The Lovisa Holdings Ltd (ASX: LOV) share price climbed over 5% in today’s early trade after the retailer released a business update last night. Lovisa was forced to close stores globally as a result of the COVID-19 pandemic but has now re-opened and reported a surge in online sales during Q4 FY20.

What does Lovisa do?

Lovisa is a fast-fashion jewellery and accessories retailer with over 400 stores globally. The company has a target customer base of fashion-conscious females aged 25-45. Operating a vertically integrated business model, Lovisa develops, designs, sources, and merchandises 100% of its Lovisa-branded products. Founded in 2010, Lovisa expanded rapidly, opening store No. 51 on the company’s first year of operation.

What did Lovisa report?

Lovisa announced that stores have now re-opened in all company-owned markets, with the company trading from 434 stores at the end of FY20. Store closures significantly disrupted Q4 FY20 sales. Lovisa’s sale revenue (excluding franchise revenue) was $237 million for the full year ended 28 June 2020 compared to $249 million in FY19.

Comparable sales for the period since stores have re-opened were down 32.5% on the previous year. Performance has been strongest in Australia and New Zealand where stores have traded the longest after an ease in restrictions. Lovisa reported online growth of 256% during Q4, with trading websites now operational in most of its markets.

How is the Lovisa share price performing?

The Lovisa share price dived 80% from a high of $12 in February to a low of $2.45 in March. Since then the Lovisa share price has gained 160% with shares currently trading at $6.40. Lovisa took action to manage the cost structure of its business following the temporary closure of the store network. This included temporary stand-downs and redundancies, as well as discussions with landlords in relation to rent subsidies and abatements. As a result, the balance sheet remains strong with current net cash of $21 million, compared to $11 million at June 2019.

In 1H FY20 Lovisa opened a net 49 stores, growing revenue by 22% and net profit after tax by 9.1%. With the trade disruptions taking place in 2H FY20, it’s unlikely Lovisa can replicate these results over the full year. Nonetheless, the company is well-placed to invest in future opportunities as the economy emerges from the coronavirus.

More reading

• Why Lovisa, PointsBet, Transurban, & WiseTech shares are racing higher
• Lovisa share price on watch after full year sales update
• A great ASX small-cap share for your watchlist
• Coronavirus second wave potential could drive investment portfolio changes
• Here are 3 Australian share market trends to watch this week

Motley Fool contributor Kate O’Brien 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 Coles Group Ltd (ASX: COL) share price has been behaving rather strangely of late.

Coles shares have been on a pretty rewarding run over the last month or two. Since 22 May, Coles is up nearly 14%, whilst the S&P/ASX 200 Index (ASX: XJO) is up around 10% over the same period.

But before that, Coles shares appeared almost to be doing the opposite of what was happening with the ASX 200. Between 12 February and 19 March, Coles shares were essentially flat, albeit with a brief dip in between. Meanwhile, the ASX 200 lost around 32% over the same period.

But then, between 19 March and 22 May, Coles shares were down around 12% whilst the ASX 200 gained around 15%.

So what on earth is going on with the Coles share price?

Coles shares on a rollercoaster

I think the volatility we have seen in the Coles share price is a function of conflicting sentiment over the supermarket giant. In the depths of the coronavirus crisis lockdowns, Coles seemed like a safe haven. Widespread stories of panic buying of essential goods, and images of bare supermarket shelves, caused investors to flock to Coles shares whilst seemingly selling everything else in their portfolios. Some time after, investors probably realised that Coles wasn’t going to enjoy this bounty forever. Furthermore, investors may have been starting to think that additional expenses associated with increased cleaning and safety measures would likely add to Coles’ long-term costs.

And then, when the market recovery came, suddenly Coles looked boring and overbought. Investors seemed far more excited over growth shares like Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P), which went on to deliver investors triple-digit returns over a month or three.

Are Coles shares a buy today?

Looking at the Coles share price today, and it’s a mixed bag for me. At the time of writing, Coles is trading at $17.11, which gives the stock a price-to-earnings (P/E) ratio of 19.25 and a trailing dividend yield of 2.45% (or 3.5% grossed-up with full franking).

This looks at least ‘fairly valued’ to me. The primary attraction of a company like Coles is the dividend yield. And whilst Coles has one of the safest dividends on the ASX in 2020 in my view, I don’t think 2.45% is anything to write home about. Yes, it’s better than what (at least) half of the ASX big four banks are offering in 2020, but I think there are better income opportunities elsewhere.

Foolish takeaway

I think Coles is a useful ASX dividend share to have as part of an income-focused portfolio. Its defensive qualities and robust dividend do lend the share some advantages in the dividend-deprived year we are in. But for anyone who doesn’t focus on income as the primary objective of investing, I think don’t think Coles has too much else in its trolley to offer.

More reading

• Why you can expect further gains for ASX shares this quarter
• Brokers name 3 ASX 200 shares to buy right now
• ASX 200 up 0.55%: Cochlear jumps on FDA approval, Adbri crushed on contract loss
• Risk to supermarkets is rising but is Woolworths share price still a buy?
• Will the Afterpay share price break $100 in 2020?

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO and COLESGROUP DEF SET. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX market bulls will be emboldened by predictions that equities will add to their strong gains from the June quarter.

History is on the side of the optimist. Whenever the S&P 500 Index (INDEXSP: .INX) records a big jump in the previous quarter, the market has always made gains in the following three months.

This may be specific to the US index, but given the correlation between the S&P 500 and the S&P/ASX 200 Index (Index:^AXJO), this bodes well for the ASX too.

September quarter looking strong

This trend was highlighted in a report by Keith Lerner, chief market strategist at SunTrust Private Wealth Management, according to Bloomberg.

He looked at the quarterly performance of the US benchmark since 1950. Whenever the S&P 500 rallied 15% to 22% in a quarter, it will rise again in the next quarter by an average of 8.4%. The index jumped 20% in the June quarter.

That’s reassuring as investors are fretting over what this quarter could bring. A resurging wave of COVID-19 infections around the world, geo-political tensions with China, the nail-biting August reporting season and the end of government wage subsidies will give us plenty to fret about.

Climbing the wall of worry

At least having history on our side will provide some comfort even though the next few months is thick with uncertainty.

Can the ASX 200 continue to build on gains even in this fog of war? The answer is “yes” as share markets have climbed walls of worry many times before.

It helps that stocks are the “least dirty shirts” in the drawer. The fundamentals for this asset class are better than most others, leading some market commentators to call stocks the new “safe haven” assets.

Why ASX shares can still outperform

I wouldn’t necessarily go that far, but I do believe equities will outperform the other major asset categories in FY21.

But this isn’t a call to indiscriminately buy the market. I think the relatively positive tailwinds for stocks need to be balanced with the multiple risk factors that are on the horizon.

In such an environment, quality defensive stocks with a successful management track record of delivering value to shareholders will be favoured.

ASX stocks to watch

I am not passing judgement on the record breaking Afterpay Ltd (ASX: APT) share price, but it doesn’t fit into what I am referring to.

I prefer stocks that are profitable and have businesses that are well placed to remain so even if the headwinds build.

Some of my favourite picks as we head into the next phase of the coronavirus crisis include the BHP Group Ltd (ASX: BHP) share price, Ansell Limited (ASX: ANN) share price and Austal Limited (ASX: ASB) share price – just to name a few.

If you are looking for other buy ideas, the experts from the Motley Fool have named some stocks that are expected to outperform in this financial year.

Follow the link below to find out for free what they are.

More reading

• What’s going on with the Coles share price?
• Will the Afterpay share price break $100 in 2020?
• Why Afterpay and this ASX share just hit record highs
• Afterpay share price hits $67! Are BNPL shares in a bubble?
• Why the Afterpay share price zoomed to a new record high today

Brendon Lau owns shares of Ansell Ltd., Austal Limited, and BHP Billiton Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Austal Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Ansell 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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Australia’s top brokers have been busy adjusting their estimates and recommendations again, leading to the release of a large number of broker notes this week.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX 200 shares are in the buy zone:

Lendlease Group (ASX: LLC)

According to a note out of Goldman Sachs, its analysts have retained their conviction buy rating on this international property and infrastructure company’s shares and put a $16.55 price target on them. Although Goldman was disappointed to see that Lendlease’s net profit after tax will fall well short of expectations in FY 2020, it believes the company’s profits will bounce back strongly in FY 2021. So much so, it estimates that the Lendlease share price is trading at just 11x FY 2021 earnings. I agree with Goldman Sachs and would be a buyer of its shares.

Telstra Corporation Ltd (ASX: TLS)

Analysts at UBS have retained their buy rating and $3.70 price target on this telco giant’s shares. According to the note, the broker expects Telstra’s mobile business to deliver solid EBITDA growth over the coming years. This follows its recently announced mobile plan changes. In light of this, it believes Telstra will be able to maintain its dividend at 16 cents per share until at least FY 2023. I think UBS is spot on and believe Telstra shares would be a great option for income investors.

Webjet Limited (ASX: WEB)

Another note out of UBS reveals that its analysts have retained their buy rating and lifted the price target on this online travel agent’s shares to $5.35. The broker believes Webjet’s outlook has improved greatly in recent months and has been factoring this and potential market share gains into its estimates. However, given the uncertainty in the travel market, it has warned that its shares are likely to remain volatile in the near term. Although I’m a fan of the company, I’m not convinced that the Webjet share price represents good value just yet. As a result, I intend to wait to see how its performance fares in FY 2021 before considering an investment.

More reading

• What’s going on with the Coles share price?
• ASX 200 up 0.55%: Cochlear jumps on FDA approval, Adbri crushed on contract loss
• Risk to supermarkets is rising but is Woolworths share price still a buy?
• Why I think these ASX dividend shares are strong buys
• 5 things to watch on the ASX 200 on Friday

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

The post Brokers name 3 ASX 200 shares to buy right now appeared first on Motley Fool Australia.

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At lunch on Friday the S&P/ASX 200 Index (ASX: XJO) is on course to end the week with a solid gain. The benchmark index is currently up 0.55% to 6,065.9 points.

Here’s what has been happening on the market today:

Bank shares mixed.

The big four banks look to have run out of steam on Friday and are acting as a bit of a drag on the ASX 200. At the time of writing the National Australia Bank Ltd (ASX: NAB) share price is down around 0.6%. Whereas the Commonwealth Bank of Australia (ASX: CBA) share price is the best performer in the group with a 0.45% gain. The other two big four banks are trading slightly lower.

Adbri (Adelaide Brighton) crushed.

The Adbri Ltd (ASX: ABC) share price has crashed significantly lower on Friday after announcing the loss of a supply contract with Alcoa Australia. The current lime supply contract will not be renewed when it expires at the end of June 2021. Although this represents approximately $70 million or 4.6% of annual revenue, investors appear concerned others may follow. Alcoa revealed that it is switching to cheaper imported products. This brings to an end a supply relationship that has been ongoing for almost 50 years.

Cochlear gets FDA approval.

The Cochlear Limited (ASX: COH) share price is storming higher after receiving US FDA approval for four new hearing technology solutions products. These new products include the Nucleus Kanso 2 Sound Processor, Nucleus 7 Sound Processor for Nucleus 22 implant recipients, Custom Sound Pro fitting software, and the Nucleus SmartNav system. The four new systems will be commercially released in the United States and Western Europe in the coming months. This is subject to local approvals.

Best and worst performing ASX 200 shares.

The best performer on the ASX 200 at lunch is the Cochlear share price with a 5.5% gain. Investors appear pleased with the upcoming launch of the aforementioned innovative new products. The worst performer on the index by some distance on Friday has been the Adbri share price with a 24% decline. Investors appear concerned that the loss of the Alcoa supply contract could be the first of many.

More reading

• Why Adbri, BlueScope, Netwealth, & Rio Tinto shares are tumbling lower
• Why the Adbri share price is crashing 26% lower today
• Cochlear share price charges higher on US FDA update
• Risk to supermarkets is rising but is Woolworths share price still a buy?
• 5 things to watch on the ASX 200 on Friday

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 Cochlear Ltd. The Motley Fool Australia has recommended Cochlear 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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After a COVID-19 production update released before trade this morning, the Tubi Ltd (ASX:2BE) share price soared more than 250% in early trade. 

Tubi announces production turnaround

Despite the disruptions of the coronavirus pandemic, Tubi’s company update announced that it’s seen a significant production turnaround.

During Q4 and Q4 FY20 the company achieved a 55% increase in production volume. Tubi increased its production volume through a 85% increase in month-on-month volume from April to May and a further 51% increase in volume from May to June.

Tubi attributed the turnaround in production volume to its mobile technology and ability to produce onsite, long-length piping. The company outlined its production strategy in its March investor presentation and results are currently in line with this thanks to its recent volume increase.

Tubi also confirmed its existing production orders at its Florida plant through July and August. The company’s Chief Executive Officer, Marcello Russo stated that “Significant orders from key strategic clients are increasing, resulting in greater product diversity and volumes.”

In addition, Russo reassured investors that, “With the third manufacturing plant commissioned and operating, Tubi is well positioned to service these growing orders through covid-19.”  

What does Tubi do?

Tubi is an Australian-based manufacturer of specialised, large-diameter high-density polyethylene (HDPE) piping. The company uses its piping for water, irrigation, oil and gas, mining, and infrastructure. Tubi’s competitive advantage comes from the company’s mobile production plants which allow a reduction in manufacturing and transportation costs.

Tubi currently has 3 production plants operating in the US, with 2 plants in Florida and 1 in Texas. The company’s Florida operations were classified as an essential service and continued operations during the COVID-19 pandemic.

In addition to mobile plants, Tubi also boasts lower costs and faster installation than its competitors. Tubi’s key drivers include efficient production, economies of scales, spread price and substantial cost savings to clients. The company holds its own sales team and has first rights to over 15 projects.

Foolish takeaway

At the time of writing, the Tubi share price is trading 100% higher at around 15 cents. The company opened the day at 9 cents and hit an intraday high of 33 cents. 

More reading

• ASX 200 up 0.55%: Cochlear jumps on FDA approval, Adbri crushed on contract loss
• Why Lovisa, PointsBet, Transurban, & WiseTech shares are racing higher
• BrainChip share price up 25% on milestone
• Why Adbri, BlueScope, Netwealth, & Rio Tinto shares are tumbling lower
• Why the Adbri share price is crashing 26% lower today

Motley Fool contributor Nikhil Gangaram 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 (ASX: XJO) is on course to finish the week on a positive note. In late morning trade the index is up a sizeable 0.7% to 6,073.1 points.

Four shares climbing more than most today are listed below. Here’s why they are racing higher:

The Lovisa Holdings Ltd (ASX: LOV) share price is up almost 7% to $6.53. This follows the release of a full year sales update by the fashion jewellery retailer. According to the update, Lovisa’s sales revenue for FY 2020 (excluding franchise revenue) came in at $237 million. This represents a 4.8% decline on FY 2019’s sales revenue of $249 million. Investors appear pleased with this result given how its stores were forced to close during the pandemic.

The PointsBet Holdings Ltd (ASX: PBH) share price has jumped 6% higher to $6.06. Investors have been buying the sports betting company’s shares after its U.S. business entered into a new multi-year deal to become a gaming partner of the Detroit Tigers Major League Baseball (MLB) team. This is the first of its kind in the MLB.

The Transurban Group (ASX: TCL) share price is up over 2% to $14.85. The catalyst for this gain appears to have been a broker note out of Ord Minnett. Its analysts have upgraded the toll road operator’s shares to an accumulate rating with a $16.00 price target. Ord Minnett is expecting Transurban’s earnings to recover close to pre-pandemic levels by FY 2023.

The WiseTech Global Ltd (ASX: WTC) share price is up 5% to $20.69. This is despite there being no news out of the logistics solutions company. However, its shares have fallen heavily this week after it revealed that its CEO offloaded almost $46 million worth of shares late last month. Investors may believe the sell off was unnecessary and have been taking advantage of the pullback.

More reading

• PointsBet share price zooms 5% higher on Detroit Tigers deal
• Lovisa share price on watch after full year sales update
• 3 high quality ASX dividend shares for patient investors
• What’s next for WAAAX shares?
• Fund managers have been snapping up Sonic and these ASX 200 stocks

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 Pointsbet Holdings Ltd. The Motley Fool Australia owns shares of Transurban Group and WiseTech Global. The Motley Fool Australia has recommended Pointsbet Holdings 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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The BrainChip Holdings Ltd (ASX: BRN) share price rose by 25% on Thursday. This was essentially due to the company achieving a milestone in the development of its Akida Neuromorphic System-on-Chip. Now, if you’re a non-tech type, this probably means very little to you. Suffice to say that the company is an artificial intelligence (AI) startup which, in the words of its CEO, Louis DiNardo, just reached an “…exciting and pivotal moment in BrainChip’s evolution to commercialize a very powerful technology that addresses the burgeoning AI Edge market…”

If, on the other hand, you are technically inclined, feel free to read on for more details on this development. 

What does the company do?

BrainChip is a United States based company listed on the ASX that is focused on neuromorphic technologies. Neuromorphic systems are large-scale systems of integrated circuits. Therefore, as the name implies, they mimic the human nervous system. In addition, Neuromorphic Computing is considered the 5th generation of artificial intelligence by the Artificial Intelligence Board of America. Having listed on the ASX in 2011, BrainChip has three main products:

First, The Akida Development Environment (ADE). ADE is a complete, industry-standard, machine learning framework for creating and training neural networks to run on the company’s Akida Neural Processor. Still with me?

Second, the Akida Neural Processor is an ultra-low power network processor. This is actually the brain that powers the continuous learning that AI is based on. Furthermore, the increased responsiveness and greater power efficiency of the system can help reduce the carbon footprint of data centers by reducing the need for cooling.

Third was the subject of today’s announcement. The Akida Neural Processor System-on-Chip (NSoC), a revolutionary new breed of neural processing computing device. Each of these effectively has 1.2 million neurons and 10 billion synapses which results in significantly greater efficiency than other neural processing devices on the market.

What caused the BrainChip share price to climb?

BrainChip and the company’s partners have completed the fabrication of the NSoC integrated circuit (IC) wafer. Next, the company will be completing the assembly and test operations. After that, the prototype chip will enter the initial evaluation program, and then be shipped to customers that have signed agreements for the early access program.

BrainChip has previously announced the signing of an agreement with Valeo Corporation, a Tier-1 European automotive supplier of sensors and systems for Advanced Driver Assistance Systems (ADAS) and Autonomous Vehicles (AV). This agreement ensures BrainChip will receive milestone payments during the development stage of the NSoC IC.

The BrainChip share price rallied 25% on Thursday to close at 11 cents, bringing its market capitalisation to just over $162 million. In addition, the company’s share price is up by 120% over the calendar year to date. Whether this momentum continues will likely depend on the progress of BrainChip’s assembly and testing phases of the product’s development. Watch this space…

More reading

• Brainchip share price rockets 42% after signing agreement with tier 1 automotive supplier

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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