Is the Telstra Corporation Ltd (ASX: TLS) share price a buy for 2021?

I think it’s important to be an investor for the long-term. What happens over the next few weeks or months isn’t as important as what happens in the coming years.

Telstra has been going through a lot of change. The shift to the NBN has caused a decline in margins and profit. Management believe that by FY23 the negative earnings before interest, tax, depreciation and amortisation (EBITDA) impact of the NBN will have been fully absorbed and all the one-off payments for the NBN disconnections will have been received.

The change to the NBN has cost Telstra around $3.5 billion in recurring EBITDA when it is complete.

That’s a big hit to profit. It’s no wonder that the Telstra share price is down 47% over the past five years. It has also lost revenue from voice revenues, SMS revenue, global roaming and due to low-cost competition.

But that can’t be changed.

What the company has been working on over the past few years is its T22 strategy to become more efficient and lower costs. A kay part is a reduction of costs by $2.5 billion. Telstra is aiming to be one of the top quartile global telcos when it comes to cost efficiency.

Telstra’s AGM

The telco held its AGM this week. One of the disappointing points covered in the AGM was that its return on invested capital (ROIC) target of more than 10% by the end of FY22 won’t be achieved. The new target is ROIC of more than 7%.

Recent accounting changes reduce how ROIC is reported, so the original 10% target becomes 9%. Even so, Telstra said the goal still can’t be achieved in the original timeframe because of competition and COVID-19. But it’s aiming to increase the ROIC over time.

There were a few interesting, more positive points from Telstra from the AGM. Telstra Chair John Mullen was personally very excited by the potential of Telstra Health which is “growing fast”. It’s his personal view that one day Telstra Health will “be a real success story and a very significant contributor to the size and success of Telstra overall.”

The company also seemingly reaffirmed its annual $0.16 dividend per share for shareholders.

Telstra has said that to maintain the dividend it needs to achieve underlying EBITDA in the order of $7.5 billion to $8.5 billion, which the company is working hard to achieve.

But remember that the Telstra share price, dividend and earnings are coming under pressure from NBN, competition and COVID.

Telstra’s board said that it’s acutely aware of the importance of dividends to shareholders and, if necessary, is prepared to temporarily exceed its capital management framework principle of paying an ordinary dividend of 70% to 90% of underlying earnings to maintain a 16 cent per share dividend.

Does that make the Telstra share price a buy for dividend investors?

That dividend commitment is dependent on three factors. The first is whether an underlying EBITDA of $7.5 billion to $8.5 billion after the rollout of the NBN is achievable. The second is whether the free cashflow dividend payout ratio remains supportive and the company can retain a strong financial position. The final factor is whether there are other factors that would make the payment of the $0.16 dividend imprudent.

The dividend is not a guaranteed payment, though Telstra said it will do what it can to maintain the dividend and eventually increase it over time.

At the moment I just don’t see how 5G can generate a lot more profit for Telstra over the next couple of years. It may need to wait until more services come out that require additional connections like automated cars (which I think are at least a few years away). 

I can understand why dividend investors are attracted to Telstra. The dividends of other popular ASX blue chips like Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) have been cut.

Telstra doesn’t offer much earnings growth at the moment, so I don’t think the Telstra share price can grow much either. A flat, at best, dividend isn’t that compelling in my opinion. There are other businesses that offer better dividend growth prospects like WAM Leaders Ltd (ASX: WLE) and Pacific Current Group Ltd (ASX: PAC) over the next few years.

More reading

• Why I would buy Telstra (ASX:TLS) and this ASX dividend share right now
• Why the Telstra (ASX:TLS) share price soared 4% today
• ASX 200 jumps more than 1%, big ASX banks rise
• ASX 200 up 0.9%: Telstra dividend update, Afterpay & Xero hit record highs
• Why Afterpay, HUB24, NEXTDC, & Telstra shares are storming higher

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra 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.

The post Is the Telstra (ASX:TLS) share price a buy for 2021? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3iZyvTE

Financial services company Thorn Group Ltd (ASX: TGA) announced on Monday it would pay a special 7.5 cents per share dividend on 3 November. At Tuesday’s closing share price of 25 cents, that represents a dividend yield of 30%. The Thorn share price goes ex-dividend on Friday. This means investors buying the share at or near 25 cents before Friday will get a payment of up to 30% in less than 3 weeks.

On publication of the company’s quarterly report, it stated that Thorn held $54.1 million of free cash. As this is excess to requirements, the directors have decided to return $24.2 million to shareholders, thus producing the high dividend yield payment. 

Investors seeking to capitalise on this yield would need to act fast. The Thorn share price already spiked by 19.05% yesterday. A payment of this magnitude is going to attract attention.

Performance of Thorn Group

Thorn Group is a company with two main lines of business. First, it is the owner of Radio Rentals, a consumer leasing company. Second, it owns Thorn Business Finance, which provides a range of tax effective credit options for small to medium enterprises (SMEs). 

The company has had a difficult couple of years. However, FY20 has been a turning point for Thorn Group, sparked by the pandemic crisis. By the end of the year, it had changed several substantial shareholders, appointed a new board of directors, installed a new CEO, changed several members of senior management, settled a class action, and completed a capital raising. 

Nonetheless, this is the third time this year that Thorn Group has seen its share price rally. Yesterday, of course, it rose in anticipation of the large dividend yield. The first time it rose by 60% on news it would permanently close all Radio Rentals stores, changing it to a digital only business. The second time it rallied by 30% on the release of its June quarter report, in which it announced a boost to free cash of $54.1 million. 

Strategies for the dividend yield

Investors interested in securing this payment would need to buy quickly to ensure a dividend yield as close as possible to 30%. They would then need to hold onto the shares past the ex-dividend date. Unfortunately, I am pretty confident the Thorn Group share price will collapse on Friday. This is because share prices often fall by the approximate value of a dividend payment after the ex-dividend date has passed. So, investors buying shares only for the dividend, and not trading out of them on Thursday afternoon to lock in share price gains, would need to be prepared to hold onto them until they rise again.

Nonetheless, I believe this company is truly at the beginning of a disciplined turnaround. We’re entering a period where SME finance is likely going to be very important to the country, so I believe the Thorn Group share price will continue to rise gradually over time.

More reading

• Is Alphabet thinking of its ‘other bets’ all wrong?
• 2 unstoppable ASX shares to buy with $2,000
• Grow your wealth with these quality ASX healthcare shares
• Apple Announces the iPhone 12: What You Need to Know
• Why I would buy Telstra (ASX:TLS) and this ASX dividend share right now

Motley Fool contributor Daryl Mather 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.

The post Want up to 30% dividend yield in 3 weeks? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3nNMi3y

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.

When Google officially changed its name to Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) in 2015, it was a clever play on words. The company could better be described as ‘Alpha’ (the most powerful) and ‘Bet’ (wager).

Google had already become synonymous with search. The advertising revenue it brought in made it a cash machine – earning the company a place in the now-famous FAANG group. But management – at the time led by co-founder Larry Page – wasn’t willing to stop there. It wanted to take that extra cash and do good for the world by taking lots of small bets.

Thus, it started focusing on moonshot projects, like self-driving unit Waymo, smart home device Nest, and health-focused Calico, to name just a few. A tech titan trying to do great things for the world. Sounds great, doesn’t it?

But maybe the company has been going about it all wrong.

Trying to ‘change the world’ as harmful goal

In 2017, Ryan Holiday – author of several best-selling books focused on stoic philosophy – wrote about something called the ‘narrative fallacy’. Specifically, he noted that too many entrepreneurs want to go out and ‘change the world’.

They do this because they look at business people who have already done so – Reed Hastings of Netflix or Tobi Lutke of Shopify, for instance. They want to be held in the same regard, and make such success their aim. In doing so, they create a narrative in their head: Those people set out to change the world, so will I.

That, said Holiday, is a recipe for disaster:

It’s both an inspired way to look at things and also a clichéd trope. It also happens to be rather delusional … Trying to ‘change the world’ was not the mission with which most great or successful things started out with. It’s only our ego, afterwards, that creates these stories. And it blinds us to the traits which actually create success.

There’s a conceit inherent in trying to ‘change the world’. We assume our vision of a ‘better world’ is more or less the same as what everyone else’s vision is. We might have a hard enough time reaching consensus on what this means in our own household. Throw different countries and cultures into the mix and it quickly becomes clear how difficult such a feat is. In this vein, setting out to change the world is not just silly, but dangerous. 

Holiday later goes on to talk about how YouTube was started by people trying to share funny video clips. Netflix? Hastings got the idea because he was worried about getting in trouble with his wife for the Blockbuster late fees he was racking up. And Shopify? Lutke made snowboards but couldn’t find a way to sell them on the internet – so he created his own platform.

What does this have to do with Alphabet? 

Here’s the other tidbit from Holiday’s piece that made me think:

A few years ago, at a private event, Google founder Larry Page told a rapt audience that the way he evaluates prospective companies and entrepreneurs is by a single metric – asking them if what they’re working on was something that could ‘change the world’.

Prior to reading this, I considered such a mission inspired. But now? I’m starting to wonder. Perhaps Page and Sergey Brin were just two people who stumbled upon a brilliant way to organise the world’s information and make it universally accessible – more or less the company’s mission – but the ‘narrative’ ends there.

I’ve long thought Alphabet to be a company with incredible optionality: a wide-moat advertising business on one side, with lots of high-risk, high-reward ventures (like the three mentioned above) on the other side. For years it has looked like Waymo would be the first ‘big hit’ to come from these other bets. Some estimates pegged the unit’s value at more than $100 billion. But recent private investments make it seem like the number is far less: $30 billion.

That’s still not bad. But on the whole, these other bets have been around for a long time. Over the past six years alone, Alphabet has lost a combined $20 billion on them.

Could part of the problem with these high-risk, high-reward investments simply be that they’re looking for companies that think they can change the world? Perhaps they should just be looking for individuals who are solving a simple problem in their own lives.

I’m not sure how to find those people, but if anyone does, it should be Google.

My takeaway

Over the years, Alphabet has become a smaller and smaller part of my portfolio. It’s not because I’ve been selling shares, it’s simply because the rest of my holdings have grown to dwarf it. This is clearly still a high-quality organisation that I want to own. It has nine different products with more than 1 billion users – and they’re uber-helpful in my own life.

But my hopes for those high-risk, high-reward projects are fading. That doesn’t mean I’ll be selling shares, but I’ll certainly be resetting my expectations. I think other Alphabet investors should – if they haven’t yet – do the same.

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

More reading

• How to position yourself for the next big surge in technology shares
• Is the Nearmap share price a buy after the tech sell-off?
• Will ASX media stocks get a $1.4 bn Google boost?
• 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

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Brian Stoffel owns shares of Alphabet (A shares), Alphabet (C shares), and Shopify. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares) and Alphabet (C shares). The Motley Fool Australia has recommended Alphabet (A shares) and Alphabet (C shares). 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 Is Alphabet thinking of its ‘other bets’ all wrong? appeared first on Motley Fool Australia.

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

from Motley Fool Australia https://ift.tt/34RFLfv

If I had $2,000 to spend on ASX shares today, I would look for a company that I feel is ‘unstoppable’. Some ASX companies just seem to thrive no matter the environment. 2020 has brought its fair share of challenges, but some companies have shown the ability to thrive amidst the chaos. These are the kind of businesses I like to see in my portfolio. So here are 2 ‘unstoppable’  ASX shares that I would happily spend $2,000 on today.

2 unstoppable ASX shares for $2,000 today

Fortescue Metals Group Limited (ASX: FMG)

Iron miner Fortescue is the first ASX share I believe is unstoppable. Fortescue has grown tremendously over the past decade to become one of the ASX’s largest companies. Today, the Fortescue share price stands at $16.62 (at the time of writing). That’s not quite at the company’s 52-week (and all-time) high of $19.56, but that just means we can pick up the shares for a cheaper price.

Although Fortescue is inherently a cyclical company due to its mining nature, I think its efficiency and lean operational structure mean it is a worthy investment today. Yes, iron ore prices are historically high right now (at roughly US$123 per tonne at the time of writing). But since it costs Fortescue between US$12 to $13 to extract and process one tonne of ore, there is plenty of padding here to absorb an iron ore pricing collapse, if that eventuates. Thus, the ‘unstoppable’ moniker applies well here in my view.

On current prices, Fortescue shares also offer a whopping trailing dividend yield of 10.59%, which also comes fully franked. Weighing all these factors up, I think Fortescue is a great buy today with $2,000.

Afterpay Ltd (ASX: APT)

If there is one company on the ASX we could apply the ‘unstoppable’ tag to, it’s this one. Afterpay is truly one of the most gravity-defying shares I’ve ever come across. Anyone who’s ever bet against this company, or held off from buying shares, is probably regretting their decision today. At the time of writing, Afterpay is going for $94.46 a pop. That’s just a touch below the company’s all-time high of $96.08, which was also recorded just yesterday.

That means anyone who picked up Afterpay for around $8 back in March (read it and weep) is looking at gains of more than 1,000% today. 

Despite this incredible run up, I think Afterpay is another ASX share worthy of consideration for a $2,000 investment today. This company simply can’t be put in the corner. It managed to grow its earnings by 74% in FY2020, and will probably throw up an equally-impressive number in FY2021 in my view. Although the Afterpay share price looks expensive today, I would still consider this company one of the most unstoppable shares on the ASX, and would thus be willing to look past today’s share price. 

More reading

• 3 hot ASX shares to buy when you’re young
• 3 reasons I don’t use stop-loss orders for ASX shares
• Why the Afterpay (ASX:APT) share price has hit a new record high
• Zip and Estrella Resources were among the most traded shares on the ASX last week
• ASX 200 up 0.9%: Telstra dividend update, Afterpay & Xero hit record highs

Motley Fool contributor Sebastian Bowen 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.

The post 2 unstoppable ASX shares to buy with $2,000 appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/34U3Baf

With populations around the world getting older and chronic disease burden increasing, demand for healthcare services is expected to rise strongly over the coming decades.

In light of this, I think the healthcare sector could be a great place to look for long term investments.

But which healthcare shares should you buy? Three that I feel could be long-term market beaters are listed below. Here’s why I like them:

PolyNovo Ltd (ASX: PNV)

The first ASX healthcare share to buy is PolyNovo. It is the medical device company behind the NovoSorb Biodegradable Temporising Matrix (BTM) product. This wound dressing product is designed to treat full-thickness wounds and burns and has a sizeable $1.5 billion addressable market. However, management isn’t resting on its laurels. It is looking to expand its usage into other markets. If this is successful, it would add a further $6 billion to its addressable market.

Pro Medicus Limited (ASX: PME)

Another ASX healthcare share that I think would be a top option is Pro Medicus. It is a leading provider of radiology IT software and services to hospitals, imaging centres, and healthcare companies. Due to increasing demand for its software from leading healthcare institutions, Pro Medicus has been growing its earnings at a rapid rate in recent years. This even continued in FY 2020 despite the pandemic. Over the 12 months, the company’s underlying profit before tax increased 33.4% to $30.24 million. Pleasingly, due to its high quality software, sizeable market opportunity, and burgeoning sales pipeline, I believe Pro Medicus can continue its positive form for some time to come.

Ramsay Health Care Limited (ASX: RHC)

A final healthcare share to buy is Ramsay Health Care. Although trading conditions remain tough in the private hospital sector because of the pandemic’s impact on elective surgeries, I expect a swift rebound once the crisis passes. Looking further ahead, I believe Ramsay’s long term outlook is very positive. This is due to the aforementioned ageing global population and increased chronic disease burden. I expect this to lead to a sustained increase in demand for its services over the 2020s and beyond. Together with potential earnings accretive acquisitions, I believe Ramsay is well-placed for long term growth.

More reading

• Why the 4DMedical (ASX:4DX) share price is reaching new highs
• 3 ASX shares I’d buy if the share market crashes again
• PainChek (ASX:PCK) share price lower despite Ramsay (ASX:RHC) partnership
• Where should you invest your Wesfarmers (ASX:WES) dividends?
• ASX 200 up 1.6%: CBA higher on COVID-19 loan deferrals update, Reliance rockets

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 Pro Medicus Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of POLYNOVO FPO. The Motley Fool Australia has recommended Pro Medicus Ltd. and 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.

The post Grow your wealth with these quality ASX healthcare shares appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/34Xwr9E

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.

It’s iPhone Day 2020, and Apple (NASDAQ: AAPL) just showed off its latest flagship iPhone and a new affordable smart speaker. There was no mention of the AirTags accessory that could help people locate lost items, or any updates around Arm-based Macs or how many Apple Music subscribers there are now.

Here’s everything that Apple showed off today.

iPhone 12

As expected, the next iPhone will feature 5G cellular technology across all new models. Apple has overhauled the lineup’s design, resembling the boxier iPad Pro and some older iPhones. The standard iPhone 12 will have the same 6.1-inch display as last year’s iPhone 11, but the smartphone is — you guessed it — thinner and lighter. However, the display has a higher resolution with twice as many pixels.

Apple has collaborated with Corning to develop a new cover glass material that it’s calling Ceramic Shield, which should improve durability and minimize damage from drops. There is an updated dual-camera system, and Apple is adding a magnetic system, repurposing its old MagSafe branding. Those magnets will make it easier to properly align a wireless charger and can also be used for other accessories.

The company is adding a smaller iPhone 12 Mini to the lineup with a 5.4-inch display. That model has essentially all of the same features as the standard iPhone 12 but in a smaller form factor.

The Pro models use the same design but swap out aluminum for stainless steel as the chassis material. iPhone 12 Pro is getting a larger 6.1-inch display, up from last year’s 5.8-inch screen, while iPhone 12 Pro Max will get a 6.7-inch display.

The triple-camera system is similarly getting a revamp with improved photo and video performance. The Pro models also include a lidar sensor in the camera system, which was expected after Apple added that sensor to the iPad Pro earlier this year. The inclusion of lidar will allow the iPhones to better understand their environments, which will be useful for augmented reality (AR) applications, as well as contribute to photo quality.

Here’s what the new lineup looks like.

Model	Display Size	Starting Price
iPhone 12 Mini	5.4 inches	$699
iPhone 12	6.1 inches	$799
iPhone 12 Pro	6.1 inches	$999
iPhone 12 Pro Max	6.7 inches	$1,099

Data source: Apple.

The iPhone 12 and 12 Pro can be pre-ordered on Friday and will ship a week later, while the Mini and Max models will ship in early November.

HomePod Mini

Years after launching the overpriced HomePod, Apple has finally announced its oft-rumored HomePod Mini, priced at $99. The new speaker is smaller, has a spherical design, and features a backlit touch surface on the top that displays visualizations. HomePod Mini looks like an upside-down version of Amazon‘s new Echo Dot, except it costs twice as much.

The original HomePod, which was initially priced at $350, was never a strong seller and failed to make a dent in the booming smart-speaker market. Apple is still touting superior audio quality, pointing to an S5 chip that powers computational audio that optimizes the speaker’s acoustics. HomePod Mini will include Apple’s U1 Ultra Wideband chip for short-range communications with other Apple gadgets that have the chip.

One of the main criticisms of the original HomePod was that it only directly supported integration with Apple Music, limiting the appeal to consumers that might use another streaming service. Apple will add support for SiriusXM‘s Pandora and Amazon Music — but not Spotify, the most popular paid music-streaming service in the world. That omission will not help dispel the ongoing antitrust scrutiny.

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?
• This is my favourite ASX share right now
• ASX investors were buying Tesla (NASDAQ:TSLA) and Apple (NASDAQ:AAPL) shares last week
• Here are the 10 most popular ETFs on the ASX
• ASX investors were buying Tesla (NASDAQ:TSLA) and Snowflake (NYSE:SNOW) shares last week

Evan Niu, CFA owns shares of Amazon, Apple, and Spotify Technology. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple. The Motley Fool Australia has recommended Apple. 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 Apple Announces the iPhone 12: What You Need to Know appeared first on Motley Fool Australia.

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

from Motley Fool Australia https://ift.tt/33V2fwR

Whether or not the cash rate goes lower again next month, only time will tell. But one thing I’m very confident of, is that it will be a long time until rates go higher again.

In light of this, I continue to believe that dividend shares are better options for income investors than traditional interest-bearing assets such as term deposits and savings accounts.

With that in mind, here are two ASX dividend shares I would buy for income:

Aventus Group (ASX: AVN)

I think Aventus would be a great option for income investors. It is the owner and operator large format retail parks across Australia. While retail property is a tough place to be, Aventus’ focus on every day needs has allowed it continue its growth during the pandemic. For example, in FY 2021 it delivered a 4.2% increase in funds from operations (FFO) to $100 million.

I’m expecting more of the same in FY 2021, especially given the tax cuts that have been promised with the Federal Budget. These cuts should be supportive of consumer spending. In light of this, I forecast a 13.5 cents per share distribution this year. Based on the current Aventus share price, this represents an attractive 5.6% yield.

Telstra Corporation Ltd (ASX: TLS)

I think this telco giant would be a great option for income investors due to its generous yield and improving outlook. The latter is thanks to its T22 strategy, the arrival of 5G internet, and the easing of the NBN headwind. Together, I believe a return to earnings and dividend growth could be on the cards in the coming years.

For now, following its annual general meeting update this week, I’m very confident that Telstra will maintain its fully franked 16 cents per share dividend for the foreseeable future. Based on the latest Telstra share price, this represents a 5.5% dividend yield.

More reading

• Why the Telstra (ASX:TLS) share price soared 4% today
• ASX 200 jumps more than 1%, big ASX banks rise
• ASX 200 up 0.9%: Telstra dividend update, Afterpay & Xero hit record highs
• Why Afterpay, HUB24, NEXTDC, & Telstra shares are storming higher
• Telstra (ASX:TLS) share price in focus after AGM dividend update

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended AVENTUS RE UNIT. 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 I would buy Telstra (ASX:TLS) and this ASX dividend share right now appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2SPzQ4K

On Tuesday the S&P/ASX 200 Index (ASX: XJO) was on form again and extended its impressive run. The benchmark index rose just over 1% to 6,195.7 points.

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

ASX 200 expected to drop lower.

The ASX 200 looks set to finally end its winning streak on Wednesday. According to the latest SPI futures, the ASX 200 is poised to open the day 55 points or 0.9% lower this morning. This follows a mixed night on Wall Street. In late trade the Dow Jones is down 0.5%, the S&P 500 is 0.6% lower, and the Nasdaq is edging slightly higher

Bank of Queensland results.

The Bank of Queensland Limited (ASX: BOQ) share price will be on watch today when it releases its full year results. Last month the regional bank warned that its result would include loan impairment expense of $175 million (pre‐tax). This is inclusive of $133 million of COVID‐19 related collective provision expenses. According to a note out of Goldman Sachs, it expects the bank to report a 34% decline in cash earnings to $210 million. It is also forecasting the payment of its deferred 10 cents per share interim dividend and a final 2 cents per share dividend.

BHP quarterly update.

The BHP Group Ltd (ASX: BHP) share price will also be on watch today when the mining giant releases its first quarter update. According to a note out of Goldman Sachs, it expects BHP to report Petroleum production of 26Mboe, Copper production of 365kt, and iron ore shipments of 71.5Mt. The latter will be a 7% quarter on quarter decline.

Gold price sinks lower.

Gold miners such as Northern Star Resources Ltd (ASX: NST) and Saracen Mineral Holdings Limited (ASX: SAR) could come under pressure today after the gold price sank lower. According to CNBC, the spot gold price is down 1.6% to US$1,897.40 an ounce. The precious metal came under pressure after a strong rally by the U.S. dollar.

Oil prices rise.

It could be a good day for energy shares such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) after oil prices pushed higher. According to Bloomberg, the WTI crude oil price is up 2.2% to US$40.29 a barrel and the Brent crude oil price is up 1.9% to US$42.52 a barrel. Oil prices jumped after the release of strong China trade data.

More reading

• Short-sellers are stepping up their attack on these ASX stocks
• ASX 200 jumps more than 1%, big ASX banks rise
• Top brokers are urging you to buy these ASX stocks today
• 3 ASX 200 growth shares to buy today
• The Unibail (ASX:URW) share price is climbing today. Here’s why.

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.

The post 5 things to watch on the ASX 200 on Wednesday appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3lGxp0X

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.

Apple Inc.‘s (NASDAQ: AAPL) stock price is up nearly 60% this year, and it has doubled in the last 12 months. At $2.16 trillion, the company’s market capitalisation is the largest on the U.S. exchanges; and until a recent pullback, shares were repeatedly hitting all-time highs. 

Those data points might scare some investors away. After all, the company was already huge. Now, its market cap is roughly $400 billion more than the next two largest companies, fellow tech giants Amazon.com, Inc. (NASDAQ: AMZN) and Microsoft Corporation (NASDAQ: MSFT), which are both around $1.7 trillion.

Is Apple’s big run a result of overly exuberant investors who have sent it soaring too high? Or can this tech behemoth keep getting bigger and continue to produce market-smashing returns?

The valuation has gone up — a lot

Here’s a look at some of Apple’s key valuation metrics and how those compare to a year ago:

Date	P/E Ratio	P/S Ratio	P/FCF Ratio
October 2020	35.7	7.6	29.0
October 2019	19.2	4.1	17.9

Data source: YCharts. Data through market close Oct. 9. P/E = price-to-earnings; P/S = price-to-sales; P/FCF = price-to-free-cash-flow. 

Those numbers illustrate that investors have gotten much more optimistic about Apple in the last year. A year ago, a dollar of sales was valued at $4.10 in the stock price. Today, that dollar is valued at $7.60. The same thing has happened with the company’s earnings and free cash flow. Put simply, Apple’s stock price has gone up much faster than its earnings, sales, and free cash flow.

How do these metrics compare to its largest tech company peers? Here’s a look.

Company	P/E Ratio	P/S Ratio	P/FCF Ratio
Amazon.com, Inc.	126.5	5.2	61.8
Microsoft Corporation	37.5	11.6	36.7
Apple Inc.	35.7	7.6	29.0

Data source: YCharts. One-year change in valuation through the close of trading Oct. 9. 

While Apple’s valuation has risen quickly, it remains lower than those of its peers. One reason is Amazon and Microsoft have higher growth rates. Amazon is forecast to grow adjusted earnings per share by 38% this year, and Microsoft just completed its fiscal year with 21% year-over-year growth. By comparison, Apple is expected to grow 9% in fiscal year 2020, which ended in September.

Reasons for investor optimism

In recent years, Apple’s iPhone sales growth stalled, and the device accounted for about two-thirds of the company’s total revenue. If iPhone sales weren’t growing, investors wondered, how would Apple grow?

That skepticism was reflected in the company’s relatively low valuation. In May 2016, when legendary investor Warren Buffett started scooping up Apple shares for Berkshire Hathaway Inc. (NYSE: BRK.A) (NYSE: BRK.B), Apple’s P/E ratio was only about 11. It has since tripled, and a lot of that expansion has come in the last year. I believe there are two main reasons investors have changed their view of the company.

First, there’s optimism that iPhone sales could be in for a boost. On Oct. 13, Apple is expected to announce that its iPhones released this fall will support 5G connectivity, a technology that could significantly improve download speeds. That update could prompt many iPhone users — and there are about a billion of them — to upgrade to a new phone.

Second, Apple has been diversifying its revenue streams. In early 2017, CEO Tim Cook said he wanted the company to double its services revenue by 2020. That has happened, and in the quarter ended in June, the company set a record for services revenue ($13.2 billion). Apple has an installed user base of more than 1.5 billion devices, and if it can get those customers to increase their use of services like Apple Music and the App Store, that will fuel growth.

The company also has grown its wearables, home, and accessories segment, which includes products like AirPods, Apple Watch, and Beats. When Apple reports full-year earnings on Oct. 29, it will have more than doubled the segment’s revenue in just three years.

Those two segments are having a much more meaningful impact on revenue. In 2016, they accounted for just 16% of Apple’s revenues. Through the first nine months of fiscal year 2020, they produced $62 billion, accounting for 30% of total revenue. Even with that growth, the iPhone still accounts for more than half the company’s revenue.

Is Apple overvalued?

Valuation is in the eye of the beholder. That means the question of whether Apple is overvalued can only be answered by each investor. After all, the market is built on people taking opposite sides of trades: buyers and sellers.

For investors who emphasize traditional valuation metrics, Apple probably looks scary. It hasn’t had valuations this high in more than 10 years.

For investors who look at Apple as one of the most innovative companies of all time, the perspective could be different. The company’s innovation has helped build a massive and loyal customer base, which is why Forbes magazine ranks Apple as the world’s most valuable brand year after year.

With that track record of innovation and customer loyalty, I don’t think Apple is overvalued. Historically, there has never been a bad time to buy Apple stock, as long as you held those shares. As a $2.16 trillion company, Apple’s largest growth days are behind it, but I think it can continue to provide long-term investors with market-beating returns for years.

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

More reading

• Buy alert: Microsoft (NASDAQ:MSFT) stock is headed higher
• Why the Buddy (ASX:BUD) share price is up today
• Where will Facebook (NASDAQ:FB) be in 5 years?
• Where will Amazon (NASDAQ:AMZN) be in 10 years?
• Amazon (NASDAQ:AMZN) is going all out to dominate this bustling e-commerce market

Mike Strain owns shares of Amazon, Apple, Berkshire Hathaway (B shares), 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, Apple, Berkshire Hathaway (B shares), and Microsoft and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short January 2022 $1940 calls on Amazon, long January 2022 $1920 calls on Amazon, and short December 2020 $210 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Amazon, Apple, and Berkshire Hathaway (B shares). 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 Is Apple (NASDAQ:AAPL) stock overvalued? appeared first on Motley Fool Australia.

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

from Motley Fool Australia https://ift.tt/34PWdwJ

In my view, ASX consumer staple shares represent a solid investment during times of economic uncertainty and market volatility. Consumer staples companies sell products that people use everyday. These include things like durables, food, beverages, tobacco, household goods and personal products. 

In this article, I take a closer look at three consumer staple companies with solid track records and trusted brands.

Woolworths Group Ltd (ASX: WOW)

Woolworths operates retail stores throughout Australia and New Zealand. Currently, Woolworths supermarkets and Metro food stores number over 1,000 across the country. In New Zealand, the group operates over 180 supermarket stores under the Countdown brand. The other major chain that Woolworths owns and operates is the Dan Murphy’s brand. This, combined with BWS, Cellar Masters and Langtons, numbers above 1,600 stores as well.

Woolworths provides consumer staples and its share price has held up well during the recent coronavirus crisis.

Let’s take a closer look…

Woolworths share price

The Woolworths share price hit an all-time high on 20 February 2020, reaching $43.96. The coronavirus pandemic initially hit the company hard, causing its share price to fall to a low of $32.12 by 13 March, less than one month later. Following this, Woolworths shares have had a steady recovery, moving from $32.12 up to $38.50 at today’s price.

I think the fact that the Woolworths share price has held up in the current climate is, in part, due to its consumer staple product base. No matter what’s happening with the economy, people still need essential products and Woolworths can provide almost all of them. Even with the pandemic still in play, overall the Woolworths share price is up 6.5% in 2020.

Dividends

Woolworths has a long history of paying solid dividends, notwithstanding the fact these have fallen lower recently. If we take a look at ten years ago, Woolworths’ average dividend yield was over 4%. Today, the company’s dividends offer an average yield of around 2.5%. Despite this, I believe Woolworths is such a stable investment that its dividends only add to its appeal for investors.

Blackmores Limited (ASX: BKL)

Blackmores develops, sells and markets natural health products for both humans and animals. It operates in Australia, New Zealand, Asia and various other locations internationally. Blackmores’ product suite includes vitamins, minerals, herbs and other supplements. The company’s range of products is vast and assists with a variety of health-related concerns such as arthritis, muscle strength, brain health, cold and flu, immunity, digestive health, eye health and more. With such a diverse array of products, I believe Blackmores can appeal to customers across a broad cross section of markets. To me, this makes the company a clear member of the ASX consumer staple shares cohort. It provides products that people rely on, regardless of the economic climate.

Blackmores share price

Like many companies on the ASX, the pandemic hit the Blackmores share price hard in the early months of this year. Between 6 February and 13 March, a period of a little more than 30 days, the Blackmores share price fell from $95.68 down to $59.84. However, as with other consumer staple companies, the Blackmores share price quickly recovered up to more than $80 by April. Unfortunately, in the second half of the year, the company’s shares have consistently fallen, all the way back down to $66.18 at the time of writing.

Considering how long this brand has been around and what a trusted name it has in the market, I’m inclined to think the Blackmores share price is a deal at current prices and can only get better as the economy improves. Maintaining good health is something that most people regard as a priority and I feel this is only likely to become more widespread into the future. So whilst Blackmores may not provide critical health services like hospitals, I still believe its offering can be regarded as a consumer staple in most climates. Blackmores does not currently offer a dividend.

Inghams Group Ltd (ASX: ING)

Inghams may seem like a specialist provider, however it is still considered a consumer staple in my books. This company produces and sells chicken and turkey products in Australia and New Zealand. Additionally, it has a business within the stock feed niche, providing food to poultry, swine, dairy and equine producers. Having been around for more than 100 years, Inghams was founded in 1918 and is, I believe, a trusted and well-known brand in the Australian and New Zealand marketplaces.

Inghams share price

The Inghams share price also suffered during the initial stages of the coronavirus pandemic, falling from $3.77 down to $3.03 over a period of around one month. However, the share price has remained relatively stable since then, fluctuating between approximately $3.00 and $3.50. Closing today’s trade at $3.10, I consider Inghams to be a strong brand and a stable stock to invest in.

Dividends

One thing to note about Inghams is that it pays a comparatively high dividend, with a yield of 4.58%. Although Inghams has only been paying dividends since 2017, it has maintained a fairly reliable yield over time. Its first dividend, issued in 2017, represented a 3.3% yield. Since then, Inghams dividends have fluctuated between 3% and 5.8%.

ASX consumer staple shares summary

Consumer staple shares might not be considered the most exciting stocks on the market. However, they are frequently associated with the older, established and more trusted brands in the market. The great thing about consumer staples is that they continue to be needed, no matter what state the economy is in. For me, this makes them a far more attractive option for longer-term investments. 

More reading

• Revealed: ASX Christmas winners and losers
• Why Woolworths is too expensive right now
• Ignore EBITDA and P/E ratios? This fundie does
• ASX 200 Weekly Wrap: Budget, US election sparks 5% surge in ASX shares
• These are the 10 most shorted shares on the ASX

Motley Fool contributor glennleese has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Blackmores Limited. The Motley Fool Australia owns shares of Woolworths 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.

The post Why I like ASX consumer staples shares in the current climate appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/36Wbmzf