The Atlas Arteria Group (ASX: ALX) share price has remained relatively flat today, despite the company providing an improved trading update.

At market open this morning, the Atlas Arteria share price reached as high as $6.34. However, the toll road company’s shares have since pulled back to $6.21, down 0.88% at the time of writing.

How did Atlas Arteria track for Q3 FY20?

Atlas Arteria reported a strong recovery following the impact of various international government responses to COVID-19.

For the quarter ending September 30, the company produced a revenue decline of 4% over the comparative period. This was a large improvement on the 44.2% drop of the June quarter compared to the prior corresponding period.

The resurgence of traffic levels was noticed particularly in France and Germany during the European summer months of July and August.

Let’s take a closer look at how each of Atlas Arteria’s segments performed.

France

The company operates APRR toll road networks in France and ADELAC on the A41 motorway between France and Switzerland. Overall traffic volumes for APRR and ADELAC were down marginally for the three months compared to this time last year. The relaxation of travel restrictions coupled with the start of the holiday season underpinned higher traffic volumes.

However, as a second wave of COVID-19 descends on France, government officials have reinstated limitations on social interaction. Thus, Atlas Arteria is experiencing softened traffic volumes and expects this to continue in the coming quarter.

United States

Across the Atlantic, Atlas Arteria’s United States road network saw a massive fall in traffic volumes. The reduction in commuting and a move to remote learning for schools has contributed to a fall of 44.8% over the prior corresponding period.

Pleasingly, the company said a staged-return of kindergarten to Grade 2 students is expected to occur in late October. It is anticipated this will have a positive impact on traffic on the Dulles Greenway in North Virginia.

Germany

Traffic on German toll roads for Q3 was up 0.8% over the same period in 2019. Mecklenburg-Vorpommern, the state in which the Warnow Tunnel is located, has reported few COVID-19 case numbers since the pandemic hit.

Social gatherings have been relaxed since early July, with regional tourism resuming and traffic returning to growth.

Atlas Arteria advised that although Germany was expecting a rise in COVID-19 cases, Mecklenburg-Vorpommern had been relatively unaffected.

About the Atlas Arteria share price

The Atlas Arteria share price fell to a 52-week low of $3.51 in the March COVID-19 crash before recovering to trade at prices over $6 by May. However, the share price remained flat in the following months, failing to recover to its pre-COVID levels.

The company has a market capitalisation of $5.9 billion.

More reading

• ASX 200 flat: Rio Tinto Q3 update, big four banks higher, GUD impresses
• 5 things to watch on the ASX 200 next week
• ASX 200 up 1.5%: Big four banks rocket higher, Premier Investments delivers record profit
• Why Atlas Arteria, Cochlear, Telix, & Treasury Wine shares are dropping lower

Motley Fool contributor Aaron Teboneras 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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I think there are a few ASX shares that Warren Buffett would want to have in his portfolio if he focused on Australia.

Warren Buffett has been one of the best investors in the world over the past five or six decades. He may not love many technology shares, but there are plenty of great industrial businesses that I think he’d like, such as these two:

APA Group (ASX: APA)

It owns a vast network of 15,000km of natural gas pipelines around Australia with a presence in every mainland state and the Northern Territory. It also owns or has interests in gas storage facilities, gas-fired power stations and renewable energy generation (wind and solar farms). APA owns, or manages and operates, a portfolio of assets and delivers half the nation’s natural gas usage.

I think Warren Buffett would like APA because it’s somewhat of a combination of Berkshire Hathaway Energy and Berkshire’s railroad divisions.

He likes businesses that most people need for everyday life. Gas is obviously a resource in high demand. The federal government is looking to gas to help provide power for the country’s recovery.

FY20 was a solid result with earnings before interest, tax, depreciation and amortisation (EBITDA) up by 5.1%, operating cashflow up 8.3% and net profit after tax (NPAT) up 10.1%.

The energy infrastructure ASX share continues to invest in new projects which can make more cashflow for APA. It has grown its distribution each year for the past decade and a half. At the current APA share price it offers a trailing partially franked yield of 4.6%.

Brickworks Limited (ASX: BKW)

It’s a building products business. One of Berkshire Hathaway’s larger divisions is Clayton Homes, so I think that shows Warren Buffett is interested in businesses related to the housing sector as a whole.

Brickworks is the biggest brick provider in Australia. It also sells other building products like precast, roofing, masonry and paving. It’s one of the most efficient building products businesses in the country. It strategically picks its time when to do plant shutdowns that require work and, every so often, it builds a top-quality new manufacturing plant.

Excess old land owned by the ASX share can be sold into its property trust which it owns equally with Goodman Group (ASX: GMG). This is a great strategy because it allows Brickworks to recognise the value of its land and then benefit from the long-term returns of industrial properties.

Two huge distribution centres are being built for Amazon and Coles Group Limited (ASX: COL) in Sydney. Once these are completed it will materially push up the net asset value (NAV) of the trust and increase net rental income. That will be good for the underlying value of Brickworks shares as well as its earnings and cashflow.

Brickworks also owns around 40% of ASX share Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) which I think is the business that may be the closest thing the ASX has to Berkshire Hathaway because it owns both listed ASX shares and unlisted businesses.

The cross-holding between the two businesses has been there for decades and it has successfully kept corporate raiders away. For Brickworks, the Soul Patts shares help smooth earnings and cashflow during the difficult construction years (such as 2020).

The investment income from Brickworks’ property trust and the Soul Patts shares are enough to fund the Brickworks dividend to investors. Brickworks’ dividend has been maintained or grown every year for 40 years.

At the current Brickworks share price it has a grossed-up dividend yield of 4.5%.

More reading

• 3 must-have ASX income shares for your portfolio
• Is it time to go all in on ASX shares?
• 2 ASX dividend shares raising their dividends like clockwork
• Why Brickworks, Flight Centre, Whitehaven, & Zip shares are dropping lower
• 5 things to watch on the ASX 200 next week

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 and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of APA Group and COLESGROUP DEF SET. 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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One of the worst performers on the Australian share market on Wednesday has been the Temple & Webster Group Ltd (ASX: TPW) share price.

The high-flying online furniture and homeware retailer’s shares have come under significant pressure today following the release of a trading update.

In afternoon trade the Temple & Webster share price is down a sizeable 15.5% to $11.88.

How is Temple & Webster performing in FY 2021?

Today’s trading update revealed that Temple & Webster’s strong growth has continued in FY 2021.

As of 19 October 2020, financial year to date, Temple & Webster’s revenue was up 138% on the prior corresponding period.

Growing at an even quicker rate was the company’s earnings thanks to a contribution margin above its 15% target. This is the margin after all variable costs, including advertising and customer service costs.

Temple & Webster reported first quarter earnings before interest, tax, depreciation and amortisation (EBITDA) of $8.6 million. This is more than the entire EBITDA it generated in FY 2020.

How does this result compare to expectations?

Based on the share price reaction, you might think that this update fell short of expectations.

However, a note out of Goldman Sachs reveals that Temple & Webster’s update has significantly outperformed its forecasts.

It commented: “YTD revenue (1 July–19 Oct) is up +138% vs. pcp with October revenue growth still >100% which is positive given TPW has now entered its peak trading months. Current revenue run rates are materially ahead of our forecast for 1H21 (+70.3%, A$126.2mn).”

The same applies to its earnings, thanks to its higher than expected contribution margin.

“Contribution margin continues to run ahead of a 15% target, despite the launch of a second TV campaign at the end of Q1 which we expect would have been slightly dilutive to contribution margins.”

“This compares to our expectation for contribution margin of 14.8%. Operating leverage is strong, and EBITDA is well ahead of our expectations, with 1Q21 EBITDA of A$8.6mn ahead of our 1H21 forecast of A$7.3mn and, for context, we forecast A$18.9mn EBITDA for FY21,” Goldman explained.

Is this a buying opportunity?

At present Goldman Sachs has a buy rating and $11.50 price target on the company’s shares.

However, I suspect that it will revisit its valuation in the coming days and, given its outperformance, is likely to lift its price target higher.

This could make today’s sizeable decline a buying opportunity for investors. Though, it may be best to let the dust settle before jumping in.

More reading

• Why CIMIC, Megaport, Mesoblast, & Temple & Webster shares are dropping lower
• Why the Temple & Webster (ASX:TPW) share price is tumbling lower today
• New $259 million ASX tech player listing Thursday
• Should you stay invested in an ASX share after a strong run?
• The Redbubble (ASX:RBL) share price is up 320% in 2020: Can it go 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 Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group 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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The St Barbara Ltd (ASX: SBM) share price is edging lower on Wednesday following the release of its first quarter update.

In afternoon trade the gold miner’s shares are down almost 1% to $2.92.

How did St Barbara perform in the first quarter?

St Barbara had a difficult start to FY 2021 due largely to issues at its Gwalia operation in Western Australia.

According to the release, first quarter gold production was 72,990 ounces, down 32.7% on the fourth quarter.

This comprised Atlantic Gold production of 27,226 ounces, Gwalia production of 22,625 ounces, and Simberi production of 23,139 ounces.

Also heading in the wrong direction was its costs. St Barbara reported an all‐in sustaining cost (AISC) of A$1,711 per ounce. This was up 31.5% from A$1,301 per ounce in the previous quarter.

This was driven by a sharp increase in costs at Gwalia due to its lower production. Gwalia’s AISC came in at A$2,592 per ounce, up from A$1,389 per ounce in the previous quarter.

In light of this poor operational performance, St Barbara reported a sharp decline in its cash contribution. It came in at A$27 million for the quarter, down from A$126 million in the fourth quarter.

Outlook.

Despite the poor start to the year, the company’s production guidance implies solid growth in FY 2021 if it achieves the high end of its range.

St Barbara is forecasting production of 370,000 to 410,000 ounces, compared to FY 2020’s production of 381,887 ounces.

And if it hits the low end of its AISC guidance, it will mean a small cut to its costs this year. St Barbara’s AISC guidance is A$1,360 to A$1,510 per ounce, compared to FY 2020’s AISC of A$1,369 per ounce.

The company’s Managing Director & CEO, Craig Jetson, appears confident on the future and notes that St Barbara is working hard to unlock value.

He commented: “Our project pipeline is central to Building Brilliance; this is of particular relevance to our Atlantic Gold and Simberi Operations. Delivering on our potential in a timely, cost‐appropriate way is key to driving deliberate and value‐accretive growth.”

“In the second quarter of FY21, we will elaborate on our aspiration to unlock value in our organisation, improve safety, deliver cost savings and improve our productivity,” he concluded.

More reading

• Top brokers name 3 ASX shares to sell next week
• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 Weekly Wrap: Bank shares push ASX 200 higher
• These were the worst performing ASX 200 shares last week

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 Nsx Ltd (ASX: NSX) share price more than doubled after the alternative stock exchange operator posted its quarterly update.

The NSX share price rocketed over 112% to 18 cents during lunch time trade when the All Ordinaries (Index:^AORD) (ASX:XAO) and the S&P/ASX 200 Index (Index:^AXJO) are only 0.1% higher.

Investors got excited after management reported a strong pick-up in the number of companies looking to list on its bourse.

NSX share price jumps on listing interest

NSX operates the National Stock Exchange of Australia (NSXA). During the quarter, it received four new pre-listing submissions, one new listing application, one new nominated adviser application and two new participant applications.

The forward pipeline for listings now stands at 30 applicants and volumes and interest have increased appreciably, added NSX.

Cash position and IT projects support NSX stock

Further, NSX reported an increase in cash of $450,000 to $5 million in the period. It also posted a net operating cash inflow of $651,000 and a $130,000 decrease in admin and corporate costs to $330,000.

Management provided an update on the NSXA Trade Acceptance Service (TAS) project. It said TAS is ready to be switched on with all but three of the 16 market participants.

It is also making progress on its IT trading system that will allow it to operate in parallel to the ASX Ltd (ASX: ASX) CHESS system. In due course, NSX believes NSXA will operate autonomously from CHESS.

Possible dark clouds

But it wasn’t all good news. Management suffered a defeat at its extraordinary general meeting (EGM) that was held in the quarter. Shareholders successfully voted against all resolutions to appoint additional directors to the board.

“The Company has received a section 249D notice with a resolution to remove Mr Thomas Price as a director,” said the NSX in its ASX statement.

“The EGM for this meeting is scheduled for the 30 October 2020.”

The company is also still feeling the impact from COVID‐19, which is affecting staff workflows. This is particularly pronounced in Victoria due to the mismanagement of the first outbreak. Fortunately, most of NSX’s business operations are undertaken in New South Wales.

More reading

• Will the outlook for ASX 200 shares stay bullish?
• ASX 200 flat: Big four banks push higher, Afterpay drops, Megaport sinks 10%
• 3 ASX shares I’d buy for summer 2021
• Warning: Here’s why keeping your savings in the bank is hurting your financial future
• 5 ASX 200 events to watch for this week

Motley Fool contributor Brendon Lau 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 AnteoTech Ltd (ASX: ADO) share price has been a disappointing performer on Wednesday.

In afternoon trade the biotech company’s shares are sinking 12% lower to 11 cents.

Why is the Anteotech share price sinking lower?

Investors have been hitting the sell button today despite the release of study results from its COVID-19 Antigen Rapid Test using stored patient swab samples.

According to the release, an independent study was conducted by Spanish lateral flow developer and manufacturer Operon at its research facilities in Zaragoza, Spain.

This study was undertaken using locally acquired positive COVID-19 patient samples and a range of local negative samples.

The release explains that all the samples were Polymerase Chain Reaction (PCR) tested prior to the study. This means the study was able to have a direct head to head comparison of the performance of the AnteoTech COVID-19 Antigen Rapid Test against the lab-based testing process.

The latter is widely regarded as a very reliable measure of test sensitivity, according to management.

What did the study find?

The study found that Operon’s results aligned with AnteoTech’s in-house laboratory results using recombinant samples.

This means the test detected COVID-19 in the range of Ct 30 to Ct 35. This PCR level is typically recorded from patients who are at very early onset or recovery stages of the disease cycle and have very low levels of viral load.

AnteoTech’s CEO, Derek Thomson, commented: “We are very pleased to have reached this key milestone in our development of the AnteoTech COVID-19 Antigen Rapid Test. The control of COVID-19 requires highly sensitive testing to ensure all positive patients are identified and isolated at the point of care to ensure they don’t continue to spread the disease.”

“We believe we are making an important contribution to the control of the disease and we look forward to entering clinical trials following the final stages of our validation phase which we believe will lead to making our test available to global markets very soon,” he added.

More reading

• Microsoft (NASDAQ:MSFT) Azure partners with SpaceX to offer cloud computing in space
• Are these shares the next Afterpay (ASX:APT) and Appen (ASX:APX)?
• Why the Orora (ASX:ORA) share price is the best performer on the ASX 200 today
• 2 defensive ASX ETFs to add to a well-balanced portfolio
• Lazy landlords: why I’d buy REITs to make a passive income

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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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.

Microsoft Corporation (NASDAQ: MSFT) announced today that it would partner with Elon Musk’s SpaceX and others to bring cloud computing to the “final frontier.” The initiative, dubbed Azure Space, will use the services of a combined fleet of low-orbit spacecraft and traditional satellites to better connect the evolving space industry with the cloud. 

The service will target both commercial and government space agencies, providing a system of integrated, secure links connecting a variety of cloud, space, and ground capabilities. Microsoft will also provide mobile cloud data centers that can be deployed anywhere across the planet, particularly in challenging environments with little or no infrastructure, which will connect to and communicate with the partner satellites. 

SpaceX, which has gained a name for itself with the use of reusable two-stage rocket and astronaut capsules, is working on a constellation of internet-beaming satellites called Starlink, with plans to bring internet service to virtually anywhere on Earth.

The news follows Microsoft’s announcement last month of the launch of Azure Orbital, a service designed to enable satellite operators to communicate with and control their satellites, as well as “gathering, transporting, and processing of geospatial data.” Orbital will also enable operators to directly downlink data to their virtual network in Azure.

Microsoft will compete directly with Amazon.com Inc (NASDAQ: AMZN) Web Services (AWS) Ground Station, which offers a similar suite of technology services, allowing users to communicate with, downlink, and process satellite data directly to the cloud. CEO Jeff Bezos also owns rocket company Blue Origin, which competes with SpaceX and is planning its own constellation of 3,236 satellites.  

Other collaborators on the Azure Space project include SES, one of the world’s largest satellite operators, ground communication specialist KSAT, ground station provider ViaSat Inc (NASDAQ: VSAT), and aerospace and defense specialist Kratos Defense & Security Solutions Inc (NASDAQ: KTOS). Partners also include mission control software provider Kubos, ground communications provider Amergint, and US Electrodynamics, which provides satellite teleport services.

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

More reading

• Is Apple (NASDAQ:AAPL) stock overvalued?
• Buy alert: Microsoft (NASDAQ:MSFT) stock is headed higher
• ASX investors were buying Tesla (NASDAQ:TSLA) and Apple (NASDAQ:AAPL) shares last week
• ASX investors were buying Tesla (NASDAQ:TSLA) and Snowflake (NYSE:SNOW) shares last week

Danny Vena owns shares of Amazon and Microsoft. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, 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. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and Microsoft and recommends the following options: long January 2022 $1920 calls on Amazon, short January 2021 $115 calls on Microsoft, long January 2021 $85 calls on Microsoft, and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Amazon. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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It wasn’t that long ago that Afterpay Ltd (ASX: APT) and Appen Ltd (ASX: APX) were mid cap tech shares.

Today they are multi-billion-dollar companies that have generated long term shareholders with some incredible returns.

While I still believe they have the potential to beat the market for some time to come, due to the law of large numbers, I wouldn’t be expecting the same level of returns again over the next five years.

So, if you’re looking for outsized returns in the coming years, you might want to take a look at these much smaller tech companies:

Audinate Group Limited (ASX: AD8)

Audinate is the digital audio-visual networking technologies provider behind the popular Dante product. This award-winning audio over IP networking solution is used widely across a number of industries globally and is head and shoulders above the competition. In fact, the number of devices enabled with Dante was 2,804 at the end of FY 2020. This is eight times greater than its next biggest competitor according to management. There are also 120,000 Dante trained and certified individuals globally.

And while 2020 has been a tough year for the company because of the pandemic, it was pleasing to see that its sales are now rebounding. I’m confident that when the crisis passes demand will start to grow again and its sales will accelerate. After which, thanks to its leadership position in a sizeable market, I expect Audinate to grow at a strong rate over the remainder of the 2020s.

ELMO Software Ltd (ASX: ELO)

ELMO is a cloud-based human resources and payroll software company that provides a unified platform that streamlines a wide range of processes. It has been growing at a very strong rate in recent years thanks to the quality of its platform and the increasing adoption of cloud-based business tools.

Pleasingly, this strong form has continued in FY 2021, with ELMO this week reporting record cash receipts of $15.6 million. This was a 29.8% increase on the prior corresponding period. The company has also put some of its hefty cash balance to work with the acquisition of Breathe for an initial payment of 18 million pounds (A$32.4 million). This acquisition provides it with entry into the small business market in Australia, New Zealand, and the UK. It also gives it cross-sell opportunities for its existing modules. Together with other potential acquisitions, I believe ELMO is in a position to capture a growing slice of its large addressable market over the 2020s.

More reading

• Top brokers name 3 ASX shares to buy today
• ASX 200 flat: Big four banks push higher, Afterpay drops, Megaport sinks 10%
• The ASX 200 slid 0.72% lower today
• Douugh and Afterpay were among the most traded shares on the ASX last week
• ASX 200 down 0.2%: Afterpay rockets on Westpac deal, Zip climbs, BHP’s Q1 update

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 Elmo Software. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AUDINATEGL FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen Ltd. The Motley Fool Australia has recommended AUDINATEGL FPO and Elmo Software. 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 best performer on the S&P/ASX 200 Index (ASX: XJO) on Wednesday has been the Orora Ltd (ASX: ORA) share price.

In afternoon trade the packaging company’s shares are up a sizeable 8% to $2.71.

Why is the Orora share price storming higher?

Investors have been buying Orora’s shares on Wednesday following the release of its annual general meeting update.

As well as providing a summary of its performance in a very difficult FY 2020, the company provided investors with an update on how it was faring in the new financial year.

According to the release, the company notes that the combination of COVID-19 and the pending US election has seen some challenges and uncertainty persisting. Nevertheless, management revealed that Orora’s businesses have continued to prove their strength and resilience, with all three continuing to operate as essential service providers.

Pleasingly, at the end of the first quarter, the Australasian Beverage Business has continued to deliver as a market leader in all segments. This has led to its segment earnings before interest and tax (EBIT) being in line with the first quarter of the prior year despite an adverse product mix.

Things were even better in North America, where both its OPS and Orora Visual businesses have been trading steadily. So much so, EBIT across both businesses is tracking ahead of the first quarter of last year.

Management revealed that the strengthening of the North American performance is thanks largely to its comprehensive business improvement plans. It notes that these plans have delivered, despite the ongoing challenges and uncertainty within the region.

What’s next for Orora?

No guidance has been given for the remainder of the half or the full year.

However, management is confident that its revised strategic approach and prudent approach to capital will help Orora continue to move from strength to strength.

More reading

• ASX 200 flat: Big four banks push higher, Afterpay drops, Megaport sinks 10%
• Why Lynas, Orora, Praemium, & Tabcorp shares are racing higher today
• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 next week

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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I think exchange-traded funds (ETFs) are some of the best investments you can buy from a diversification standpoint. A share-based ETF normally works by holding a basket of shares within it. Thus, when you buy an ETF, you are really buying whichever shares that ETF holds. In this way, you can add ‘one share’ to your portfolio, when really you’re adding the 50, 100 or even 1,000 different shares within it.

Some ETFs are more growth focused. Others are more defensive – offering some theoretical protection in a market crash or economic recession. Here are 2 defensive ASX ETFs that I think any investor can add to their portfolio for diversification and balance.

2 defensive ETFs for a well-balanced portfolio

iShares Global Healthcare ETF (ASX: IXJ)

Our first defensive ETF tody is this healthcare-focused fund from Blackrock’s iShares. The ASX EFT has a few high-quality health care names, like CSL Limited (ASX: CSL) and Ramsay Health Care Limited (ASX: RHC).

However, I think the global companies that IXJ holds offer a lot more. This ETF is heavily weighted (67.5%) towards the United States, as well as Switzerland (9.7%), Japan (6.3%) and the United Kingdom (4.17%). Some of IXJ’s top holdings include Johnson & Johnson (the name behind Band-Aids and Listerine), Novartis, Pfizer and Abbott Laboratories, plus 107 others.

This ETF covers an evergreen sector in healthcare and has returned an average of 16.48% per annum over the past decade. Thus, I think it’s a top choice for any portfolio today.

iShares Global Consumer Staples ETF (ASX: IXI)

Another iShares ETF, this fund instead tracks a global basket of consumer staples shares. Consumer staples are defined as goods we all ‘need’ rather than ‘want’. These typically include food, drinks, household essentials and vices.

Think about it, no matter the economic circumstances, we all need to buy food, toilet paper, laundry powder and soap. This simple fact can make the companies in this sector very powerful investments. We have seen this in play in 2020 especially. While consumers around the world were shunning all kinds of purchases in the midst of the COVID-19 pandemic, demand for these ‘staples’ held up extremely well.

IXI includes companies like Coca-Cola, Nestle, PepsiCo, Walmart, Diageo,  British American Tobacco, Procter & Gamble and Unilever. Like IXJ, it’s also heavily weighted towards the United States (53.55%). IXI’s holdings feature very old and very established companies, some of which pay hefty dividends as well.

This ETF has delivered an average return of 12.10% over the past decade. It also comes with a trailing dividend/distribution yield of 2.01%. For a defensive and robust holding that can fit in any ASX portfolio, I think IXI is another top choice today.

More reading

• 3 ETFs every ASX investor should consider today
• Here are 2 of the best ETFs you can buy today

Motley Fool contributor Sebastian Bowen owns shares of Ramsay Health Care Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of iShares Global Consumer Staples ETF. The Motley Fool Australia has recommended Ramsay Health Care 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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