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:

Ampol Ltd (ASX: ALD)

A note out of Goldman Sachs reveals that its analysts have retained their sell rating and $23.30 price target on this fuel retailer’s shares. According to the note, the broker was surprised to see Ampol, formerly known as Caltex, announce a $300 million share buyback. Given the tough operating environment and its Lynton refinery closure, Goldman was expecting the company to delay any capital returns. While this is a positive for shareholders, it feels its shares are overvalued at the current level. Particularly given the growing capital intensity of the business, which it sees as a risk to capital return expectations in the future. The Ampol share price ended the week at $30.63.

Mesoblast limited (ASX: MSB)

According to a note out of Canaccord Genuity, its analysts have retained their sell rating but increased the price target on this biotechnology company’s shares slightly to $1.68. This follows the announcement of a deal with global pharma giant Novartis which could be worth upwards of US$1.25 billion to Mesoblast in milestone payments. The broker appears to believe the company’s shares are materially overvalued at the current level. The Mesoblast share price was fetching $4.07 at Friday’s close.

Xero Limited (ASX: XRO)

Analysts at UBS have retained their sell rating and lowly $77.00 price target on this cloud-based business and accounting software platform provider’s shares. According to the note, the broker was surprised with Xero’s announcement of a US$700 million convertible notes offering last week. It believes this could be a sign that management is readying a major acquisition. Although this has the potential to be a positive, it continues to see its shares as expensive. The Xero share price ended the week at $133.76.

More reading

• These were the best performing ASX 200 shares last week
• The Aussie dollar is near a 2-year high. Here’s what it means for ASX shares
• ASX 200 falls on Thursday
• Top brokers name 3 ASX shares to sell today
• The 13 ASX shares that could have doubled your money in 2020

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 Xero. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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It certainly has been a fantastic month for the National Australia Bank Ltd (ASX: NAB) share price.

Since the start of November, the banking giant’s shares have rallied an impressive 25% higher.

This means the NAB share price is now trading a whopping 76% higher than its COVID-low of $13.20.

Why is the NAB share price racing higher in November?

There have been a number of catalysts for NAB’s strong share price gains in November.

The first is of course the positive developments that are being made with COVID-19 vaccines. This month no less than three vaccine candidates have been shown to be highly effective against the virus.

This has sparked hopes that the pandemic could be over sooner than expected, reducing the risk of an economic disaster.

It also has the potential to give the housing market a lift in 2021, which would be great news for the banks and could underpin demand for mortgages.

Another catalyst has been the shift away from high-flying COVID winners like Kogan.com Ltd (ASX: KGN) and NEXTDC Ltd (ASX: NXT) by investors.

A significant amount of funds has shifted away from this side of the market this month and into beaten down areas like the banks.

And finally, the prospect of bigger dividend payments has given the banking sector a lift.

Earlier this year at the height of the pandemic, APRA told the banks to keep their payout ratios below 50% of earnings. This was designed to ensure their balance sheets remained robust during these challenging times.

However, with the worst seemingly over and their provisions appearing to be more than sufficient, APRA is considering the relaxing of its dividend cap.

This would be great news for income investors in this low interest rate environment.

Is it too late to buy NAB shares?

One broker that still sees some upside for NAB’s shares is Ord Minnett. It currently has an accumulate rating and $24.20 price target on its shares.

The broker is also forecasting a dividend of $1.00 per share in FY 2021 and then $1.10 per share in FY 2022. This represents fully franked yields of 4.2% and 4.6%, respectively, based on the current NAB share price.

More reading

• 10 fantastic ASX shares to buy in December
• 4 great ASX growth shares to buy
• What happened to the NextDC (ASX:NXT) share price in November?
• The Telstra (ASX:TLS) dividend yield is 8 times greater than term deposits
• 2 ASX shares delivering explosive growth in FY 2021

Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Some ASX dividend shares have been rated as buys by the Motley Fool Dividend Investor service.

The RBA official interest rate is now just 0.1% and the share prices of some ASX dividend shares are going higher. However, the following the ASX dividend shares are rated as buys:

Sonic Healthcare Ltd (ASX: SHL)

Sonic Healthcare is a global pathology business with operations across the USA, Europe, Australia and New Zealand.

The business has performed over 11 million COVID-19 tests which is providing a lift to revenue. Despite COVID-19 impacting its operations earlier in 2020, it was still able to report revenue growth of 11% in FY20 and underlying net profit growth of 7%.

In FY20 the ASX dividend share actually maintained its final dividend, but there was a 3% increase of its interim dividend, which allowed the total FY20 dividend to increase by 1.2% to $0.85 per share.

FY21 has seen a recovery of normal pathology operations, whilst COVID-19 testing is surging. In the first quarter of FY21 it saw revenue growth of 29% and earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 71%.

At the current Sonic Healthcare share price it has a grossed-up dividend yield of 2.9%.

Brickworks Limited (ASX: BKW)

Brickworks is an ASX dividend share with a long dividend record. It hasn’t cut its dividend in over 40 years.

The building products business funds its dividend entirely from the cashflow received from its non-construction assets.

It has a 50% stake of an industrial property trust in partnership with Goodman Group (ASX: GMG). This trust actually has a lot of growth potential over the next couple of years. At Oakdale West in Sydney, construction of the Amazon distribution facility is well advanced and is due to be completed in September 2021. Brickworks also said that infrastructure works are also proceeding to schedule and will allow construction of the Coles Group Ltd (ASX: COL) distribution warehouse to commence early in 2021.

Once these two facilities are completed, net rental distributions will increase by over 25% and gross assets held within the property trust is expected to exceed $3 billion.

Brickworks also owns around 40% of the shares of investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). Soul Patts itself regularly increases its dividend.

The company is reporting a promising recovery in its Australia building products segment, though the US building products business is not going as well as management hoped.

At the current Brickworks share price it offers a grossed-up dividend yield of 4.2%.

Rural Funds Group (ASX: RFF)

Rural Funds is an agricultural real estate investment trust (REIT) which owns a variety of farms including cattle, almonds, vineyards, macadamias and cropping (cotton and sugar).

The ASX dividend share aims to increase its distribution by 4% per annum for unitholders. It has been successful with this goal each year since listing.

Most of the regular rental profit growth (AFFO – adjusted funds from operations) is generated from rental increases built into its contracts – either a fixed 2.5% increase or linked to CPI inflation.

It also aims to increase its rental profit (and distribution) by investing in productivity improvements at its farms. The cattle farms have been a particular focus in recent years.

Rural Funds has a weighted average lease expiry (WALE) of around 11 years, which is among the highest in the REIT sector.

At the current Rural Funds share price it has a FY21 forward distribution yield of 4.3% based on the 11.28 cents annual distribution per unit forecast for this financial year.

More reading

• These ASX dividend shares offer yields of at least 4%
• 3 ASX shares with large dividend yields
• Is the Brickworks (ASX:BKW) share price a buy?
• ASX 200 rises more than 1% on Tuesday
• ASX 200 jumps 1.2%: Technology One results, Brickworks update, gold miners sink

Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, RURALFUNDS STAPLED, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool Australia has recommended Sonic Healthcare Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX tech shares have been some of the brightest stars in ASX investors eyes in 2020. The S&P/ASX All Technology Index (ASX: XTX) is up more than 32% year to date (at the time of writing). That includes the impact of the share market crash/bear market we saw back in March. If you take the index’ returns since 23 March, the returns are even more staggering – more than 127% at the time of writing.

But with companies in this index such as Afterpay Ltd (ASX: APT) rising more than 200% since the start of the year, many investors in the tech space might find themselves getting nervous with money still on the table.

That’s a view that is justified, if reporting from the Australian Financial Review (ASFR) this week is to be believed. The AFR reports that Andrew Brown, fund manager at hedge fund East 72, is reminded of the ‘dot.com bubble’ when looking at the current state of the ASX tech sector. Calling tech valuations “still crazy”, Mr Brown colourfully commented, “at one stage last week, Afterpay was worth more than Coles. I don’t care where you come from, that’s plain stupid.”

Are ASX tech shares ‘stupidly’ overvalued?

According to the AFR, the fundie sees tech valuations as remaining dangerously high, as a cause of ultra-low interest rates and stimulus resulting in “zero-cost money”. He stated the following on this matter:

What it does is take away from people’s valuations disciplines. If you do a discounted cashflow using low-cost money it’s going to come out whatever you want. So people just put a finger in the air and judge the business model. That’s what’s gone on in buy now, pay later.”

Mr Brown foresees 2021 as being a difficult year for the ‘hero companies’ of 2020:

Things started to really pick up for the online retailers around this time last year, with the Black Fridays and coronavirus. So it’s going to get really tough for them as we get into the first and second quarters [of 2021] as they’re cycling off COVID.

Mr Brown is instead looking to what investors might describe as ‘traditional’ value shares. He notes the effects of the Pfizer coronavirus vaccine news, as well as the “steepening in the US yield curve” in the bond markets, that give the opportunity to “buy a dollar for 70 cents”.

He names Seven West Media Ltd (ASX: SWM) as one such share, telling the AFR that it’s “one of those sum of the parts type things you have to do a bit of homework on”. Mr Brown likes Seven because “they have a lot of assets on the balance sheet that might be sold”. If Mr Brown is to be believed, sometimes it’s the simple things that are most worthy of attention.

More reading

• 10 most searched shares in Australia
• 5 things to watch on the ASX 200 on Friday
• CBA and Zip were among the most traded shares on the ASX last week
• Why the Afterpay (ASX:APT) share price is sliding lower
• The 13 ASX shares that could have doubled your money in 2020

Motley Fool contributor Sebastian Bowen owns shares of Pfizer. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Last week saw a large 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:

Jumbo Interactive Ltd (ASX: JIN)

According to a note out of Goldman Sachs, its analysts have retained their buy rating and $14.50 price target on this online lottery ticket seller’s shares. The broker believes the next 12 to 24 months could be catalyst rich for its share price. These catalysts include the completion of the LotteryWest agreement, further contract wins domestically and offshore, and a normalisation and improvement of the jackpot sequence. In respect to the latter, it notes that there is a strong correlation between transaction value, revenue growth, and trading multiples with the number of large jackpots. So, given that the expectations for jackpots are low currently, it feels this makes it an attractive time to invest. The Jumbo share price was fetching $13.83 on Friday.

Qantas Airways Limited (ASX: QAN)

Another note out of Goldman Sachs reveals that its analysts have reiterated their buy rating and $6.99 price target on this airline operator’s shares. According to the note, the broker believes that a change of focus from rival Virgin Australia has put Qantas in a strong position domestically as borders reopen. It expects Qantas to take full control of the high-end corporate and premium markets and for Jetstar to take the low-cost, price sensitive leisure end of the market. The Qantas share price ended the week at $5.52.

TechnologyOne Ltd (ASX: TNE)

Analysts at Morgans have retained their add rating and increased the price target on this enterprise software company’s shares to $9.99. The broker made the move following the release of the company’s FY 2020 result last week. It was pleased to see TechnologyOne deliver a better than expected profit. In addition to this, it notes that management’s outlook for FY 2021 is positive. Morgans is forecasting more strong annual recurring revenue (ARR) growth over the next 12 months. The TechnologyOne share price was changing hands for $9.20 at Friday’s close.

More reading

• Is the Qantas (ASX:QAN) share price heading to $7.00?
• 5 things to watch on the ASX 200 next week
• Is the Qantas (ASX:QAN) share price flying closer to recovery?
• ASX 200 drops on Friday
• Why Harvey Norman, Northern Star, Stockland, & TechnologyOne shares are charging higher

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 Jumbo Interactive Limited. The Motley Fool Australia has recommended Jumbo Interactive Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Qantas Airways Limited (ASX: QAN) share price has been a strong performer in November.

Since the start of the month, the airline operator’s shares have gained an impressive 32%.

Can the Qantas share price go higher from here?

One leading broker that believes there are still more gains ahead for the Qantas share price is Goldman Sachs.

According to a note out of the investment bank, its analysts have just reiterated their buy rating and $6.99 price target on its shares.

This price target implies potential upside of 26.5% for the Qantas share price over the next 12 months.

Why is Goldman bullish on Qantas?

Goldman Sachs has previously highlighted that the risks to a domestic market reopening were diminishing and that it had become more confident in a reopening pre-Christmas.

Last week there has been major progress on this front with the NSW-Victoria border reopening on 23 November, and the Queensland government announcing that it would re-open to NSW and Victoria from 1 December.

Its analysts feel this is great news for airlines and particularly for Qantas. This is because rival Virgin Australia has closed its Tiger brand and is committed to retaining a third of the domestic market capacity share. This is down from ~40% pre-COVID, including the Tiger brand.

The broker believes this gives “breathing space for Qantas to gain market share as domestic market re-opens.”

It commented: “The full scale reopening of the east coast states marks a major advance in the Australian aviation market recovery. Movements between NSW, Victoria and Queensland represent c.80% of total air travel, so the opening of these borders was necessary to facilitate a material recovery of the domestic market. As indicated the airlines have moved rapidly to schedule additional capacity and launch renewed marketing campaigns.”

“The key takeaway from the most recent Virgin Australia commentary is the latest confirmation that it will retreat to its previous market position as a mid-market carrier, targeting SME’s and premium leisure travelers,” it added.

Goldman Sachs sees this as a big win for Qantas and its Jetstar brand, essentially handing it full control of some key markets.

Goldman said: “The plan effectively hands back to Qantas full control of the high-end corporate and premium markets, and to Jetstar the low-cost, price sensitive leisure end of the market.”

This is positive for three reasons.

“With limited competition at these ends of the market during the early phase of the recovery we believe QAN will be well-placed to: (i) manage available capacity to meet demand, (ii) set ticket pricing; and (iii) apply appropriate discounting, to ensure profitable utilisation,” it explained.

At present, Goldman Sachs is forecasting a 50% recovery in domestic travel by Christmas. Though, it acknowledges that there is upside risk to its forecasts given the pent up demand.

More reading

• Top brokers name 3 ASX shares to buy next week
• 5 things to watch on the ASX 200 next week
• Is the Qantas (ASX:QAN) share price flying closer to recovery?
• Why the Webjet (ASX:WEB) share price is soaring 6%
• Why Origin, Qantas, Webjet, & Westpac shares are storming higher

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The EML Payments Ltd (ASX: EML) share price has recovered a lot of the lost ground since the COVID-19 crash. It has risen by 168% since the bottom of March, however it’s actually still down by 37% from before the COVID-19 crash.

What is EML Payments?

EML Payments is a business that offers a wide variety of payment services. It has general purpose reloadable offerings such as gaming payouts with white label gaming cards, salary packaging cards, commission payouts and rewards programs. EML Payments also offers physical gift cards, shopping centre gift cards and digital gift cards. Finally, it offers virtual account numbers.

What happened during the worst of COVID-19?

FY20 was a record year for EML Payments. It generated a record underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $32.5 million, excluding acquisition costs for buying Prepaid Financial Services (PFS). EML said that it had a strong financial performance during the first eight months of the year before COVID-19 impacted trading conditions. The physical gift cards were hit, though online retailers provided some offset.

EML said that it had signed and launched with major new customers in all its verticals with the sales pipeline momentum evident in all markets. In FY21 it’s seeing more companies seeking digital payment solutions as part of a global trend to move away from cash payments.

What happened in the latest quarter?

EML Payments recently gave an update for the first quarter of FY21 for the three months to 30 September 2020.

It said that first quarter revenue was $40.6 million, up 75% over the prior corresponding period and it was 20% higher than the fourth quarter of FY20. It also said that its EBITDA of $10 million was up 215% compared to the prior corresponding period and up 69% compared to the fourth quarter of FY20.

Historically, the first quarter of the financial year is the weakest. Cost control initiatives helped reduce cash overheads by $0.7 million over the prior corresponding period, excluding PFS.

The gift and incentive yield was ahead of expectations at 5.98% due to improved trading in shopping centre programs. Trading through the three months to December is crucial to the results of this segment.

The general purpose reloadable yield was in line with expectations at 1.1%, the same as the previous quarter, with a stable program mix. Excluding PFS, EML grew gross debit volume (GDV) by 16% compared to the prior corresponding period, driven by Australian payroll and gaming payout volumes.

The virtual account numbers saw GDV recover in the FY21 first quarter, with growth of 23% compared to the fourth quarter of FY20. It was in line with the prior corresponding period.

In terms of other growth avenues for the company, EML Payments is expanding to include non-card payments and open-banking payments. It’s going to invest $10 million to $15 million on its technology and platform over 2021 and 2022.

Is the EML share price a buy?

EML is currently rated as a buy by the Motley Fool Million Dollar Portfolio investment service.

According to estimates on Commsec, the EML Payments share price is trading at 24x FY23’s estimated earnings.

More reading

• 3 compelling ASX payment shares rated as buys
• Top brokers name 3 ASX shares to buy next week
• Are these 2 COVID-hit ASX shares worth buying?
• ASX 200 Weekly Wrap: ASX 200 has another shocker as US election approaches
• These were the worst performing shares on the ASX 200 last week

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends EML Payments. The Motley Fool Australia owns shares of and has recommended EML Payments. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Are you looking to buy some dividend shares next week? Then listed below are two shares that might be worth considering.

Here’s why they are being tipped as dividend shares to buy:

Accent Group Ltd (ASX: AX1)

The first dividend share to look at is Accent. It is a leading footwear-focused retailer which owns a number of retail store brands such as HYPE DC, Platypus, The Athlete’s Foot, and Sneaker Lab. It has also just launched a couple of new brands, Australian Stylerunner and Pivot. This is part of its store expansion plan, which is aiming to add approximately 80 new stores in FY 2021.

Last week Accent held its annual general meeting and released a trading update. That update revealed that the company’s sales for the first 20 weeks of FY 2021 are well ahead of its expectations. Excluding its Auckland and Victorian stores, Accent’s like for like sales are up 15.7% over the period. Its online sales have been even stronger thanks to the shift to online shopping. It recorded a 129% increase in sales compared to the same period last year.

This update caught the eye of analysts at Citi. In response to its update, its analysts upgraded the retailer’s shares to a buy rating with an improved price target of $2.09. And while its shares have now reached this level, they still offer a generous trailing 4.4% dividend yield.

Bravura Solutions Ltd (ASX: BVS)

Bravura Solutions is a leading provider of software products and services to the wealth management and funds administration industries. It is the company behind the Sonata wealth management platform, the Rufus transfer agency solution, the Midwinter financial planning solution, and the recently acquired Delta Financial Systems.

The Bravura share price has come under pressure this year due to the pandemic and its impact on its performance in FY 2021. Management advised that its earnings could be flat year on year. While this isn’t terrible, all things considered, it’s the 80% weighting to the second half which has investors concerned. 

Analysts at Goldman Sachs think investors should accept this short term pain due to the potential for significant long term gains. It believes Bravura is well positioned due to its strong market position, high degree of recurring revenue, and its emerging microservices ecosystem strategy. It has a buy rating and $5.00 price target on its shares. It is also forecasting a ~10.6 cents per share dividend in FY 2021. Based on the current Bravura share price, this represents a 3.2% dividend yield.

More reading

• Why Beach, Bravura, Flight Centre, & Treasury Wine shares are dropping lower
• Is the Bravura Solutions (ASX:BVS) share price a buy?
• Top brokers name 3 ASX shares to buy today
• Why Coles and this ASX dividend share are buys for income investors
• Here’s why the Bravura Solutions (ASX:BVS) share price raced higher today

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 Bravura Solutions Ltd. The Motley Fool Australia has recommended Accent Group and Bravura Solutions Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Although the S&P/ASX 200 Index (ASX: XJO) finished the week softly, it couldn’t stop it from recording another solid weekly gain. The benchmark index rose 1% over the five days to 6,601.1 points.

Another busy five days is expected next week. Here are a few things to watch:

ASX 200 futures pointing higher.

The Australian share market looks set to start the week on a very positive note. According to the latest SPI futures, the ASX 200 is expected to rise 39 points at the open tomorrow. This follows a solid end to the week on Wall Street on Friday, which saw the Dow Jones rise 0.1%, the S&P 500 climb 0.25%, and the Nasdaq jump 0.9%.

Collins Foods half year result.

The Collins Foods Ltd (ASX: CKF) share price will be one to watch on Tuesday when it hands in its half year results. The KFC and Taco Bell operator has been a positive performer during the pandemic and delivered strong sales and earnings growth in FY 2020. Expectations are high for FY 2021, with more of the same being forecast in the first half. Investors will also be keen to see how its European businesses are faring given the rising COVID cases on the continent.

Zip Co AGM.

The Zip Co Ltd (ASX: Z1P) share price could be on the move on Monday when it holds its annual general meeting. While the buy now pay later provider only recently released a trading update, it could potentially provide investors with an idea of how it has performed in November and during the Black Friday sales event. In addition, the company could update the market on its international expansion plans and progress.

Premier Investments AGM.

Smiggle, Peter Alexander, and Just Jeans owner, Premier Investments Limited (ASX: PMV), is holding its annual general meeting on Friday. It was a surprisingly strong performer in FY 2020 thanks to its online sales growth. Premier Investments reported a 29% increase in net profit after tax to $137.8 million. Investors will no doubt be keen to hear whether this momentum has carried over into the new financial year.

Qantas rated as a buy.

The Qantas Airways Limited (ASX: QAN) share price could be heading higher next week according to analysts at Goldman Sachs. They have just reiterated their buy rating and $6.99 price target on the company’s shares. The broker believes that a change of focus from rival Virgin Australia has put Qantas in a strong position domestically as borders reopen.

More reading

• Are gold and bitcoin both ‘safe havens’?
• Is the Qantas (ASX:QAN) share price flying closer to recovery?
• These were the worst performing ASX 200 shares last week
• These were the best performing ASX 200 shares last week
• Are near-zero interest rates the reason the ASX 200 is surging in 2020?

James Mickleboro owns shares of Collins Foods Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool Australia has recommended Collins Foods Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Obtaining a growing passive income in retirement may be more straightforward than many people realise.

Certainly, the recent stock market crash may dissuade some investors from buying shares. They may decide that other less risky assets offer more stability.

However, investing regularly in high-quality stocks at low prices over the long run could lead to a surprisingly large retirement nest egg. Therefore, even if you have no retirement savings at 50, now could be the right time to start buying a diverse range of stocks.

Investing money in cheap shares

A portfolio of shares could act as a solid vehicle through which to obtain a passive income in retirement. The stock market has a long track record of delivering annual total returns that are in the high-single digits. At the present time, it may be possible to achieve an even higher rate of return due to low valuations that are on offer across a variety of sectors. Buying cheap shares may allow you to benefit from a likely long-term recovery that could have a positive impact on your retirement plans.

At the same time, other investment opportunities may have become more limited since the start of the year. An uncertain economic environment means that policymakers may retain an accommodative monetary policy over the coming years to stimulate GDP growth. This may mean that investing money in bonds or cash fails to improve your spending power over the long run. Meanwhile, high house prices and gold’s strong performance this year could limit their scope to produce capital returns that lead to a large retirement nest egg.

Regular investing for a passive income

Regularly buying cheap shares could lead to a surprisingly large passive income in retirement. Regular investment means that you stand to benefit from future bear markets between now and your retirement, since you will continue to invest money in stocks through a range of market conditions. As such, it is imperative to ignore short-term stock market movements, and instead focus on the long-term potential of your portfolio.

Furthermore, investing in a diverse range of companies can reduce your overall risks. Some companies may fail to deliver impressive returns over a long time period due to factors that could not be anticipated by an investor ahead of time. By holding a variety of companies, you can reduce your dependency on a limited number of businesses for returns.

Starting to invest today

Starting to invest money in shares today could produce a worthwhile passive income by the time you retire. For example, investing $750 per month from age 50 to 65 could produce a portfolio valued at $260,000 if the stock market continues to deliver total returns of 8% per annum (as it has done over recent decades). From this, a 4% annual withdrawal could produce an income of over $10,000.

As such, now could be the right time to start investing regularly in a range of stocks. Doing so may improve your retirement prospects.

More reading

• 2 of the best ASX shares for your retirement portfolio
• 2 top ASX blue chip shares to buy
• Why stock market crash round 2 could be a rare chance to make a million
• Are gold and bitcoin both ‘safe havens’?
• Is the Webjet (ASX:WEB) share price a buy 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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post No savings at 50 and worried about retirement? Here’s how I’d make a growing passive income appeared first on Motley Fool Australia.

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