There are some ASX dividend shares that offer higher yields.

Here are three ideas to consider:

Brickworks Limited (ASX: BKW)

Brickworks is an ASX dividend share with one of the longest dividend records on the ASX. It hasn’t cut its dividend in over 40 years.

The business may be best known for its Australian building products divisions, but it’s actually the other assets that entirely support the Brickworks dividend.

Brickworks has a 50% stake of an industrial property trust along with Goodman Group (ASX: GMG). Brickworks supplies the land, which is excess to requirements, and then Goodman provides the necessary infrastructure works and the contacts with quality potential tenants.

One example of this arrangement working is the gigantic high-tech warehouse that is currently being built for Amazon in Sydney. Amazon is one of Goodman’s largest global tenants. Another big warehouse is also being built for Coles Group Ltd (ASX: COL). After those two warehouses are built, it’ll increase the gross assets of the trust by around $900 million to $3 billion. It’ll also grow the rental profit distributions to Brickworks by at least 25%.

The other asset supporting the Brickworks dividend is its approximate 40% holding of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). Soul Patts is an ASX dividend share itself, it owns a diversified portfolio with investments across telecommunications, building products, resources, financial services, listed investment companies (LICs) and agriculture.

At the current Brickworks share price it has a grossed-up dividend yield of 4.25%.

Charter Hall Long WALE REIT (ASX: CLW)

This is a real estate investment trust (REIT) that has long rental contracts with high quality tenants. It’s rated as a buy by the broker Citi.

At 31 December 2020, the ASX dividend share had a weighted average lease expiry (WALE) of 14.1 years, which was slightly up from 14 years at 30 June 2020.

It has tenants like Telstra Corporation Ltd (ASX: TLS), Australian government entities, BP, Woolworths Group Ltd (ASX: WOW), Inghams Group Ltd (ASX: ING), Coles and David Jones.

Those tenants are spread across property classes like telecommunication exchanges, service stations, agri-logistics, offices and long WALE retail.

In the FY21 half-year result which was just released, operating earnings per share (EPS) and the distribution per security grew by 3.6% to 14.5% cents.

The net tangible assets (NTA) increased by 5.1% to $4.70. It had balance sheet gearing of 29%, with look through gearing of 39.3%.

At the current Charter Hall Long WALE REIT share price, it has a FY21 distribution of at least 6.1% based on management guidance of operating EPS.

360 Capital REIT (ASX: TOT)

This is another REIT, it’s managed by 360 Capital Group Ltd (ASX: TGP).

The REIT ASX dividend share invests across the entire real estate industry to take advantage of varying market conditions in order to maximise returns for investors.

In a recent change of strategy, 360 Capital REIT is now focusing on equity investing in real estate assets and businesses, and exiting its debt investments.

One example of recent investment includes the $78.6 million investment into Irongate Group (ASX: IAP). 360 Capital REIT also announced it had agreed terms to become a major equity partner in an unlisted real estate funds management platform with settlement expected this month.

Based on the recurring nature of the income from the above investments, the REIT decided to provide guidance of 6 cents per unit for FY21. At the current 360 Capital REIT share price, that equates to a distribution yield of 6.8%.

More reading

• 2 ASX dividend shares rated strong buys by brokers
• ASX 200 rises 0.6%, Vocus jumps on takeover offer, Afterpay hits new record
• What’s moving the Charter Hall Long WALE (ASX:CLW) share price today?
• 2 ASX dividend shares with yields above 5%
• 2 secret ASX dividend shares with large yields

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, Telstra Limited, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 3 ASX dividend shares with higher yields appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/2Z4SxVb

Scott Phillips appeared on Sky News today to provide his take on the latest financial news.

Below, he discusses the day’s headline items, including bitcoin being propelled into the mainstream by Tesla’s pledge to accept the cryptocurrency as payment, and the welcome return of ASX dividend payments in 2021 after the COVID-induced squeeze last year.

https://fast.wistia.com/embed/medias/tfzajkjs1p.jsonphttps://fast.wistia.com/assets/external/E-v1.js

More reading

• How CEP Energy ‘world’s largest battery’ will shake up the energy market
• Bitcoin skyrockets to a new all-time high after Tesla invests $1.5 billion in the popular cryptocurrency
• ASX 200 Weekly Wrap: RBA unleashes ASX’s inner animal
• Should short selling be banned?
• Top brokers name 3 ASX shares to sell next week

Scott Phillips 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 Tesla. 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 Motley Fool CIO, Scott Phillips, talks to Sky News: Tesla’s bitcoin bandwagon, and ASX dividends back on menu appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3tI7730

The Aerometrex Ltd (ASX: AMX) share price has been a particularly positive performer on Tuesday.

In afternoon trade the aerial mapping company’s shares are up a sizeable 9% to $1.31.

Why is the Aerometrex share price surging higher?

Investors have been buying Aerometrex shares today following the release of an update on its US operations.

According to the release, the Nearmap Ltd (ASX: NEA) rival has signed its first enterprise client in the United States market. And while the company hasn’t named the customer, the release explains that it is a leading US Defence contractor.

In addition, although the financial impact of the sale is immaterial, management believes it is an exciting milestone in the company’s growth strategy.

It explained that the sale is for a specific project and has the potential to develop into a much larger program in the future.

In the meantime, Aerometrex is continuing to pursue large enterprise opportunities in the US and notes that it has been gaining traction.

Aerometrex’s Managing Director, Mark Deuter, commented: “The US market provides a tremendous growth opportunity for Aerometrex’s 3D modelling and aerial imagery. We have carefully planned out our growth strategy for the US market, and the signing of our first enterprise client in the US is an exciting step as we begin commercialising our technology in this market. We have been gaining good traction in the US and look forward to announcing further new client signings.”

Supporting this growth will be its team of trained sales and technical staff in the US. Its sales staff are located in California, Florida, and Denver. Whereas its imagery capture program is centred in Denver. All production and delivery services continue to be headquartered in Adelaide.

Management also revealed that despite the impact of COVID-19, it is proceeding with its US 3D capture program. It has now captured the downtown (Central Business District) areas of the City of Denver, Centennial, Orlando, and Miami. A capture program of San Francisco will be undertaken at the next available weather opportunity

More reading

• Better Buy: Alphabet vs The Trade Desk
• Countdown to launch of new ASX indexes for ESG boom
• Got cash to invest? Here are 3 ASX shares to buy
• BikeExchange (ASX:BEX) share price jumps 23% on ASX IPO
• How I’d identify the best shares to buy in a stock market recovery

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 Nearmap Ltd. The Motley Fool Australia has recommended Nearmap 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 the Aerometrex (ASX:AMX) share price is surging 9% higher appeared first on The Motley Fool Australia.

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

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.

Alphabet Inc‘s (NASDAQ: GOOG) (NASDAQ: GOOGL) Google and Trade Desk Inc (NASDAQ: TTD) are both in the digital ad business, an industry that is expanding rapidly as marketers move toward digital channels and measurable, data-driven campaigns. Over the last three years, both companies have outperformed the broader market, though The Trade Desk has surged more than 1,700%, while Alphabet is up just 84%. But which of these growth stocks is the better buy today?

Alphabet: The search giant

Alphabet’s Google has more than 90% search engine market share, ranking the company nearly 89 percentage points ahead of second-place Bing.

That nearly inconceivable level of success is something few companies ever achieve, but it’s just the tip of the iceberg for Alphabet. The company also owns the rights to Android, YouTube, and Chrome, all of which are market leaders in their own categories. This incredible network of content platforms has allowed Google to collect troves of consumer data – the kind of data that’s valuable to marketers.

Not surprisingly, Google’s many content platforms have allowed the company to claim the top spot in the US digital ad market, though investors should note that the company has lost significant ground recently. Even so, Google’s advertising business continues to generate mountains of cash – $147 billion in the past year. And that figure represents more than 80%  of the company’s total sales.

But Alphabet’s not done yet. Google Cloud Platform (GCP) ranks third globally among public cloud service providers. And the company’s reenergized, partner-based growth strategy has made Google Cloud the fastest-growing part of Alphabet’s business. In 2019, partners like Deloitte and Globant brought 85% more new customers to the platform than in 2018, and revenue attributable to partners jumped 195%. While this segment represents only a fraction of Alphabet’s top line, if the strong growth continues, this could be another big revenue stream for the company.

As a final note, investors should be aware that Alphabet is facing litigation. The US Department of Justice has sued the company for “anticompetitive tactics to maintain and extend its monopolies in search and advertising”. And it’s entirely possible that this lawsuit will hurt Google’s ad business, putting the company’s primary source of revenue in jeopardy.

The Trade Desk: The content-neutral platform

The Trade Desk primarily earns revenue through its AI-powered demand-side platform (DSP), which allows marketers to plan, launch, and optimise digital ad campaigns. The company also generates revenue by providing clients with data captured by its platform; this second-party data is used alongside the client’s first-party data to improve ad targeting and, as a result, operational efficiency.

The Trade Desk differentiates itself through its content-neutral strategy, meaning the company doesn’t own content platforms like YouTube or Google Search. Additionally, The Trade Desk only works on the buy-side of ad transactions, which eliminates the conflicts of interest and transparency concerns that come with Google’s presence on both the buy-side and sell-side.

According to Gartner, both The Trade Desk and Google are leaders in the ad tech market, though The Trade Desk outranks Google in campaign setup, management, and results analysis. These performance advantages, paired with The Trade Desk’s content-neutrality, have helped the company grow its client base quickly while keeping churn (client turnover) below 5%. That combination has powered exceptional growth in revenue and free cash flow.

Metric	2017	Q3 2020	Change
The Trade Desk revenue	$308.2 million	$732.1 million	138%
The Trade Desk free cash flow	$18.2 million	$132.3 million	629%
Alphabet revenue	$110.9 billion	$171.7 billion	55%
Alphabet free cash flow	$23.9 billion	$34.0 billion	42%

Data source: The Trade Desk and Alphabet SEC Filings.

Going forward, The Trade Desk is betting heavily on connected TV (CTV). The company has expanded access to CTV inventory through integrations with supply-side partners, and CEO Jeff Green believes that premium video will eventually represent about 50% of global ad spend. For reference, eMarketer estimates that ad spend in 2020 hit $615 billion. That’s a big market opportunity.

The verdict

In the coming years, Alphabet’s market share in the digital ad space may continue to fall as competition intensifies with Amazon and The Trade Desk. Moreover, the looming legal consequences raise questions about the company’s future in the ad market. So Alphabet’s other businesses will have to pick up the slack. But Google Cloud Platform faces intense competition from the likes of Amazon and Microsoft, and Google hardware (Google Nest, Pixelbooks, Pixel phones) doesn’t have the same mass appeal as products from Apple and Samsung.

By comparison, The Trade Desk is much smaller, and it’s growing more quickly. During the most recent earnings call, Green told investors that the company gained significant market share in fiscal 2020. Moreover, the company’s content-neutral strategy promotes transparency, which helps separate it from walled gardens like Google. These advantages give The Trade Desk more long-term potential in my opinion and should help the company continue to outpace Alphabet in the future.

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

More reading

• Countdown to launch of new ASX indexes for ESG boom
• Got cash to invest? Here are 3 ASX shares to buy
• BikeExchange (ASX:BEX) share price jumps 23% on ASX IPO
• How I’d identify the best shares to buy in a stock market recovery
• The Little Green Pharma (ASX:LGP) share price has dived 16% today. Here’s why

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. Trevor Jennewine owns shares of The Trade Desk. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and Microsoft and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, 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 Better Buy: Alphabet vs The Trade Desk appeared first on The Motley Fool Australia.

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

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

The ASX share market looks set to gain yet another new tranche of indexes in 2021.

Until now, ASX exchange-traded funds (ETFs) that track the Australian share market follow a very narrow range of ASX-based indexes. These mostly revolve around the flagship S&P/ASX 200 Index (ASX: XJO). However, there are other less-used indexes, such as the S&P/ASX 300 Index (ASX: XKO).

But as you might have noticed, most of these ‘ASX-only’ indexes are run by S&P Global Inc (NYSE: SPGI).

But today, we have news that another global index provider in MSCI is set to join the party.

Who’s this?

MSCI (formerly Morgan Stanley Captial International) is a New York-based company known for its globe-spanning indexes. Although MSCI currently does not offer ETFs, ASX investors might be familiar with some ASX ETFs that already track MSCI indexes around the world.

These include the Vanguard MSCI Index International Shares ETF (ASX: VGS), the iShares MSCI South Korea ETF (ASX: IKO) and the iShares MSCI Emerging Markets ETF (ASX: IEM).

But in Australia, MSCI is moving from the backroom to the open in offering its own indexes that exclusively track ASX shares. The Australian Financial Review (AFR) reported today that MSCI is launching more than 50 Australian indexes this week. According to the report, MSCI has been “quietly” working with super funds, ETF providers and fund managers over the last few months on the new offerings.

The new indexes will be grouped into four areas: market capitalisation, factor, thematic, and ESG (environmental, social and governance).

The market cap indexes will group ASX shares based on size (eg large-cap, small-cap), while the factor indexes will revolve around labels like value, quality or momentum.

Thematic indexes will cover specific sectors or areas of interest, such as real estate or resources. The ESG offerings will include a universal ESG index and others based on factors like climate change and excluding fossil fuels.

ASX is the pick of the bunch

The AFR reports that Australia is one of only 2 markets that MSCI has chosen to build a portfolio of domestic indexes. That’s due to 2 reasons.

Firstly, the large capital base that our unique superannuation system provides. With at least 9.5% of the country’s pre-tax income going into the superannuation system every year, there is a wide capital base to work off and a long runway for growth. Clearly, MSCI has noticed and is banking on super funds offering investments that may track MSCI’s indexes in the future.

Secondly, the shift towards ESG investing in Australia. That AFR report states there is “a hunger for index-based strategies that can better replicate their investment philosophies”. That spills over into which super products and investments Australians might choose to direct their super into.

MSCI clearly sees an opportunity here as the report states that the company wants to “work with each fund to create custom indexes that can reflect the fund’s ESG view”.

More reading

• ASX 200 down 0.4%: Macquarie impresses, Challenger disappoints, & Suncorp rises
• Real reporting season surprise isn’t about profits but dividends
• Here’s a bargain ASX share in a sea of expensive stocks
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 rises 0.6%, Vocus jumps on takeover offer, Afterpay hits new record

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Countdown to launch of new ASX indexes for ESG boom appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/36Quqy3

If you have you cash to invest then there could be some ASX shares to consider thinking about.

Here they are:

Bubs Australia Ltd (ASX: BUB)

Bubs is a business that manufactures and sells infant formula products, predominately made from goat milk. It also sells organic baby food, grass-fed cow milk infant formula and a range of vitamin and mineral supplements.

The Bubs share price is down around 25% from where it was six months ago. But the company recently provided a trading update for the quarter to December 2020 which showed that sales were recovering.

In the three months to 31 December 2020, group quarterly sales grew by 36% to $12.8 million quarter on quarter. However, sales were still 12% lower than the prior corresponding period.

The ASX share reported that its cross border e-commerce (CBEC) sales went up 27% quarter on quarter and it grew 34% compared to the prior corresponding period. Adult goat dairy gross revenue increased 45% quarter on quarter and it was up 25% over the prior year’s quarter.

Bubs’ infant nutrition portfolio, which represented 57% of the second quarter revenue, saw sales growth of 27% quarter on quarter.

The company boasted that it is the fasting growing infant formula manufacturer across Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL) and Chemist Warehouse with combined retail scan sales at the checkout up 41% quarter on quarter and up 67% over the prior corresponding period.

The corporate daigou trade is softer than pre-COVID-19 levels, but it was up 122% quarter on quarter.

Export sales to markets outside of China continue to strengthen, with sales up 194% quarter on quarter and up 138% compared to the prior corresponding period.

Bubs thinks the quarterly turnaround in sales is a positive indicator for the long-term.

Pushpay Holdings Ltd (ASX: PPH)

Pushpay is an ASX share that services the large and medium US church sector.

It offers a variety of tools including donor tools, finance tool and a community app, as well as a church management system to the faith sector. One of the abilities of the technology is a livestreaming option, which is useful during this COVID-19 pandemic.

The company has boasted of continuing operating leverage improvements over the last 12 months, with strong processing volumes. It received better-than-expected donation volumes in December 2020, which caused the business to increase its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) guidance yet again.

EBITDAF guidance was increased again to a range of US$56 million to US$60 million, up from the previous guidance range of US$54 million to US$58 million.

The company also recently advised that it has allocated an initial investment of resources into developing and enhancing the customer proposition for the Catholic segment of the US faith sector. The ASX share said that focused investment into the Catholic segment represents a significant milestone.

At the current Pushpay share price, it’s valued at 23x FY23’s estimated earnings according to Commsec.

VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)

This is an exchange-traded fund (ETF) which looks to provide exposure to a diversified portfolio of attractively priced US companies with sustainable competitive advantages according to Morningstar’s equity research team.

VanEck, the ETF’s provider, says that this portfolio has a high conviction strategy with US shares. The businesses within the ETF are ones that the research outfit believes has a ‘wide economic moat’ after going through Morningstar’s share research process. Target companies must be trading at attractive valuations, relative to Morningstar’s estimate of fair value.

The ASX share gives Aussies exposure to a portfolio of US-listed businesses including: John Wiley & Sons, Charles Schwab, Corteva, Cheniere Energy, Wells Fargo, Blackbaud, Intel, Bank of America, Biogen and Constellation Brands.

It has an annual management fee of 0.49% per annum.

Over the last five years the average total return per annum of VanEck Vectors Morningstar Wide Moat ETF has been just over 17%.

More reading

• Leading brokers name 3 ASX shares to sell today
• 3 great ASX tech shares to buy
• Got money to invest? Here are 2 ASX shares to buy
• 2 top ETFs to buy next week
• 2 fantastic ETFs to buy for strong potential returns

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BUBS AUST FPO and PUSHPAY FPO NZX. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool Australia has recommended BUBS AUST FPO, PUSHPAY FPO NZX, and VanEck Vectors Morningstar Wide Moat ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Got cash to invest? Here are 3 ASX shares to buy appeared first on The Motley Fool Australia.

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

On its first day of listing on the ASX, BikeExchange Ptd Ltd (ASX: BEX) shares jumped 23.1% to a high of 32 cents. However, at the time of writing, the BikeExchange share price has retreated to 26.75 cents, up 2.9% for the day so far.

The company raised $20 million at an issue price of 26 cents per share as part of its initial public offering (IPO). The raising valued the company at a market capitalisation of $76.9 million.

BikeExchange bills itself as a global marketplace for all things bike. Its online cycling marketplace enables brands, retailers and distributors to connect with customers around the world.

And this morning’s BikeExchange share price action, at a time when the All Ordinaries Index (ASX: XAO) is down 0.6% for the day, implies many investors believe in the potential of the newly listed company.

Growth potential in global cycling

BikeExchange operates across eight markets in Australia, Europe, North America and Latin America. According to the company, its addressable global market is over $83 billion.

BikeExchange hosts more 1,500 brands, 1,450 retailers and 600,000 products. It reaches 29 million consumers each year. Globally, the company reported that its marketplace generated over $1.5 billion in sales leads and enquiries value (annualised) in the first half of the 2021 financial year.

Commenting on today’s ASX listing, global CEO Mark Watkin said:

Today marks a significant milestone for our business, from its humble beginnings as a concept 14 years ago, to now being a leading global marketplace for all things bike. Our initial public offering will help us to scale our business and support future growth. Cycling, in addition to sport and recreation, is playing an increasing role in mobility and transport globally, as infrastructure and behaviours change…

The funds raised from our initial public offering will be invested in growth initiatives, such as: strategies to convert existing sales leads on our site to e-commerce transactions, increasing the retailer, brand accounts and key partnerships on site, and improving the customer experience through technology and products.

New strategic partnership for BikeExchange

In a busy day for the newly listed BikeExchange, the company also announced a strategic partnership with Latin America-based Auteco Mobility. Auteco is the leading Colombian motorcycle assembler and electric vehicle distributor.

BikeExchange says Auteco’s knowledge and network will help scale its business in Colombia and other Latin American countries. BikeExchange has been operating in Columbia since 2017.

Addressing the new strategic partnership, Auteco Mobility board member Daniel Vásquez said:

We believe bicycles will continue to grow in relevance and revolutionise urban transportation as cities world-wide realize the benefits of favouring bicycles over other means of transport, and BikeExchange is uniquely positioned to capture the growth in this trend.

More reading

• How I’d identify the best shares to buy in a stock market recovery
• The Little Green Pharma (ASX:LGP) share price has dived 16% today. Here’s why
• Leading brokers name 3 ASX shares to sell today
• How CEP Energy ‘world’s largest battery’ will shake up the energy market
• Why Challenger, DEXUS, Emeco, & Zip shares are tumbling lower

Motley Fool contributor Bernd Struben 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 BikeExchange (ASX:BEX) share price jumps 23% on ASX IPO appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3p2b1QQ

Finding the best shares to buy in a stock market recovery can be a challenging task. After all, forecasts are very dependent on the economic outlook, which itself is likely to be heavily impacted by coronavirus.

However, by investing money in financially-sound businesses that have long-term growth potential while they trade at low prices, an investor could reduce their risks and increase their potential rewards.

Financial strength is key to long-term performance

The past performance of equity markets suggests that a long-term stock market recovery is likely to continue in the coming years. Even if there are downturns in the meantime, the stock market has always produced new record highs after each of its previous bear markets.

However, companies must be able to survive present economic difficulties in order to benefit from a period of growth in the long run. As such, identifying those businesses that have large cash positions, modest amounts of debt and access to liquidity should it be required could be a shrewd move. They may stand a better chance of surviving the short-term challenges that continue to face many sectors to benefit from improved operating conditions and stronger investor sentiment in the coming years.

Low valuations ahead of a stock market recovery

In a stock market recovery, the best performing shares are often those companies that previously traded at low prices. They have greater scope to deliver capital gains, since they trade at a larger discount to intrinsic value.

As such, buying undervalued stocks today could be a profitable long-term move. They can be found by, for example, looking at the value of their net assets versus share prices, or by considering their earnings track record in a variety of operating conditions. This may provide guidance as to whether they have the capacity to trade significantly higher in the long run. In cases where they seem to offer wide margins of safety, there may be opportunities to deliver market-beating performance.

Identifying potential growth opportunities

It is difficult to assess the prospects for any stock at the present time. Ultimately, nobody knows how the economy will perform due to the ongoing pandemic. Furthermore, the financial cost of the pandemic remains unclear, which could have an impact on growth opportunities within many industries.

However, buying companies that may benefit from underlying industry growth trends could be worthwhile ahead of a stock market recovery. For example, healthcare companies may capitalise on demographic changes such as an ageing population in future. Equally, online retailers may use digital growth opportunities to enhance their earning capacity.

Through purchasing such companies when they have solid finances and trade at low prices, it is possible to capitalise on a long-term market rally. This could improve an investor’s financial position in the coming years.

More reading

• The Little Green Pharma (ASX:LGP) share price has dived 16% today. Here’s why
• Leading brokers name 3 ASX shares to sell today
• How CEP Energy ‘world’s largest battery’ will shake up the energy market
• Why Challenger, DEXUS, Emeco, & Zip shares are tumbling lower
• Why the Dexus (ASX:DXS) share price is slipping 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 identify the best shares to buy in a stock market recovery appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3q6SDI6

The Little Green Pharma Ltd (ASX: LGP) share price has fallen more than 16% this morning after the company announced a $22 million share placement. At the time of writing, the Little Green Pharma share price is trading at 78 cents, down 16.58%.

What’s driving the Little Green Pharma share price?

Yesterday, the company announced its first exports of cannabis flower medicines to Germany. Little Green Pharma has manufactured Australian medical-grade cannabis products since August 2018.

The company today advised it has received ‘firm commitments’ to raise approximately $22 million (before costs). This will be executed via a share placement program for sophisticated, experienced and professional investors.

The company will issue a total of 34 million new fully paid ordinary shares at the price of 65 cents a share. Currently, Little Green Pharma has 82.6 million shares outstanding and a market capitalisation of $77.2 million. 

An additional share purchase plan to raise up to $5 million will also be offered to eligible shareholders, also at a fixed price of 65 cents per share.

Little Green Pharma will use the proceeds to accelerate sales and marketing activities, expand its cultivation and manufacturing capacity, and provide general working capital.

Here’s why company executives are confident 

Regardless of the Little Green Pharma share price taking a 16% hit today, the company remains optimistic about its future.

Here’s what managing director Fleta Solomon had to say about the upcoming share placement:

We’re highly encouraged by the strong support shown by new and existing shareholders for Little Green Pharma.

Little Green Pharma has gone from strength to strength, and has achieved immense growth in the last year, most recently setting new records for quarterly revenue, unit sales, and patient numbers. We expect the next 12 months to be very exciting for the company and look forward to reporting on our continued success.

The Little Green Pharma share price has rocketed up by around 122% over the past 12 months.

More reading

• Why the Little Green Pharma (ASX:LGP) share price will be on watch today
• Little Green Pharma (ASX:LGP) share price whiskers near all-time high
• What does the Biden administration mean for ASX shares? 

Motley Fool contributor Gretchen Kennedy 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 The Little Green Pharma (ASX:LGP) share price has dived 16% today. Here’s why appeared first on The Motley Fool Australia.

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

On Monday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three that have just been given sell ratings are listed below.

Here’s why these brokers are bearish on these ASX shares:

A2 Milk Company Ltd (ASX: A2M)

According to a note out of Citi, its analysts have retained their sell rating and cut the price target on this infant formula and fresh milk company’s shares to $9.40. The broker expects the company to continue to struggle in the second half of FY 2021 due to ongoing weakness in the daigou channel and a resurgence in Chinese infant formula brands. It appears concerned these pressures could be structural. Incidentally, for similar reasons, the broker has reaffirmed its sell rating and 51 cents price target on Bubs Australia Ltd (ASX: BUB) shares. The a2 Milk share price is currently fetching $10.45.

Cochlear Limited (ASX: COH)

Analysts at UBS have retained their sell rating and $175.00 price target on this hearing solutions company’s shares. According to the note, the broker expects the company to report a sizeable decline in sales during the first half. This is due to foreign exchange and COVID-19 headwinds. Unfortunately, it notes that the latter isn’t easing as quickly as the company might like, which could delay the rebound in sales until FY 2022 or beyond. The Cochlear share price is trading at $206.86 today.

Medibank Private Ltd (ASX: MPL)

A note out of the Macquarie equities desk reveals that its analysts have retained their underperform rating and $2.70 price target on this private health insurance company’s shares. This follows Medibank’s investment in the Myhealth Medical Group last week. While the broker sees strategic value in the non-controlling acquisition over the long term, it isn’t enough for a change of rating right now. Macquarie remains bearish due to structural pressures and concerns over a catch up of claims. The Medibank share price is trading at $2.95 this afternoon.

More reading

• What to expect from the a2 Milk (ASX:A2M) half year result
• 2 exciting mid-cap ASX shares to buy and hold
• Got money to invest? Here are 2 ASX shares to buy
• Brokers name 2 ASX blue chips to buy
• Here’s why the Medibank (ASX:MPL) share price is edging 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 BUBS AUST FPO and Cochlear Ltd. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia has recommended BUBS AUST FPO and Cochlear Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Leading brokers name 3 ASX shares to sell today appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/36UUyYK