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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Woolworths Group Ltd (ASX: WOW) has made a step towards its carbon emissions targets, signing its first renewable power purchase agreement. At the time of writing, the Woolworths share price is up 1%, with shares in the company trading for $43.35.

Woolworths shared the news of its power purchase – which will cover 30% of Woolworths’ supermarket’s electricity use – yesterday.

According to the group, its energy needs make up around 1% of Australia’s total energy use. Woolworths Group is aiming to be powered entirely by renewable energy by 2025.

Let’s take a closer look at Woolworths’ news.

Renewable power purchase agreement

Woolworths has signed a 10-year agreement with CWP Renewables to purchase power from the new Bango wind farm – located near Yass, NSW.

The agreement will see Woolworths paying to put 195,000 megawatt hours of renewable electricity into the NSW electricity grid each year. By doing so, it will avoid the release of 158,000 tonnes of carbon emissions annually.

Woolworths already has a network of 140 rooftop solar panels scattered around Australia.

The retail giant is aiming to cut its carbon emissions by 63% by 2030 and by 100% by 2050. It’s already reduced its emissions by 25% since 2015.

Woolworths is one of a handful of ASX companies to have its emission reduction targets backed by the United Nations Science-Based Target Initiative, which aims to limit global warming to 1.5 degrees.

Woolworths stated it plans to continue searching for opportunities to directly invest in renewable power purchases.

The Bango wind farm will begin producing power for Woolworths in early 2022.

Commentary from management

Woolworths Group’s director of format, Rob McCartney, commented on the power purchase agreement:

Going beyond net carbon neutral, we’ve committed to take more carbon out of the atmosphere than we produce by 2050 and our first renewable power purchase is a key milestone in that pursuit.

Supermarkets are particularly energy intensive to run and we want to use our scale for good by supporting the transition to renewable electricity.

Woolworths share price snapshot

The Woolworths share price has been performing well on the ASX lately.

Currently, it’s 7.27% higher than it was at the start of this year. The Woolworths share price has also gained 17.27% since this time last year.

The group has a market capitalisation of around $54 billion, with approximately 1.2 billion shares outstanding.

The post Woolworths (ASX:WOW) inks first renewable power deal appeared first on The Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) has slipped 0.1% from record all-time highs on Friday.

This follows a weak overnight performance on Wall Street with all three indices, the Nasdaq Composite (NASDAQ: .IXIC), S&P 500 Index (SP: .INX) and Dow Jones Industrial Average Index (DJX: .DJI) down between 0.07% and 1.03%.

Despite the slight pullback, ASX gold miners have taken a worse hit on Friday.

Large cap ASX gold miners including Northern Star Resources Ltd (ASX: NST), Evolution Mining Ltd (ASX: EVN) and Newcrest Mining Ltd (ASX: NCM) are currently down 4.10%, 3.20% and 1.73% respectively.

Mid-tier players such as Perseus Mining Ltd (ASX: PRU) and Ramelius Resources Ltd (ASX: RMS) are a little worse off, down 5.61% and 7.18% respectively, but Regis Resources Ltd (ASX: RRL) is faring better, down just 1.91%.

At the more speculative end of town, gold explorers have also taken a hit with popular names such as De Grey Mining Ltd (ASX: DEG) slumping 7.32% at the time of writing.

Higher treasury yields smacks gold prices

US bond yields ticked upwards on Thursday night in response to better than expected labour market data. The United States reported a surge in private-sector employment in May, while initial jobless claim figures came in within expectations.

Benchmark US 10-year treasury yields rose about 4 basis points to 1.626%. 10-year treasury yields have been range bound between 1.5% to 1.7% since March this year. This follows its meteoric rise from lows of 0.50% in August last year to a peak of 1.75% in late March.

Coinciding with the uptick in treasury yields and positive labour market data, gold prices slumped about 2% overnight from US$1,900 to US$1,870.

Why do treasury yields matter?

There is an opportunity cost when it comes to holding gold. The yellow metal does not bear any yield, so a capital flow from gold to bonds can be expected when yields become sufficiently high.

For most of last year, the opposite was happening as 10-year yields plunged from 1.95% pre-COVID to lows of 0.50% by August 2020. In conjunction with the fall in yields, gold prices surged from around US$1,650 to a peak of over US$2,060 on 6 August 2020.

Gold could be at its crossroads, with factors such as a weak US dollar and high inflation propping up prices, while a potential breakout of yields could send prices further south.

The post Why ASX gold miners are taking a hit today appeared first on The Motley Fool Australia.

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Appen Ltd (ASX: APX) shares are falling this morning after the company’s chief executive officer sold a sizeable amount of his shareholding.

At the time of writing, the Appen share price is trading 4.9% lower at $12.42.

Why is the CEO selling?

According to the announcement by the artificial intelligence data provider, CEO Mark Brayan disposed of 109,430 shares last Friday. The sale was actioned at $13.0805 per share — an approximate total sale value of $1.43 million.

Whenever a CEO cashes out of the company they are leading, eyebrows are raised. So, why has Brayan sold down his holding?

The company’s release specifies the sale was to satisfy tax obligations arising from the vesting of 173,153 performance rights in March.

Post-sale, Brayan retains 482,032 shares in the company. On that basis, this recent sale would represent a selldown of roughly 18.5% of Mr Brayan’s holdings in Appen.

Poor timing for Appen share price

Usually, shareholders aren’t too bothered by management taking some pocket change for their efforts. However, cashing out after a period of share price underperformance is a surefire way to leave investors with a bitter taste.

The Appen share price has fallen approximately 70% from its high back in August last year. Disappointment has lingered since the company issued a guidance downgrade in December, following a sluggish quarter.

More recently the shares have rebounded somewhat after the company announced a business restructuring. The move to reposition Appen with four distinct business units — Global, Enterprise, China, and Government — seemed to restore some shareholder optimism.

However, today’s down move indicates shareholders may feel the restructure alone isn’t enough to warrant a $1.4 million payday for the CEO.

Looking ahead

Shareholders will be hoping Appen delivers on its full-year guidance, which was reaffirmed in May. Between US$83 million and US$90 million is expected in underlying earnings before interest, tax, depreciation, and amortisation (EBITDA).

Once a growth company starts missing forecasts, it can get ugly quickly. The Appen share price will be skating on thin ice if FY21’s result disappoints — especially after seeing the CEO reduce his own interests in the company.

The post Here’s why the Appen (ASX:APX) share price is falling 5% today appeared first on The Motley Fool Australia.

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The Adriatic Metals PLC (ASX: ADT) share price is gaining in morning trade, up 2% at time of writing.

Below we look at the ASX silver company’s latest permitting success.

What did Adriatic Metals report?

The Adriatic Metals share price is gaining after the company announced the Bosnian Federal Ministry of Spatial Planning had greenlighted the Urban Planning Permit (UPP) for its Rupice underground deposit.

The Rupice deposit makes up part of the silver explorer’s Vares silver project in Bosnia and Herzegovina. It received the UPP for the other part of the Vares silver project – called Veovaca – in November 2020, with an exploitation licence granted in January. The company said Veovaca received its permits earlier because it’s a brownfield open pit deposit, whereas Rupice is a greenfield underground deposit.

Adriatic Metals said receipt of the permits involved approval from significant government stakeholders, including neighbouring municipalities, as well as local commercial service providers.

Commenting on the permit, Adriatic Metal’s CEO, Paul Cronin, said:

The award of the UPP represents the last major step before obtaining the Rupice Exploitation Permit, which I remain confident it will be received within the coming weeks. Since Adriatic’s incorporation in March 2017, the company has worked very hard with the local community and the various levels of government to work through the project permitting process.

This award demonstrates the level of expertise in our team, as well as the support and cooperation from the local community and government in building the Vares Project.

Adriatic reported it will immediately apply for the exploitation permit, a technically focused process.

Construction can commence on receipt of the exploitation permit for Rupice, which will give Eastern Mining, Adriatic’s wholly owned Bosnian subsidiary, the right to mine and process ore at the Vares silver project.

How has the Adriatic Metals share price been performing?

Adriatic Metals’ share price is up 82% over the past 12 months. By comparison the All Ordinaries Index (ASX: XAO) has gained 23% over that same time.

Year-to-date, Adriatic shares have gained 9%.

The post Here’s why the Adriatic Metals (ASX:ADT) share price is gaining today appeared first on The Motley Fool Australia.

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The Ioneer Ltd (ASX: INR) share price is in freefall today. At the time of writing, shares in the lithium miner are trading at 31.5 cents each – down 17.1%.

The company’s precarious position comes after the US Fish and Wildlife Service (FWS) said it would declare the Tiehm’s Buckwheat that inhabits the site of its proposed Nevada lithium mine as an endangered species.

Let’s take a closer look at today’s news and why it might be worrying investors.

Ioneer share price tanks

In a blow to the Ioneer share price, the FWS says the proposed Rhyolite Ridge lithium mine would have a “permanent and irreversible” effect on the desert flower.

In the last northern summer, 40% of Tiehm’s Buckwheat, which are only found in Nevada, had been destroyed. Conservationists blamed Ioneer and its mine, but Ioneer blamed local wildlife. The FSA found it was mostly local squirrel populations, but that the mine did and would have an exacerbating impact on the plant.

In a statement to the ASX this morning, Ioneer said it has done “significant work” to transport the plant to other parts of the state. FWS, however, says this plan would likely fail because Tiehm’s Buckwheat does best in the soil that is found on top of the proposed lithium site.

While a final designation is not due until September and will not block the mine automatically, investors seem to think it could be a significant hindrance – judging by this morning’s performance of the Ioneer share price.

Management commentary

In a statement to the ASX this morning, Ioneer managing director Bernard Rowe said the company supports and expected today’s decision by the FWS.

Mr Rowe also says Ioneer can assist in preserving Tiehm’s Buckwheat from the threats of drought and small mammals in the area. He added that the company believes the Rhyolite Ridge mine and the Tiehm’s Buckwheat can coexist.

As the price of lithium is up 91.4% since the beginning of the year, it is unsurprising the company is keen to see this mine proceed as planned, despite today’s news. However, the reaction of the Ioneer share price today suggests investors may be less optimistic about its prospects.

Ioneer share price snapshot

Over the past 12 months, the Ioneer share price has increased by around 163%. Its value has been steadily appreciating as investors flock to lithium shares. Year to date, the company’s shares are up by around 13%.

Given its current valuation, Ioneer has a market capitalisation of $597 million.

The post Ioneer (ASX:INR) share price plummets 17% on new lithium mine hurdle appeared first on The Motley Fool Australia.

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The Creso Pharma Ltd (ASX: CPH) share price is on form again on Friday morning.

At the time of writing, the cannabis and psychedelics company’s shares are up 5.5% to 19.2 cents.

This means the Creso share price is now up a massive 35% in the space of just two days.

Why is the Creso share price racing higher?

Investors have been scrambling to buy Creso’s shares since the release of an announcement on Thursday.

That announcement revealed that the company is planning to expedite a Californian psychedelics market entry following the recent passing of Senate Bill 519.

Senate Bill 519, which remains subject to further regulatory approval from California’s lower house and the Governor of California, could make a wide range of psychedelic substances, including psilocybin, legal to use and possess for adults over the age of 21.

Creso is well-positioned to benefit from the regulatory shift through its soon-to-be acquired Halucenex Life Sciences business.

Halucenex specialises in psychedelic compounds and recently announced that had secured additional pharmaceutical grade psilocybin supply. This made it one of the largest holders of single batch GMP grade synthetic psilocybin in Canada.

Creso’s non-executive Chairman, Adam Blumenthal, commented: “This is a major development for Creso Pharma and Halucenex and provides a key strategy piece, which will underpin our expansion into the US market. Over the recent months, we have made a number of US focused appointments and Halucenex have secured multiple partnerships and agreements that will allow the Company to pursue the US psychedelics market and become a first mover in the sector.”

What else is supporting its shares?

Also giving the Creso share price a boost was the release of yet another announcement this morning.

Today’s announcement, its eighth in the space of a month, reveals that the company has extended its distribution agreement with Route 2 Pharm to allow for distribution of Creso’s products into Ecuador. This means the agreement now extends to 14 countries

Management commented: “Ecuador provides a large market opportunity for Creso Pharma as it recently passed legislation to approve the production, commercialisation, use and consumption of cannabis for medicinal or therapeutic treatment. The country has a population of over 15m and is part of the rapidly emerging medicinal cannabis market in the Latin American and Caribbean region, which has an estimated population of 655mii. Creso is confident that Ecuador will provide it with a strong foothold in the rapidly growing Latin American market, which is expected to grow to over US$300m in value by 2024.”

The post Why the Creso (ASX:CPH) share price is up 35% in two days appeared first on The Motley Fool Australia.

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Blue chip shares are leading companies that generally have strong business models, long track records, and products or services that dominate their respective markets.

It is because of these characteristics that they are considered to be quite stable and therefore lower risk options than the average share. For this reason, many investors will load up their portfolios with blue chip shares.

If you’re looking to do the same, then you might want to look at the two listed below. Here’s why they have been named as blue chips to buy:

Aristocrat Leisure Limited (ASX: ALL)

The first blue chip ASX share to consider is Aristocrat Leisure. It is one of the world’s leading gaming technology companies with a portfolio of world class poker machines and digital games.

It recently released its half year results, which revealed that Aristocrat has bounced back strongly from the pandemic. For the six months ended 31 March, the company reported a normalised net profit after tax (NPAT) of $362.2 million. This was an increase of 18.4% on the prior corresponding period.

Aristocrat’s profit growth was driven by strong performances from both its Gaming and Digital businesses. Positively, almost 80% of its revenue was derived from recurring sources during the period. This gives it a firm foundation to build on in the coming years.

This result went down well with analysts at Citi. In response, the broker retained its buy rating and lifted its price target to $46.00.

Healius Ltd (ASX: HLS)

Another blue chip share to look at is Healius. It is one of Australia’s largest pathology and diagnostic imaging providers in Australia.

Like Aristocrat, Healius has been performing very strongly in FY 2021. During the first half, it reported a 16% increase in revenue to $953.5 million and a massive 190% jump in net profit to $75.6 million.

A key driver of this growth was its pathology business, which reported a 22% increase in revenue to $711.4 million and significantly wider margins. This was thanks largely to its role in testing for COVID-19.

Positively, this strong form has continued, with Healius recently reported solid growth during the third quarter. Once again, COVID-19 testing played a key role in this strong form.

One broker that is particularly bullish on Healius is Macquarie. This morning the broker retained its outperform rating and lifted its price target to $4.70.

The post Top brokers have named these ASX blue chip shares as buys appeared first on The Motley Fool Australia.

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