• Why Dicker Data, Harvey Norman, Rhipe, & Senex shares are pushing higher

    asx growth shares

    In late morning trade the S&P/ASX 200 Index (ASX: XJO) is fighting hard to get into positive territory but has fallen short. At the time of writing the benchmark index is down 0.2% to 5,852 points.

    Four shares that have not let that hold them back today are listed below. Here’s why they are pushing higher: 

    The Dicker Data Ltd (ASX: DDR) share price is up 2.5% to $8.10. Today’s gain could be attributable to the wholesale distributor of computer software and hardware joining the S&P/ASX All Technology Index (ASX: XTX) this morning.

    The Harvey Norman Holdings Limited (ASX: HVN) share price has climbed 2.5% to $4.46. This morning the retail giant released a trading update which revealed strong sales and profit growth so far in FY 2021. Harvey Norman’s comparable aggregated sales for the period 1 July 2020 to 17 September were up a massive 30.3% compared to the prior corresponding period. Things were even better for its earnings, with its unaudited profit before tax up 185.8% to $178.1 million during the first two months of FY 2021.

    The Rhipe Ltd (ASX: RHP) share price is up 5% to $1.78 after announcing an acquisition. The cloud and technology solutions provider has entered into a binding agreement to acquire Parallo. It is a New Zealand-based IT services provider that specialises in infrastructure and cloud deployment technologies. Rhipe is acquiring Parallo for an initial fee of NZ$4.25 million. The acquisition is expected to be earnings accretive in FY 2021.

    The Senex Energy Ltd (ASX: SXY) share price is up 6.5% to 32.5 cents. This morning the energy producer announced that it has been awarded preferred tenderer status for natural gas acreage in the Surat and Bowen basins. This is part of the Queensland Government’s domestic gas acreage tender process. The award includes additional highly valuable Atlas acreage immediately adjacent to Senex’s existing development.

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    In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

    *Returns as of 6/8/2020

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    Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data 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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  • 3 ASX growth ETFs to add to your portfolio

    miniature shopping trolley containing black board with the word ETFs on it

    Trying to pick the next hot growth company is hard – particularly during a once-in-a-century global pandemic. How are you supposed to predict which ASX shares are going to light up the market when you can’t even be sure of what the world will look like next week?

    But while certain sectors continue to be hit incredibly hard by the pandemic – traditional forms of retail and tourism instantly come to mind – there have been some surprising pockets of growth. Unlikely heroes like cloud-based network provider Megaport Ltd (ASX: MP1) have helped individuals and companies adapt to the crisis – and have seen their share prices surge higher as a result.

    So, although picking individual winners might be tough, perhaps picking broader sectors is a bit easier. For example, you may not have had the foresight back in March to buy shares in Megaport (don’t worry, not many people did!), but you may have still predicted that many digital technology companies would benefit from a significant chunk of the population being cooped up indoors for months on end.

    Well, luckily for you, there are plenty of exchange-traded funds (ETFs) on the market that can help you invest in those growth trends. ETFs operate more or less like ordinary shares, but give you exposure to a whole portfolio of companies that make up a certain index. Investing in this way reduces your risk through diversification, and saves you having to know the ins-and-outs of individual companies’ balance sheets.

    Here are three of my favourite ETFs for growth investors.

    BetaShares Asia Technology Tigers ETF (ASX: ASIA)

    This ETF from BetaShares gives investors exposure to some of the largest technology and e-commerce companies in Asia. One trade gives you access to companies like Taiwan Semiconductor Manufacturing Company, the world’s largest pureplay semiconductor foundry, as well as Chinese ecommerce giant Alibaba Group Holding Ltd and South Korean tech conglomerate Samsung Group.

    The fund has performed exceptionally well this year. Many Asian countries – such as South Korea, China and Taiwan – have been amongst the best in the world at keeping COVID-19 at bay, and this has played out in the Tigers share price. It easily shrugged off the effects of coronavirus back in March, and since then has been on an absolute tear, soaring close to 40% higher in the last 6 months.

    VanEck Vectors China New Economy ETF (ASX: CNEW)

    The name is a bit of a mouthful, but the goal of VanEck’s CNEW ETF is pretty simple: pick the 120 best growth companies in China. It selects companies from industries like technology, health care and consumer discretionary, all of which will support the long-term growth of China’s new economy. When selecting shares for its portfolio, the fund looks at fundamental attributes like cash flow, growth prospects and value.

    The fund has also performed well this year, up more than 30% year to date. However, it has been more volatile recently, driven by heightened geopolitical tensions between China and the West. It almost goes without saying that, with all its investments held in Chinese companies, the fund is more exposed to these geopolitical risks than a more geographically diversified fund like Technology Tigers. This is worth keeping in mind if you choose to invest.

    BetaShares Nasdaq 100 ETF (ASX: NDQ)

    The last ETF on the list provides investors exposure to the top 100 non-financial companies listed on the New York Nasdaq stock market. These include some of the biggest and most innovative technology companies in the world, like Apple Inc. (NASDAQ: AAPL), Microsoft Corporation (NASDAQ: MSFT), Amazon.com, Inc. (NASDAQ: AMZN) and Facebook, Inc (NASDAQ:FB).

    Despite plenty of volatility on the United States markets this year, the fund has managed to gain over 17% year to date. Given the global pedigree of many of these companies, I believe this ETF is really a must for everyone’s portfolio, and provides instant global diversification.

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    In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

    *Returns as of 6/8/2020

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    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. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Rhys Brock 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 Amazon, Apple, Facebook, MEGAPORT FPO, and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS and recommends the following options: long January 2022 $1920 calls on Amazon, long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, and short January 2022 $1940 calls on Amazon. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool Australia has recommended Amazon, Apple, BETANASDAQ ETF UNITS, Facebook, and MEGAPORT 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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  • Is the A2 Milk (ASX:A2M) share price going above $20?

    A2 Baby formula shares

    The A2 Milk Company Ltd (ASX: A2M) share price is trading slightly higher on Monday morning.

    At the time of writing the infant formula and dairy company’s shares are up 0.5% to $16.47.

    Can the a2 Milk share price go higher from here?

    The a2 Milk share price could still go a lot higher from here according to one leading broker.

    A note out of Goldman Sachs reveals that its analysts have retained their conviction buy rating but trimmed their price target slightly to $20.40.

    This price target implies potential upside of almost 24% for the a2 Milk share price over the next 12 months.

    Why is Goldman Sachs positive on the company?

    Although the broker acknowledges recent changes in management and very heavy insider selling, it notes that the key drivers of company performance remain intact.

    It explained: “ATM retains a promising earnings outlook (3YR EBITDA CAGR of 18%, FY20-23) despite the short term uncertainties around COVID stockpiling and customer disruption.”

    A key driver of this growth is of course expected to be its China business. Especially given its expanding footprint in the country. Goldman estimates that it is now inside 23,800 mother and baby (MBS) stores in the country, up from 19,000 at the end of FY 2020.

    Its analysts commented: “Despite the cross border e-commerce channel remaining strong, we forecast the MBS channel to deliver stronger medium term growth as door units are increased.”

    As a result of this, Goldman Sachs is forecasting earnings before interest, tax, depreciation and amortisation (EBITDA) of NZ$662 million in FY 2021. This will be a 19.9% increase on FY 2020’s EBITDA of NZ$552 million.

    On the bottom line, it has penciled in earnings per share of NZ$0.63, up 20% from NZ$0.524 a year earlier.

    Does this make the a2 Milk share price good value?

    In light of this growth and the recent pullback in the a2 Milk share price, Goldman thinks the company is trading at a very attractive level.

    It explained: “ATM is trading at an FY21 P/E of 17.9X, a 6% premium to the market compared to its five-year average of a 50% premium.”

    While I do have concerns that its first half performance could underwhelm if sales were brought forward during the pandemic because of pantry stocking, I would still invest if you plan to buy and hold its shares for the long term. 

    Given its positive long term growth outlook and attractive valuation, I believe the a2 Milk share price could be a market beater over the coming years.

    Man who said buy Kogan shares at $3.63 says buy these 3 ASX stocks now

    When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

    *Returns as of 6/8/2020

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    Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. 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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  • Why everyone should have Brickworks (ASX:BKW) and 1 other ASX share

    Rolled up banknotes in soil to symbolise wealth growth and dividencs

    In these times of high share market volatility, it’s nice to have a few dependable shares to ground your portfolio. These are the defensive income earners that will chug along regardless of fluctuations in the broader economy. They may not light up your portfolio like some market darlings, but they won’t have you fearful of waking up to a sea of red if Trump tweets something controversial overnight.

    They’re shares like Brickworks Limited (ASX: BKW) and Washington H Soul Pattinson and Co. Ltd (ASX: SOL). While both companies took a hit during the COVID-19 market crash in March, they have steadily rebounded. To the point where their share prices are now within striking distance of respective 52-week highs.

    But the main reason to invest in both companies is their ability to generate income. Soul Pattinson has increased its dividend every year for the past 22 years (including during the GFC). And 2020 has been no exception. Its interim dividend rose 4.2% year-on-year to 25 cents per share, fully franked.

    Similarly, Brickworks boosted its interim dividend by 5% to 20 cents per share. Incredibly, Brickworks has either maintained or increased its dividend every year since 1976.

    So, what do these companies do?

    Soul Pattinson is a diversified investment company. It has significant holdings in telecommunications, through a 25% stake in TPG Telecom Ltd (ASX: TPG). It’s also invested in healthcare, mining and energy. A number of its holdings are in other investment companies, including Bki Investment Co Ltd (ASX: BKI) and Milton Corporation Limited (ASX: MLT).

    Brickworks, as the name suggests, started out making bricks. It remains Australia’s largest brick producer, but over the years has expanded into other areas, including property and investments.

    Brickworks and Soul Pattinson are also intimately related. In addition to its other investments, Soul Pattinson owns a 44% stake in Brickworks, while Brickworks has a 39% stake in Soul Pattinson. Brickworks has said the dependable nature of the Soul Pattinson dividend has helped the company balance out cyclical earnings patterns in its building and property businesses.

    Should you invest?

    Absolutely. Both Brickworks and Soul Pattinson are ASX royalty. They pay consistent, generally increasing dividends, and are the ultimate ‘set and forget’ shares for your portfolio. In its June market update, Brickworks reported that it had delivered shareholder returns of 13% per annum over the last 44 years. If you had invested $1,000 in the company back in 1976, you’d be sitting on close to $260,000 today.

    That sort of timeline might feel pretty abstract for younger readers, but it essentially means that if you entered the workforce 40 years ago, and parked your savings in Brickworks, you’d be enjoying a pretty lavish retirement right now. Let’s see how flavour of the month companies like Afterpay Ltd (ASX:APT) stack up against that in 40 years’ time.

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    In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

    *Returns as of 6/8/2020

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    Rhys Brock owns shares of Brickworks and Afterpay Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Afterpay Ltd. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company 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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  • 4 dividend kings to buy now and hold forever

    piggy bank wearing crown representing asx share dividend king

    There are a lot of great dividend shares an investor could buy now for a good price. Many have been selling at low prices since the 23 March market rout. Furthermore, others have seen their share prices fall in the past week. Yet, there has been no fundamental change to any of these companies. In fact, some of them are in better shape now than they were at the start of the year. Following are 4 ASX shares I think currently represent great dividend buys to hold for the long term.

    Fortescue Metals Group Limited (ASX: FMG) 

    I believe the current Fortescue share price is definitely a great opportunity to buy now. The iron ore miner saw its share price fall by 6.8% last week for no apparent reason. At this price, it is selling at a price-to-earnings (P/E) ratio of 7.8 and has a trailing 12 month dividend yield of 10.74%. I think this is an absolute steal. 

    Fortescue is pressing ahead with the development of two high grade iron ore mines due to come in over the next 18 to 24 months. The iron ore market is struggling to keep up with Chinese demand and re-entry of Brazilian miner, Vale, or any new iron ore mines in Africa, should not dent demand for Fortescue ore. 

    Centuria Office REIT (ASX: COF)

    The Centuria Capital Group (ASX: CNI) manages a number of great real estate investment trusts (REITs). Nevertheless, I think the Centuria Office REIT is the best one to buy now. This is Australia’s largest pure-play office REIT. During FY20, in the middle of the pandemic, the company managed to increase funds from operation by 39.5%, while maintaining an occupancy rate of 98.1%.

    Commercial office real estate is protected by a relatively long weighted average lease expiry (WALE). For example, Centuria Office REIT has a WALE of 4.7 years. In addition, many of this REIT’s tenants are government departments. The REIT is selling at a P/E of 12.6 and pays a trailing 12 month dividend yield of 8.44%. Another company I think is an absolute bargain.

    2 investment companies to buy now

    With a market capitalisation of $1.5 billion, WAM Capital Limited (ASX: WAM) has a deserved reputation as one of the country’s leading capital managers. During FY20, the company still outperformed the All Ordinaries Index (ASX: XAO) by 4.4% whilst delivering a full year loss of $47 million due to cratering in investment values in a very volatile market.

    WAM Capital executed a rapid sell off in less liquid small caps during the COVID-19 crash. Nonetheless, it later returned to take advantage of mispricing opportunities with companies like Temple & Webster Group Ltd (ASX: TPW), City Chic Collective Ltd (ASX: CCX), and Fisher & Paykel Healthcare Corp Ltd (ASX: FPH). It is currently expanding its value via a takeover.

    If you you were planning to buy now, WAM Capital has a trailing 12 month dividend yield of 7.24% after declaring full year dividends of 15.5 cents. I believe the repositioning of the portfolio, in reaction to the pandemic, places the company in a great position to benefit from the move to online shopping. 

    Pendal Group Ltd (ASX: PDL) is another investment company on the ASX, though not strictly a listed investment company (LIC). With a large array of managed funds, the company delivered a 21% reduction in statutory net profit after tax of $54.8 million. I think this is an exemplary result given the volatility caused by COVID-19.  

    At the time of writing, Pendal Group has a P/E of 12.08, which I consider to be a good ratio, and a trailing 12 month dividend of 7.4%. 

    These stocks could rocket in a Post-COVID world (FREE STOCK REPORT)

    When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

    *Returns as of 6/8/2020

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    Daryl Mather owns shares of Coffey International Limited and Fortescue Metals Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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  • Why do people choose an ECN Forex broker over a regular one?

    The forex trading market has various types of brokers. The services and products a broker provides depend on the type of broker they are. They include ECN brokers, STP brokers, Dealing Desk brokers etc. STP brokers are the normal brokers that are considered as intermediaries between dealers and liquidity suppliers, which are organizations that offer Read More…

    The post Why do people choose an ECN Forex broker over a regular one? appeared first on Wall Street Survivor.

    source https://blog.wallstreetsurvivor.com/2020/09/21/why-do-people-choose-an-ecn-forex-broker-over-a-regular-one/

  • Why is demo account trading dangerous?

    Forex trading has gone a long way from being a less popular activity to a major phenomenon. It is a method of earning additional profits if you do not back from hard work. As time passes we see even more traders who are involved in this activity. As technology evolved, rookie traders got the chance Read More…

    The post Why is demo account trading dangerous? appeared first on Wall Street Survivor.

    source https://blog.wallstreetsurvivor.com/2020/09/21/why-is-demo-account-trading-dangerous/

  • Why I would buy these ASX growth shares right now

    growth ASX shares, small caps

    If you’re looking to add some growth shares to your portfolio this week, then I would suggest you consider the ones listed below.

    I believe these growth shares have the potential to provide strong returns for investors over the next decade. Here’s why I would buy them:

    Aristocrat Leisure Limited (ASX: ALL)

    It has been a difficult year for this gaming technology company because of the pandemic. With most casinos closing during the height of the crisis, demand for its poker machines fell off a cliff. Thankfully, the company’s Digital business offset some of this decline after closures and lockdowns sent more gamblers online. The good news is that most casinos around the globe are now open again. I expect this to lead to a resurgence in demand for its machines in 2021 and for its earnings growth to accelerate again.

    ELMO Software Ltd (ASX: ELO)

    One of my favourite growth shares at the smaller end of the market is ELMO. It is a cloud-based human resources and payroll software company providing businesses with a unified platform to streamline a range of processes. These include employee administration, recruitment, training, and payroll. Demand for its offering has been growing strongly in recent years, even during the pandemic. Pleasingly, this looks set to continue in FY 2021, with management forecasting further strong organic growth. This growth should be boosted by earnings accretive acquisitions in the near future. ELMO finished FY 2020 with a cash balance of approximately $140 million.

    IDP Education Ltd (ASX: IEL)

    IDP Education is a leading provider of international student placement services and English language testing services. Despite the pandemic bringing parts of its business to a halt this year, it was still able to deliver strong profit growth in FY 2020. While FY 2021 will be tough and trading conditions are likely to remain subdued until the crisis passes, I believe its market position is strengthening and expect IDP Education to come out the other side as a stronger business. Looking further ahead, I believe it is well-placed for long term growth thanks to its sizeable market opportunity and growing software business.

    These stocks could rocket in a Post-COVID world (FREE STOCK REPORT)

    When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

    *Returns as of 6/8/2020

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

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  • Harvey Norman (ASX:HVN) share price surges higher on strong sales and profit growth

    Harvey Norman

    The Harvey Norman Holdings Limited (ASX: HVN) share price is surging higher on Monday after the release of a sales and profit update.

    At the time of writing, the retail giant’s shares are up a sizeable 4% to $4.53.

    What did Harvey Norman announce?

    Harvey Norman’s trading update reveals that business has continued to boom in FY 2021 for its international businesses and Harvey Norman, Domayne, and Joyce Mayne businesses in Australia.

    According to the release, comparable aggregated sales for the period 1 July 2020 to 17 September are up a massive 30.3% compared to the prior corresponding period.

    Pleasingly, the good news doesn’t stop there. Harvey Norman is currently benefiting from higher margins, leading to its earnings growing at an even quicker rate over the period.

    Management advised that unaudited preliminary accounts for the period 1 July 2020 to 31 August 2020 indicate a profit before tax of $178.1 million. This is an increase of 185.8% on its profit before tax of $62.3 million during the same period last year.

    This profit before tax excludes the net impact of AASB 16 Leases and net property revaluation adjustments.

    How are its Melbourne stores performing?

    Harvey Norman also provided the market with commentary on how its stores in Melbourne have been performing following stage four lockdowns.

    It explained: “Franchised complexes in greater Melbourne, Victoria were closed to the public from 6th August 2020 to date as a direct result of the Stage 4 Restrictions mandated by the State Government of Victoria.”

    And while its “franchisees quickly moved to service their customers via Click & Collect and contactless deliveries”, this wasn’t enough to stop the sales turnover of its affected franchisees from being “adversely affected by these mandated closures.”

    Given the disruption that these stores have faced, Harvey Norman’s overall sales and profit growth early in FY 2021 is arguably even more impressive than it first appears.

    Man who said buy Kogan shares at $3.63 says buy these 3 ASX stocks now

    When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

    *Returns as of 6/8/2020

    More reading

    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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  • ASX shares Tesla (NASDAQ:TSLA) needs to survive

    hand reaching out of water for life buoy representing asx shares needed for Tesla to survive

    The Tesla Inc (NASDAQ: TSLA) share price has been one of the great gravity defying shares of 2020. Tesla is at the vanguard of electric cars, which is impressive enough, but also in the field of power transmission and distribution. Accordingly, there is an incoming wave of predominantly lithium batteries designed to be used for multiple purposes. These require materials produced by some ASX shares. 

    Building batteries is not going to be possible without a steady, high quality supply of the necessary materials. Lithium battery production will need the continuous supply of mining companies operating at scale. Companies like the many ASX shares producing these materials. 

    Tesla needs ASX shares

    In a a conference by BenchMark Mineral Intelligence in Perth in 2018, BenchMark Managing Director, Mr Simon Moores, said that by 2028, “…the the giga-factories being built by Elon Musk’s Tesla would need 840,000 tonnes per year of lithium, 193,000 tonnes per year of cobalt, 1.1 million tonnes per year of graphite anode, and 480,000 tonnes of nickel chemical.”

    Nonferrous metals and minerals featuring highly in lithium-ion batteries are lithium, cobalt, nickel, manganese, graphite, copper and aluminium. The first four are used in cathodes, although lithium is also used in electrolyte. The last three are used in the anode. In particular, graphite wrapped in an alloy of copper or aluminium.

    Cathode materials

    A range of ASX shares produce lithium. For example, companies like Galaxy Resources Limited (ASX: GXY), Orocobre Limited (ASX: ORE) and Pilbara Minerals Ltd (ASX: PLS). Orocobre is building an industrial chemicals and minerals business in Argentina through the construction and operation of lithium brine, potash and boron projects. It has also built a lithium processing facility in the north of Argentina.

    South32 Ltd (ASX: S32) is a leading miner of manganese. Moreover, in FY20 the company produced 854,000 wet metric tonnes of manganese ore in the June quarter. South32 has a 60% interest in its Australian manganese operations. These are the Groote Eylandt Mining Company Operation (GEMCO) and the Tasmanian Electro Metallurgical Company Operation (TEMCO).

    Anode materials

    Ecograf Ltd (ASX: EGR)  has two bases of operation. First, in Tanzania it is developing the Epanko Graphite Project. This is a long life, highly profitable graphite project. The forecast for this plant is 60,000 tonnes per year of graphite products. Second, the company is developing a processing plant in Kwinana, Western Australia. This will aim to produce spherical graphite using a new eco-friendly process to sell directly to lithium-ion battery manufacturers. The plant will draw both from recycled battery materials as well as graphite flak products from the Americas, Asia and Australia. 

    Where to invest $1,000 right now

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    Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. 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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