French poet Victor Hugo famously said; “Nothing is more powerful than an idea whose time has come.” I believe this applies precisely to what has happened to Afterpay Ltd (ASX: APT) shares over the past year. Since the market low point on 23 March, the Afterpay share price has grown over 960%. To be sure, it is an amazing run. Nonetheless, for investors trying to find the next Afterpay, I feel there are plenty of potential choices.

The following 4 ASX shares are all companies that have enjoyed significant growth this year. One of them may turn out to be the next Afterpay, but for others it may still be too early to tell.

Criteria for the next Afterpay

I believe Afterpay meets a few criteria that has enabled it to become such an explosive ASX share. 

First and foremost, it is pioneering a new field of commerce. In particular, it is disrupting the credit card model and modernising the layby model. Second, it meets a burning need. In this case, the need is a lack of disposable cash, an issue I feel relates to growing inequality. Third, it is a repeat mass consumer product.

Last, and for me the most interesting, is the strength and style of management. The Afterpay company founders are currently blitzkrieging the world in a land grab to establish leadership in important markets like the United Kingdom, the United States and Europe. So, on that note, here are 4 ASX shares I investigated as possibly becoming the next Afterpay.

Harvest Technology Group Ltd (ASX: HTG)

This company has developed a range of products to enable secure communications for enriched and real time data, requiring significantly less bandwidth. The technology is industry agnostic and is adaptable for remote workers as well as to sensors, video feeds, and many other applications. Under the company’s new chair, this was the first time it had achieved annual revenues in excess of $10 million.

Since 23 March, the Harvest Technology share price has risen 275%. I believe the company is definitely filling a need and has uncompromising, experienced management. However, I still don’t think it exactly qualifies as the next Afterpay.

Vection Technologies Ltd (ASX: VR1)

This company has built a technology, FrameS, that allows people to engage with 3-dimensional models in virtual reality. It takes previously created models from software such as CAD or others and provides an immersive experience for up to six remote users. Applications include interior design, design review of industrial projects, exhibiting products remotely, and even training.

Since 23 March, the Vection share price has risen 750%. Again, this company is filling a need and, to me, appears to be a front runner as another possible Afterpay . 

Brainchip Holdings Ltd (ASX: BRN)

Brainchip is one of my favorite companies on the ASX at the moment. The company has developed a range of artificial intelligence technologies, as well as a first-of-a-kind technology called the Akida System on Chip. It is currently in the prototyping stages and expects to start leasing its technology within the next six months, and producing its own chips by the end of CY21.

Since 23 March, the Brainchip share price has risen 837.5%. I believe this company is not only filling a need, it is creating one. As more companies become aware of what the technology can do, the applications expand. I feel the leadership team are competent and very driven to develop this product into the future.

However, there is not yet a mass consumer demand. Nevertheless, there are a range of applications, like gaming, which could change that.

MyFiziq Ltd (ASX: MYQ)

This ASX share has been one of the great success stories of the year. The MyFiziq share price has risen by 1,568.75% since 23 March. An investment here at the low point in the market would have returned far more than an investment in Afterpay at the same time. 

The company has built a technology that accurately measures body circumferences from photos. Integrating with partner apps, it is already revolutionising the online clothes shopping sector by helping to eliminate or reduce the incidence of returns. Further applications include evaluation of diet and exercise results, as well as body fat percentage calculations.

Foolish takeaway

Although I believe all of these small caps are worthy growth shares, I feel MyFiziq has the highest potential of becoming the next Afterpay. This is primarily due to the current existing demand and potential for repeat, mass consumer use.

More reading

• Why Kogan (ASX:KGN) and this hot stock just hit record highs
• How top ASX tech shares like Afterpay (ASX:APT) have performed in 2020
• ASX 200 finishes lower, Afterpay (ASX:APT) shares rise
• My top 5 ASX growth shares to buy right now
• Why the Afterpay Ltd (ASX:APT) share price broke its record high today

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

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The Rio Tinto Limited (ASX: RIO) share price will be on watch this morning following the release of its third quarter production update.

How did Rio Tinto perform in the third quarter?

For the three months ended 30 September, Rio Tinto reported Pilbara iron ore shipments of 82.1Mt.

This was a 5% decline on the prior quarter and a touch lower than expectations. Goldman Sachs, for example, was forecasting iron ore shipments of 83.3Mt for the quarter. Management advised that this reduction in shipments was due to planned maintenance activity in its port.

However, iron ore production was strong at 86.4Mt. This was a 4% lift on its second quarter production. Management notes that its Pilbara operations are returning to more normal operating conditions with rosters back to pre-COVID-19 settings.

Rio Tinto’s mined copper came in a 129.6kt for the quarter. While this was down 2% on the prior quarter due to smelter issues at Kennecott, it was significantly higher than the 91kt predicted by Goldman Sachs. And given the recent strength in the copper price, this can only be good news for shareholders.

Elsewhere, Rio Tinto reported a 1% decline in Bauxite production to 14.5Mt, a 2% lift in Aluminium production to 797kt, and a 12% increase in Titanium dioxide slag production to 293kt.

Market conditions.

Management provided commentary on market conditions in the third quarter and its expectations for the months ahead.

It commented: “Global economic activity in the third quarter was generally strong, helping to sustain optimism for a widespread recovery in 2021. However, recent high-frequency data suggests that the rate of recovery in growth is slowing in most economies, with pent-up demand dissipating, and the rise of renewed lockdowns threatening recovery.”

The company also spoke about iron ore demand, which has been incredibly strong recently.

Management advised: “Chinese iron ore demand is at record levels against a backdrop of recovering seaborne supply that was disrupted earlier in the year.”

“However, with the major producers expected to deliver strong volumes in the fourth quarter, iron ore inventories are expected to grow modestly as China’s steel consumption eases from record highs and scrap consumption increases. Japan, South Korea, Taiwan and Europe continue to show signs of recovery: however, exChina steel production remains down significantly year on year,” it added.

Outlook.

Rio Tinto has made no major changes to its production guidance for the remainder of FY 2020.

It continues to expect Pilbara iron ore shipments of 324Mt to 334Mt this year, up from 327Mt in FY 2019. And mined copper is expected to be in the range of 475kt to 520kt.

Its cost guidance for both remains unchanged as well. Pilbara iron ore unit cost guidance remains $14 to $15 per tonne and copper C1 unit cost guidance stays at 120-135 US cents per pound.

This guidance is based on an average Australian dollar exchange rate of US$0.67.

More reading

• 5 things to watch on the ASX 200 on Friday
• ASX 200 up 0.9%: Big four banks rise, Pro Medicus jumps, miners charging higher
• ASX 200 Weekly Wrap: Budget, US election sparks 5% surge in ASX shares
• 5 things to watch on the ASX 200 next week
• Will the Fortescue (ASX:FMG) share price outperform in 2021?

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 silver bullet to slay the coronavirus and return life to normal remains elusive. But that doesn’t mean it might not be here sooner than most S&P/ASX 200 Index (ASX: XJO) investors are pricing in.

The world’s top institutions and brightest minds are working around the clock, after all, with record amounts of private and government funding pouring in.

However, recent setbacks with some leading vaccine trials, alongside announcements that any new vaccines may only prove 50–60% effective, have seen the share prices of most ASX 200 travel, leisure and retail shares remain well below pre-pandemic levels.

Does your ASX portfolio have exposure to an early, effective vaccine?

Dmitry Balyasny is the co-founder of the Chicago-based hedge fund Balyasny Asset Management.

According to Bloomberg, Balyasny says that while most investors expect a COVID-19 vaccine to be available this year, the market has priced in the likelihood it will only be 50–60% effective.

He notes that if a more effective vaccine is produced and delivered faster than expected, “Markets will start to look through the current weakness for the companies that have really been affected.”

Balyasny adds:

If there is a solution where the markets are confident that, well, OK, this is a real solution to the problem, whether it takes three months or six months, the stocks will move ahead of that.

Foolish takeaway

There is no shortage of quality travel, retail and leisure shares on the ASX 200 still trading well below their pre-COVID levels.

One share I believe remains significantly undervalued in the long term, and potentially in the short-term should an effective vaccine be delivered, is Qantas Airways Limited (ASX: QAN).

Qantas was founded in Queensland in 1920, making it the world’s second oldest airline. Today the company is Australia’s largest airline for domestic and international travel.

With both its domestic and international flights all but grounded in efforts to contain the virus, Qantas’ share price plunged 68% from 20 February through to 19 March. Although it has regained 99% from that low, shares remain down 41% year-to-date.

By comparison, the ASX 200 is down 7%.

Qantas’ share price stands to benefit from the reopening of domestic flights in Australia. As well as from the proposed travel bubbles with New Zealand, Singapore, Japan, Pacific island nations and South Korea.

But if an effective vaccine is delivered and distributed faster than expected, Qantas could be flying passengers across the world again next year.

If the Qantas share price were to regain its 2 January levels, that represents a 70% upside from yesterday’s closing price of $4.25 per share.

More reading

• Why the Flight Centre (ASX:FLT) share price slumped despite new tourism campaign
• Should you consider buying Qantas (ASX:QAN) shares?
• ASX 200 up 2.3%: Big four banks charge higher, Qantas soars, energy shares jump
• Why Costa, Qantas, Santos, & Westpac shares are storming higher today
• Leading broker upgrades Qantas (ASX:QAN) shares to buy rating

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. 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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There is much disagreement about where the world and share markets are heading.

Should you buy growth stocks or value shares? Should you build up your cash reserves in case of a second COVID-19 crash? Will there be a vaccine soon?

The divergence in opinion indicates one sure thing: no one knows.

For those wanting to hedge against the uncertainty, defensive shares might be an answer.

These are shares that sell products or services that will still have high demand even if the economy becomes depressed.

Grocery and healthcare providers are two examples – people still have to eat and will get sick regardless of what the economy is doing.

Pengana Australian Equities Fund senior fund manager Rhett Kessler famously bought up $110 million of shares as the world burned in February and March.

He told investors this month of two defensive shares in Pengana’s portfolio:

Get Coles to send you money for 11 years 

Waypoint REIT Ltd (ASX: WPR) is a real estate investment trust (REIT) that focuses on commercial properties. 

Real estate funds are currently out of favour due to uncertainty in how people might commute and work in the future. 

But Kessler said Waypoint has a major advantage in its relationship with Coles Group Ltd (ASX: COL).

“Its lease expiry dates prolong for 11 years or longer. So there’s 11 years of certainty,” he told an investor briefing.

“Its 95% tenant is Coles, through Shell petrol stations. So it’s essentially the landlord for the Shell forecourts — the pieces of land that petrol stations are built on.”

The agreement with Shell has a 3% ‘inflator’, meaning rents go up automatically each year.

And what’s remarkable is that this ownership hardly involves any maintenance costs.

“All its leases are ‘triple net’, which means the management team turns up every month, puts out its hand and Coles or Shell pays them rent. And Coles or Shell takes care of rates, taxes, maintenance capex, everything else,” said Kessler.

“We often tease [Waypoint] management about why they need a CEO, CFO and a IR person.”

Lucky for Pengana investors, Kessler was able to buy up Waypoint shares back when it had 8% yield. The price is a bit higher now, so yields 4.59%.

Invest in gold without owning a safe 

For centuries, investors have flocked to gold in times of anxiety. As well as its aesthetic use, in modern times the precious metal is useful for industrial purposes.

Kessler also feels gold is a good hedge against quantitative easing and inflation.

“We felt holding gold would be providing us some protection against all the printing presses being turned on.”

To simulate investment in gold without actually buying bars that you have to safely keep somewhere, many people buy gold ETFs or gold miners.

Kessler is a fan of this approach for another good reason.

“We don’t like holding physical gold because it doesn’t generate an income.”

Pengana Australian Equities Fund’s answer was Evolution Mining Ltd (ASX: EVN).

“We’ve never owned a gold company before and it’s done really well for us.”

Kessler said his team looked for “the lowest cost gold producer, with a well diversified set of gold mines and was run by a competent and honest management team with a balance sheet with no debt.”

The gold price and gold shares have since gone up, so the fund has sold out a significant portion.

More reading

• 5 things to watch on the ASX 200 on Friday
• 2 safe ASX shares for your retirement portfolio
• Is the Coles (ASX:COL) share price set for a big Santa Rally?
• 2 blockbuster blue chip ASX shares to buy
• Leading brokers name 3 ASX shares to sell today

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of 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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The GUD Holdings Limited (ASX: GUD) share price will be one to watch on Friday following the release of its first quarter trading update.

How did GUD perform in the first quarter?

When the products company released its full year results in late July, management revealed that FY 2021 had started positively.

At the time, the company advised that it had experienced double digit growth in Auto sales compared to the prior comparable period.

Management noted that this was being driven by a recovery of underlying demand and an unwind of reseller destocking.

At that point in time, the company expected this strong demand to moderate as major reseller restocking concluded and pent up end-user demand abated.

However, pleasingly for shareholders, that hasn’t been the case and its strong sales performance continued across both Automotive and Water divisions during the first quarter.

The Automotive business reported first quarter sales growth of almost 16% and the Davey business has delivered 10% revenue growth. The latter was driven by favourable agricultural conditions and rural demand in Australia. This has offset lower demand in New Zealand and notably slower sales to tourism dependent export markets.

As a result, first quarter group sales have increased approximately 14% over the prior corresponding period. This is despite government lockdown restrictions impacting sales in Victoria and the Auckland region.

Managing Director and CEO, Graeme Whickman, commented: “Our employees are focused on our businesses remaining compelling and resilient suppliers to our customers and ensuring GUD remains financially strong and thus well placed to respond to the opportunities such times may trigger – it’s clear that the operational costs and importantly incremental employee efforts have been notable, I’d like to go on record and thank them for their contribution through this challenging period.”

Outlook.

Due to the uncertainty caused by the pandemic, management warned that its first quarter sales performance cannot be extrapolated over the remainder of the financial year.

As a result, it believes it is inappropriate to provide half year or full year earnings guidance at this stage.

Incidentally, one broker that was pleased with this update is Goldman Sachs. This morning it retained its buy rating and lifted its price target to $14.75.

More reading

• 5 things to watch on the ASX 200 on Friday

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 Xero Limited (ASX: XRO) share price hit another new all-time high this week, pole vaulting over $115 a share to close at $117.86 on Wednesday. Even though Xero shares cooled off yesterday and closed for $115.50, it’s an incredible run up for this online accounting software company. Remember, Xero was going for under $80 a share just 6 months ago.

Xero’s current share price is not cheap by any metric you use. At $115.50, Xero has a price-to-earnings (P/E) ratio of more than 5,000.

Now, if Xero continues to grow at its current clip, this laughably high P/E ratio might be justifiable for some investors. Xero did manage to post earnings growth of 88% for FY20, as well as revenue growth of 30% and free cash flow growth of 388%.

But perhaps investors are getting a bit carried away…

Hero to Xero?

The market is arguably acting like Xero has an unlimited growth runway and a monopolistic presence in its market. But this isn’t the case. Xero has a competitor and it’s a gorilla. Intuit Inc (NASDAQ: INTU) is an American company that also offers cloud-based accounting software – its QuickBooks program. Xero currently has a market capitalisation of $16.55 billion. But Intuit is valued at US$90.4 billion. This isn’t a company to be trifled with.

According to reporting in the Australian Financial Review (AFR), Intuit is the number 3 player in Australia, behind Xero and MYOB. But Intuit also has a global customer base of 5.1 million across 200 countries.

Additionally, the AFR also reports that the Australian Competition and Consumer Commission (ACCC) has authorised Intuit to participate in open banking. Open banking is part of a key government competition policy that, according to the AFR, “allows consumers to direct data held by banks – and soon energy companies – to be securely transferred to accredited third parties, who can use it to offer lower-cost services.”

So it’s clear that Intuit isn’t entirely happy with its bronze medal in the Australian market  – and that should have Xero worried. If Intuit can tap this avenue effectively, it could steal some market share away from Xero. I’m not suggesting Xero is in trouble. But it is possible that the current Xero share price isn’t reflecting the true nature of the accounting software landscape. The company has fierce competitors. Think about that when you’re looking at P/E of more than 5,000.

Foolish takeaway

Don’t get me wrong, Xero is a fantastic company. However, I do think its possible that the market is pricing it to perfection right now. As such, I’m not too interested in the current Xero share price. But I’ll keep my eye on it nonetheless.

More reading

• The niche ASX shares critical to fuelling the tech boom
• 3 ASX tech shares that pay dividends
• Could these ASX 200 tech shares at 52-week highs go higher? 
• ASX 200 up 0.9%: Telstra dividend update, Afterpay & Xero hit record highs
• 5 things to watch on the ASX 200 on Tuesday

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

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Is it a good idea to stay invested in an ASX share after its share price goes on a strong run?

I think the decision to sell is a much harder choice than buying. Buying is usually pretty easy – you just pick an investment you think could do well over the long-term.

But selling is a lot harder. When is the right time to sell something? It may be a simpler thought process when something has gone wrong – when your investment thesis is broken you should probably move on.

What about when a share performs really strongly over a relatively short period of time? Should you lock in those gains? Should you buy low and then “sell high”?

We’ve seen a number of digital ASX shares perform really strongly after the COVID-19 impacts. Businesses like Kogan.com Ltd (ASX: KGN), Temple & Webster Group Ltd (ASX: TPW), Redbubble Ltd (ASX: RBL), Nextdc Ltd (ASX: NXT), Data#3 Limited (ASX: DTL), Megaport Ltd (ASX: MP1) and so on have done great.

I don’t think we’re on the verge of a dot com crash with these types of businesses. They are all generating real growth of customer activity and revenue growth.

Here are three big reasons why I think you should keep holding these types of big winners:

Tax

I don’t think enough investors give much thought about tax with their investment decisions.

If you’ve done really well with an investment and go to sell it, you’re likely going to have to pay tax if you crystallise that gain. The higher your marginal tax rate, the more you would have to pay in tax if you sold a winner from your portfolio.

For tax reasons alone, I think it makes sense to let your winners keep running.

We all need to pay our taxes, but I don’t think you should cause any capital gains tax events if you can help it, as it would reduce your portfolio balance and hamper the compounding of your wealth.

Winners keep winning

Think about some of the best sports players or sports teams. Think about the best musicians, actors or investors. They may not be perfect every single year, but they have a habit of producing and outperforming most years over the long-term.

I think you can see similar things with businesses. Companies with strong management, a strong product or service, a strong brand – they tend to keep on winning.

Think about businesses like Altium Limited (ASX: ALU), REA Group Limited (ASX: REA), Goodman Group (ASX: GMG), Pro Medicus Limited (ASX: PME), CSL Limited (ASX: CSL), Magellan Financial Group Ltd (ASX: MFG) and so on. It’s these types of ASX shares that have strong long-term visions and keep executing their strategies very effectively.

Why would you want to sell one of the best businesses on the ASX out of your portfolio?

The smaller, digital businesses that I named earlier – ones like Redbubble – still have long-term growth potential. It could be a big mistake to think that FY21 is going to be the last year of exceptional growth. Compounding profit growth can be a great wealth-builder for our portfolios.

If you did decide to sell, you could have another major difficulty.

Where else will you invest?

It’s hard to find a winner. The odds of choosing another winner, at the right time/price (after paying tax), make it even harder to hop from one successful investment to another.

How many wonderful opportunities are there on the share market right now? It’s hard with many of the most promising growth shares now priced fairly highly.

If you still think your underlying business has good long-term profit growth potential, then I think it’s worth holding onto winners. The low interest rate environment has pushed up a lot of asset prices. The alternatives to (ASX) shares don’t look good to me. I’d stick with the best ASX shares and ignore short-term worries.

More reading

• ASX 200 rises, Pro Medicus (ASX:PME) wins another global contract
• 3 exciting ASX growth shares to buy for stellar long term returns
• The Redbubble (ASX:RBL) share price rocketed 25% higher today: Is it a buy?
• Why Bank of Queensland, BHP, Pro Medicus, & Redbubble shares are charging higher
• ASX 200 up 0.9%: Big four banks rise, Pro Medicus jumps, miners charging higher

The post Should you stay invested in an ASX share after a strong run? appeared first on Motley Fool Australia.

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Are you looking for a source of income in this low interest rate environment? Then I think the ASX dividend shares listed below could be the ones to buy.

Both look well-positioned to continue paying their dividends as normal over the coming years despite the pandemic.

Here’s why I think they are among the best on offer on the ASX and in the buy zone today:

BWP Trust (ASX: BWP)

BWP is a real estate investment trust (REIT) that invests in and manages commercial assets. These assets are predominantly leased to home improvement giant, Bunnings Warehouse. I think this is a great tenant to have, especially with tax cuts and government stimulus likely to support solid sales growth for Bunnings in the years ahead.

I believe this puts BWP in a position to collect rent as normal in the coming years and grow its income and distribution at a consistent rate for the foreseeable future. Based on the current BWP share price, I estimate that it offers investors a forward 4.4% yield. I think this is very attractive in the current environment.

Rural Funds Group (ASX: RFF)

Another option for investors to consider buying is Rural Funds. It is an agriculture-focused property company which owns a collection of high quality properties across Australia. These properties are leased to some of the biggest players in the industry on long term leases which include rental increases.

In light of this, barring some extraordinary events, I believe Rural Funds is perfectly positioned to continue growing its rental income and distribution at a solid rate over the next decade. In FY 2021, the company plans to increase its distribution by 4% to 11.28 cents per share. Based on the latest Rural Funds share price, this equates to a generous 4.7% yield.

More reading

• 2 of the best ASX dividend shares you can buy today
• Westpac (ASX:WBC) tips RBA cash rate cut in November
• How to replace your entire wage with ASX dividend shares
• Say goodbye to low interest rates and buy these ASX dividend shares
• Buy these ASX dividend shares to smash low interest rates

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. 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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On Thursday the S&P/ASX 200 Index (ASX: XJO) was back on form again and pushed higher. The benchmark index climbed 0.5% to 6,210.3 points.

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

ASX 200 futures pointing lower.

The ASX 200 is expected to edge lower on Friday after a soft night of trade on Wall Street. According to the latest SPI futures, the benchmark index is poised to open the day 2 points lower this morning. In late trade in the United States the Dow Jones is down 0.05%, the S&P 500 is 0.15% lower, and the Nasdaq is down 0.4%.

Rio Tinto update.

The Rio Tinto Limited (ASX: RIO) share price will be on watch on Friday when it releases its first quarter update. According to a note out of Goldman Sachs, its analysts expect Rio Tinto to report iron ore shipments of 83.3Mt and copper production of 91kt. This will be a quarter on quarter decline of 4% and 32%, respectively.

Gold price edges higher.

Gold miners such as Evolution Mining Ltd (ASX: EVN) and Saracen Mineral Holdings Limited (ASX: SAR) could have a positive day after the gold price edged higher. According to CNBC, the spot gold price is up 0.1% to US$1,909.60 an ounce.

GUD trading update

The GUD Holdings Limited (ASX: GUD) share price could be on the rise today after the products company released a positive trading update. That update revealed that its strong sales performance has continued across both Auto and Water divisions. This led to GUD reporting a 14% increase in first quarter group sales. No guidance has been given for the first half or full year. Goldman Sachs was pleased with this update and retained its buy rating and lifted its price target to $14.75.

Oil prices drop lower.

Energy producers such as Oil Search Limited (ASX: OSH) and Santos Ltd (ASX: STO) could have a tough finish to the week after oil prices dropped lower. According to Bloomberg, the WTI crude oil price is down 0.3% to US$40.93 a barrel and the Brent crude oil price is down 0.5% to US$43.08 a barrel. Traders were selling oil amid concerns that lockdowns would hurt demand.

More reading

• ASX 200 rises, Pro Medicus (ASX:PME) wins another global contract
• Bank of Queensland (ASX:BOQ) among the latest buy ideas from brokers
• Looking to invest in ASX real estate shares? Read this first
• ASX 200 up 0.9%: Big four banks rise, Pro Medicus jumps, miners charging higher
• 5 things to watch on the ASX 200 on Thursday

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 Alumina Limited (ASX: AWC) share price is trading higher after the company announced a strong quarterly report. It comes as the miner trades close to its 52-week low of $1.30.

On today’s news, the Alumina share price closed 1.77% higher at a price of $1.44.

What Alumina does

Alumina owns 40% each of the Alcoa Worldwide Alumina and Chemicals (AWAC) entities. This forms part of the Alcoa Corp (NYSE: AA) business. The company is engaged in investing in bauxite mining, alumina refining and selected aluminum smelting operations.

Alumina has developed a reputation for being an exceptional dividend distributer. However, with the headwinds brought on by COVID-19, shares in the mining company have been on a downward trend. The company is in the S&P/ASX 200 Index (ASX: XJO) with a market capitalisation of more than $4.1 billion.

Why did the Alumina share price rise?

Alumina’s share price increased on the back of strong quarterly results. The company saw strong growth in its aluminium segment of earnings before interest, taxes, depreciation and amortisation (EBITDA) which was up 35% to a total of $119 million. In contrast, bauxite earnings fell to $124 million, lower due to the appreciation of the Australian dollar.

In terms of the company’s production levels, the results saw little change. Both the mining and refining business saw changes of 0.1 mega tonnes. The refining business increased in volume whereas mining decreased.

Despite the good news for shareholders, net distributions fell. Distributions in Q3 were lower as Q2 had benefitted from the flow-on effect of higher margins earlier in the year. This, combined with Alumina’s payment to the Australian Tax Office, reduced available cash for distribution. As such Alumina’s net distributions were $46.3 million.

What did management say?

Commenting on the results, Alumina Limited CEO Mike Ferraro said:

Building on last quarter’s record daily alumina production, the current AWAC system produced a record total production for the quarter, driven by increased plant stability. The joint venture continues to focus on the safety of AWAC employees and the wider communities.

The alumina price is currently $274/t amid continuing signs of a promising economic recovery in China and higher LME aluminium prices. However, COVID case numbers in many countries have started to increase again and the economic impact of the continuing pandemic remains unclear.

The Alumina share price finished the day 1.77% higher at $1.44. However, the share has had a challenging year to date, falling 38%.

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Motley Fool contributor Daniel Ewing 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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