $3.17 and a market cap of $5.7 billion. The company pays a 1.6% dividend yield, fully franked.

The post Here are the 5 best ASX transport shares of the 2021 financial year appeared first on The Motley Fool Australia.

More reading

• The ASX shares with the most to lose from a delayed COVID reopening
• 3 ASX shares looking pretty cheap right now: expert
• ASX travel shares slip as Sydney lockdown extends for another week
• Auckland Airport (ASX:AIA) share price jumps 6% on travel bubble news
• Qube (ASX:QUB) share price lifts on $1.67 billion asset sale update

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The weekend could be a good time to consider looking into some ASX shares.

Shares are often described as volatile. But that also means that investors are presented with different opportunities at different (sometimes lower) prices.

These two ASX shares might be two worthy of considering:

VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)

As the name suggests, this investment is an exchange-traded fund (ETF) that aims to give investors exposure to the video gaming and e-sports sector.

There are only a total of 26 businesses in the portfolio. The largest ten positions make up almost 62% of the portfolio. Those names are: Nvidia, Advanced Micro Devices, Tencent, Sea, Nintendo, Activision Blizzard, Netease, Bilibili, Unity Software and Roblox.

This ETF actually has more of the portfolio allocated to Asia than any other region. Asian weightings include China (19.5%), Japan (18%), Singapore (6.7%), South Korea (4.6%) and Taiwan (1.7%). The US has a weighting of 43.2%, so it still has the largest single country weighting. Other countries include Sweden and France.

Two of the selling points of the ETF, according to VanEck, is that it’s a dynamic growth opportunity and it provides technology diversification. The ASX share invests in the future of sports and accesses companies that are positioned to benefit from the increasing popularity of video games and eSports. Its portfolio gives technology diversification away from the usual names like Apple, Amazon, Facebook, Alphabet/Google and Microsoft.

Past performance is not an indicator of future performance. Over the last three years, the index that VanEck Vectors Video Gaming and eSports ETF tracks has produced an average return per annum of 31%.

Volpara Health Technologies Ltd (ASX: VHT)

Volpara is a leading medical technology ASX share.

Its main focus is providing software to help analyse breast scans. The company has been investing (and acquiring businesses) to ensure its breast health platform has the best patient experience, easier integration of expanded patient pathways and provides support for customer reporting compliance, whilst also positioning the company for scale.

A particular focus of the business is ‘risk’ for the patient. It recently bought CRA Health to expand its best-in-class personalised risk offerings to all customers whilst also getting a better connection with genetics companies.

The company is seeing a rising gross profit margin, an increasing group average revenue per user (ARPU) and improving scalability.

In FY21, the gross profit margin increased to 91%. The group ARPU increased from US$1.16 at the FY21 half-year result to US$1.40 in the FY21 result. In FY21, total revenue increased 57% and gross profit went up 67%, whilst operating costs only increased by 8%.

In FY22, the ASX share is expecting higher ARPU, new customers, upselling existing customers, acquisitions and a high retention rate.

Most new sales are now for two or three of Volpara’s products, representing significantly increased ARPU and the relationship with genetics companies is expected to increase that further.

The post 2 ASX shares that could be worth looking at this weekend appeared first on The Motley Fool Australia.

More reading

• 3 growing small cap ASX shares to watch
• 3 quality ETFs for ASX investors in July
• 2 ASX tech shares that might be buys in July 2021
• 2 top small cap ASX shares that might be buys
• Why Afterpay (ASX:APT) and this ASX share could be top growth options

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended VOLPARA FPO NZ. The Motley Fool Australia owns shares of and has recommended VOLPARA FPO NZ. The Motley Fool Australia has recommended VanEck Vectors ETF Trust – VanEck Vectors Video Gaming and eSports ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Shares in AGL Energy Limited (ASX: AGL) have plummeted this year as the stars align against the energy giant. Right now, the AGL share price is 32.96% lower than it was at the beginning of 2021.

The AGL share price closed at $12.12 on the first trading day of 2021. It finished Friday’s trade at $8.13.

In that same period, the S&P/ASX 200 Index (ASX: XJO) has gained 8.49%.

Let’s take a look at what’s been dragging on AGL’s performance on the ASX.

AGL‘s 2021

2021 hasn’t been a great year so far for AGL.

Since the year began, it’s lost a court battle against Greenpeace, spruced a 10% dividend yield for all the wrong reasons, and had its CEO walk out.

However, those aren’t the likeliest reasons the AGL share price has been falling this year.

AGL’s plan to split into two separate businesses has been weighing on its share price since March.

Under AGL’s proposal, one of the resulting businesses would focus on renewable energy, and the other would take control of AGL’s fossil fuel businesses.  

The company announced the plan in March.

The last we heard of the split was on 30 June, when AGL outlined how it will go ahead.

First, AGL will become Accel Energy, an electricity generation business. Then, Accel Energy will demerge a new entity named AGL Australia. AGL Australia will focus on energy-led retailing, flexible energy trading, storage and supply.

AGL shareholders will end up with 1 security in each company for every security of AGL they hold at the time of the split.

The second weight dragging down the AGL share price is continuous drops in wholesale electricity prices.

Wholesale electricity prices have been falling as a result of the availability of solar and wind-generated electricity increasing.

Unfortunately, this means the AGL share price is likely to be partly driven by happenings outside the company’s control.

AGL share price snapshot

Beyond 2021, the AGL share price hasn’t been performing at its best for a number of years now.

It fell 16% over the course of 2018, gained 2.7% in 2019, and fell 42% over 2020.

Since this time last year, the AGL share price has fallen 52%.

The company has a market capitalisation of around $5 billion, with approximately 623 million shares outstanding.

The post It hasn’t been a great 2021 so far for the AGL (ASX:AGL) share price appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to sell today
• How did ASX renewable energy shares perform in FY21?
• Best and worst performing ASX sectors of financial year 2021
• AGL and Zip shares were among the most traded ASX shares last week
• ASX 200 Weekly Wrap: ASX finishes FY21 on a high

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If you’re looking to beat low interest rates in 2021, then you might want to look at the dividend shares listed below.

Both shares offer investors generous yields that are vastly superior to those offered with term deposits and savings accounts. Here’s what you need to know about these dividend shares:

Mineral Resources Limited (ASX: MIN)

The first high yield ASX dividend share to consider is Mineral Resources. It is a mining and mining services company.

Mineral Resources has been tipped by analysts at Macquarie to reward shareholders with some big dividends over the next couple of years. This is thanks to its exposure to iron ore and lithium.

Macquarie is expecting Mineral Resources to pay fully franked dividends of $3.32 per share in FY 2021 and then $3.05 per share in FY 2022. Based on the latest Mineral Resources share price of $57.18, this will mean fully franked yields of 5.8% and 5.3%, respectively, over the next two financial years.

The broker currently has an outperform rating and $73.00 price target on the company’s shares.

Telstra Corporation Ltd (ASX: TLS)

Another ASX dividend share for income investors to look at is Telstra. It could be a good option due to its increasingly positive outlook.

This is due to sizeable cost cutting, restructuring, rational competition, and a positive growth outlook in the key mobile business driven by its 5G leadership.

One broker that is positive on Telstra is Ord Minnett. It has a buy rating and $4.10 price target on its shares at present. The broker also continues to forecast 16 cents per share fully franked dividends for the foreseeable future.

Based on the current Telstra share price of $3.75, this will mean attractive yields of almost 4.3% over the coming years.

The post 2 high yield ASX dividend shares that could be buys appeared first on The Motley Fool Australia.

More reading

• These 3 ASX 200 shares were the most heavily traded today
• It’s been a big month for the Mineral Resources (ASX:MIN) share price
• The Telstra (ASX:TLS) share price is now up 24% so far in 2021
• Why the Mineral Resources (ASX:MIN) share price hit an all-time high today
• Expert says more ASX shares to follow Sydney Airport (ASX:SYD) takeover trend

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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