The Blackmores Limited (ASX: BKL) share price will be one to watch this morning following the release of its annual general meeting update.

What was in Blackmores’ update?

As well as providing investors with a summary on how the health supplements company performed in FY 2020, management revealed its expectations for the current financial year.

According to the release, while no specific full year profit guidance has been given, it is anticipating full year profit growth in FY 2021. This is despite additional cost variances arising from Braeside manufacturing ownership in the first half of the year.

Though, management has warned that its profit growth will come predominantly from the second half of the financial year.

Looking beyond FY 2021, management notes that it has confidence in its renewed strategy and expects it to put the company back on a path to sustainable, profitable growth and in a position to restore future dividends.

No real update was given for its performance in the first quarter of the year. Though, management did advise that it has completed its restructuring, which is set to deliver $15 million of gross annualised savings from the second half.

It has also initiated a Leading Value Position (LVP) savings program, which will contribute to cost of goods sold savings of $10 million in FY 2021.

Global Therapeutics divestment.

In a separate announcement, Blackmores has revealed an agreement to sell its Global Therapeutics business to McPherson’s Ltd (ASX: MCP) for $27 million.

Chief Executive Officer, Alastair Symington, commented: “Fusion Health and Oriental Botanicals are wonderful brands which play an important role in the health and wellness routine of many Australians. While we have decided that Global Therapeutics is no longer part of of our strategic priorities, I want to acknowledge the unique value of these brands and believe Global Therapeutics will now have an opportunity to reach its true potential with McPherson’s.”

The transaction is scheduled for completion on 30 November. It remains subject to conditions in relation to the transfer of a minimum number of employees and material contracts and there being no material adverse change to the business.

More reading

• 5 things to watch on the ASX 200 next week
• McPherson’s (ASX:MCP) share price on watch on Wednesday after Q1 update
• Why I like ASX consumer staples shares in the current climate
• These were the worst performing shares on the ASX 200 last week
• Why a2 Milk, Blackmores, Ramelius, & Synlait Milk shares are tumbling lower

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Blackmores 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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Is the Australia and New Zealand Banking Group (ASX: ANZ) share price a buy today?

The ANZ share price has gone up by 14.3% over October alone and the month hasn’t finished yet. Though it may fall a bit today. Either way, it has gone up nicely in a short amount of time.

What has happened recently?

ANZ has been going up after a few positive developments for the bank.

‘Responsible’ lending laws are going to be axed so that credit will flow easier to borrowers so that the economy can recover from COVID-19 quicker. It’s up to you to decide what that means in light of the Hayne royal commission – but it’s going to help ANZ’s growth that’s for sure.

Another big help for positive sentiment was the recent Australian federal budget that announced tax cuts for a large number of Australian workers. We’ve seen how well jobkeeper and an improved jobseeker helped stabilise the Australian economy during this recession. Tax cuts could be another boost for the economy and the share market.

Melbourne’s COVID-19 situation has been improving throughout October and this week was the first time in months that it reported 0 new daily cases. Retail will finally open and most other businesses can open in a couple of weeks. This should be good news for the strength of ANZ’s Victorian loan book.

Not everything is great though

ANZ’s loan book isn’t impervious to COVID-19 difficulties. In the third quarter of FY20, it recognised another provision charge of $500 million. This was on top of the $1.56 billion provision in the second quarter. ANZ’s total provision balance is now $4.65 billion.

One of the most worrying statistics from the third quarter was that the number of Australian home loans that are overdue by more than 90 days increased by 18 basis points (from 31 March 2020) to 1.28% at 30 June 2020. These borrowers are the ones that were ineligible for deferral.

How many borrowers will go from a current payment holiday to being an overdue borrower? Thankfully a number of borrowers are now making repayments again, even if some of them are only making interest-only repayments.

There are a number of issues hurting ANZ’s net interest margin (NIM) at the moment: It’s a low interest rate environment in all geographies, there has been a shift in customer preferences to fixed interest loans, across the loan market there is higher competition and retention pricing, and there has been a reduction in unsecured (higher margin) retail lending.

It’s a difficult period, I’m not buying bank shares

COVID-19 has caused a tough environment for the banks. Increased lending may be good news for the bank but there are plenty of other factors that are not helping ANZ’s cause.

The RBA has said that interest rates are likely to stay low for a few years. So I can’t see ANZ’s profit recovering to FY19 levels any time soon. Particularly whilst loan arrears are elevated and rising. Royal commission remediation continues to bite at big bank profits.

ANZ has done quite well to remain resilient during this period of uncertainty and maintain a strong balance sheet.

There are plenty of other ASX shares that I’d buy for dividends such as Magellan Financial Group Ltd (ASX: MFG), Brickworks Limited (ASX: BKW), Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) and APA Group (ASX: APA).

I think there are other ASX shares that offer more growth potential than ANZ and can still pay a growing dividend for shareholders. There may be a time that ANZ is worth buying, perhaps in a rising interest rate environment, but I wouldn’t want to buy it for my own portfolio today.

More reading

• ASX 200 Weekly Wrap: ASX snaps winning streak… just
• 3 important rules to help you build wealth
• 5 things to watch on the ASX 200 next week
• What to expect from the ANZ Bank (ASX:ANZ) full year result next week
• ASX 200 flat: Big four banks push higher, Afterpay drops, Megaport sinks 10%

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of APA Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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There are a good number of dividend shares for investors to choose from on the Australian share market. Two that I think are among the best on offer are listed below.

Here’s why I think they would be top options for income investors in November:

Coles Group Ltd (ASX: COL)

The first ASX dividend share I would buy is Coles. I continue to believe that the supermarket giant is one of the best income options on the Australian share market. This is due to its defensive qualities, strong market position, and positive long term growth outlook. The latter is being underpinned by its refreshed strategy and long history of comparable store sales growth. In fact, in August, Coles reported its 51st consecutive quarter of Supermarkets comparable sales growth. I think this is a staggering record and demonstrates the quality of its business.

And while this incredible run is likely to come to an end next year when it cycles the third and fourth quarters of FY 2020, which saw sales spike from panic buying at the height of the pandemic, I expect it to resume its comparable store sales growth again soon after. In the meantime, based on the current Coles share price, I estimate that it offers a fully franked ~3.6% dividend yield in FY 2021.

Wesfarmers Ltd (ASX: WES)

Another ASX dividend share to consider buying is Coles’ former parent, Wesfarmers. I believe the conglomerate is well-positioned for growth over the coming years thanks to its high quality portfolio of assets. These include Bunnings, Kmart, Target, Officeworks, online retailer Catch, and a collection of industrial businesses. The key business for me is the Bunnings business, which I believe is well-placed for growth thanks to government home improvement stimulus and personal tax cuts. The latter should also be supportive for other retail businesses. 

Another reason I like Wesfarmers is its strong balance sheet and management’s history of making earnings accretive acquisitions. I suspect the company will be adding to its portfolio before the end of FY 2021 and boosting its future growth. For now, I expect it to pay a fully franked dividend of ~$1.50 per share in FY 2021. Based on the latest Wesfarmers share price, this equates to an attractive fully franked 3.2% dividend yield.

More reading

• What to expect from the Coles Q1 update this week
• What zero COVID-19 cases in Victoria means for ASX 200 shares
• ASX 200 Weekly Wrap: ASX snaps winning streak… just
• 5 things to watch on the ASX 200 next week
• Why you shouldn’t sweat the small stuff when it comes to investing

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Wesfarmers 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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I think there are some great ASX shares out there that are worth buying in a heartbeat.

Some tech shares like Altium Limited (ASX: ALU) and Pro Medicus Limited (ASX: PME) are great businesses, but I think the market fully understands the potential – that’s why they trade on such a high price/earnings ratio.

However, there are some ASX shares that still look really good value to me:

City Chic Collective Ltd (ASX: CCX)

City Chic is a plus-size fashion retailer of clothes, footwear and accessories.

The City Chic share price dropped 6.5% yesterday and it has actually fallen by 29% since 18 August 2020.

The company has been losing investor sentiment since it said that it hadn’t won the Catherines auction. Catherines was a US retailer that was in financial trouble and was sold to a prospective buyer.

Whilst it was disappointing that the ASX share didn’t win the auction. I think there’s a couple of things to think about the failed bid. I think it was a good sign that City Chic didn’t want to overpay – it shows that management respect shareholder capital.

The other thing to remember is that the company still sees other opportunities to add to its collective and take more market share. City Chic could soon put that money from the capital raising to work, sooner than expected.

But it’s the organic growth I’m most excited about with this ASX share. City Chic sells a good proportion of its products to the northern hemisphere, which is a huge market. It also sells a lot of products online. Those are attractive attributes about the ASX share in my opinion.

At the current City Chic share price it’s valued at 17x FY23’s estimated earnings.

Pacific Current Group Ltd (ASX: PAC)

Pacific Current describes itself as a global multi-boutique asset management business committed to partnering with exceptional investment managers. It combines capital with strategic business development to help businesses grow.

Pacific is invested in a number of interesting fund managers. Some of them are growing very well. For example, in FY20, fund manager GQG grew its funds under management (FUM) by 78% in one year from US$25.1 billion to US$44.6 billion.

Indeed, Pacific’s FUM has been growing strongly recently. In FY20, excluding investments sold and acquired, Pacific’s FUM grew by 52% to $93.3 billion.

That FUM growth and asset gathering efforts was impacted by COVID-19. This ASX share has a lot of growth potential. In FY20 alone it grew its underlying earnings per share (EPS) by 18%.

Pacific thinks its boutiques are well positioned to secure new commitments from investors in FY21 as institutional investor activity resumes. Not only that, but the company thinks it will be able to deploy capital into new, diversifying investments in FY21.

I think there is a lot to like about this ASX as its underlying earnings could compound nicely over the next few years.

At the current Pacific share price it’s valued at 9x FY23’s estimated earnings. It also offers a grossed-up dividend yield of 8.1%.

Foolish takeaway

I think both of these ASX shares look really good value when you just look ahead a couple of years. City Chic is continuing on its path to becoming a global leader in plus-size fashion, so I think it’s worth being along for the ride.

Pacific has had a volatile history. But I think it’s on a good path now and continues to see strong underlying growth. I think it can offer exposure to the theme of people looking for return (from fund managers) in a world of low interest rates. I believe Pacific is a solid option for total returns.

More reading

• 3 ASX dividend shares to buy with yields over 7.5%
• 3 small cap ASX shares I’d buy with $3,000 right now
• 4 ASX shares to buy for a rare Christmas surprise
• Beat the low interest rate with these ASX dividend shares
• Is it time to go all in on ASX shares?

Tristan Harrison owns shares of Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus 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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If you’re a growth investor looking for some new investments, then I think you’re very much in luck right now.

This is because I believe there are a number of quality companies that are well-placed to deliver strong earnings growth over the coming years.

Three that jump out at me right now are listed below. Here’s why I would Invest $3,000 across them:

a2 Milk Company Ltd (ASX: A2M)

The first growth share that I think investors ought to buy is A2 Milk Company. It is an infant formula and fresh milk company which has been growing at a rapid rate over the last few years. This growth has been driven largely by the increasing demand for its premium infant formula in the China market, but also its expanding fresh milk footprint. And while FY 2021 appears likely to be an off-year for the company because of the pandemic’s impact on the daigou channel and pantry de-stocking, I’m confident the company will bounce back strongly in FY 2022. Especially given its expanding distribution in China through mother and baby stores. Another positive is that management has the option of boosting its growth with acquisitions thanks to its significant cash balance.

ELMO Software Ltd (ASX: ELO)

Another growth share to consider buying is ELMO. It is a cloud-based human resources and payroll software company that streamlines a wide-range of processes through a single unified platform. ELMO has been growing at a strong rate over the last few years and looks well-placed to continue this positive form in the years that follows. This is thanks to rapid adoption of cloud-based solutions, the quality of its platform, and its growth through acquisition strategy. In fact, the company has recently just boosted its offering with the acquisition of UK-based Breathe. This gives the company access to the SME market and plenty of cross-selling opportunities in the $6.8 billion UK market. 

Kogan.com Ltd (ASX: KGN)

A final growth share to buy is this ecommerce company. While its shares are not cheap now after their incredible gains in 2020, I still believe they would be a great long term option. This is because Kogan and its increasingly popular website appear perfectly positioned to benefit from the structural shift to online shopping that has been accelerated by the pandemic. In addition to this, following a capital raising earlier this year, management has the option to make value accretive acquisitions in the near term to boost its growth.

More reading

• How did ASX retail shares perform in the latest quarter?
• I think the A2 Milk (ASX:A2M) share price is strong buy
• The best time to invest may feel uncomfortable
• Got $1,000? You should buy one of these 8 ASX shares
• 3 sublime ASX growth shares to buy this month

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 Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia has recommended Elmo Software and Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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On Monday the S&P/ASX 200 Index (ASX: XJO) gave back its morning gains and ended the day slightly lower. The benchmark index fell 0.2% to 6,155.6 points.

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

ASX 200 expected to sink lower.

The Australian share market looks set to sink notably lower on Tuesday after rising COVID-19 levels led to global markets being sold off overnight. According to the latest SPI futures, the ASX 200 is expected to open the day 57 points or 0.9% lower this morning. In late trade on Wall Street the Dow Jones is down 2.8%, the S&P 500 has fallen 2.3%, and the Nasdaq has dropped 2.1% lower. 

NAB rated as a buy.

The National Australia Bank Ltd (ASX: NAB) share price is in the buy zone according to analysts at Goldman Sachs. This morning the broker retained its conviction buy rating but trimmed its price target slightly to $20.89. Goldman remains very positive on NAB, even after factoring its recent remediation and one-offs into the equation.

Gold price trades flat.

Unfortunately for gold miners like Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST), the market selloff hasn’t led to the gold price storming higher. According to CNBC, the spot gold price is trading mostly flat at US$1,904.20 an ounce. COVID-19 fears were offset by a stronger U.S. dollar.

Oil prices tumble lower.

Energy shares such as Oil Search Limited (ASX: OSH) and Woodside Petroleum Limited (ASX: WPL) could drop lower today after oil prices tumbled lower. According to Bloomberg, the WTI crude oil price is down 3.2% to US$38.56 a barrel and the Brent crude oil price has fallen 3.15% to US$40.46 a barrel. This was driven by concerns that rising COVID-19 cases could reduce demand for oil.

Annual general meetings.

A number of companies are holding their annual general meetings today and could provide updates at their virtual events. This includes regional bank Bendigo and Adelaide Bank Ltd (ASX: BEN), building products company Boral Limited (ASX: BLD), and auto & water products company GUD Holdings Limited (ASX: GUD).

More reading

• 3 ASX stocks are outperforming today after brokers upgraded them to “buy”
• ASX 200 was mixed today, ends down 0.2%
• Leading brokers name 3 ASX shares to buy today
• ASX 200 up 0.3%: Coca-Cola Amatil rockets on takeover approach, Westpac’s $1.2bn earnings hit
• 5 major ASX 200 events this week

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

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The S&P/ASX 200 Index (Index:^AXJO) surrendered its morning gains to trade flat. But these three ASX stocks are on a high after being upgraded by brokers to “buy”.

The Iluka Resources Limited (ASX: ILU) share price surged 3.7% to $5.31 on Monday. This makes it the third best performer on the ASX 200 after the Coca-Cola Amatil Ltd (ASX: CCL) share price and Idp Education Ltd (ASX: IEL) share price.

Upgraded to buy based on attractive peer valuation

Investors got excited about Iluka after Citigroup upgraded the stock to “buy” from “neutral”. The move comes after the broker reviewed its valuation on the mineral sands miner following the spin-off of Deterra Royalties Ord Shs (ASX: DRR).

Citi noted that the market is valuing the remaining Iluka assets at $1.67 billion before today’s share price surge, or $5.12 a share.

This is too low as the broker reckons fair value is $6.20 based on peer valuations.

Building to an upgrade

Another stock that outpaced the market today is the CSR Limited (ASX: CSR) share price. Shares in the building materials supplier gained 2.8% to $4.72 after Credit Suisse lifted its rating on the stock to “outperform” from “neutral”.

The outlook for non-residential construction is improving and that means the expected volume declines are all but reversed.

“We increase our segment weighted market forecast a cumulative ~10% to FY23 (-9% and -2% YoY in FY21 and FY22, respectively), and assume that CSR outperforms this by ~5%,” said the broker.

“This compares to [an estimated] ~3% outperformance in FY20, and 5-yearr average of ~7%.”

What’s more, detached housing construction is rebounding thanks to the government’s Homebuilder grant. This segment accounts for 51% of CSR’s revenue.

Credit Suisse upped its 12-month price target on the CSR share price to $5.30 from $4.10 a share.

Legal headwind not much of a challenge

Finally, the Mineral Resources Limited (ASX: MIN) gave shareholders a reason to smile following a bout of recent weakness. The MIN share price jumped 2.8% to $25.61 but it’s still well down from the near $30 peak it hit last month.

A legal challenge by Fortescue Metals Group Limited (ASX: FMG) is the main driver for the weakness.

Mineral Resources intends to acquire the Wonmunna Iron Ore Project from Australian Aboriginal Mining Corporation (AAMC) but FMG is trying to get the court to declare the Wonmunna mining leases invalid.

But Bell Potter isn’t concerned as it upgraded the stock to “buy” from “hold”.

“Incorporating Wonmunna has increased our FY21 EPS forecast by 2.6% and by 6.6% in FY22, resulting in our price target increasing from $28.10 to $28.50,” said Bell Potter.

“We have upgraded our recommendation to Buy, noting the pull back in the share price from >$30 to <$25, resilient iron ore pricing, plus potential new projects to increase Iron Ore exports from 20Mt in FY21 to >70Mt within 5 years.”

More reading

• ASX 200 was mixed today, ends down 0.2%
• Coca-Cola Amatil (ASX:CCL) share price jumps 16% on takeover bid
• ASX 200 up 0.3%: Coca-Cola Amatil rockets on takeover approach, Westpac’s $1.2bn earnings hit
• Why Coca-Cola Amatil, CSR, Link, & Qantas shares are storming higher
• 5 major ASX 200 events this week

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I believe the Australian share market is home to a number of mid cap tech shares that have the potential to grow their earnings at a rapid rate over the next decade.

But which mid cap tech shares should you buy? Two that I rate highly are listed below. Here’s why I would buy them:

Megaport Ltd (ASX: MP1)

The first option to look at is Megaport. Due to its exposure to the cloud computing megatrend, I think it could be very well-placed for growth over the 2020s. It offers scalable bandwidth for public and private cloud connections, metro ethernet, and data centre backhaul. In addition to this, its global platform allows customers to rapidly connect their network to other services across the Megaport Network. After which, users can then control their networks effortlessly via mobile devices, their computer, or its open API.

At the end of September, Megaport’s customer numbers reached 1,980, its total ports stood at 6,333, and its quarterly revenue grew to $17.3 million. The good news is that the company is still only scratching at the surface of an enormous global market opportunity. And thanks to its leadership position, I expect it to capture a big slice of its over the next decade.

Pushpay Holdings Group Ltd (ASX: PPH)

Another mid cap tech share to buy is Pushpay. I think the donor management and community engagement platform provider has the potential to grow at a strong rate for many years to come. This is thanks to its increasingly popular and high quality platform, which has been capturing a growing slice of the U.S. church market in recent years. This has underpinned very strong recurring revenues and even stronger operating earnings.

Looking ahead, management expects this strong form to continue in FY 2021 and is confident that another strong result is coming. It is guiding to the more than doubling of its operating earnings this year. Given the tailwinds it is experiencing from the shift to a cashless society and the digitisation of the church, I believe Pushpay will deliver on this guidance and then continue its growth throughout the 2020s.

More reading

• Is the Pushpay (ASX:PPH) share price a buy at today’s levels?
• 5 ASX tech shares that could be the next WAAAX stocks
• Is Temple & Webster Group Ltd (ASX:TPW) still a buy?
• ASX 200 Weekly Wrap: ASX snaps winning streak… just
• 3 star ASX shares to buy for the rest of 2020

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 MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia has recommended MEGAPORT FPO and PUSHPAY FPO NZX. 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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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.

Though there’s still more than two months left to 2020, that hasn’t stopped Tesla Inc (NASDAQ: TSLA) analysts from trying to start making estimates on the electric-car maker’s potential growth in 2021. During the company’s third-quarter earnings call last week, an analyst took a stab at getting CEO Elon Musk to talk about vehicle delivery expectations for next year – and he succeeded.

As it turns out, Tesla may be positioned for massive growth in vehicle deliveries in 2021 – and the automaker has the installed production capacity to back it up.

After explaining how he arrived at his estimate, New Street Research analyst Pierre Ferragu he believed Tesla could deliver between 840,000 to one million cars in 2021 – up from the projected 500,000 units the company is expected to deliver this year.

When asked whether he was on the right track, Musk responded saying, “I mean, it’s in that vicinity. Yes. You’re not far off.”

To put this potential growth into perspective, consider it in percentage terms compared to the 500,000 vehicles Tesla is aiming to deliver this year. Growing deliveries from 500,000 in 2020 to 850,000 in 2021 implies 70% year over year growth. One million deliveries next year, of course, would translate to 100% growth (again assuming Tesla delivers 500,000 vehicles in 2020.

How Tesla’s deliveries could grow 70%

But are these realistic expectations?

There’s actually a rational case for this analyst’s projections. As the analyst pointed out when explaining the reasoning for his forecast, the automaker has already installed enough production capacity to produce nearly 850,000 cars per year.

Tesla broke down this capacity in its third-quarter shareholder letter. The company’s production lines at its Fremont, California factory can produce 90,0000 combined Model S and X units per year and 500,000 combined Model 3 and Y units. Tesla’s new Shanghai factory has the capacity for 250,000 Model 3 vehicles annually.

Meanwhile, Tesla’s Model Y factories in both Berlin, Germany and Austin, Texas are both under construction. In addition, the company is building a production line for Model Y in Shanghai. Given Tesla’s recent accelerated pace at bringing factories and new production lines online, it wouldn’t be surprising to see production at these factories begin in meaningful volumes next year.

While Tesla could run into some unexpected detours, the company’s recent execution and its expansion plans suggest Tesla will likely see accelerated growth next year.

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

More reading

• Tesla Q3 trounces analyst estimates
• Tesla (NASDAQ:TSLA) earnings: What to watch
• 2 big challenges as Tesla (NASDAQ:TSLA) aims for a $25,000 car
• Is Tesla Inc (NASDAQ:TSLA) stock a buy ahead of earnings?
• How this fund manager is 60% UP in the year of COVID-19

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

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In the 5 days since the market opened on Tuesday of last week, the Santos Ltd (ASX: STO) share price has risen by 3.6%. This at a time when the oil and gas sectors are under siege due to persistent low oil prices driven by low demand, and a glut in supply. There are a few reasons for this movement in the Santos share price, some of which are due to the performance of the company, not only external factors. 

What is supporting the Santos share price?

On 15 October, Santos CEO Kevin Gallagher confirmed that the cost of the Narrabri gas project would be much cheaper than the $3 billion-plus price tag being widely quoted. This had raised doubts over the economic feasibility of the project. Particularly amid low gas prices globally, as well as the proposed Port Kembla LNG import terminal. The latter is a project proposal by Andrew Forrest. Tattarang, Forrest’s private investment vehicle, will own 100% of the Port Kembla terminal and has plans to accelerate progress.

Nonetheless, Mr Gallagher told Citi’s Investment Conference that the $3 billion figure was out of date.  Specifically, that cost reductions Santos has made in its drilling operations in Queensland would lower the estimate. Moreover, he promised to update the market on progress on reducing capex at an investor briefing on 1 December.

Moreover, drilling results have significantly exceeded expectations at the company’s fracking project at its Tanumbirini-1 well. This is located in the Northern Territory and played a part in the Territory’s recent election. In addition, it continues to rapidly progress for the 1.7 mtpa Moomba carbon capture and storage (CCS) project. Consequently, the project is on track to be ready for the final investment decision by year end.

Despite this good news, the Santos share price remains down by 35.5% in year to date trading.

External factors

There are some significant factors bringing good news to the sector. First, and unfortunately, weather forecasters are predicting a harsh winter for the Asia region. At present natural gas is selling for USD$2.96 per mmBtu, significantly higher than the price has been throughout the entire year. Although, still lower than the average USD$6 per mmBtu, at which LNG traded a year ago.

LNG demand normally improves during the winter in the northern hemisphere, but mild winters have been harsh to producers before. Nevertheless, Japanese forecasters believe the likelihood of a La Nina was 90 percent. The mild northern summer is part of why gas prices fell so hard, damaging the Santos share price in the process. 

In a recent video conference organised by the Gas Exporting Countries Forum (GECF), representatives stated:

We expect LNG demand to increase by four billion cubic metres this winter and that’s led by growth in China, Japan and South Asia.

LNG supply is expected to grow by three billion cubic metres, led by the US. And when we put together demand and supply forecast, we expect the LNG market to be slightly tighter than last winter by one billion cubic meters.

Foolish takeaway

The Santos share price edged up slightly today on the back of positive sentiment. However, there appears to be a culmination of good news for the company. In particular the reduced costs for its major expansion project, and the positive results for its NT fracking project. If this were to combine with a harsh northern winter, there may be pressure on the Santos share price. 

More reading

• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 on Friday
• Santos (ASX:STO) share price on watch after record Q3 production
• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 on Tuesday

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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