Exchange-traded funds (ETFs) have exploded in popularity over the past few years.

So there are now all sorts of funds that represent different indices, sectors, investment strategies and assets.

Investment services provider BetaShares recently extracted ASX data from 1 January to 30 September to work out which ETFs attracted the most amount of investor money.

And the analysis makes for fascinating reading.

Overwhelmingly, two asset types dominated investor money: Australian shares and international shares. They took in around $4.1 billion and $3.5 billion respectively.

Gold was a distant third with about $1.1 billion. Fixed income ETFs weren’t too far behind in fourth place.

“Just because an asset class is receiving large inflows does not necessarily mean it will perform well,” said BetaShares Associate Director, Michael Brown.

“It is, nonetheless, always interesting to observe where the money is flowing into and out of, to get a sense of sentiment within the overall market, and what is resonating with different types of investors.”

At the end of the spectrum, currency ETFs were the only category to experience negative net investment. Geared long, commodities, Australian listed property and cash all recorded positive flows but were the least popular.

Australian shares ETFs breakdown

ETFs that represented Australian equities were then broken down to subcategories — broad, sector-based, high yield, large cap and small cap.

“Broad market exposures dominated, with just over $3.5 billion in net flows,” said Brown.

“Broad market exposures are generally made up of very liquid, large companies that trade on the ASX.”

He added that there might be 3 reasons why broad ETFs were so popular:

1. Many active managers have underperformed against their benchmarks this year
2. Investors reckon there’s value within Australian shares
3. Broad-exposure funds have less stock-specific risk than directly picking shares

International shares ETFs breakdown

While developed world shares were easily the most popular, attracting almost $1.7 billion, sector-based ETFs fared better than in Australian equities.

Sector-based international ETFs brought in the second most amount of investor money, raking in just under $1 billion.

This is largely because of the United States technology sector’s stunning rally this year.

“ETFs providing exposure to the NASDAQ-100 (NASDAQ: NDX) took the lion’s share, with the BetaShares Nasdaq 100 ETF (ASX: NDQ) and the BetaShares Nasdaq 100 ETF – Currency Hedged (ASX: HNDQ) attracting ~$380 million in new money between them,” Brown said.

Despite a correction in September, the Nasdaq Composite (NASDAQ: .IXIC) has gained more than 70% since the COVID-19 trough in March.

ETFs for gold, fixed income and ethical investing

Fortunately for investors in the year of the coronavirus, it’s easy to invest in gold through ETFs.

“Given recent market volatility, and considering gold has traditionally been viewed as a ‘safe-haven’ asset, we have previously written about why there are still plenty of reasons to consider an investment in gold,” Brown said.

“Gold has seen a consistent and high level of total flows this year.”

Fixed income ETFs have been popular for similarly defensive reasons.

“For yield-hungry investors, we saw hybrids exposure obtain a large share of inflows with over $190 million,” said Brown.

“For more defensive investors, we saw strong flows into core Aussie and Global bond indices, with Australian Government bonds a standout.”

More than $900 million has also flowed into ethical investment ETFs this year, showing social responsibility ascending in priority for retail investors.

Brown said market capitalisation of ethical ETFs has increased more than 800% since December 2016.

“Since the start of the pandemic, the knock-on effects of lockdown, including restricted movements of people and the shutdown of industrial activity, have had significant impacts on global carbon emissions and the way we work,” said Brown.

“Now, as we consider how best to shape the economy coming out of the crisis, ESG considerations are again coming to the forefront of investment decisions.”

More reading

• How to position yourself for the next big surge in technology shares
• Why it is important to diversify your ASX portfolio and how you can do it
• 3 five-star ASX shares to buy next week
• 3 ASX shares to buy in a US election selloff
• Easily diversify your portfolio by investing in these ETFs

Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS. 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 Redbubble Ltd (ASX: RBL) share price will be one to watch on Thursday following the release of its first quarter update.

How did Redbubble perform in the first quarter?

Redbubble has started FY 2021 in a very positive fashion, with further strong growth being delivered across the business.

For the three months ended 30 September, Redbubble reported Marketplace Revenue of $147.5 million, up 116% (122% on a constant currency basis) on the prior corresponding period.

Things were even better for its gross profit, which increased 149% (157% in constant currency) to $64.5 million for the quarter.

This ultimately led to Redbubble delivering first quarter earnings before interest and tax (EBIT) of $22.1 million, compared to a loss before interest and tax of $1.5 million a year earlier.

What were the drivers of its growth?

Management advised that the company saw a continuation of strong demand across products and geographies during the quarter.

This was particularly the case in its largest market – North America. First quarter sales in the region more than doubled during the quarter. This is a big positive given that the North American market accounts for 71% of its gross transaction value.

Sales were also very strong in the ANZ and UK markets, growing 124% and 122% over the prior corresponding period.

In respect to products, the accessories category was the star of the show. It reported a 562% increase in accessories sales during the first quarter. This appears to have been driven partly by increasing demand for fashionable face masks. Accessories now account for 27% of sales on its marketplace.

What’s next?

The company advised that it is continuing to monitor online sales trends and remains mindful of external uncertainties that lie ahead.

It intends to focus on four key initiatives to generate ongoing profitable growth:

1) Artist acquisition, activation and retention; 2) User acquisition and transaction optimisation, 3) Customer understanding, loyalty and brand building; 4) Further physical product and fulfilment network expansion.

Redbubble CEO, Martin Hosking, commented: “The strategic priority for the group now is to ensure we extend the market leadership we have established. We intend to invest in the customer experience to improve loyalty and retention and ensure long-term higher levels of growth. The company has the resources to undertake the anticipated investments and the margin structure to ensure it can do so while remaining profitable.”

More reading

• 3 unstoppable ASX shares to buy with $3,000
• The Redbubble (ASX:RBL) share price is up 320% in 2020: Can it go higher?
• 3 ASX tech shares to buy and hold for the next decade
• Top ASX Stock Picks for October 2020
• Buying these 3 ASX shares could change your life

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 Corporate Travel Management Ltd (ASX: CTD) share price is an interesting proposition right now. ASX travel shares including Webjet Limited (ASX: WEB) were hammered on Wednesday but Corporate Travel’s value edged higher.

That’s symptomatic of what I think is Corporate Travel’s edge in the current market. Here are a few reasons I like the ASX travel share at $17.74 per share today.

Aggressive growth strategy

Corporate Travel has gone from the hunted to the hunter in the space of a few months. When the Corporate Travel share price slumped in the March bear market, distressed investors would have been eyeing off the travel group.

However, Corporate Travel’s fortunes and financial position have come full circle. The ASX travel group has restocked its balance sheet with a $375 million equity raise and announced the acquisition of United States-based Travel & Transport (T&T).

That to me sends a strong signal that Corporate Travel is back and looking to buy cheap assets to boost growth going forward.

Diversified international operations

One thing I like about Corporate Travel is its global diversification. Now, amidst the coronavirus pandemic, this is something of a double-edged sword.

Corporate Travel makes approximately 80% of its revenue offshore with key markets in the US and Europe. A second wave of COVID-19 doesn’t bode well in the short-term, but I think it does create opportunities.

Similar to the T&T opportunity, Corporate Travel has the expertise and experience to manage international assets. That could create some exciting operational opportunities in these markets and boost the Corporate Travel share price in 2021.

Strong earnings base is good for the Corporate Travel share price

Corporate Travel has an impressive online profile with the vast majority of customer transactions now completed online. That is good news given restrictions on bricks and mortar retail right now and travel agent store closures.

On top of that, I think the demand side of the equation is better for Corporate Travel than other ASX travel shares. As the name suggests, business travel is a key component of the company’s earnings. I think that’s a positive for the Corporate Travel share price in the current climate.

Business travel may be more resilient during COVID-19 compared to the leisure segment which could see restrictions and weaker demand hit the bottom line over a longer period of time.

Foolish takeaway

The Corporate Travel share price is not everyone’s cup of tea. There is sure to be more volatility on the way thanks to COVID-19 and government restrictions.

However, I think the ASX travel share could be a strong buy for long-term investors who believe in the acquisition and efficiency story that management is telling right now.

More reading

• Brokers name 3 ASX shares to buy right now
• ASX 200 sinks 2%, Corporate Travel (ASX:CTD) soars 8%
• Top brokers name 3 ASX shares to buy today
• Why Corp Travel Management, EOS, Evolution, & Recce shares are charging higher
• ASX 200 down 1.1%: Corp Travel Management surges higher, gold miners rise, Santos given approval

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Webjet Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Although the Australian share market ended its winning streak on Wednesday, that didn’t stop a number of shares from continuing their positive runs.

In fact, a few shares even managed to climb so much they hit record highs.

Two ASX shares which achieved this feat are listed below. Here’s why they are flying high right now:

Afterpay Ltd (ASX: APT)

The Afterpay share price jumped to a new record high of $98.68 on Wednesday. Investors have been buying the buy now pay later provider’s shares this year after it delivered further explosive sales and customer growth in FY 2020. This was driven by the accelerating shift to online shopping, its international expansion, and the growing popularity of the payment method with both consumers and retailers.

Yesterday’s rise, however, was driven by a positive update on its dealings with AUSTRAC in relation to its Anti-Money Laundering and Counter-Terrorism Financing audit. After considering the final audit report and Afterpay’s response to the findings, AUSTRAC has decided it will not be taking any further regulatory action.

Kogan.com Ltd (ASX: KGN)

The Kogan share price stormed to a new record high of $24.45 yesterday. When the ecommerce company’s shares hit that level, it meant they were up a massive 227% since the start of the year. As with Afterpay, the accelerating shift to online shopping has been the catalyst for this strong gain. The pandemic has sent millions of consumers online for their shopping, many for the first time, leading to Kogan benefiting greatly.

The good news for Kogan is that even with retail stores now open, it hasn’t slowed its growth. Kogan recently revealed that it added 152,000 new customers to its platform during August. This was a record monthly increase and took its total customers to 2,461,000. This led to both its sales and earnings more than doubling during the month.

More reading

• 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
• The niche ASX shares critical to fuelling the tech boom

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

The post Why Kogan (ASX:KGN) and this hot stock just hit record highs appeared first on Motley Fool Australia.

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ASX tech shares have been on fire in 2020. The recently launched S&P/ASX All Technology Index (ASX: XTX) has been climbing higher after adding $33 billion of value in just three months.

Here’s how some of the top tech shares within that index have performed in the year to date.

Which shares are in the index?

The total market capitalisation of the index is over $140 billion with 28 listed tech ‘unicorns’, those with above $1 billion market cap, as at 3 September 2020. The minimum market cap requirement for inclusion currently sits at $120 million.

In terms of country of origin, there are 48 from Australia with the United States (5), New Zealand (3), Ireland (1) and Israel (1) also represented.

Unsurprisingly, the WAAAX technology shares lead the list with all 5 companies making the top 10 by market capitalisation. 

Afterpay Ltd (ASX: APT) is the leader as at 3 September 2020 with a $27.3 billion market cap while Appen Ltd (ASX: APX) rounds out the top 10 at $4.4 billion.

How have the top shares performed?

The list of constituents reads a bit like a who’s who of ASX outperformers. The Appen and Afterpay share prices have rocketed 62.7% and 213.7% year to date, respectively.

Apart from Afterpay, Appen and the like, there are some more loosely-defined ASX tech shares included.

An example is REA Group Limited (ASX: REA), which has seen its share price rocket 17.2% higher in 2020. Real estate listings have been strong despite the coronavirus pandemic which has helped the media organisation maintain its earnings.

Fellow ASX tech share SEEK Limited (ASX: SEK) has been under pressure but seen a rebound thanks to the Federal Budget. Last Tuesday’s budget showed strong support to boost employment which is good news for Seek’s FY21 earnings.

Computershare Limited (ASX: CPU) shares have fallen 22.0% this year while the NextDC Ltd (ASX: NXT) share price has rocketed 108.3% higher in 2020.

Foolish takeaway

ASX tech shares have been on fire in 2020 as investors have looked for growth opportunities. That strong momentum could be good news for shareholders looking to ride market ups and downs in 2021.

More reading

• This is how you can become a millionaire with ASX shares
• ASX 200 finishes lower, Afterpay (ASX:APT) shares rise
• Are Seek (ASX: SEK) shares a good pick for long term investors?
• 4 ASX shares rated as strong buys by brokers
• My top 5 ASX growth shares to buy right now

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen Ltd. The Motley Fool Australia has recommended REA Group Limited and SEEK 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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If you have $50,000 in a savings account and no immediate use for it, I would suggest you consider investing it into the share market.

This is because if you have a long enough investment time horizon, the share market could turn these funds into a life-changing sum.

As of the end of June, the Australian share market had provided investors with an average annual return of 8.7% over the last 30 years.

This means that if you had invested these funds into the ASX in June 1990 and earned the market return, they would now be worth a sizeable $610,000.

If you can then earn the same return for a further six years, the power of compounding will turn these funds into a cool million dollars.

What about the future?

While nothing is certain, I feel confident the share market will generate a similar return over the next 30 years.

So, if you’re happy with this level return, then you could invest these funds into an exchange traded fund (ETF) that tracks the S&P/ASX 200 Index (ASX: XJO). The BetaShares Australia 200 ETF (ASX: A200) allows investors to do this.

There is also the Vanguard Australian Shares Index ETF (ASX: VAS) to consider. This ETF gives investors exposure to the 300 shares listed on the S&P/ASX 300 index.

But you don’t have to settle for that. The ASX 200’s 8.7% per annum return over the last 30 years is an average. This means some shares underperform it and others beat it.

If you’re looking for future market beaters, then I would suggest you look at investing in the likes of electronic design software company Altium Limited (ASX: ALU), artificial intelligence services provider Appen Ltd (ASX: APX), and biotherapeutics giant CSL Limited (ASX: CSL).

I believe these companies are well-positioned to grow their earnings at a strong rate over the next decade and beyond. This could lead to their shares generating market-beating returns, turning that $50,000 into something significantly larger.

More reading

• 2 blockbuster blue chip ASX shares to buy
• ASX 200 finishes lower, Afterpay (ASX:APT) shares rise
• Here’s why Medical Developments (ASX: MVP) share price has soared 12% today
• My top 5 ASX growth shares to buy right now
• ASX 200 flat: Bank of Queensland impresses, CSL guidance update, AUSTRAC clears Afterpay

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 Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of Appen 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.

The post This is how you can become a millionaire with ASX shares appeared first on Motley Fool Australia.

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At present, the base interest rates on savings accounts from Westpac Banking Corp (ASX: WBC) are an ultra-low 0.05%.

With rates as low as this, it is near impossible to generate a sufficient income from them.

So, if you’re an income investor, I would suggest you skip savings accounts and look to the share market. Especially given the good number of quality dividend shares you’ll find there.

But which ASX dividend shares should you buy? Two that I like are listed below:

Accent Group Ltd (ASX: AX1)

I think that Accent Group would be a great option for income investors. It is the footwear-focused retail group responsible for popular store brands such as The Athlete’s Foot, HYPE DC, and Platypus. Accent Group has been a very positive performer over the last few years and even during the pandemic. This has been driven by the popularity of its exclusive brands and its growing online business. The latter was incredibly important during the height of the pandemic.

The good news is that I’m confident these positive trends will drive further growth in the coming years. This should be supported by its expansion plans. For now, I’m forecasting Accent to pay a 9 cents per share fully franked dividend in FY 2021. Based on the current Accent share price, this equates to a generous 5.2% dividend yield.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

Another top option for income investors to consider buying is the Vanguard Australian Shares High Yield ETF. I think this would be perfect for investors that don’t have the funds required to build a truly diverse income portfolio.

This is because the Vanguard Australian Shares High Yield ETF provides investors with exposure to 66 of the highest yielding shares on the Australian share market. This diverse group of shares include the likes of BHP Group Ltd (ASX: BHP), Coles Group Ltd (ASX: COL), Fortescue Metals Group Limited (ASX: FMG), Telstra Corporation Ltd (ASX: TLS), and Westpac and the rest of the big four banks. I estimate that its units offer a FY 2021 dividend yield in the range of 4% to 5%.

More reading

• ASX 200 finishes lower, Afterpay (ASX:APT) shares rise
• ASX 200 jumps more than 1%, big ASX banks rise
• ASX 200 Weekly Wrap: Budget, US election sparks 5% surge in ASX shares
• Is the Westpac (ASX:WBC) share price a buy?
• Top brokers name 3 ASX shares to buy next week

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool Australia has recommended Accent Group. 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 Wednesday the S&P/ASX 200 Index (ASX: XJO) ended its incredible seven-session winning streak with a small decline. The benchmark index fell 0.3% to 6,179.2 points.

Will the market be able to build bounce back from this on Thursday? Here are five things to watch:

ASX 200 futures pointing slightly lower.

The Australian share market is expected to edge lower on Thursday after a weak night of trade on Wall Street. According to the latest SPI futures, the ASX 200 is poised to open the day 1 point lower this morning. In late trade on Wall Street the Dow Jones is down 0.3%, the S&P 500 has fallen 0.4% lower, and the Nasdaq is down 0.5%.

Perpetual annual general meetings.

The Perpetual Limited (ASX: PPT) share price will be one to watch today when it holds its virtual annual general meeting. The fund manager is likely to provide the market with an update on its performance during the first quarter at the event.

Gold price rebounds.

It could be a good day for gold miners such as Newcrest Mining Limited (ASX: NCM) and Saracen Mineral Holdings Limited (ASX: SAR) after the gold price rebounded. According to CNBC, the spot gold price is up 0.7% to US$1,907.70 an ounce. A pullback in the U.S. dollar and economic uncertainty gave the precious metal a lift.

Bank of Queensland shares rated as a buy.

The Bank of Queensland Limited (ASX: BOQ) share price could be heading higher from here according to analysts at Goldman Sachs. In response to its full year results yesterday, the broker has retained its buy rating and lifted its price target to $7.39. Goldman believes Bank of Queensland’s net interest margin outperformance will continue.

Oil prices rise again.

Energy shares such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) could be on the rise after oil prices pushed higher again. According to Bloomberg, the WTI crude oil price is up 2.25% to US$41.11 a barrel and the Brent crude oil price is up 2.3% to US$43.42 a barrel. Traders were buying oil amid hopes that U.S. crude oil stockpiles are falling.

More reading

• Is Transurban’s (ASX:TCL) share price 18% undervalued?
• ASX 200 finishes lower, Afterpay (ASX:APT) shares rise
• ‘Vomit buying’: How fundie spent $110m during COVID-19 crash
• Why the Flight Centre (ASX:FLT) share price slumped despite new tourism campaign
• 4 ASX shares rated as strong buys by brokers

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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If you’re planning to add a few blue chip ASX shares to your portfolio in the near future, then I would suggest you consider the two listed below.

I believe these are among the best on offer on the Australian share market right now. Here’s why I think they are in the buy zone:

Coles Group Ltd (ASX: COL)

I believe this supermarket giant could be a great option for investors looking at blue chips. Even those its shares have been on fire this year, I still see a lot of value in them for a long-term investment. This is due to its defensive qualities, refreshed strategy, and solid growth prospects.

In respect to the latter, I believe Coles’ focus on cost cutting through automation and efficiencies will underpin solid earnings growth over the next decade. Another positive is its favourable dividend policy. Coles intends to pay out upwards of 90% of its earnings as dividends each year. This could mean plenty of dividend growth over the 2020s, which is very welcome in this low interest rate environment.

CSL Limited (ASX: CSL)

Another quality blue chip ASX share to buy is CSL. I’m a big fan of the biotherapeutics company due to its high quality CSL Behring and Seqirus businesses. CSL Behring is the global leader in plasma therapies and Seqirus is the second biggest player in the influenza vaccines industry.

I believe both businesses can grow their sales at a strong rate over the next decade thanks to their leading therapies and vaccines, robust demand, and lucrative research and development pipelines. Each year CSL invests somewhere in the region of 10% to 11% of its sales into research and development. This investment keeps its pipeline filled with ground-breaking products that have the potential to generate billions of dollars of sales in the future. Overall, I feel this could make CSL the perfect buy and hold option for investors today.

More reading

• ASX 200 finishes lower, Afterpay (ASX:APT) shares rise
• Here’s why Medical Developments (ASX: MVP) share price has soared 12% today
• ASX 200 flat: Bank of Queensland impresses, CSL guidance update, AUSTRAC clears Afterpay
• CSL (ASX:CSL) share price pushes higher on FY 2021 guidance update
• 3 ASX 200 growth shares to buy 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 CSL Ltd. 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 Transurban Group (ASX: TCL) share price was down 0.5% at close of trade today.

That’s broadly in line with the wider market moves, which saw the S&P/ASX 200 Index (ASX: XJO) fall 0.3% by the closing bell.

Still, October’s been a good month for Transurban shareholders, with the share price up 6.2% so far this month. Following the massive COVID-19 driven sell-off in March, year-to-date the share price remains down 6.5%. 

So why do I think the Transurban share price is undervalued by at least 18%? We’ll get to that in a tick. But first…

What does Transurban do?

Transurban is one of the world’s largest toll road operators. Atop collecting toll payments from road users, the company also designs and constructs new road projects. Transurban is Australian-owned and operates in Melbourne, Sydney and Brisbane. It also runs toll roads in Montreal, Canada and the wider Washington DC area in the United States.

Transurban first listed on the ASX in 1996.

Why the Transurban share price could go up

Less than 8 months ago, on 20 February, the Transurban share price hit an all-time closing high of $16.26 per share.

That’s just over 14% above today’s price of $13.93 per share. This means if things were simply to ‘return to normal’ the share price could gain 18%.

And traffic counts on the company’s toll roads indicate that the return to normal is already well under way.

At last week’s annual general meeting (AGM), the company revealed that while average daily traffic (ADT) was still down 58.6% on its Melbourne tollways for the September quarter, traffic numbers in Sydney were up 1.5%.

That’s not huge. But it does indicate that once restrictions are lifted, people are prone to return to their cars. And with angst over potential infections on public transport likely to linger in Australia and North America, car travel should see a boost from people turning away from buses and trains.

Then there’s the multi billions of dollars in the recovery budgets that the Australian, US, and Canadian governments have pledged for infrastructure (including roads) projects. This should also offer long term gains for Transurban’s road design and construction branches.

Connecting the dots, I believe Transurban’s share price could be at least 18% higher by this time next year.

More reading

• ASX 200 finishes lower, Afterpay (ASX:APT) shares rise
• ‘Vomit buying’: How fundie spent $110m during COVID-19 crash
• Why the Flight Centre (ASX:FLT) share price slumped despite new tourism campaign
• Here are 10 years of ASX 200 historical returns
• Ramsay (ASX:RHC) share price firms as its UK hospitals reopen to private patients

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group. 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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