The Openpay Group Ltd (ASX: OPY) share price is on the move on Monday after the release of a business update.

At the time of writing the buy now pay later provider’s shares are up 1.5% to $3.03.

Why is the Openpay share price pushing higher?

Investors have been buying the shares of the Afterpay Ltd (ASX: APT) rival after it provided an update on its performance in August.

According to the release, Openpay delivered record growth across a number of leading indicators during the month.

Openpay’s active plans increased by a record 237% compared to the prior corresponding period to 986,000. This was underpinned by a 40% increase in active merchants and a record 147% increase in active customers to 359,000. Among its new merchants was sports and footwear giant JD Sports Australia.

Combined, this led to Openpay recording total transaction value (TTV) of $22.7 million in August, up 88% on the prior corresponding period. Also growing strongly was its revenue, albeit from a very small base. Openpay’s monthly revenue grew 63% to $2 million.

Another positive was that the company’s net bad debts as a percentage of TTV remained stable in August. They came in at 1.53% during the month.

Strong surge in demand.

Openpay’s CEO, Michael Eidel, commented: “Openpay has continued its robust start to FY21 with strong growth across leading indicators again in August, despite ongoing macroeconomic uncertainty and continued stage 4 restrictions in Victoria. […] As consumers continued to seek better ways to structure purchases across their lifestyle needs, we again saw a strong surge in new customers and plans during August.”

Mr Eidel also appeared to comment on the arrival of PayPal in the buy now pay later market.

He said: “We have seen strong competitive dynamics in major retail and consumer markets around the globe over the last few months. Openpay welcomes new competition as it demonstrates the global potential of BNPL as a preferred new payment option.”

“Building on our strongly differentiated approach, there continues to be significant growth potential for Openpay, with our flexible payment plans, our focus on specialised verticals, and our finance savvy customer demographic. In FY20, we saw very strong usage of Active Plans by Active Customers in our ‘sweet spot’ of longer-term and higher-value plans: 3- to 5-month plans contributed 54% of TTV and 6+ month plans 37% of TTV. Only 9% of TTV has come from our 2-month plans in the highly competitive area of plans with up to two months duration,” he added.

Woolworths deal starts.

Openpay’s performance could be a given a boost this month following the commencement of its deal with Woolworths Group Ltd (ASX: WOW).

Woolworths is exclusively offering Openpay’s SaaS solution across its payments and digital platform, as part of its Woolworths at Work solution.

Openpay for Business will be accessible to trade and business customers including not-for-profit organisations, charities, government agencies, schools, and businesses.

The company believes this platform will enable these organisations to gain operational efficiencies by making purchasing simpler and easier. It notes that it will allow them to focus on their core business activities, whilst allowing Woolworths at Work to deliver consumables and essential products.

More reading

• ASX 200 Weekly Wrap: ASX 200 snaps 4 week losing streak… just
• Is the Openpay (ASX:OPY) share price a bargain?
• BNPL shares like Afterpay (ASX:APT) and Zip (ASX:Z1P) are soaring today. Here’s why
• Are higher P/E ratios really here to stay?
• 2 top notch ASX shares for beginners

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 AFTERPAY T FPO. 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.

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The Magellan Financial Group Ltd (ASX: MFG) share price is dropping lower today following the release of an announcement.

At the time of writing, the fund manager’s shares are down slightly to $56.79.

What did Magellan announce?

This morning Magellan announced that it has become a foundation investor in Barrenjoey Capital Partners.

Barrenjoey is a newly established Australian-based full-service financial services company. It will provide corporate and strategic advisory, equity and debt capital market underwritings, cash equities, research, prime brokerage, and traditional fixed income services to Australian and international clients.

The financial services company will be led by a team of experienced executives. This includes Guy Fowler as Executive Chairman and the former Challenger Ltd (ASX: CGF) leader, Brian Benari, as Chief Executive. They will be supported by John Cincotta, Matt Hanning, and Chris Williams as founding partners.

The Chairman of BHP Group Ltd (ASX: BHP), Ken MacKenzie, is due to join in early 2021 as Barrenjoey’s Senior Strategy Partner. Mr MacKenzie will be available to provide strategic advice and senior counsel to CEOs, chairpersons, boards, executive teams and business owners in developing and executing their long-term strategies.

Former Telstra Corporation Ltd (ASX: TLS) executive, Cynthia Whelan, will join as a Senior Adviser.

Partnership model returns.

Magellan’s CEO, Brett Cairns, was very pleased to be a founding partner in Barrenjoey and sees a lot of potential in its offering.

He said “Magellan is delighted to be a founding partner of Barrenjoey. We believe the partnership model that leaves control, equity ownership and core decision making with the executives is proven and powerful.”

“This partnership model was adopted historically by many investment banks but unfortunately seems to have disappeared over the last 20 years. By offering true ownership and autonomy to staff, we believe that Barrenjoey will be able to attract the best and brightest talent in the country providing clients with the best possible service and outcomes,” he added.

What has Magellan invested?

Magellan has made an investment of both cash and scrip for a stake in Barrenjoey.

Its investment comprises the issue of approximately 1.2 million Magellan shares and $90 million of cash, to take a 40% economic ownership interest in Barrenjoey. Though, it will only have a 4.99% voting interest.

The fund manager is also providing Barrenjoey with a $50 million working capital facility to support the growth of the business.

Mr Cairns said “This investment represents a rare opportunity to generate attractive financial returns together with meaningful optionality and diversification prospects for Magellan and its stakeholders over the long term. I look forward to joining the Board of Barrenjoey.”

More reading

• Why the Telstra (ASX:TLS) share price looks cheap today
• ASX 200 Weekly Wrap: ASX 200 snaps 4 week losing streak… just
• Goldman Sachs names 4 reasons to buy Telstra shares
• Brokers name 3 ASX shares to buy right now
• Telstra (ASX:TLS) share price hits a 52-week low: Is this a buying opportunity for investors?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger Limited and 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.

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The Insurance Australia Group Ltd (ASX: IAG) share price is edging lower today after making a major announcement.

At the time of writing the insurance company’s shares are down 0.2% to $4.52.

What did Insurance Australia Group announce?

This morning Insurance Australia Group announced that it has found a replacement for its retiring Managing Director and Chief Executive Officer, Peter Harmer.

According to the release, the insurance giant has appointed Nick Hawkins as its new Managing Director and Chief Executive Officer following a comprehensive internal and external search. Mr Hawkins will replace Mr Harmer in the role on 2 November.

This is likely to be a very smooth transition, given that Mr Hawkins has been the company’s deputy CEO since April this year. In that role he was accountable for the management and performance of day-to-day operations.

Prior to this appointment, Mr Hawkins spent 12 years as Insurance Australia Group’s Chief Financial Officer with responsibility for the overall financial risk profile of the company.

The company’s Chair, Ms Elizabeth Bryan, believes the appointment reflects the strength of its leadership team and expects it to support continuity and stability.

She commented: “Nick has a deep understanding of both global and domestic general insurance along with operational and financial experience, and this will ensure a smooth transition for IAG.”

The next phase of growth.

Insurance Australia Group’s new CEO appears up for the challenge of leading the company through its next phase of growth.

Mr Hawkins said: “I am excited to lead IAG during its next phase of growth and ensure the company emerges from the economic downturn as a strong, resilient organisation. Insurance plays a fundamental role in our society and I’m proud to work for and lead a company that is truly purpose-led and customer-focused.”

“Our purpose – to make your world a safer place – has never been more important than now as we continue to help our customers and communities recover from the devastating natural disasters of late 2019 and 2020, and the ongoing challenges resulting from climate change and the pandemic. I look forward to working with our people and our partners to continue to grow IAG and build on our work to meet the evolving needs of our customers and their communities,” Mr Hawkins added.

More reading

• Why AGL Energy (ASX:AGL) and these ASX shares just hit new lows
• Should you buy Telstra and these beaten down ASX shares?

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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October will be yet another pivotal moment in 2020 for Australian investors. Victoria is likely to open up further, enabling more people to get closer to normal life. And some state borders will reopen.

On the business front, banks are likely to start renegotiating loans and calling in bad debts. In addition, several states have already extended the Government’s Commercial Tenancy Code of Conduct.

The result is a unique chance for investors to choose which ASX shares to buy for medium to long-term profits.

Retail companies

Premier Investments Limited (ASX: PMV) is a great retail share to buy. It is already starting to see revenues return after openings in most of Australia. With Victoria representing a large percentage of its annual sales, it is likely to see a fast recovery from its physical shops. The company achieved an increase in online sales by 50% in 2H20 against the previous corresponding period. This resulted in 25.5% of total sales for the half.  The company still expects its earnings before interest and taxes to be 9.7% – 11.7% when compared with 2H19.

Premier owns 100 of The Just Group, who’s brands include Smiggle, Just Jeans, Jay Jays, and Dotti. It also owns 28.06% of Breville Group Ltd (ASX: BRG) which is performing very well. 

Premier Investments is currently selling at a price to earnings ratio (P/E) of 25.61, with a trailing 12-month dividend yield of 3.75%.

Bank shares to buy

National Australia Bank Ltd. (ASX: NAB), like all banks, has carried much of the economic burden of the coronavirus. Primarily this has been due to demands from banking regulator, APRA. The treasurer has indicated that temporary insolvency and bankruptcy protections will be extended a further three months to December 31. Nevertheless, banks are already contacting more than 450,000 borrowers to see if they can restart payments, or if they require further assistance. 

All care has been taken by banks and government to ensure that borrowers impacted by COVID-19 are not tipped into insolvency early. Nonetheless, they will be moving to normalise financing terms. Those unable to restart payments may be offered restructuring, such as interest-only loans. But, if borrowers are judged as unable to repay, there may be a need for  “tailored assistance”, according to the Australia Banking Association.

National Australia Bank is currently trading at a P/E of 15.52 with a trailing 12-month dividend yield of 6.5%. This is a solid ASX share to buy at a good price. 

Entertainment shares

Right now, South Australia is talking about opening borders with NSW. In addition Victoria appears to be moving faster than anybody thought it would. The likelihood of further border opening is high, and already there is a 50km bubble around the NSW/Victorian border. 

One of the companies able to take advantage of this is Ingenia Communities Group (ASX: INA). It develops, operates and sells residential housing in retirement, lifestyle and holiday communities. Despite the pandemic, the company still managed to increase earnings per share (EPS) by 5%, and increased operating cash flow by 13%. I think Ingenia is a great share to buy for short term gains as well as strong performance over the medium to long-term.

More reading

• ASX 200 Weekly Wrap: ASX 200 snaps 4 week losing streak… just
• 3 ASX 200 growth shares to buy right now
• 5 things to watch on the ASX 200 next week
• Negative rates may be coming to a big four ASX bank near you
• ASX 200 down 0.1%: Tech shares push higher, AMP (ASX:AMP) sinks lower

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments 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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The S&P/ASX 200 Index (ASX: XJO) snapped a losing streak last week as the benchmark index edged 0.1% higher to 5,864.50 points. That’s despite ongoing volatility in tech shares as ASX 200 mining shares like Saracen Mineral Holdings Limited (ASX: SAR) saw strong gains.

As I look ahead to another big week of trade, I’ve got my eye on a few potential movers and shakers. Here are 3 ASX 200 shares that I think are worth watching this week.

3 ASX 200 shares to watch this week

Let’s start with Saracen. The Saracen share price was one of the top performers last week as the ASX gold share rocketed 4.2% higher on Friday.

Market volatility has been good for gold shares with the precious metal in high demand right now for its perceived safety. That’s certainly been reflected in the Saracen share price this year which has rocketed 63.3% higher in 2020.

There’s always the risk of commodity-based shares overinvesting and seeing a medium to long-term slump. However, I think we’ll see more volatility in 2020 which could push ASX gold shares higher through to the end of the year.

Outside of gold shares, I’ve got my eye on a potential growth stock: Qube Holdings Ltd (ASX: QUB). The ASX 200 logistics share fell 2.6% lower on Friday which could present a buying opportunity.

Qube has a market capitalisation of $4.8 billion and a 2.0% dividend yield right now. I’m bullish on the logistics sector as more retailers shift from bricks-and-mortar to an online warehouse model similar to Amazon.com, Inc. (NASDAQ: AMZN).

That could increase demand for Qube’s expertise like we’ve seen in the $1 billion deal with Woolworths Group Ltd (ASX: WOW).

I’ve also got my eye on an ASX 200 media share in the form of Domain Holdings Australia Ltd (ASX: DHG).

The Domain share price slipped 2.4% lower on Friday but I think the short-term outlook for property isn’t all bad. Prices are starting to stabilise which is good news for more listings and higher traffic to the Domain site.

Shares in the real estate media group are down 1.4% for the year but could be worth a look if the housing rebound continues in 2020.

More reading

• Why I like Saracen (ASX:SAR) and these ASX mining shares today
• ASX 200 drops 0.3%, gold miners keep rising
• Why the St Barbara (ASX:SBM) share price is climbing higher today
• Why Mineral Resources, Redbubble, Saracen, & Temple & Webster shares are pushing higher
• Are ASX gold shares like Newcrest (ASX:NCM) still good value?

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Ken Hall 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 and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia owns shares of Woolworths Limited. The Motley Fool Australia has recommended Amazon. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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While everyone has been busy looking at buy now, pay later (BNPL) shares, there are plenty of other ASX shares that have also grown considerably since the start of the year. Each of the following companies has developed a solid foundation based on innovative technology, patents, or medical research. As such, I think it’s likely that these ASX shares will continue to grow. 

Whispir Ltd (ASX: WSP)

Whispir provides mass communication tools for organisations. Accordingly, it has won clients across a very diverse spectrum of Australian industries. To illustrate, some of these include Transport for NSW, RACQ, APA Group (ASX: APA), Roy Hill, and the country’s number one health booking app, Health Engine. 

This ASX share rose by 9.65% on Friday alone, and has risen by 140.38% since the start of the year. The company has a high gross operating margin of 62%, and recurring revenues make up greater than 95% of its income. 

Zoono Group Ltd (ASX: ZNO)

Zoono is a very special ASX share. The company produces hand sanitiser which is certified against a range of bacteria and viruses. This includes the African Swine Flu, and on 28 February, it announced its product tested favourably in protecting against COVID-19. The company has rapidly scaled up production to keep up with escalating demand and has rapidly put together a range of distribution deals covering the globe. 

Over the past year, the Zoono share price has risen by 2,550%. Since 1 January it has risen by 207.25%.

Recce Pharmaceuticals Ltd (ASX: RCE)

Recce is a drug researcher working on synthetic antibiotics. In particular the company is working to develop treatments for antibiotic resistant super bugs. Moreover, the company is pioneering work on treatments for sepsis. According to the medical journal The Lancet, sepsis killed 11 million people in 195 countries in 2017. Right now, sepsis remains an unmet challenge.

The Recce share price has risen by 380.88% since 1 January. Interest piqued after the ASX share announced two of its products had been selected for a CSIRO trial into antiviral treatments for COVID-19.

Brainchip Holdings Ltd (ASX: BRN)

I think Brainchip is one of the year’s great ASX shares. The company is the largest listed pure-play artificial intelligence company in the world. A range of security applications use its products for facial recognition and pattern recognition. This include casinos, subways and airports. 

The market has become more interested in Brainchip after the announcement that it had completed the wafer for its latest product. This is called a neuromorphic chip and is the first of its kind. In recent announcements, the company has entered into proof of concept partnerships across a range of sectors including gaming and autonomous cars. The Brainchip share price is up 760% in 2020.

More reading

• 3 exciting small cap ASX tech shares that could be the next big thing
• Zoono (ASX:ZNO) share price jumps 9% on United Airlines deal
• Redbubble (ASX:RBL) and this ASX share have more than doubled in 2020
• Could this be the large cap version of the Brainchip (ASX:BRN) share price? 
• BrainChip (ASX:BRN) share price crashes a further 20% lower: Where next for its shares?

Daryl Mather owns shares of Recce Pharmaceuticals Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Whispir Ltd. The Motley Fool Australia owns shares of APA Group. The Motley Fool Australia has recommended Whispir 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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We have seen a surge in companies positioning themselves for the rise of the lithium battery industry. For example, lithium mining company Galaxy Resources Limited (ASX: GXY) has seen a 56.5% rise in share price in year to date trading. Other metals required for cathodes include manganese, mined by South32 Ltd (ASX: S32), also nickel and cobalt, currently being developed by Ardea Resources Ltd (ASX: ARL). Nevertheless, one of the few listed Australian miners focused on graphite, the anode material is Ecograf Ltd (ASX: EGR). 

What is moving EcoGraf ASX shares?

In the past week, EcoGraf ASX shares rose by 72.414%. The company has two bases of operation. First, in Tanzania it is developing The Epanko Graphite Project. This is a long life, highly profitable graphite project. It is forecast to produce 60,000 tonnes / yr of natural flake graphite products.

Second, the company is developing a processing plant in Kwinana, Western Australia. This will 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. 

Over the past 6 months it has had a succession of very promising and positive releases. For example, it recently reported solid results from its proprietary purification process to recover high purity battery anode material from lithium-ion battery materials. Furthermore, it has also provided electrochemical analysis supporting the claim that battery products uniquely positioned as a superior and cost competitive material for battery anodes.

EcoGraf has already had a lot of positive support from the West Australian government. The company believes that it can deliver a plant in Kwinana within 11 months of a final investment decision.   

Foolish Takeaway

EcoGraf ASX shares currently value the company at $54.6 million. It appears to have a pathway top funding in Tanzania as well as  in Kwinana. The management team includes several resources professionals with a solid track record of bringing in large scale developments. 

With no funding secured, the company remains a speculative play. However, EcoGraf has an experienced leadership team, and is starting its development stage. I think this could be a great growth story in the battery business over the next few years. 

More reading

• Why Galaxy (ASX:GXY) and these ASX shares just hit new highs
• Leading brokers name 3 ASX shares to sell today
• Ecograf (ASX:EGR) responds to ASX price query after shares rocket 51%
• An all-weather ASX resources shares strategy
• 5 things to watch on the ASX 200 on Thursday

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.

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The Telstra Corporation Ltd (ASX: TLS) share price has been under pressure in 2020, but is the Aussie telco in the buy zone?

How has the Telstra share price performed this year?

The Telstra share price has slumped 21.0% lower in 2020 compared to a 12.3% fall in the S&P/ASX 200 Index (ASX: XJO).

That could mean the telco’s shares are cheap or there are some underlying issues that are weighing on investors’ minds.

What do the numbers say?

At the current Telstra share price of $2.83 per share, the company’s shares have a price-to-earnings (P/E) ratio of 18.5x. That on its own doesn’t tell us that much but let’s try to compare it to a fellow telco peer company.

Vocus Group Ltd (ASX: VOC) is an ASX-listed rival albeit with a market capitalisation of $2.2 billion compared to Telstra’s $33.7 billion.

Vocus’ full-year result was a mixed bag for investors. The telco made a statutory net loss after tax and minority investments of $178.2 million.

That saw earnings per share (EPS) fall to negative 28.74 cents with fully diluted underlying EPS of 16.04 cents per share.

That means at $3.51 per share, Vocus has an underlying P/E of 21.9x compared to 18.5x for Telstra.

That could mean Telstra is slightly undervalued relative to Vocus right now.

Is Telstra a cheap buy in September?

It’s hard to judge whether the Telstra share price is cheap based on just that one metric. However, the company did maintain its final dividend of 16 cents per share which is a positive signal for future earnings.

It’s also a signal that investors need as the TPG Telecom Ltd (ASX: TPG)-Vodafone merger looms large and NBN continues to cause the company headaches.

One saving grace could be the company’s leadership in the 5G network space. Telstra has emerged as a serious player in the growing technology and much of its future success could be based on 5G success in Australia.

I don’t think the Telstra share price is overvalued at $2.83 per share. The shift towards more working from home and a potential population boom in regional Australia could be good news for its network services.

I think Telstra could be a good pickup for investors looking for dividends right now. After all, blue chip ASX dividend shares like Telstra are hard to come by in the current market.

More reading

• ASX 200 Weekly Wrap: ASX 200 snaps 4 week losing streak… just
• Goldman Sachs names 4 reasons to buy Telstra shares
• Top brokers name 3 ASX shares to buy next week
• Telstra (ASX:TLS) share price hits a 52-week low: Is this a buying opportunity for investors?
• Interest rates to stay low for years? Buy these ASX dividend shares

Motley Fool contributor Ken Hall 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.

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ASX mining shares had a bumper day on Friday. Shares in top miners like Saracen Mineral Holdings Limited (ASX: SAR) rocketed higher despite the S&P/ASX 200 Index (ASX: XJO) edged 0.3% lower.

Here are a few of my favourite Aussie miners that I’d like to buy with some spare cash today.

Saracen and 2 more ASX mining shares to buy today

The Saracen share price has been absolutely flying in 2020. The ASX gold share is up 63.3% for the year including a 4.2% gain on Friday.

Gold prices have been rocketing in 2020 as the coronavirus pandemic has fuelled significant volatility in global share markets. That has seen investors seek the safe haven of gold and increased demand for ASX gold shares like Saracen.

Given the uncertain outlook for FY21, I think ASX gold shares could continue to outperform. That means the Saracen share price is a potential buy even at $5.42 per share.

It’s not just Saracen that I’m watching right now. I think the BHP Group Ltd (ASX: BHP) share price could be worth a look after slumping 3.0% lower this year.

The ASX mining share has been under pressure despite strong iron ore prices this year. That’s largely thanks to the group’s Petroleum segment which comprises a significant portion of earnings.

Oil prices are under pressure this year as supply has increased despite a slump in demand. That means BHP could be a better value buy compared to a pure play iron ore miner like Fortescue Metals Group Limited (ASX: FMG) if we see a strong economic recovery.

The last ASX mining share on my watchlist right now is Lynas Corporation Ltd (ASX: LYC).

The Lynas share price jumped 3.3% higher on Friday but has been largely out of the spotlight in recent months. I think there’s plenty to like about the rare earths miner after securing a lucrative US military tender in April this year.

Foolish takeaway

Momentum can be a funny thing in the share market. These are just a couple of the ASX mining shares I’ve got my eye on as potential outperformers in FY21.

More reading

• Iron ore slumps: Does this make the BHP (ASX:BHP) share price and other miners a buy? 
• Why these ASX laggards could start to rally in the next few months
• ASX 200 Weekly Wrap: ASX 200 snaps 4 week losing streak… just
• 5 things to watch on the ASX 200 on Monday
• Buy Fortescue and this ASX dividend share for a source of income

Motley Fool contributor Ken Hall 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 Why I like Saracen (ASX:SAR) and these ASX mining shares today appeared first on Motley Fool Australia.

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The iron ore spot price fell sharply this week following rising port inventories and signs that supply has caught up to the strong demand from China. This has caused the Fortescue Metals Group Limited (ASX: FMG) share price to slump 7.5% last week while the more diversified commodity portfolios of Rio Tinto Limited (ASX: RIO) and BHP Group Ltd (ASX: BHP) saw their share prices flat for the week.  

Is this the top for iron ore? 

Iron ore prices have been able to enjoy the merits of tight supply conditions and soaring demand from China. China’s industrial output increased at its fastest pace this year in August, while crude steel production set a monthly record high. Infrastructure and property investment seem to be the key drivers for China’s economic recovery. It estimates that it will finish 2020 with a GDP growth of approximately 2%, outperforming all its G20 peers. 

While this is a positive signal for iron ore, the tides are slowly turning as inventories and steel stockpiles continue to rise in China. Iron ore prices have soared to levels only seen when global supply took a hit following the tailings dam disaster in Brazil. The higher cost of raw materials combined with increasing inventories may see demand settle in the near-term.

From a supply side perspective, Brazilian miner Vale has operationally struggled to meet its guidance amidst COVID-19 and challenging weather conditions. On Wednesday, the company announced that it expects to reach an iron ore capacity of 400 million tonnes per year by increasing output across its operations, including the state of Minas Gerais, the location of the deadly dam disaster in 2019. It is currently producing 318 million tonnes per year, and before the dam disaster in 2019, it produced 385 million tonnes. A recovery in seaborne supply from Vale could further cool down the iron ore price, and adversely impact Fortescue, and to a lessor extent the Rio Tinto and BHP share price. 

Is this bad for the Fortescue share price?

Fortescue is a pure iron ore play which is why its share price has been more adversely affected by iron ore pullback. The improvement in production and exports out of Brazil, combined with the strong Australian dollar could weaken the profitability of Fortescue for FY21. However, even if iron ore prices were to fall back to US$80 per tonne, Fortescue would still be a highly profitable company with the ability to pay market leading dividends.

Could the Rio Tinto or BHP share price be better value?  

While the top might be in for iron ore, other commodities in Rio’s and BHP’s portfolios have been booming. Copper prices are at an almost five-year high, with coal at a one-year high and crude oil holding steady at US$40. I believe the Rio Tinto and BHP share price represent fair value at today’s prices, and could be worth a closer look once the near-term volatility subsides. 

More reading

• Why I like Saracen (ASX:SAR) and these ASX mining shares today
• ASX 200 Weekly Wrap: ASX 200 snaps 4 week losing streak… just
• Buy Fortescue and this ASX dividend share for a source of income
• How to generate $1,000 a month in dividends
• ASX 200 drops 1.2%, Mineral Resources (ASX:MIN) fell 9%

Motley Fool contributor Lina Lim 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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