In morning trade the NEXTDC Ltd (ASX: NXT) share price is charging higher following the release of a positive announcement.

At the time of writing the data centre operator’s shares are up over 8% to $10.72.

This latest gain means that NEXTDC’s shares are now up 64% since the start of the year.

Investors have been buying the company’s shares after the pandemic accelerated the shift to the cloud and demand for data centre capacity.

What did NEXTDC announce?

This morning NEXTDC announced that its data centres in New South Wales have won several material customer contracts.

According to the release, the company’s contracted commitments at its New South Wales data centre facilities have now increased by approximately 4MW, to more than 36MW.

But it doesn’t stop there. Contracted customer commitments plus expansion options at its data centres in the state are now approaching a sizeable 60MW.

In light of this, NEXTDC has committed to completing the Sydney-2 centre fit-out to a total planned capacity of 30MW.

What now?

Management advised that revenue recognition for these new contracted commitments is expected to commence during FY 2021. This will be after the completion and commissioning of the associated data halls.

The company’s CEO and Managing Director, Craig Scroggie, was pleased with the wins and notes that demand for its services has been growing quicker than expected.

He said: “The demand for our data centre services continues to accelerate and exceed our expectations, yet requires discipline and patience as the nexus between the hyperscale capacity planning, site development, infrastructure deployment and revenue recognition can in practice be 2-3 years for these very large hyperscale developments.”

“This is all part of NEXTDC’s digital infrastructure business model, which continues to build long term value through contracted capacity and tangible asset backing,” he concluded.

More reading

• Top ASX Stock Picks for July 2020
• Where I would invest $10,000 into ASX shares in FY 2021
• 2 quality ASX shares I would buy with $10,000 in July
• 3 stellar ASX tech shares to buy in July
• Here are 3 top ASX tech shares to buy with $5,000 today

Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. 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 Wesfarmers Ltd (ASX: WES) share price has recovered strongly since the early phase of the coronavirus pandemic. The company’s share price has risen by 44% from its low of $31.02 on 23 March to close yesterday at $44.83.

Wesfarmers has operations spanning a broad spectrum of the Australian economy. This provides it with a buffer to any industry-specific challenges that may come its way. In particular, Wesfarmers’ online offerings have seen increased demand during the coronavirus crisis.

So, is the Wesfarmers share price in the buy zone right now?

Online sales continue to grow strongly

Wesfarmers provides online retail offerings via its Target and Kmart offerings, as well as its pure online offering, Catch. 

Online demand been particularly strong in recent months, as consumers have stayed away from brick-and-mortar stores. Online sales for Catch have risen by a whopping 69% in the half-year to date up to early June. In comparison, Catch’s online sales only rose by 21% in the 6 months ending December last year.

Although online sales growth for Wesfarmers is likely to be more subdued as the coronavirus pandemic eases further, consumer habits may to some degree have changed permanently. Many Australians are finding that the online channel is very attractive due to its convenience and price competitiveness over physical stores.

Bunnings and Officeworks continue to be star performers

Wesfarmers’ Bunnings and Officeworks stores have continued to perform strongly in recent months. For the half year to date until early June, Bunnings’ sales rose by 19.2%, compared to growth of just 5.8% during 1H20. Officeworks also has seen strong recent growth due to more Australians purchasing goods to help them work and learn in a home environment during the pandemic.

Target, however, continues to be a problem for Wesfarmers. In late, May Wesfarmers announced it will implement a strategy to downsize its underperforming Target store network.

So, does the Wesfarmers share price offer good value to investors right now?

The Wesfarmers share price has rallied strongly in recent months, regaining nearly all of its share price losses incurred during the initial period of the coronavirus pandemic. Wesfarmers shares also rose strongly in the 12 months prior to the pandemic, so are no longer looking cheap.

Despite this, I still believe the Wesfarmers share price is in the buy zone. The long-term growth potential of Wesfarmers remains strong driven by a diversified portfolio of quality assets. In particular, I feel that its Bunnings chain has the potential to grow further over the next decade.

More reading

• E-commerce is the COVID-19 success story. These businesses are the clear winners.
• ASX 200 Weekly Wrap: ASX retreats as confidence wanes
• 3 fantastic ASX dividend shares to buy next week
• ASX shares vs property: which is a better investment?
• Wesfarmers and one more ASX share I’d buy in another market crash

Motley Fool contributor Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of 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.

The post Is the Wesfarmers share price a good buy right now? appeared first on Motley Fool Australia.

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The Coles Group Ltd (ASX: COL) share price rocketed 11.8% higher in June, but can it repeat the trick this month?

Why the Coles share price surged in June

There have been no new ASX announcements from the Aussie supermarket group since 22 May. This means it’s purely investor sentiment that has pushed the Coles share price higher in June.

Prior to June, Coles’ market value had been sinking lower for a couple of months. As it stands right now, the ASX supermarket share is worth $22.9 billion and is firmly inside the ASX 20.

Coles wasn’t the only ASX share to climb higher in June with the S&P/ASX 200 Index (ASX: XJO) gaining 2.5% to close the month at 5,897.9 points.

In relation to the Aussie supermarket sector, there was one announcement that piqued my interest last month, however it wasn’t from Coles. SCA Property Group (ASX: SCP) provided a trading update and it suggested some good news for supermarkets like those run by Coles and Woolworths Group Ltd (ASX: WOW).

SCA reported that sales performance for a number of its tenants had been volatile due to the coronavirus pandemic, but the supermarkets were doing better than most. In fact, SCA’s supermarket tenants increased year-on-year moving annual turnover by 4.4% through to 31 May 2020.

That could be a good sign for Coles’ earnings, as we will likely discover in August this year. If the Aussie supermarket group shows a strong growth trajectory, I think the Coles share price could finish the year strongly.

For context, the Woolworths share price also climbed 5.5% higher in June to $37.28 per share. 

Is Coles good value at the moment?

I always like to look at the relative value of shares against their peers. Woolworths shares are currently trading at a price to earnings (P/E) ratio of 18.6x compared to 19.3x for Coles.

This to me says there isn’t a huge difference in the current valuations for the ASX supermarket shares. That said, I still think July could be another strong month for the Coles share price if robust sales continue.

However, I also think the group’s August earnings result will be a good barometer of what to expect for the rest of 2020.

More reading

• The Fortescue share price rose 51% in FY20. Too late to buy?
• Up nearly 33% in 12 months. Can the CSL share price climb higher?
• Afterpay and these shares were the best performers on the ASX 200 in June
• Webjet and these shares were the worst performers on the ASX 200 in June
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and 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 Flight Centre Travel Group Ltd (ASX: FLT) share price was out form last month and tumbled a disappointing 15% lower.

Concerns over a delay in the recovery of tourism and travel markets appear to have been weighing on the travel agent’s shares.

It is perhaps because of these same concerns that Flight Centre has just announced its decision to take on more debt.

What did Flight Centre announce?

This morning Flight Centre announced that it has secured access to a debt facility of up to 65 million pounds.

According to the release, the company intends to draw down these funds as and when it is necessary to help offset the coronavirus’ impact on its United Kingdom-based operations.

The release explains that this funding has been made available to the company via the Bank of England’s COVID Corporate Financing Facility.

This is a program that has recently been implemented in the UK. It has been designed to support short-term liquidity among companies as they work to overcome the disruption caused by the pandemic and the restrictions that have been put in place to limit its spread.

The initial notes that will be issued under the facility are scheduled to mature in March 2021. However, management believes they should be capable of being extended for a further 12 months through the issue of further notes under the facility.

Should you invest?

While I believe that Flight Centre now has ample liquidity to ride out the storm, I wouldn’t be in a rush to invest.

Given the dilution of its equity raising and the likelihood that the next couple of years could be very tough, I believe investors will be able to pick up Flight Centre shares at much fairer prices in the future. In light of this, I think it would be best to keep your powder dry for the time being.

More reading

• Webjet and these shares were the worst performers on the ASX 200 in June
• ABS reveals which industries (and ASX shares) may rebound hard after COVID-19
• ASX 200 drops 1.15%: Fisher & Paykel Healthcare impresses, big four banks tumble
• These were the worst performing ASX 200 shares last week
• Share price winners and losers of the pandemic

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group 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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Of all of the major ASX blue chip shares, Fortescue Metals Group Limited (ASX: FMG) has probably had the best financial year.

It being the first day of July, it’s now time to welcome in FY2021. This gives us a great opportunity to see how some S&P/ASX 200 Index (ASX: XJO) shares have performed over the past 12 months.

And boy, has Fortescue performed.

On 1 July 2019, Fortescue Metals was asking $9.15 per share (which at the time seemed high in its own right). But fast forward to today, and Fortescue closed the financial year at $13.85. That’s a handy 51.37% gain for the year and a ‘time-and-a-half’ return for investors. If you include Fortescue’s hefty, fully franked dividend payments, the return is even better at somewhere around 58.5%. It’s not the highest return you could have achieved from an individual ASX 200 share, but it’s certainly better than a poke in the eye!

Why did Fortescue shares go bananas in FY20?

There’s one major reason Fortescue shares have raised the roof in FY20: the price of iron ore. That’s because Fortescue is about as pure an iron ore play that you can find on the ASX 200. It generates approximately 95% of its revenues from the extraction and shipping of iron ore. In its latest annual report (2019), Fortescue told investors its rough cost of extracting and selling one tonne of iron ore came in around US$12-13. Now, the iron ore price has fluctuated wildly over the past 12 months (as it is wont to do). Over the first half of the financial year, we saw prices go from over US$115 per tonne to as low as US$80 per tonne.

But over the course of the calendar year, albeit with a few ups and downs, overall the opposite swing has occurred. Back in early April, iron ore was asking around US$77 per tonne. But today, the iron ore price is back over US$100 and is seemingly looking like staying there. This has mostly been the result of a supply squeeze sparked by collapsing output from the Brazilian market (which has been extremely hard hit by the coronavirus pandemic).

And it’s this price swing that I think has been behind the massive surge in Fortescue shares over the past year.

Is Fortescue a buy today?

Normally, I am distrusting of ASX resources shares. They are more or less subject to the whims of the commodity market, which can easily double or erase a miner’s profitability in any given year. But Fortescue is an extremely well-run company with, in my view, one of the most successful management teams on the ASX, headed by the reputable Andrew ‘Twiggy’ Forrest. Due to Fortescue’s superbly low cost base for mining iron ore, I think the company will be well-placed this year to continue to grow and pay healthy dividends. And this is of utmost importance at a time when most ASX dividend payers are struggling. I wouldn’t call Fortescue shares cheap right now, but I would also happily consider them for a well-rounded ASX dividend portfolio.

More reading

• Can the Coles share price climb 12% again in July?
• Up nearly 33% in 12 months. Can the CSL share price climb higher?
• 2 shares to buy before earnings season
• Afterpay and these shares were the best performers on the ASX 200 in June
• Webjet and these shares were the worst performers on the ASX 200 in June

Motley Fool contributor Sebastian Bowen 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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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.

What happened

Shares of renewable-energy company Tesla (NASDAQ: TSLA) surged to all-time highs on Tuesday, and the reason isn’t obvious. CEO Elon Musk sent out an email to talk about “breaking even,” reminding Wall Street this stock may be mere weeks away from inclusion in the S&P 500. 

As of 2:00 p.m. EDT, Tesla stock was up 6.5%. But earlier in the session, it was up a little higher and briefly achieved a market capitalization of $200 billion for the first time. 

TSLA data by YCharts

So what

Once a quarter, a committee adjusts the S&P 500. New companies are often added while others are removed. To be considered, companies must meet various eligibility requirements. Tesla already meets some requirements, like being based in the U.S. and having a price per share over $1. But it’s lacked profitability.

Four consecutive quarters of profitability are needed to be considered by the committee. Tesla has reported three consecutive quarters. Considering it’s already a large-cap stock headed into mega-cap territory, a fourth consecutive quarter of profits would make it a shoo-in for inclusion into the S&P 500.

According to CNBC, a leaked email from Musk encouraged employees to “go all out” because “[b]reaking even is looking super tight.”  Without more context, it’s hard to know what this means. But it appears Musk needs more productivity from his workers down the stretch of the quarter to be profitable. And Musk is likely aware of what’s at stake if the company swings to the green.

As a reminder, Tesla’s fiscal quarter ends today, providing a small window of opportunity.

Now what

So why would investors be excited about Tesla getting included in the S&P 500? Tesla is a polarizing stock, with passionate investors on both sides. At times, this makes Tesla stock volatile. Consider that it’s up over 150% in 2020, but it also fell more than 60% from February to March. That’s a wild ride.

Once in the S&P 500, that volatility could mitigate. Tesla stock will be purchased for index funds, and as long as it’s in the club, those shares won’t be sold. It could create a floor for Tesla stock. However, while it’s an interesting development for Tesla shareholders, it doesn’t make the stock a buy in isolation. Investing in stocks for the long haul requires a good assessment of the underlying business as well.

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

More reading

• These 2 ASX shares are perfect for a beginner investor
• Millennials be warned! Signs of dangerous ASX share trading grow

Jon Quast 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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The Carsales.Com Ltd (ASX: CAR) share price will be one to watch on Wednesday after it became the latest company to report heavy insider selling.

What did Carsales announce?

According to a change of director’s interest notice, the auto listings company’s former Chair and current Non-Executive Director, Wal Pisciotta OAM, was selling a sizeable number of shares through on-market trades at the end of June.

The notice reveals that Mr Pisciotta sold a total of 388,000 shares through a series of on-market trades between 24 June to 30 June.

The director received a total consideration of $6,805,893.09 for the shares, which equates to an average of $17.54 per share. No explanation was provided for the share sales.

However, it is worth noting that Mr Pisciotta still has a significant interest in the company. Even after this sale, his indirect holdings amount to almost 8.3 million shares. So, I feel it is fair to say his interests remain firmly aligned with shareholders.

Who else has been selling shares?

As I mentioned at the top, this is not the first instance of heavy insider selling in recent weeks.

Back on 23 June a number of executives of buy now pay later provider Zip Co Ltd (ASX: Z1P) sold some of their shares. This includes Managing Director Larry Diamond, Chairman Philip Crutchfield, and Company Secretary David Franks.

Combined, they offloaded almost $48 million worth of shares through on-market trades. Though, as with Mr Pisciotta and Carsales, each of these directors still has plenty of skin in the game.

Another seller of shares was the founder and CEO of logistics solutions company WiseTech Global Ltd (ASX: WTC). On Tuesday Richard White offloaded almost $46 million worth of shares.

Though, once again, the chief executive still has a considerable holding after this sale. The notice shows that Mr White continues to own ~151 million WiseTech Global shares. This represents approximately 46.9% of the issued capital of WiseTech Global.

More reading

• Safe ASX 200 dividend shares to buy today
• These ASX stocks might be a better option than Carsales.Com
• Brokers just upgraded these ASX 200 stocks to “buy” today
• Top brokers have just downgraded Carsales.Com and these outperforming ASX 200 stocks
• Why Air NZ, Carsales, Pendal, & Star shares are dropping lower

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 ZIPCOLTD FPO. The Motley Fool Australia owns shares of WiseTech Global. The Motley Fool Australia has recommended carsales.com 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 CSL Limited (ASX: CSL) share price has been a consistently strong performer on the ASX.

Shares in the Aussie biotech giant climbed 32.53% in the last 12 months and outperformed the S&P/ASX 200 Index (ASX: XJO). But can the Aussie large-cap share repeat the trick in FY21?

Why the CSL share price can climb higher

Despite being a top growth share for many years, I think the Aussie biotech company’s value can continue to climb.

For one, the CSL share price hit a new all-time high of $342.75 before the February/March bear market.

Given CSL is currently trading at $287.00 per share, that says to me there is strong growth potential.

The coronavirus pandemic has certainly thrown a spanner in the works for ASX shares and the broader economy. It’s tough to value any share at the moment, let alone those in the healthcare sector.

However, I think CSL has some really strong growth initiatives that can strategically position the company in the coming years.

For example, CSL is indirectly involved in the COVID-19 vaccination development effort through its partnership with University of Queensland. The Aussie biotech is also leveraging its blood plasma expertise to try to develop a plasma-derived therapeutic to treat serious complications of COVID-19.

Beyond just the pandemic though, CSL is also continuing to do some great work. The CSL share price in recent years has been built on strong research and development (R&D) and a successful business model.

CSL boasts a team of over 1,700 R&D experts and has innovation partnerships across Australia, Europe and the United States. In fact, CSL invested US$832 million in its R&D portfolio in FY19 or 9.7% of its total revenue. That strong focus on reinvestment and innovation has been a real key to the CSL share price growth in past decades.

The group is currently undertaking some promising work in the treatment of respiratory diseases like asthma. Given the prevalence of these sorts of conditions around the world, the potential addressable market and possible earnings from product breakthroughs are enormous.

Foolish takeaway

I personally think we could see the CSL share price close out this calendar year above the $300 per share mark. Of course, nothing is guaranteed, but it’s hard to bet against such an innovative and successful ASX share like CSL.

More reading

• Afterpay and these shares were the best performers on the ASX 200 in June
• Webjet and these shares were the worst performers on the ASX 200 in June
• 5 things to watch on the ASX 200 on Wednesday
• Top ASX Stock Picks for July 2020
• ASX 200 rises 1.4%, Collins Foods delivers tasty returns

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 CSL Ltd. 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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We might be in a new financial year, but unfortunately for income investors, the outlook for interest rates hasn’t changed.

Current cash rate futures continue to point to the cash rate being between zero and 0.25% until at least the end of 2021.

In light of this, I continue to believe dividend shares are the best way to earn a passive income. But which dividend shares should you buy? Here are three that I would buy:

Commonwealth Bank of Australia (ASX: CBA)

If you don’t already have exposure to the banking sector, then I think Commonwealth Bank could be the one to buy. I believe it is the best option in the sector due to its high quality operations. And while dividend cuts are highly likely to be made in FY 2021, I’m not convinced the cuts will be as bad as some fear. I expect Commonwealth Bank to pay a fully franked dividend of $3.70 per share in FY 2020. This would be a generous 5.3% dividend yield, based on its last close price.

Transurban Group (ASX: TCL)

Another dividend share to consider buying is Transurban. It is a leading toll road operator with a portfolio of key roads in North America and Australia. The pandemic has hit the company hard and led to a sharp reduction in traffic volumes over the last few months. The good news is that with restrictions now easing, traffic volumes are starting to recover. And while it may take time for its roads to be back to their former glory, I’m optimistic it will be generating enough toll revenue to pay a decent distribution in FY 2021. At this point, I’m forecasting a 49 cents per unit distribution in FY 2021. This works out to be a forward 3.5% distribution yield.

VanEck Vectors Australian Banks ETF (ASX: MVB)

Finally, if you’re not sure whether Commonwealth Bank is the best bank to buy, but you’re wanting exposure to the banking sector, then the VanEck Vectors Australian Banks ETF could be a great option. This exchange traded fund gives investors exposure to Commonwealth Bank and the rest of the big four banks through just a single investment. It also provides investors with access to the regional banks and investment bank Macquarie Group Ltd (ASX: MQG). I estimate that its units currently provide a forward dividend yield in the region of 5%.

More reading

• Top ASX Stock Picks for July 2020
• Top brokers name the latest ASX shares to buy today
• Morgans picks the best FY21 ASX buys for the COVID-19 world
• ASX bank shares have experienced a horrible financial year
• Is CommBank still the best ASX dividend share to buy?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia owns shares of Transurban 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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I think more than ever before, earnings season is going to represent a volatile time on the ASX. Investors are looking everywhere for good shares to buy in what has become a very unpredictable market. As such, often companies that deliver decent earnings reports see a rise in their share prices.

Earnings season begins in August. I think the following are solid shares to consider picking up before the end of July. I believe these companies are likely to report strong earnings, which may see them deliver reasonable increases in their share prices. 

Mining shares

In the mining space, there are two sectors that have done remarkably well during H2 FY20. These are iron ore and gold. Having said that, I feel most of the ASX gold miners are currently priced far too high to consider buying.

Instead, in the iron ore space, I believe Fortescue Metals Group Limited (ASX: FMG) is a solid share to consider buying in July. This is because Fortescue is presently a pure play iron ore producer. BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO), on the other hand, both produce commodities in addition to iron ore that I feel will be a drag on their overall earnings.

During coronavirus lockdowns, the iron ore price actually rose. Today it is at a higher spot price than it was at the start of the pandemic. In Fortescue’s Q3 FY20 report, it declared record third quarter iron ore shipments which were up 10% on Q3 FY19 as well as record tonnages for the year to date. In addition, the company also reported a reduction in costs of 2% for the quarter.

Fortescue and the other large iron ore producers were also aided by continuing production troubles with Brazil-based iron ore leader, Vale.

Medical supplies

In the medical supplies space, I believe Ansell Limited (ASX: ANN) are great shares to buy ahead of earnings season. We have not heard a lot from this company since the release of its H1 FY20 report in February. The company produces a wide range of personal protective equipment (PPE) that has seen unprecedented demand during the coronavirus pandemic. Global demand for the company’s protective gloves and surgical masks has been particularly strong. 

Ansell’s H1 report highlighted the important role the company is playing during the pandemic in supplying PPE around the world. Particularly in China where Ansell is working with authorities to fast track its regulatory and import process in order to expedite supply.

Ansell improved its earnings before interest and taxes in H1 by 4.3%. However, this relatively modest increase was affected by one-off costs relating to restructuring; including asset impairment and costs of the company’s transformation program totalling USD$26.9m.

Foolish takeaway

Both of the companies highlighted above have been able to prosper during the pandemic. I believe they represent solid shares to buy prior to earnings season as they are likely to surprise the market. Fortescue is currently selling at a price to earnings (P/E) ratio of 5.89. This is less than half the P/E ratios of BHP (13.29) and Rio Tinto (13.83).

Ansell, on the other hand, already has a high P/E ratio. However, I expect the company to report truly stellar earnings come August. Moreover, this time its reporting won’t include the once-off costs of the transformation program and will reflect the unprecedented demand for its PPE.

More reading

• Top ASX Stock Picks for July 2020
• Morgans picks the best FY21 ASX buys for the COVID-19 world
• Searching for decent dividends? These 4 ASX shares are paying 6% or more
• The top 10 performing ASX shares over the past year
• Why I would buy these high yield ASX dividend shares

Motley Fool contributor Daryl Mather owns shares of Fortescue Metals Group Limited. 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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