The ARB Corporation Limited (ASX: ARB) share price has been a very strong performer on Friday.

In fact, in afternoon trade the 4×4 parts company’s shares are the best performers on the S&P/ASX 200 Index (ASX: XJO) with a 7% gain to $45.23.

Why is the ARB share price charging higher?

Investors have been bidding the ARB share price higher today following the release of a couple of positive broker notes out of Ord Minnett and Wilsons.

In respect to the former, Ord Minnett believes that ARB is well-placed to benefit from growth in new vehicle sales. Particularly given strong demand for four-wheel drive and SUV vehicles. This should be supported by new store openings.

The broker commented: “Supportive factors such as the extension of the instant asset write-off scheme, continued demand for vehicles driven by domestic tourism and increased road use by households should continue to drive solid demand for new vehicles.”

Elsewhere, this morning analysts at Wilsons retained their buy rating and lifted their price target by almost 20% to $47.80.

Even after today’s gain, this price target implies potential upside of almost 6% over the next 12 months.

Why is Wilsons bullish?

Wilsons is positive on the company for the same reasons. It believes recent vehicle sales data and current trading conditions are supportive of the company’s growth.

Its analysts commented: “We remain attracted to ARB and its prospects for sustained sales growth through a continued shift to SUVs, significant investment in R&D, and penetration of export markets.”

Another positive that the broker highlighted was ARB’s recent agreement with Ford. That agreement will see ARB branded off-road accessories for Ranger and Everest vehicles sold as Ford licensed accessories through participating Ford dealers in Australia.

The products are due to go on sale with Ford in Australia in the second half of the year. After which, other selected Ford markets are expected to follow.

Wilsons suspects that this could lead to greater brand recognition in the lucrative USA market in the future.

Today’s gain means the ARB share price is now up a sizeable 46% since the start of the year.

The post Why the ARB (ASX:ARB) share price is jumping 7% to a record high appeared first on The Motley Fool Australia.

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The Straker Translations Ltd (ASX: STG) share price is in the red today after the company released an update on its capital raising efforts.

At the time of writing, Straker shares are down 5.58% to $2.20.

What’s driving the Straker share price lower?

A possible catalyst for the decline is an impending share dilution for all existing shareholders.

According to this morning’s release, the translation specialist has completed a share placement and an upsized institutional entitlement offer. Both equity-raising efforts saw strong demand from existing shareholders and new investors.

As a result, the company increased the offer size of the placement by $5 million to $15 million. Together with the institutional entitlement offer of $5 million, this brings the total equity raised to $20 million.

Approximately 10.5 million new ordinary shares will be issued at a price of $1.90 apiece to each participating investor. This represents a discount of around 13.5% to today’s Straker share price.

Straker will use its existing placement capacity to create the new shares. Under listing rule 7.1, this allows up to 15% of its total shares to be issued without shareholder approval. The company will use an extension to the listing rule (7.1A) to issue the remaining shares with the additional 10% capacity.

The proceeds of the placement and institutional entitlement offer will see Straker improve balance sheet liquidity to execute its growth strategies. Funds will be allocated once the company pays down existing debt and covers the cost of the equity raise.

It is expected the placement and institutional entitlement offer shares will be allotted on 15 June 2021.

In addition, Straker will launch a $5 million retail entitlement offer on 9 June 2021. Eligible investors will be able to top up their holding with 1 share for every 10.32 Straker shares held.

Management commentary

Straker CEO Grant Straker said:

Having delivered strong growth since our IPO this was our first post-IPO equity raise and our stronger balance sheet will enable us to drive towards our aspirational goal of getting to $100m in revenue.

We have multiple growth opportunities in front of us, and we feel now is the time to invest in organic and inorganic growth strategies. It is very pleasing to see strong support for the equity raise and to have a world-class range of new and existing institutional shareholders on the register, a great reflection on all the hard work the Straker team has done over the past few years.

The Straker share price has almost doubled in value in the past 12 months, surging by more than 96%.

The post Why the Straker (ASX:STG) share price is falling 6% today appeared first on The Motley Fool Australia.

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The Westpac Banking Corp (ASX: WBC) share price has been a positive performer on Friday.

In afternoon trade, the banking giant’s shares are up 1% to a 52-week high of $26.80.

This means the Westpac share price is now up an impressive 36% since the start of the year.

Why is the Westpac share price pushing higher today?

The catalyst for the rise in the Westpac share price today appears to have been a bullish broker note out of Morgan Stanley.

According to the note, the broker has retained its overweight rating and $29.20 price target on the bank’s shares.

Based on the latest Westpac share price, this implies potential upside of 9% over the next 12 months excluding dividends.

And with Morgan Stanley forecasting dividends of $1.18 per share in FY 2021 and $1.25 per share in FY 2022, the potential total return stretches to approximately 13.5%.

What did Morgan Stanley say?

The note reveals that Morgan Stanley is expecting the big four banks to return significant capital to shareholders via off-market buybacks. It sees this as a way to distribute extra franking credits.

And while it suspects that the banks will remain conservative in the near term until all ongoing pandemic risks are accounted for, once the crisis passes it believes Westpac has the strongest case for a buyback.

It is expecting a $3.5 billion buyback to be announced with Westpac’s half year results in FY 2022.

Is anyone else bullish on Westpac?

Morgan Stanley isn’t the only broker that sees value in the Westpac share price.

A note out of Citi at the start of the week reveals that its analysts have a buy rating and $29.50 price target on its shares. It sees opportunities for return on equity improvements via its cost reduction plans.

Citi’s price target and its dividend forecasts imply a total potential return of ~14.5% over the next 12 months.

The post Why the Westpac (ASX:WBC) share price just hit a 52-week high appeared first on The Motley Fool Australia.

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Westpac Banking Corp (ASX: WBC) is said to be pressing ahead with determining whether to demerge its $10.3 billion New Zealand-based banking business.

According to reporting by today’s The Australian, the Westpac board will hear advice from Macquarie Capital on whether the bank should keep a hold of its New Zealand unit later this month.

Westpac first announced it was considering demerging its New Zealand business on 24 March this year. On the day of that announcement, the Westpac share price slumped by nearly 1%. But today, investors appear unfazed by the news the banking giant is further considering the spin-off, sending the company’s shares higher.

Currently, Westpac shares are swapping hands for $26.75 – 0.94% higher than yesterday’s closing price.

Let’s take a closer look at the potential demerger.

Westpac New Zealand demerger still on the table

According to The Australian, Westpac will decide whether to put the spin-off of its New Zealand business to shareholders within the coming months.

Westpac’s talks of demerging its New Zealand business began earlier this year when the Reserve Bank of New Zealand (RBNZ) put pressure on the bank’s Kiwi segment.

In March, the RBNZ found Westpac had potentially committed 2 breaches. The first was a breach of the RBNZ’s liquidity policy. The RBNZ’s liquidity policy dictates how much cash a bank should be able to access at short notice. The second breach was Westpac New Zealand’s potential non-compliance through the central bank’s liquidity thematic review – an ongoing review of the RBNZ’s liquidity policy.

As a result of the potential breaches, the RBNZ instructed Westpac New Zealand to undertake independent reports into both its risk governance and liquidity risk management.

Additionally, the RBNZ told Westpac its New Zealand business segment must hold more liquid assets until the RBNZ determines the remediation work to have been effective.

The same day the RBNZ issued its directions, Westpac announced it was considering if demerging its New Zealand business would be in its shareholders’ best interests.

Westpac’s New Zealand business brings in around 15% of the bank’s cash flow. It’s operated in the country for more than 160 years.

According to The Australian, Macquarie Capital is analysing the consequences and potential valuation of the proposed demerger.

The demerger will require shareholder approval to proceed.

The potential demerger of its New Zealand business isn’t the only shakeup Westpac has seen lately.

Earlier this year, the bank stated it was simplifying its business by combining its consumer and business divisions. Westpac’s consumer and business divisions became its new consumer & business banking division in late March.

Westpac share price snapshot

Despite numerous challenges reported by Westpac this year, the bank’s share price is performing well on the ASX.

Currently, the Westpac share price is around 38% higher than it was at the start of 2021. It’s also gained 47% since this time last year.

The bank has a price-to-earnings (P/E) ratio of around 21.4 and a market capitalisation of approximately $978 billion. It has 3.6 billion shares outstanding.

The post Westpac (ASX:WBC) board to further consider New Zealand demerger appeared first on The Motley Fool Australia.

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is pushing ever so slightly higher. At the time of writing, the benchmark index is up 0.1% to 7,265.7 points.

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

ARB Corporation Limited (ASX: ARB)

The ARB share price is up 5.5% to $44.64. Investors have been buying the 4×4 parts company’s shares following the release of a bullish broker note out of Ord Minnett. According to the note, the broker believes that ARB will benefit from growth in new vehicle sales. In addition, it expects new store openings and demand for SUVs to be supportive of its growth.

Humm Group Ltd (ASX: HUM)

The Humm share price has risen 5% to $1.08. The catalyst for this appears to have been a broker note out of UBS this morning. Its analysts have retained their buy rating and $1.60 price target on the company’s shares. This follows the announcement of the release of its new buy now pay later product, TAPP.

Incitec Pivot Ltd (ASX: IPL)

The Incitec Pivot share price is up 2% to $2.39. This appears to have been driven by a broker note out of Macquarie this morning. The broker highlights that fertiliser prices remain positive and in some cases are strengthening. The broker has retained its outperform rating and $2.93 price target on its shares.

Pro Medicus Limited (ASX: PME)

The Pro Medicus share price is up 2.5% to $48.79. In response to the announcement of a collaboration with healthcare giant Mayo Clinic, Goldman Sachs retained its buy rating and $53.80 price target on the company’s shares. “We believe the strategy of partnering with the leading academics helps to maximise the value and competitive advantage of PME’s technology proposition,” the broker commented.

The post Why ARB, Humm, Incitec Pivot, & Pro Medicus shares are charging higher appeared first on The Motley Fool Australia.

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The CVC Limited (ASX: CVC) share price is down today. At the time of writing, shares in the investment company are trading for $1.95 – down 2.01%. By comparison, the S&P/ASX All Ordinaries Index (ASX: XAO) is 0.19% higher.

The company comes into focus after issuing a profit guidance and several business updates.

Let’s take a closer look at today’s announcement.

CVC share price edges lower

In a statement to the ASX, CVC Limited gave the following updates.

Profit guidance

CVC is forecasting a net profit after tax of $21–$23 million for the year ended 30 June 2021. In the prior corresponding period, the company made a $2.1 million loss. CVC stated that the forecasted profit includes a “significant proportion of unrealised gains, approximately 50%, arising from the revaluation of long-term investments held by CVC.”

In its half-year report, the company posted a net profit after tax of $15.7 million. Today’s announcement would mean profits for the second half of the financial year are down by approximately 50%.

Business updates

In today’s statement, CVC also highlighted its portfolio investment “is now significantly more weighted to property focused investments.”

It provided a number of property-related updates, including:

• A property in East Bentleigh, Victoria, which CVC has a 50% stake in, has been rezoned from industrial use to mixed residential, retail, and commercial use. The property has now been revalued upwards to $67.3 million – adding $13 million in pre-tax profit for FY21.
• A property in Donnybrook, Victoria, which CVC has a 49% interest in, is on the brink of being approved. Formal approval is now with the state minister for planning, and the area is expected to be rezoned.
• A property in Liverpool, NSW, which CVC owns a 66% stake in, has had planning approval from Liverpool City Council and is now in the hands of the NSW Department of Planning.
• A Bunnings Warehouse has been approved for development at a 60% owned property of CVCs in Caboolture, Queensland. Construction of shopping centre at the site should commence within FY22.

CVC share price snapshot

Over the past 12 months, the CVC share price has increased 39.3%. The company was hit hard by the COVID market sell-off of March 2020, losing 53.9% of its value in the space of two and a half months.

Its recovery since then has been steady but it has still not reached its pre-pandemic levels.

CVC has a market capitalisation of $228 million.

The post Why is the CVC Limited (ASX:CVC) share price sinking today? appeared first on The Motley Fool Australia.

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The DroneShield Ltd (ASX: DRO) share price is taking off today after the company announced it has received a new $3.8 million defence contract.

In morning trade, DroneShield shares rocketed 12.12% higher to 18.5 cents apiece before partially retreating. At the time of writing, the company’s shares are swapping hands for 17.25 cents each, up by 4.55% for the day so far.

New defence contract

Investors are buying up DroneShield shares after the company updated the market with a positive release.

According to the statement, DroneShield has received a 2-year defence contract with a Five Eyes country. The term ‘Five Eyes’ relates to a signals alliance between the United States, Canada, Australia, the United Kingdom, and New Zealand.

The deal, valued at about $3.8 million, represents ongoing commitments from government agencies, which have sought DroneShield products in the past.

DroneShield said the agreement contains the usual customary clauses of a research and development contract. It is expected around $2 million of the contract’s value will be collected during the June and September 2021 quarters.

DroneShield CEO Oleg Vornik said, “This contract is testament to the world-leading capabilities of the DroneShield team”.

What does DroneShield do?

DroneShield specialises in drone security technology. The company designs and develops detection systems that use specialised technology to protect people, organisations and critical infrastructure from drone incursions.

Specifically, its multi-layered products are centred around detection and disruption from unmanned aerial systems.

DroneShield share price summary

Over the past 12 months, DroneShield shares have been recovering from the fallout of COVID-19. After hitting a 52-week low of 10 cents in July last year, the company’s share price has lifted by around 70%. However, DroneShield shares are still some way off their 52-week high of 25 cents achieved in September.

DroneShield has a market capitalisation of around $69 million. The company holds more than 389 million shares on its registry.

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I was a guest on a webinar, yesterday, hosted by NAB.

Hosted by Gemma Dale, it was a fun chat, and a chance to share my thoughts on portfolio construction, stock picking and some of the hottest trends around.

(Yes, I was asked about Bitcoin. And lithium. And China. And renewables.)

And I made the point that there are trends.

And then there are trends that make money for investors.

Huh?

I used the example of oil.

Now, if you had been told, in early 1900, the story of oil demand over the next 120 years, you would have sold your house, your car and your dog, and put the lot into oil, right?

The data is a little sketchy from the very early days, but from a standing start of, well, zero back then, the world was producing around:

— 500 million barrels of oil, per year, in 1920

— 2.5 billion barrels per year in 1945

— 5 billion per year by 1955

— 10 billion in 1963 or 1964

— 20 billion by 1970; and

— Just under 35 billion barrels of oil per year, in the most recently available data.

Can you imagine how much money you would have made???

Oh… you want something else?

You want to know the price?

I see you’re onto me.

Now, I couldn’t easily find data back as far as the early 1900s, but according to one website, the price of oil, adjusted for inflation, is the same as it was back in 1974.

It’s barely double what it was in 1948.

So, volumes were up around 17 times, but the price went up by a factor of only 2!

The answer — you’re ahead of me already, aren’t you — is that supply came on stream, and fast, keeping prices down, even as volumes skyrocketed.

Air travel is a similar, but even worse example.

Even before COVID, while the number of passenger miles skyrocketed over the previous 50 years, airlines went broke.

Repeatedly.

The lesson is clear: while a ‘trend’ — say, skyrocketing demand for oil, or a huge and sustained growth in air travel — might be real, it just simply doesn’t follow that prices or profits will necessarily follow.

You still want to bet on lithium prices? 

Iron ore?

Gold?

Be my guest — but history isn’t full of examples of sustained high prices — or profits — for things best described as ‘commodities’.

Unless you have a sustainable cost advantage…

… or supply is limited…

… or you can lock up a market …

… I don’t like your odds.

Because remember: the oil price has merely doubled in 70 years… and that’s even with the OPEC cartel doing its best to control supply!

Now, that’s not to say you can’t find, and profit from, trends.

After all, the internet as a megatrend has made a lot of money for a lot of people.

But even there, the internet itself became a medium, more than a profit centre per se — and the winners were those who could most successfully take advantage of the new technology to capture audiences and create businesses — in e-commerce, social media, streaming and hardware and software design.

Trends can be a fantastic wave on which to surf.

Or they can wash you straight onto the rocks.

Wave — and trend — selection is key.

Fool on!

The post Lithium might be the new oil… in all the wrong ways appeared first on The Motley Fool Australia.

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ASX gold share Red 5 Limited (ASX: RED) is having a wild ride today, up 3% in early morning trade and then down 3% by late morning at the time of writing. 

Below we take a look at the company’s latest project update.

What did Red 5 report?

Red 5’s shares are currently lower despite the ASX gold share reportedly continuing progress at its King of the Hills Gold Project (KOTH). The 2.4-million-ounce project is located in Western Australia.

Significantly, the company said it has received approval from the Department of Environment and Water Regulation to commence construction on the KOTH power station well in advance of the scheduled start of construction.

The ASX gold share said the project remains within its forecast budget and is on track to deliver its first gold production in the June quarter of 2022. Its KOTH village is now also fully operational. The village has already been accommodating the onsite construction teams for several months.

Commenting on the progress, Red 5 Managing Director, Mark Williams, said:

We are continuing to complete the permitting, development and construction milestones at KOTH, with solid progress being made since our last update in early May 2021.

Construction activities continue to advance, gaining good momentum, with the construction of the CIL tanks for the processing circuit rapidly advancing. It’s also great to see structural steel now beginning to arrive at site and key items of imported equipment, including the steel liners for the SAG Mill and the SAG Mill pinions, motors, bearings and lubrication skids arriving in Fremantle.

This is a consequence of our decision last year to lock in key fixed-price contracts and long-lead items early in the project development schedule, well ahead of the recent increase in activity in the resources and construction sectors.

How has this ASX gold share performed?

It’s been a tough year for Red 5 shareholders, with shares down 39% over the past 12 months. By comparison, the All Ordinaries Index (ASX: XAO) gained 23% over that same time.

Year-to-date, the ASX gold share continues to struggle, down 37% so far in 2021.

The post Why ASX gold share Red 5 (ASX:RED) is on a rollercoaster today appeared first on The Motley Fool Australia.

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At lunch on Friday, the S&P/ASX 200 Index (ASX: XJO) is fighting hard to stay in positive territory. The benchmark index is currently up 0.1% to 7,265.9 points.

Here’s what is happening on the market today:

Tech shares under pressure

It has been a disappointing finish to the week for Australian tech shares. This follows a poor night of trade on Wall Street, which saw the tech-heavy Nasdaq index fall 1% after investors rotated into cyclical stocks. The likes of Xero Limited (ASX: XRO) and Zip Co Ltd (ASX: Z1P) shares are trading lower today and dragging the S&P/ASX All Technology Index (ASX: XTX) 0.8% lower.

Appen CEO sells shares

The Appen Ltd (ASX: APX) share price has been a particularly poor performer on Friday. At the time of writing, the artificial intelligence data services company’s shares are down 5.5%. This follows news that its CEO, Mark Brayan, has sold 109,430 Appen shares for a total consideration of $1.43 million. However, it is worth noting that the sale was made to satisfy tax obligations arising from the vesting of 173,153 performance rights.

Gold miners tumble

Another area of the market underperforming on Friday is the gold sector. The likes of Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) are tumbling lower after the spot gold price fell almost 2% during overnight trade. The S&P/ASX All Ords Gold index is down a disappointing 3.1% at lunch.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Friday has been the ARB Corporation Limited (ASX: ARB) share price with a 5% gain. This follows the release of a positive broker note out of Ord Minnett this morning. The worst performer has been the De Grey Mining Limited (ASX: DEG) share price with a 7% decline following the weakness in the gold price.

The post ASX 200 up 0.1%: Tech shares fall, gold miners tumble appeared first on The Motley Fool Australia.

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