With earnings season on the horizon, I thought I would take a look at what is expected from some of Australia’s most popular companies.

On this occasion, I’m going to take a look at telco giant Telstra Corporation Ltd (ASX: TLS).

What is expected from Telstra in the first half of FY 2021?

According to a note out of Goldman Sachs, it believes 2021 will be a pivotal year for the ANZ telecom sector.

It notes that mobile revenue and earnings growth are set to return in the second half, supported by ongoing rationality. It is expecting further price rises from Optus by July.

In addition, following the completion of the NBN in December, Goldman believes industry fixed earnings will begin to stabilise late in the year.

The broker expects the improving fixed and mobile earnings’ outlook to drive a re-rating in the sector and support shareholder returns. This will be supplemented by an attractive dividend yield, with further upside potential through asset sales such as Telstra’s TowerCo.

In respect to its half year update, Goldman Sachs is expecting Telstra to report an 8% decline in revenue to $12,318 million.

Things will be a little softer on the earnings front. The broker is forecasting a 15% decline in earnings before interest, tax, depreciation and amortisation (EBITDA) to $3,971 million and a 26% reduction in net profit after tax to $941 million.

From this, its analysts are expecting Telstra to pay out an 8 cents per share fully franked dividend.

What about the full year?

Goldman will also have its eyes on its guidance for the full year.

At present, the broker is estimating headline EBITDA of $7,672 million versus guidance of $7,200 million to $8,000 million. This compares to the consensus estimate of $7,655 million.

It is also forecasting underlying EBITDA of A$6,809 million versus guidance of $6,500 million to $7,000 million and capex (excluding spectrum) of $2,947 million versus guidance of $2,800 million to $3,200 million.

Finally, a 16 cents per share fully franked dividend is expected for FY 2021. Based on the latest Telstra share price, this represents a 5% dividend yield.

Goldman Sachs has a buy rating and $3.80 price target on the company’s shares.

More reading

• 2 cheap ASX shares to buy today
• 5 things to watch on the ASX 200 on Wednesday
• Experts want Big Tech to stop the spread of COVID-19 misinformation
• ASX 200 Weekly Wrap: Change in America spurs ASX 200 higher
• 2 blue chip ASX dividend shares to buy next week

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.

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If you have money to invest, it’s never been easier to buy shares.

Compared to years gone by, we have so much information about public companies available free via the internet.

It was only a couple of decades ago that potential investors had to pay a fee to get hard copy books of company financials delivered to them.

And with smartphone apps lowering the cost and minimum transaction thresholds, pretty much anyone can join the market now.

But selling is a much more difficult proposition. It always has been, and remains so.

How do you know when to sell a stock? Do you sell when it has returned a certain percentage? Do you sell if the price goes down, to save yourself from further losses?

SG Hiscock portfolio manager Hamish Tadgell this week gave some advice on selling for The Motley Fool readers. 

His fund is a high conviction fund, which means it goes hard on a small set of companies it really believes in. So saying goodbye to one is a massive decision.

Tadgell has 3 criteria that are triggers to sell:

Can risk-return improve?

Risk-return is the quantification of the old investment axiom that dictates higher potential returns await those who are willing to put up with more risk.

If a company has become more risky without the returns proportionally rising, or its returns deteriorate, it might time to rethink its risk-return. Is it better or worse than when you bought it?

“That often comes down to a valuation argument, or it might be that there’s a better competing idea to put in the portfolio,” said Tadgell.

Impairment of earnings power

Whether it’s due to an internal or external shock, it could be time to sell if a company’s ability to rake in earnings is impaired.

“Has there been a loss of competitive position or a decline in the earnings predictability for some reason?” Tadgell said.

“Or a regulatory change or something like that, which is impairing the potential earnings power?”

An example might be computer chip maker Intel Corporation (NASDAQ: INTC). For many decades it dominated the world with both PC and Apple Inc (NASDAQ: AAPL) computers using its processors.

Then smartphones rose to prominence 14 years ago, allowing smaller rivals like Advanced Micro Devices Inc (NASDAQ: AMD) and NVIDIA Corporation (NASDAQ: NVDA) to gain a new edge. 

Intel was slow to realise the power of mobile computing and even lost the Apple account in recent years.

“AMD is a lot smaller and more nimbler, and the share price has been on a tear,” Nucleus Wealth head of investments Damien Klassen told The Motley Fool in November. 

“Whereas the Intel price has been going in the opposite direction.”

Loss of confidence in leadership

Getting blindsided by a company decision can turn the stomachs of many shareholders.

Public companies by definition are supposed to be transparent, so a rude surprise would have to raise the question of selling.

“Have we lost confidence in management’s ability to build value?” asked Tadgell.

“Management change or if management does something which is out of character with their strategy or that they’ve suggested to us they’ll do — then that will change us to consider selling.”

More reading

• These 2 Nasdaq Giants Are at All-Time Record Highs — and They’re Not Slowing Down
• Amazon’s ad business will dominate the 2020s
• Does Netflix have a competitive advantage?
• Why Tesla (NASDAQ:TSLA) shares were last year’s worst short bet
• Here are the US shares ASX investors are buying

Tony Yoo 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 Apple and NVIDIA. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Intel. The Motley Fool Australia has recommended Apple and NVIDIA. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Share prices of Airbnb Inc (NASDAQ: ABNB) have taken off since the company’s initial public offering (IPO) on 10 December. Despite listing at a tumultuous time for the travel industry, Airbnb’s shares currently trade at $180.40 — more than double its IPO price of $68 a share. At $108.44 billion, Airbnb’s market capitalisation has already eclipsed the combined valuations of rivals Booking Holdings Inc (NASDAQ: BKNG) and Expedia Group Inc (NASDAQ: EXPE).

Investors who missed the rally may wonder if they should chase up Airbnb’s soaring stock price. But first, they need to understand why Airbnb is getting so much love. 

Airbnb has a highly scalable and resilient business model

Alongside Uber, Airbnb is seen as the poster child of the sharing economy. It runs a software platform connecting hosts (people who own homes) and users (those looking to stay in a particular area). This highly capital-efficient business model is one of its biggest merits.

By turning unused bedrooms into an alternative to hotel accommodations, Airbnb has made travel a less expensive affair. In the process, it has also unlocked a valuable source of extra income for homeowners. Since Airbnb was founded in 2008, hosts have earned over $110 billion through the platform.

The scalability of Airbnb’s business model has helped revenue grow from $919 million in 2015 to $4.8 billion in 2019, an over fourfold increase.

Along the way, the company has become a sort of legend among start-ups. After scoring seed funding from Y Combinator in 2009, Airbnb raised capital from a Who’s Who list of venture capitalists including Sequoia Capital, Kleiner Perkins Caufield & Byers, and Andreessen Horowitz.

At the time, Airbnb’s potential upside was obvious. But investors knew little about how well it would survive black swan, economy-crushing situations such as a pandemic. Then COVID-19 hit.

Lockdowns killed off long-distance travel, and Zoom Video Communications calls took over face-to-face business meetings. For many investors, this might have sounded the death knell for airlines and other travel industry players. Shares of Airbnb rivals Expedia and Booking Holdings dropped to multi-year lows.

By April 2020, Airbnb’s bookings had slumped 72% year on year. It was forced to slash a quarter of its workforce, and raise emergency funding. But bookings have since recovered to 70% of pre-COVID levels. How has this happened?

While COVID-19 shut down international travel, many have kept moving within national borders. People just don’t like to stay home, but they don’t want to be in crowded hotel lobbies either. 

Furthermore, a new Airbnb use case emerged as people began combining work-from-home and travel, resulting in longer stays. According to a report in The Economist, the average length of an Airbnb stay in June 2020 was a week, nearly double what it was pre-COVID. The share of domestic reservations also more than doubled to over 80%, while stays less than 200 miles from home generated 56% of bookings, up from 33%.

All this has proved the resiliency and flexibility of Airbnb’s business model — even in the face of wild demand fluctuations.

Seizing a multi-trillion dollar market opportunity

Airbnb is a very recognizable brand in the global travel industry, where it estimates its total addressable market is worth $3.4 trillion. In 2019, the company recorded $38 billion in gross booking value — just 1% of this market opportunity.

To expand its business, Airbnb is slowly transforming from a bed-and-breakfast provider into a global travel marketplace working with airlines, hotels, and tour guides. 

There are good reasons to believe Airbnb can keep growing, thanks to its massive global scale. This includes 4 million hosts who’ve placed over 5 million listings across 220 countries and regions. This huge selection naturally attracts and retains users, which in turn draws more hosts onto the platform. This network effect will drive a rising number of users, hosts, and listings toward Airbnb, sustaining its long-term growth — while reducing the amount it needs to spend on marketing.

Despite the strengths of Airbnb’s business model, there are risks investors shouldn’t ignore. For instance, Airbnb still faces the threat of a prolonged COVID-19 pandemic. While vaccines are now available, cases remain high and are on a rising trend. That means international travel is still severely restricted.

In coming years, Airbnb will increasingly go head-to-head with industry bigwigs like Booking.com, Tripadvisor, and Expedia. Meanwhile, companies like Hostfully are giving hosts a way to manage listings across multiple platforms.

All this could prevent Airbnb from turning profitable anytime soon as it plows cash into retaining users and attracting new ones. The company has never had a full year of profitability.

Promising prospects, but a sky-high valuation

By now, it’s quite obvious Airbnb is a wonderful business that’s poised to grow over the long term — post-COVID-19, of course. Given its explosive potential, Airbnb was never going to trade at a cheap valuation. 

But at $180 a share, Airbnb trades at 30 times its trailing 12-month revenue. That’s jaw-dropping, considering Facebook — the biggest social media company in the world — trades at barely half that multiple.

Rational investors will look for a good entry point promising adequate returns, and some margin of safety. Right now, they are better off not hitting the road with Airbnb stock.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• Will the ASX see a share market bubble in 2021?

Lawrence Nga has no position in any of the stocks mentioned. 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. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Booking Holdings, Facebook, TripAdvisor, and Zoom Video Communications. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Airbnb, Inc. and Uber Technologies. The Motley Fool Australia has recommended Booking Holdings, Facebook, TripAdvisor, and Zoom Video Communications. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Is Airbnb stock a buy now? appeared first on The Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Wesfarmers Ltd (ASX: WES) share price climbed 1.7% on Monday to start the week at a new record high.

Shares in the Aussie conglomerate closed the day at $54.34 per share, just shy of the $54.48 all-time high set during Monday’s session.

Why is the Wesfarmers share price climbing higher?

The S&P/ASX 200 Index (ASX: XJO) had a solid start to the week, climbing 0.4% higher to a new 11-month high. The benchmark Aussie index closed the day at 6,824.70 points. That’s its highest level since the start of the coronavirus-induced bear market in late February 2020.

The Wesfarmers share price was one of those ASX 200 shares propelling the index higher. Monday’s gains came as Australia’s medical regulator approved the first COVID-19 vaccine for use in Australia.

Wesfarmers is a conglomerate, meaning it owns and operates many companies across different sectors. These include businesses in the mining, gas, retail and insurance sectors.

The vaccine news on Monday saw many ASX shares edge higher. The Wesfarmers share price gained 1.7% to finish the day at $54.34 on the back of Monday’s investor optimism.

This means the Aussie conglomerate now boasts a market capitalisation of $61.6 billion. Wesfarmers shares are trading at a price-to-earnings (P/E) ratio of 37.9 with a 2.8% dividend yield.

What else happened on the ASX on Monday?

Despite the S&P/ASX 200 Index climbing higher on Monday, it wasn’t all good news for investors.

The suspension of the Australia-New Zealand travel bubble saw ASX travel shares stumble on Monday afternoon. The discovery of the highly infectious South African strain of COVID-19 in New Zealand prompted a temporary change to the quarantine-free travel arrangement.

So, while Wesfarmers shares climbed higher to start off the week, ASX travel shares fell lower. These included the Webjet Limited (ASX: WEB) share price which closed 3.8% lower at $4.77 per share.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• ASX property stocks are likely to beat property investments in 2021
• 2 ASX 200 shares to buy for dividends
• Will Joe Biden’s election help an Australia-China reset?
• These blue chip ASX shares just hit multi-year highs

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

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Although the Australian share market is trading at an 11-month high, not all shares are performing as positively.

Two ASX shares which are still trading materially lower than their 52-week highs are listed below. Are these beaten down shares too cheap to ignore?

Appen Ltd (ASX: APX)

The Appen share price has been well and truly out of form in recent months and is now trading almost 50% lower than its 52-week high. This has been driven largely by a recent update which revealed that demand for its artificial intelligence (AI) data services from major tech giants has softened due to COVID-19. In addition to this, the appreciation of the Australian dollar has also weighed on the company. It generates the vast majority of its revenue in the United States.

While this is undoubtedly disappointing, management is confident that demand will rebound strongly once these headwinds ease and tech giants start investing back in AI projects again.

One broker that feels the weakness in the Appen share price is a buying opportunity is Macquarie. Based on its estimates, Appen’s shares are changing hands for 31x FY 2021 earnings. While this may not be conventionally cheap, it appears to believe it is great value given its strong long term growth potential thanks to the expected increase in AI spending in the future. 

Macquarie has an outperform rating and $27.00 price target on the company’s shares.

Telstra Corporation Ltd (ASX: TLS)

Another ASX share that could be cheap is this telco giant. The Telstra share price is currently trading 18% lower than its 52-week high. This share price weakness has been caused by COVID-19 headwinds and concerns over the sustainability of its dividend.

In respect to the latter, some investors are not convinced that Telstra will be able to maintain its 16 cents per share dividend. However, it is worth noting that the Telstra board has revealed that it will do whatever it can to maintain this dividend.

In addition to this, Telstra has plans to split its business into three separate entities. Management believes the restructure will allow Telstra to take advantage of potential monetisation opportunities for its infrastructure assets. This could unlock additional value for shareholders.

These plans have gone down particularly well with Macquarie. It believes its shares are undervalued after looking through its assets and estimating what it could receive for them. The broker also believes Telstra can continue to pay a 16 cents per share dividend for the foreseeable future.

In light of this, Macquarie has put an outperform rating and $4.00 price target on its shares.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Experts want Big Tech to stop the spread of COVID-19 misinformation
• ASX 200 up 0.35%: Afterpay & Appen push higher, big four banks rising
• ASX 200 Weekly Wrap: Change in America spurs ASX 200 higher
• 2 outstanding ASX tech shares to buy today

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

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Are you looking to add a growth share or two to your next month? Then take a look at the two ASX shares listed below.

Here’s why they could be growth shares to buy in February:

Aristocrat Leisure Limited (ASX: ALL)

The first growth share to look at is Aristocrat Leisure. It is one of the world’s leading gaming technology companies with a portfolio of industry-leading poker machines and mobile games.

Aristocrat Leisure has had its growth stifled over the last 12 months due to the pandemic. But with casinos around the world opening, demand for its poker machines is expected to rebound and support its strong-performing digital business.

Last week UBS retained its buy rating and put a $35.50 price target on its shares. Its research appears to indicate that the company’s digital segment is thriving and delivered exceptionally strong growth during the final quarter of 2020. This was largely due to its social gaming portfolio, which it estimates grew over 40% year on year during the three months.

Zip Co Ltd (ASX: Z1P)

Another growth share to look at is Zip. It is a leading buy now pay later provider with operations across several key markets such as Australia, the United Kingdom, and the United States.

Zip has been growing its customer numbers, merchants, and transaction value at a rapid rate over the last few years. This has been underpinned by the increasing popularity of the buy now pay later payment method with consumers and merchants, the decline in credit card usage, the shift online, and its international expansion.

Pleasingly, the company’s strong form has continued in FY 2021, with Zip recently reporting stellar second quarter growth. For the three months ended 31 December, Zip delivered a 103% increase in transaction volume to a record $1.6 billion. A key driver of this growth was its US-based QuadPay business, which recorded a 217% increase in transaction volume to $673.1 million. QuadPay also reported a 180% lift in customer numbers to 3.2 million and a 655% jump in merchants to 8,400.

This update went down well with analysts at Ord Minnett. In response to the announcement, the broker retained its accumulate rating and increased its price target to $7.80.

More reading

• Leading brokers name 3 ASX shares to sell today
• These ASX 200 shares are on fire in 2021
• ASX 200 Weekly Wrap: Change in America spurs ASX 200 higher
• These were the best performing ASX 200 shares last week
• Brokers name 3 ASX shares to buy right now

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

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There are some ASX shares that a number of brokers like and have rated as ‘buys’

It can be quite hard to find good businesses that are trading at a good price. One investor might say that BHP Group Ltd (ASX: BHP) is a good buy, whilst another might say that Woolworths Group Ltd (ASX: WOW) is the share to buy.

Brokers are constantly looking at businesses and share prices, thinking about what would be a good investment. There are various brokers out there like Bell Potter, Macquarie Group Ltd (ASX: MQG) and UBS that provide different recommendations about shares.  

With that in mind, these ASX shares are liked by more than one broker. Of course, this still isn’t a guarantee of success – they could all be herding together.

Reject Shop Ltd (ASX: TRS)

This ASX share is liked by at least three brokers.

In FY20 the discount retailer reported that its sales grew by 3.4% with comparable store sales growth of 3.5%. In the first half comparable sales rose 0.5% and in the second half they rose 7.1%.

Before AASB 16, FY20 earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 30.1% to $23.7 million. It generated $4.5 million of earnings before interest and tax (EBIT), up from a loss of $23.3 million in FY19, and it made $2.7 million of net profit after tax (NPAT), up from a $16.9 million loss in FY19.

Reject Shop made free cashflow of $61.6 million in FY20, up from an outflow of $1.9 million in the prior corresponding period. The company ended the financial year with $92.5 million of cash.

In FY21 the ASX share’s board is considering whether to return to paying dividends.

It said at its AGM that it is/was considering exiting rental leases where the occupancy costs are above the benchmark if the rent can’t be renegotiated lower. It has also been working on improving its inventory. Reject Shop has been reducing the number of different items (SKUs – stock keeping units) being sold. At the time of the AGM, management said that the reduction of SKUs was already increasing sales per SKU, which is resulting in better availability for customers and improves buying power.

Another benefit of the improved inventory is that it will enable opportunities for the ASX share to standardise ways of working through the supply chain and then into stores.

Once the company’s cost base is set at a sustainable level, Reject Shop expects to pursue store network expansion and e-commerce. It’s currently trialling an e-commerce offering.

Charter Hall Group (ASX: CHC)

Charter Hall is an ASX share that owns and manages real estate for investors. It invests across the real estate spectrum of sectors including office, industrial, retail and social infrastructure.

It operates a number of listed and unlisted funds including Charter Hall Retail REIT (ASX: CQR), Charter Hall Long WALE REIT (ASX: CLW) and Charter Hall Social Infrastructure REIT (ASX: CQE).

Charter Hall says that it has 1,300 properties, with $45 billion of funds under management (FUM), an occupancy rate of 97.5% and a weighted average lease expiry of 8.9 years.

The business has been regularly making acquisitions for its funds to increase FUM. For example, Charter Hall recently bought the flagship David Jones store in Sydney for $510 million, with the parent business retaining 25% ownership. The purchase price reflects a 5% initial yield based on the initial annual net rent of $25.5 million.

More reading

• ASX 200 up 0.4%: Afterpay & Zip charge higher, NAB rises, Harvey Norman hits new high
• ASX 200 rose 1.6%
• 3 small cap ASX shares to buy for 2021
• ASX 200 down 0.8%: Big four banks and tech shares drag the market lower

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

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Next week the Reserve Bank of Australia will meet to discuss the cash rate. According to the latest cash rate futures, the market is pricing in a 75% probability of a rate cut to zero.

This would be another blow for income investors, who will have to contend with even lower rates this year.

But never fear, the Australian share market and its countless dividend shares are here to save the day. Two ASX dividend shares that could solve your income needs are listed below. Here’s what you need to know about them:

Aventus Group (ASX: AVN)

The first dividend share to look at is Aventus. It is the largest fully-integrated owner, manager, and developer of large format retail centres in Australia, with a portfolio of 20 centres valued at $2.2 billion.

The company’s portfolio covers 536,000m2 in gross leasable area and features a diverse tenant base of 593 quality tenancies. From these, national retailers such as ALDI, Bunnings, and Officeworks represent ~87% of the total portfolio.

Goldman Sachs is positive on the company. It recently reiterated its buy rating and lifted the price target on its shares to $2.79. The broker notes that approximately 63% of its tenants are exposed to the household goods sector, which has been performing strongly during the pandemic.

Goldman estimates that it will pay a ~16.5 cents per share distribution this year. Based on the current Aventus share price, this represents a 6% yield.

Rio Tinto Limited (ASX: RIO)

If you’re not averse to investing in the resources sector, then you might want to look at Rio Tinto. Thanks to favourable copper and iron ore prices, this mining giant has been tipped to pay bumper dividends to investors in FY 2021.

For example, a recent note out of Macquarie reveals that it is expecting the mining giant to pay an ~$8.53 per share fully franked dividend in 2021.

Based on the current Rio Tinto share price, this represents a fully franked 7% dividend yield. The broker currently has an outperform rating and $125.00 price target on the company’s shares. 

More reading

• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 rises 0.4%
• ASX 200 Weekly Wrap: Change in America spurs ASX 200 higher
• What a dramatic day in the US could mean for ASX shares in 2021
• 2 outstanding ASX dividend shares to buy

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

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On Monday the S&P/ASX 200 Index (ASX: XJO) started the week strongly and charged higher. The benchmark index rose 0.35% to 6,824.7 points.

Will the market be able to build on this on Wednesday? Here are five things to watch:

ASX 200 expected to fall

It looks set to be a difficult day for the ASX 200 on Wednesday. According to the latest SPI futures, the ASX 200 is poised to open the day 30 points or 0.35% lower. This is despite it being a positive night of trade on Wall Street. In late trade the Dow Jones is up 0.1%, the S&P 500 is up 0.1%, and the Nasdaq index is up 0.2%.

Commonwealth Bank is Australia’s strongest brand

Commonwealth Bank of Australia (ASX: CBA) is now Australia’s strongest brand according to Brand Finance Australia’s analysis, courtesy of the AFR. Australia’s largest bank took the top spot from Optus. One of the worst performers was Rio Tinto Limited (ASX: RIO), which suffered a $3.5 billion reduction in its brand value.

Oil prices mixed

Energy producers such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) will be on watch after a mixed night for oil prices. According to Bloomberg, the WTI crude oil price is down 0.3% to US$52.62 a barrel and the Brent crude oil price has risen 0.1% to US$55.92 a barrel. Concerns about demand due to rising COVID cases has been weighing on prices.

Gold price softens

Gold miners such as Evolution Mining Ltd (ASX: EVN) and Saracen Mineral Holdings Limited (ASX: SAR) could come under pressure after the gold price dropped lower. According to CNBC, the spot gold price is up 0.35% to US$1,848.40 an ounce. US stimulus worries put pressure on the price of the precious metal.

Telstra given buy rating

The Telstra Corporation Ltd (ASX: TLS) share price is in the buy zone according to analysts at Goldman Sachs. The broker has put a buy rating and $3.80 price target on the telco giant’s shares. It believes Telstra is on course to achieve the mid to upper end of its earnings guidance in FY 2021. In light of this, it continues to forecast a 16 cents per share fully franked dividend this year.

More reading

• ASX property stocks are likely to beat property investments in 2021
• Experts want Big Tech to stop the spread of COVID-19 misinformation
• 2 ASX 200 shares to buy for dividends
• Will Joe Biden’s election help an Australia-China reset?
• ASX 200 rises 0.4%

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.

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The debate on whether you can get better bang for your investment buck in property or shares rages, but there are signs that ASX shares are still the place to be.

This is despite the S&P/ASX 200 Index (Index:^AXJO) struggling to break its record while some experts are predicting a 15% increase in house prices for 2021.

But lovers of property should take note. Australian real estate investment trusts (A-REITs) are tipped to deliver 18% total returns this year, reported the Australian Financial Review.

This is largely because ASX property stocks have largely lagged in the COVID-19 market recovery.

ASX property stocks trading at a discount

While ASX stocks like the Fortescue Metals Group Limited (ASX: FMG) share price, Afterpay Ltd (ASX: APT) and Kogan.com Ltd (ASX: KGN) share price surged to record highs as the ASX bounced, A-REITs underperformed the market by 6% in 2020.

But the analysts at Jefferies believe the tide is starting to turn. The bad news is largely reflected in share prices while not much of the good news is.

There is a disconnect in the market. Investors believe in the tailwinds that are supporting the bright outlook for our residential property market, but they haven’t really factored any of that into A-REITs.

This certainly puts an interesting spin on the ASX shares vs. property debate!

What’s good for the goose is good for the gander

One of these tailwinds are the record low interest rates and bond yields. These are inflating property prices.

The economic recovery from the COVID recession is also supportive of property, as is the rebound in the job market.

These factors are just as significant for A-REITs and they give Jefferies reason to believe ASX property stocks will play catch up later this year.

ASX property stocks vs. property investments

Of the 18% expected return, 4.7% of that will come from dividends, the AFR quoted Jefferies as saying.

To be fair, there are distinct differences between investing in property stocks and residential property. For one, many listed property groups are also exposed to office and retail properties.

The outlook for these segments are more convoluted. While employees are starting to return to their desks, demand for office space is unlikely to return to post-COVID levels.

The pandemic has also caused a de-rating in megamalls. Who wants to be in the middle of a crown these days when you can shop online from the safety of your sofa?

A-REITs to play catch-up in 2021?

This explains the weak performance of the Mirvac Group (ASX: MGR) share price, Scentre Group (ASX: SCG) share price and Vicinity Centres (ASX: VCX) share price – just to name a few.

But as mentioned earlier, these negatives are already reflected in current prices, according to Jefferies.

Further, rental collection is recovering and these groups own quality properties that the market is not fully appreciating.

Foolish takeaway

If Jefferies is right, it would make more sense to own ASX property stocks than brick and mortar, in my view.

For one, transaction costs are much lower when buying and selling shares. The capital outlay is also far more manageable for many.

I am not saying one asset class is better for everyone as this really depends on your circumstances. Diversification is also an important consideration.

But the expected returns from A-REITs does give food for thought.

More reading

• These ASX 200 shares are on fire in 2021
• 2 ASX 200 shares to buy for dividends
• Will Joe Biden’s election help an Australia-China reset?
• ASX 200 rises 0.4%
• Why ASX travel shares like Webjet (ASX:WEB) fell lower on Monday

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

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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