Every investor will have a different approach when seeking to build a ‘best stocks to buy now’ list.

However, it could be focused on the quality of a business, as well as its price. This may enable an investor to buy the most attractive companies while they trade at prices that undervalue their long-term prospects.

Through focusing on a wide range of sectors, it may be possible to unearth a diverse range of companies. This could limit risk in what remains an uncertain economic environment.

High-quality companies may be among the best stocks to buy now

Companies with solid financial positions and competitive advantages may feature on a ‘best stocks to buy now’ list. This does not guarantee their investment success. However, they may be able to more easily overcome challenging operating conditions such as those currently in place for many companies. Similarly, they could deliver higher profitability in the long run because of their capacity to invest in new growth areas and rely on a loyal customer base.

Identifying such companies is very subjective. However, by assessing their annual reports and latest investor updates it may be possible to find them within a specific sector. Comparing them versus sector peers may also make it clearer as to which companies have a more attractive growth outlook in a potential economic recovery over the coming years.

Buying undervalued shares

Companies that offer good value for money may be among the best stocks to buy now. Even if an investor is able to unearth a very high-quality business, paying too much for it can lead to disappointing returns. Such a company could lack a margin of safety, which may indicate that investors have already factored in its future earnings potential.

Clearly, there are various methods to analyse companies. Different ones can be more relevant to different sectors. For example, the price-to-book (P/B) ratio may be more relevant for banks and real estate investment trusts (REITs), while the price-to-earnings (P/E) ratio may be more useful when comparing consumer goods businesses. Comparing a company’s valuation to its long-term average and its sector peers may provide guidance as to whether it offers good value for money at the present time.

Searching in a wide range of sectors

It may be prudent to search for the best stocks to buy now in a wide range of sectors. Otherwise, an investor may be limiting their choice to a small number of businesses that leads to higher risks because of a greater reliance on a concentrated range of industries.

A diverse portfolio may also be able to offer greater returns in the coming years. It may allow an investor to capitalise on a broader range of growth opportunities that are lacking in a concentrated portfolio. Although a diverse portfolio never guarantees positive investment returns, it may create a more favourable risk/reward opportunity for a long-term investor.

More reading

• Why this fund likes these 3 exciting ASX shares
• How to invest in the Nasdaq Index on the ASX
• Revealed: 4 least profitable industries in Australia
• Why Webjet (ASX:WEB) got kicked out of ASX All Tech index
• Why the Austal (ASX:ASB) share price will be on watch today

Motley Fool contributor Peter Stephens 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.

The post How I’d build a ‘best stocks to buy now’ list appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3rXGiGN

The Nasdaq Composite (INDEXNASDAQ: .IXIC) Index has been a growing point of fascination with ASX investors over the past few years.

The United States’s newer major stock exchange, the Nasdaq is famously home to most of the US’s disruptive tech companies.

Probably as a result of this, this index has been a top performer over the past decade. The index alone is up more than 83% over the past 12 months (not even including dividends), and up 181% over the past 5 years.

Is investing in the Nasdaq a good idea?

Since the Nasdaq is a US-based index, it offers many diversification benefits for an ASX investor. Having some investments denominated in a currency outside the Australian dollar can offer some benefits in this regard.

And since the ASX’s own tech sector pales in front of the Nasdaq’s offerings (more on that later), it can be an easy way to increase your exposure to tech as well.

How to invest in the Nasdaq on the ASX

Well, there are 2 ASX exchange-traded fund (ETF) that directly track the Nasdaq, both from BetaShares. They are the BetaShares Nasdaq 100 ETF (ASX: NDQ) and the BetaShares Nasdaq 100 ETF-Currency Hedged (ASX: HNDQ).

These two ETFs are almost identical, they both mirror the NASDAQ-100 (INDEXNASDAQ: NDX), which holds the 100 largest companies in the Nasdaq Composite.

However, HNDQ is a hedged ETF, which means that it takes currency fluctuations between the US and Aussie dollar out of the equation. In exchange for a slightly higher management fee of course.

NDQ’s management fee is 0.48% per annum, while HNDQ’s fee is 0.51%. Movements in the exchange rate will affect NDQ though.

So, let’s look at which companies these ETFs hold. Here are the top 10, according to BetaShares:

Nasdaq Company	Weighting in NDQ (%)
Apple Inc (NASDAQ: AAPL)	11.4%
Microsoft Corporation (NASDAQ: MSFT)	9.6%
Amazon.com Inc (NASDAQ: AMZN)	8.2%
Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL)	7%
Tesla Inc (NASDAQ: TSLA)	4.2%
Facebook Inc (NASDAQ: FB)	3.6%
NVIDIA Corporation (NASDAQ: NVDA)	2.7%
PayPal Holdings Inc (NASDAQ: PYPL)	2.4%
Intel Corporation (NASDAQ: INTC)	2.1%
Comcast Corporation (NASDAQ: CMCSA)	2.1%

So it is very obvious here where the Nasdaq gets it’s ‘tech-heavy’ reputation from. There are some ‘non-tech’ companies in the index as well, such as PepsiCo Inc (NASDAQ: PEP). But almost half of the index is allocated to the tech space.

Past performance doesn’t guarantee future success

So we’ve already touched on the Nasdaq’s performance history. But let’s take a look at the BetaShares Nasdaq 100 ETF’s performance, given that it takes into account the currency fluctuations that we Australians face.

So according to BetaShares, NDQ has returned 27.34% over the past 12 months, 24.22% per annum over the past three years, and 23.67% per annum over the past five years.

That’s some impressive numbers to be sure. However, it’s worth noting that all sectors and indexes have their time in the sun, and the Nasdaq is no different.

Sure, this index is up an impressive 396% over the past decade. But before that, the picture was not as bright. The dot-com crash of the early 2000s hit the Nasdaq hard. In fact, it took until December 2014 for the index to once again hit the peaks that it first hit back in early 2000.

More reading

• Revealed: 4 least profitable industries in Australia
• Afterpay (ASX:APT) share price wobbles on CommBank BNPL news
• Elon Musk reviews title and decides ‘Technoking of Tesla’ is more fitting
• ASX investors still can’t get enough of GameStop (NYSE:GME) shares
• Flight Centre and Zip were some of the most traded ASX shares last week

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares), Facebook, Intel, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Amazon, Apple, Facebook, Microsoft, NVIDIA, PayPal Holdings, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Comcast and Intel and recommends the following options: long January 2023 $57 calls on Intel, short March 2023 $130 calls on Apple, long January 2022 $1920 calls on Amazon, short January 2023 $57 puts on Intel, long March 2023 $120 calls on Apple, short January 2022 $1940 calls on Amazon, and long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia has recommended Alphabet (A shares), Amazon, Apple, Facebook, NVIDIA, and PayPal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post How to invest in the Nasdaq Index on the ASX appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3tAHEbd

More reading

• How to invest in the Nasdaq Index on the ASX
• Revealed: 4 least profitable industries in Australia
• Why Webjet (ASX:WEB) got kicked out of ASX All Tech index
• Why the Austal (ASX:ASB) share price will be on watch today
• Is the new CBA BNPL service bad news for Afterpay and Zip shares?

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Kate O’Brien owns shares of Apple and Rio Tinto Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Apple. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), and Apple. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post LIVE COVERAGE: ASX to open higher; Fed holds rates appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/2Arppiz

The four least profitable industries in Australia have been named, in a warning to investors who have ploughed money into ASX companies in those sectors.

Research firm IBISWorld revealed its analysis this week, noting that the named sectors are having a rough time in 2020-21 — but this may not necessarily mean losses will continue in future years.

Here are the four industries:

International airlines

With travel between countries at an almost standstill since the COVID-19 pandemic hit last year, it is no surprise that airlines are bleeding cash.

In the 2020-21 financial year, IBISWorld forecasts the average profit margin for the industry will sink to -31.4%.

“Revenue across the industry is expected to decline by 67.2% in 2020-21, as international tourist visitor nights have fallen by 82.6%,” said IBISWorld senior industry analyst Tom Youl.

“The industry is expected to begin a rebound next year, with revenue expected to rise by 78.4%, to $14.7 billion.”

In the latest reporting season, Qantas Airways Limited (ASX: QAN) recorded a $1.1 billion statutory loss after tax, while Air New Zealand Limited (ASX: AIZ) copped a 93% loss in earnings before taxation.

IBISWorld predicted recovery would take “several years” while vaccinations roll out around the globe.

Buy now, pay later

Players like Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) have been ASX darlings in the past 12 months. But that still doesn’t make them profitable.

“Although the buy now, pay later industry is growing strongly, industry firms have made losses over the past 5 years and will likely continue to do so in 2020-21,” said IBISWorld senior industry analyst Yin Yeoh.

“While losses as a share of revenue are declining, the industry has yet to achieve profitability.”

IBISWorld predicts revenue will grow 25.8% for the industry this year but the average profit margin will sit at -2.6%.

The industry is also seeing more competition from broader financial institutions like Paypal Holdings Inc (NASDAQ: PYPL) and Commonwealth Bank of Australia (ASX: CBA), which this week revealed its own BNPL product.

But Yeoh was optimistic about the industry in the long run.

“While the industry continues to post losses, the scale of losses has shrunk significantly over the past two years,” she said.

“It is likely that the industry will achieve profitability for the first time before 2023-24.”

Wired telecommunications network operation

The wired telco sector, dominated on the ASX by Telstra Corporation Ltd (ASX: TLS), is one of the largest loss-makers in the country, according to IBISWorld.

The industry copped an average profit margin of -25.7% for the 2020-21 year.

IBISWorld senior industry analyst Liam Harrison placed the blame on government-owned NBN Co.

“‘NBN Co Limited’s industry-related revenue has risen at an annualised 68.2% over the 5 years through 2020-21, vastly outperforming the wider industry,” he said.

“However, the company has registered stronger losses over the past five years, largely due to the high costs involved in financing the NBN rollout.”

The sector is suffering from a multi-year downward spiral, with revenue declining 4.7% per annum over the past 5 years.

“NBN Co has been able to sustain its losses largely due to its public backing. However, it will need to achieve profitability eventually,” said Harrison.

“There are increasing threats to its profitability, including the roll-out of 5G fixed wireless networks that may erode NBN’s user base.”

Cotton ginning

Ginning is the process of separating fibres from the seeds on harvested cotton.

Severe drought across the country in the season leading up to the current financial year has meant revenue will go backwards to the tune of 26%.

The average profit margin for the sector will end up at -4.5% for the year.

However, Youl predicted better times ahead as water availability has improved in the past 12 months.

“Assuming a return to near-average annual rainfall, industry revenue is projected to increase from a low base over the next 5 years,” he said.

“Wide profit margins in the cotton growing industry are expected to encourage farmers, particularly irrigators, to grow cotton when water availability increases.”

More reading

• Is the new CBA BNPL service bad news for Afterpay and Zip shares?
• 2 quality ASX dividend shares with generous yields
• 5 things to watch on the ASX 200 on Thursday
• Is the Zip (ASX:Z1P) share price a buy now or buy later?
• ASX 200 dips, CBA launches BNPL, Fonterra reports

Tony Yoo owns shares of AFTERPAY T FPO, PayPal Holdings, and Qantas Airways Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends PayPal Holdings. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO and recommends the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended PayPal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Revealed: 4 least profitable industries in Australia appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3bW6D2q

Webjet Limited (ASX: WEB) will be removed from the S&P ASX All Technology Index (ASX: XTX) on 22 March.

This means that a business with a $2.1 billion market capitalisation will be missing from the most prominent index of Australian technology companies.

Webjet has been a success story in the local tech scene. The online travel agency was founded in 1998 then reverse listed on the ASX two years later.

The Webjet share price hovered around the 10 cent mark in mid-2005. But it spiked up to about $3.50 by 2013 as Australians started abandoning physical travel agents and embraced the lower prices from online merchants.

As that trend continued in the 2010s, Webjet’s valuation kept growing. The share price well surpassed the $12 mark in both 2018 and 2019, and the company now commands 50% of the online travel agency flights market in Australia and New Zealand.

But of course, COVID-19 brought the entire travel industry to a standstill last year. 

Webjet shares suffered a low of $2.25 during the 2020 market crash but have since recovered nicely to trade at $6.18 by close of trade Wednesday.

Goldman Sachs on Wednesday put a “buy” rating on the stock and slapped a price target of $7.36 on it, which is a 19% premium to the current cost.

So why is it getting kicked out of the All Tech index?

The reason Webjet was removed from the All Tech index

A spokesperson for S&P Dow Jones Indices, which operates the All Tech index, told The Motley Fool that Webjet’s industry classification will be changed.

“The global industry classification standard of WEB will be changed from ‘25502020 (Internet & Direct Marketing Retail)’ to ‘25301020 (Hotels, Resorts & Cruise Lines)’ effective on 22 March, 2021.”

This has led to Webjet’s exclusion, as the All Tech index doesn’t include the ‘Hotels, Resorts & Cruise Lines’ industry.

Webjet declined to comment to The Motley Fool on the reclassification.

The All Tech index encompasses the following industries:

• Information technology
• Consumer electronics
• Internet & direct marketing retail
• Healthcare technology
• Interactive media & services

Webjet’s fate means that index funds that follow the All Tech will be forced to sell out of the business in the coming days. The impact of that sell-off on the share price is yet to be seen.

The Webjet share price was down 0.32% on Wednesday, while it has risen slightly since the index removal was revealed after Friday’s trading session.

More reading

• ASX 200 down 0.6%: Telstra upgraded, Webjet rated as a buy, Westpac update
• Webjet (ASX:WEB) share price rises on bullish broker note
• 5 things to watch on the ASX 200 on Wednesday
• These are the 10 most shorted shares on the ASX
• ASX 200 unmoved, Flight Centre soars, Afterpay keeps falling

Motley Fool contributor Tony Yoo owns shares of Webjet Ltd. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why Webjet (ASX:WEB) got kicked out of ASX All Tech index appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3vuxZVc

Austal Limited (ASX: ASB) shares will be on watch today following the company’s announcement regarding a completed vessel delivery. By yesterday’s market close, the Austal share price had fallen 1.6% to $2.41.

Here is what the global defence shipbuilder announced on Wednesday night.

What could impact the Austal share price today? 

The Austal share price could be on the move today as investors digest the company’s latest update.

According to yesterday’s late market release, Austal has delivered its ninth guardian-class patrol boat to the Australian Department of Defence.

The vessel, named ‘HMPNGS Rochus Lokinap’, was gifted to the Papua New Guinea Defence Force under the Pacific Patrol Boat Replacement project. This took place during a certificate signing ceremony at Austal’s Henderson shipyard in Western Australia.

Austal stated that this is the second guardian-class patrol boat handed over to Papua New Guinea. In 2018, the company delivered the ‘HMPNGS Ted Diro’ as part of the Australian Government’s Pacific Maritime Security Program. Two more guardian-class patrol boats are in the pipeline for Papua New Guinea within the next two years.

The guardian-class patrol boats have an array of capabilities to support important mission objectives. These ships are built to be fast for seakeeping and can be retrofitted to mount machine guns or an autocannons if required. In addition, the boats have up-to-date electronics suites.

With these navy assets, Papua New Guinea will be able to conduct border patrols, regional policing, search and rescue, and other operations.

Austal CEO comments

Paddy Gregg, Austal CEO, commented on the company’s full service, and positive relationship between Australia and Papua New Guinea. He said:

Austal not only design and construct the Guardian-class, but also deliver a comprehensive training program to each crew accepting the vessels. Through this successful handover process, we are continuing to develop a very strong, productive relationship with the Papua New Guinea Defence Force and their crews.

More on the Pacific Patrol Boat Replacement project

The Pacific Patrol Boat Replacement project was awarded to Austal in May 2016. The shipbuilder was granted an additional contract option, taking the program to 21 vessels. In total, the value of the contract is estimated to be more than $335 million.

Twelve Pacific Island nations including Papua New Guinea, Fiji, Samoa, Vanuatu and others will receive the vessels through to 2023.

Austal share price review

The Austal share price has sunk by around 14% over the past 12 months and is down close to 10% year to date.

On current valuation grounds, Austal has a market capitalisation of about $866.5 million, with almost 360 million shares outstanding.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 recovers strongly, Austal floats higher, Fortescue drops
• Why Afterpay, Austal, Reece, & Service Stream shares are racing higher
• ASX 200 up 1.5%: Afterpay & Zip jump, Fortescue tumbles
• Here’s why the Austal (ASX:ASB) share price is storming 6% higher

Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Austal Limited. 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.

The post Why the Austal (ASX:ASB) share price will be on watch today appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3ttmj3i

On Thursday Commonwealth Bank of Australia (ASX: CBA) announced plans to take on Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) with the launch of its own buy now pay later (BNPL) service.

According to the release, the banking giant’s BNPL offering will begin rolling out to eligible CBA customers from mid-2021 and be able to be used anywhere debit and credit card payments are accepted.

The service closely resembles the Afterpay product for shoppers. It allows them to make fortnightly instalments for transactions and comes with a limit of $1,000.

However, the service differs for merchants, as it carries no additional merchant fees above the standard merchant service fees. Whereas Afterpay and its peers also take a cut of the transaction as well.

CBA’s Group Executive, Retail Banking Services, Angus Sullivan, commented: “When making a payment, customers will have additional flexibility to use it for their everyday spending for smaller purchases as well as split over four instalments to help smooth payments for bigger purchases.”

“Additionally we know transaction costs are important considerations for businesses. Unlike some other BNPL providers which may charge a high fee, there are no additional fees to businesses when customers choose to pay with CommBank’s BNPL,” Mr Sullivan said.

Is this a threat to Afterpay and Zip?

The addition of another major player in the industry appears to have some investors concerned. Especially one with such deep pockets and a large customer base.

However, analysts at Goldman Sachs aren’t fazed by the news. It explained:

“While the headline would suggest competition is intensifying we do not believe it is likely to materially impede on APT’s market position. APT’s 3.4mn customers are transacting on average 18x per annum (1H21 annualised trends). And while merchants may benefit from a lower transaction cost, APT has likely aggregated a user base that is possibly different to the user base that CBA may appeal to. We also note that recent launches of Klarna and NAB no-interest credit cards have yet to have any noticeable impact on APT’s growth relative to our forecasts.”

In light of this, the broker has made no changes to its estimates or rating. It continues with its neutral rating and $127.60 price target on Afterpay’s shares.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Is the Zip (ASX:Z1P) share price a buy now or buy later?
• ASX 200 dips, CBA launches BNPL, Fonterra reports
• Is the Commonwealth Bank (ASX:CBA) share price a buy or hold?
• How much have investors made (or lost) on Zip (ASX:Z1P) 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 ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Is the new CBA BNPL service bad news for Afterpay and Zip shares? appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3bWeGfZ

The good news for income investors in this low interest rate environment is that the Australian share market has a large number of dividend shares offering generous yields.

Two that provide exactly this are listed below. Here’s why these ASX dividend shares could be the ones to buy:

Charter Hall Social Infrastructure REIT (ASX: CQE)

Charter Hall Social Infrastructure REIT is a real estate investment trust that has a focus on social infrastructure properties. Among its portfolio are properties with specialist use, limited competition, and low substitution risk. This includes childcare centres and government properties.

Demand for its properties has been very strong, leading to the company recently reporting an occupancy rate of 99.7%. Positively, these tenants aren’t going anywhere any time soon and are in for the long run. Charter Hall Social Infrastructure REIT’s weighted average lease expiry (WALE) stood at a sizeable 14 years at the end of the first half. Another positive is that the number of leases on fixed rent reviews has increased to 63.3%. This bodes well for its future rental income growth.

The company’s strong form this year means it is expecting to reward shareholders with a higher than planned 15.7 cents per unit distribution. Based on the current Charter Hall Social Infrastructure share price, this represents a 5.15% yield.

One broker that is a fan is Goldman Sachs. It currently has a conviction buy rating and $3.45 price target on its shares.

Telstra Corporation Ltd (ASX: TLS)

Another ASX dividend share to consider is Telstra. After several disappointing years caused by the NBN rollout, this telco giant looks ready to return to growth at long last.

Last month when Telstra released its half year results, the company’s CEO, Andy Penn, revealed that he has set some bold targets for the next couple of years. And pleasingly, he appears confident the company can achieve this thanks to industry trends and its T22 strategy.

Telstra is aiming for mid to high single-digit growth in underlying EBITDA in FY 2022 and then further growth in FY 2023. 

In light of this, the company’s dividend cuts appear to be over and 16 cents per share looks set to be the bottom. Based on the latest Telstra share price, this will mean a fully franked 5% dividend yield for investors.

Goldman Sachs is also a fan of Telstra. Its analysts currently have a buy rating and $4.00 price target on its shares.

More reading

• Top brokers name 3 ASX shares to buy today
• ASX 200 down 0.6%: Telstra upgraded, Webjet rated as a buy, Westpac update
• Leading brokers just upgraded these ASX shares to “buy” today
• Is the Telstra share price (ASX:TLS) a buy today?
• ASX 200 Weekly Wrap: Calm restored to the ASX 200

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

The post 2 quality ASX dividend shares with generous yields appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3bSrKml

If you’re wanting to take advantage of recent weakness in the tech sector, then you might want to look at the ASX shares listed below.

Here’s why these ASX tech shares could be great long term options for investors:

Altium Limited (ASX: ALU)

The first ASX tech share to look at is Altium. It is a leading electronic design software platform provider exposed to the Internet of Things and artificial intelligence booms. The proliferation of electronic devices is expected to lead to increasing demand for its software over the next decade. Management certainly believes this is the case and has set itself bold growth targets over the coming years. It is also aiming to dominate its market and looks well-placed to achieve this thanks to its industry-leading technology. UBS recently upgraded its shares to a buy rating and put a $34.00 price target on its shares.

Appen Ltd (ASX: APX)

Appen provides and prepares the data that goes into artificial intelligence and machine learning models. This includes for some of the biggest tech companies in the world such as Amazon, Facebook, and Microsoft. Given the growing importance of artificial intelligence for businesses and governments, Appen has the potential to grow very strongly over the next decade. One broker that is positive on the company is Ord Minnett. Last month it upgraded its shares to a buy rating with a $24.75 price target. The broker believes recent weakness in the Appen share price has brought it down to an attractive level. Especially given its exposure to the global trend of investment in artificial intelligence.

NEXTDC Ltd (ASX: NXT)

Another tech share to consider is NEXTDC. It is a leading data centre operator with operations across Australia. It has also recently opened up offices in Singapore and Tokyo, with a view to expanding into these markets in the near future. If this proves to be a success, it could take its growth up another level. Looking ahead, NEXTDC appears well-placed to benefit from increasing demand for data centre services due to the structural shift to the cloud. Goldman Sachs is very positive on its future and has a buy rating and $13.50 price target on its shares. The broker has previously even suggested the NEXTDC share price could go as high as $20.00 based on bullish but not unrealistic assumptions.

More reading

• 2 of the best ASX growth shares to buy immediately
• 3 beaten down ASX shares that could be great value
• ASX 200 up 0.8%: Metcash update, tech shares rebound, PointsBet acquisition
• 2 outstanding ASX shares to buy and hold
• ASX 200 down 0.1%: Afterpay sinks, Evolution announces acquisition

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 recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Appen Ltd. 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.

The post 3 stellar ASX tech shares to buy for the long term appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/38MfwKb

Would Coles Group Limited (ASX: COL) make a dependable ASX share to buy right now for a portfolio?

The Coles share price sank after releasing its half-year result for FY21 – it has dropped by around 15% since 16 February 2021.

What was in the report?

It wasn’t as though Coles reported a loss for the first 27 weeks of the financial year.

Total sales revenue went up 8.1% to $20.4 million, total earnings before interest and tax (EBIT) rose 12.1% to $1 billion, net profit after tax (NPAT) rose 14.5% to $560 million and earnings per share (EPS) grew 14.5% to 42 cents.

Like most retail businesses, Coles is seeing a large increase of online sales. Coles saw total e-commerce sales go up 48%, whilst sales to household consumers grew 61%. Coles Supermarkets saw EBIT rise by 14.4%.

The liquor division actually had a standout performance, with revenue growing by 15.1% to $1.95 billion and EBIT growing 36.8% to $104 million.

Drilling down into the different metrics for Coles Supermarkets, it saw a 71 basis point increase of the gross profit margin to 25.8%. This improvement came about after strategic sourcing initiatives in its own brand as well as a more efficient supply chain, according to management.

Despite the worsening of the cost of doing business (CODB) percentage by 40 basis points to 20.7%, Coles was able to increase its EBIT margin by 31 basis points to 5.1%. There were approximately $70 million of COVID-19 costs during the period.

Over the half, Coles Supermarkets delivered comparable sales growth of 7.2%. There was inflation of 2.3% over the period, though it was only 0.7% when excluding tobacco and ‘fresh’.

A key focus of Coles is expanding its own brand offering. Own brand saw $5.7 billion of sales in the half, an increase of 9.8%. The most successful products were in the convenience and Christmas ranges.

Was the Coles share price hit by the outlook?

Coles warned that depending on COVID-19 and various impacts, sales in the supermarket sector may moderate significantly or even decline in the second half of FY21 and into FY22.

The supermarket business pointed out that it will be cycling against elevated sales from COVID-19 supermarkets late in the third quarter, for the rest of FY21 and most of FY22. Remember, Coles has benefited from pantry stocking, people working and eating at home, and customers shopping online to avoid physically shopping in-store.

However, Coles did say that its stores in larger shopping centres are likely to pick up again as customers return to those places. Increased movement could benefit fuel volumes as COVID-19 restrictions ease.

In the first six weeks of the third quarter, supermarket same store sales growth was 3.3% with online sales growth of 37%. Growth was stronger in liquor with comparable growth of 12.5%.

Is the Coles share price worth buying?

Whilst there aren’t that many buy ratings out there for Coles shares right now, the price targets suggest there’s quite a lot of potential growth.

For example, Citi doesn’t rate Coles as a buy – but its share price target is $19 which suggests it could rise around 20% over the next year. The broker was turned off by the higher costs and expectations of lower sales growth, or even a decline of sales.

Broker Morgan Stanley has a share price target for Coles of just over $20. The broker expects that growth is going to slow from here and it’s not expecting Coles to do as well as it previously thought over the next couple of years.

According to Morgan Stanley, Coles shares are trading at 22x FY21’s estimated earnings.

More reading

• 2 quality ASX dividend shares to buy today
• Why the Coles (ASX:COL) share price is still down 15% in 2021
• 2 ASX dividend shares to buy with yields above 4%
• ASX 200 Weekly Wrap: Calm restored to the ASX 200
• Will the ASX share e-commerce boom last?

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Is Coles (ASX:COL) a dependable ASX share to buy right now? appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3eNs73p