The Coles Group Ltd (ASX: COL) share price will be in focus later this month when it releases its highly anticipated full year results.

The supermarket giant and rival Woolworths Group Ltd (ASX: WOW) are two of only a handful of companies on the S&P/ASX 200 Index (ASX: XJO) that have been benefiting from the pandemic.

Ahead of the release of its full year results on 18 August, I thought I would see what analysts are expecting from the company.

What is expected from Coles in FY 2020?

According to a note out of Goldman Sachs, its analysts expect Coles to deliver stronger than expected sales and profit growth in FY 2020.

The broker has forecast total sales of $37.5 billion, which will be a 7.1% year on year increase and 1.1% ahead of the market consensus.

Also growing at a solid rate will be its earnings before interest and tax (EBIT). Goldman is expecting Coles to report EBIT of $1392.4 million. This represents a 5.1% year on year increase. And on a post-AASB16 basis, Goldman expects EBIT to come in at $1,759.1 million. This is 0.8% higher than the consensus estimate.

Finally, its analysts are forecasting FY 2020 underlying net profit after tax to be $928.2 million and operating cash flow of $2,824.6 million.:

Food segment.

Goldman Sachs expects the key Food segment to deliver comparable store sales growth of 6.2% in FY 2020, which implies comparable store sales growth of 10.7% for the second half.

This will ultimately lead to Food sales of $33.2 billion for the year.

And thanks to a 10-basis point increase in its margins, Food EBIT is expected to be up 10.3% to $1,304.7 million.

Liquor segment.

The broker also expects its Liquor segment to deliver strong comparable store sales growth. It is forecasting comp growth of 4.4%, taking its total sales 6.3% higher for the year to $3,254.7 million.

However, unlike the Food segment, Goldman is forecasting weaker margins for the Liquor segment. It expects margin decline of 40 basis points, leading to segment EBIT of A$114.5 million. This will be a 4.6% decline year on year.

Coles Express.

The Coles Express segment is expected to act as a drag on its FY 2020 result.

Although the broker expects just a small 0.3% year on year sales decline to $1,045.1 million, it is expecting the segment to post a loss. This compares to its segment EBIT of $50 million in FY 2019.

Taken off conviction buy list.

In light of the strong performance by the Coles share price this year, the broker has removed it from its conviction buy list on valuation grounds.

Goldman explained: “While our thesis remains intact on COL, we remove the stock from our Conviction List in view of the relative limited upside. Since being added to the Conviction list on the 3rd of March 2020, the COL share price is up +25% vs. the ASX 200 being -6.2% (outperformance of 31.2%) and also outperforming supermarket peer WOW by 20% over the period.”

“We maintain the Buy rating on COL on the basis of the reliable ongoing growth and strong balance sheet story,” it concluded. I would agree with this view.

More reading

• 4 coronavirus-resistant blue chip ASX shares
• Coronavirus: What does lockdown mean for ASX retail shares like JB Hi-Fi?
• 3 ASX shares with generous dividend yields to buy today
• 3 high quality blue chip ASX 200 shares to buy
• Will the Coles share price rocket higher again in August?

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 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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One area of the market which I continue to believe is home to a large number of quality options for investors is the mid cap space.

Three top mid cap shares which I believe could one day become much larger companies are listed below. Here’s why I think they would be quality long-term investments:

Collins Foods Ltd (ASX: CKF)

The first mid cap ASX share to consider buying is this quick service restaurant operator. Collins Foods is one of the largest operators of KFC stores in the world. It has a growing network of restaurants across Australia and also in the under-penetrated European market. It is the latter market which I believe could be the key driver of growth over the next decade. Also supporting its growth will be the rollout of the Taco Bell brand across Australia. This rollout has been going very well and is showing a lot promise. This could mean that after two failed attempts to crack the Australian market over the last 40 years, it will be third time lucky for the Taco Bell brand.

Jumbo Interactive (ASX: JIN)

Another mid cap share to consider buying is Jumbo. It is the online lottery ticket seller behind the Oz Lotteries website. But that’s not the only thing the company does. It also has its Powered by Jumbo software as a service business. It is this business which is expected to become the driver of its future growth and play a key role in the company achieving its target of $1 billion in ticket sales through the Jumbo platform by FY 2022. This will be triple what it achieved in FY 2019. Given how a material portion of lotteries are still not online, I believe the Powered by Jumbo business has a very lucrative global opportunity.

Nanosonics Ltd (ASX: NAN)

Nanosonics is the infection control specialist behind the trophon EPR disinfection system for ultrasound probes. I’m a big fan of the company due to the quality of the product and the growing recurring revenues it generates from consumables sales. Given its massive market opportunity, and management’s plan to launch several new products targeting unmet needs in the near term, I believe Nanosonics is well-positioned to continue its strong growth for many years to come. Though, it is worth noting that its FY 2020’s sales performance is likely to be stifled by the pandemic. However, I’m confident there will be a sharp rebound in 2021.

More reading

• Here’s how to start investing with $5k
• Smart investors should buy these ASX growth shares
• How to turn $20,000 into over $200,000 in 10 year with ASX shares
• 3 quality ASX shares to add to your portfolio
• 2 top ASX shares to buy for reporting season

James Mickleboro owns shares of Collins Foods Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nanosonics Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive Limited. The Motley Fool Australia has recommended Collins Foods Limited and Nanosonics 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 Silver Mines Limited (ASX: SVL) share price has hit a 52-week high today as the silver price continues its climb.

The silver price rallied 30.63% in July, taking gains since March to 110%. Many commentators remain bullish on the silver price, arguing expansionary fiscal and monetary policy will lead to falling real yields. Historically, this has benefited precious metal prices. 

What does Silver Mines do?

Perhaps unsurprisingly, Silver Mines mines silver. The company holds the high grade Conrad and Webbs projects in Northern New South Wales. Its strategy is to consolidate quality silver deposits in NSW to form Australia’s pre-eminent silver company. Silver Mines recently purchased the Bowdens Silver Project near Mudgee in NSW. This is the largest undeveloped silver project in Australia and one of the largest globally. 

What is the plan for the Bowdens Silver Project? 

Silver Mines has submitted a development application for an open cut mine and processing plant to the NSW Department of Planning, Industry, and Environment.

The plant is designed for 2.0 million tonnes per annum with a project life of 16.5 years. Life of mine production is planned to be approximately 66 million ounces of silver, 130,000 tonnes of zinc, and 95,000 tonnes of lead. The company has committed to expanding drilling activities at Bowden Silver, which are likely to continue until the end of calendar year 2020. 

How has COVID-19 impacted the company?

Silver Mines reports that current operations have continued safely with minimal interruption from the coronavirus pandemic. Field activities including drilling in the Bowdens silver area (where the company can control access) have continued. Some activities at regional projects have been put on hold and some are due to recommence during the September quarter. 

How has Silver Mines been performing? 

The Silver Mines share price was trading below 6 cents in March, but has now surged to 25 cents. This means the Silver Mines share price has gained more than 300% over the last few months.

The company conducted a $12 million capital raise in May at 10 cents a share, with funds earmarked for the pre-development progression of the Bowdens Silver Mine. Funding will also be used for land acquisitions and for corporate and working capital purposes.

More reading

• Earnings preview: What to expect from the Coles FY 2020 result
• 3 stellar mid cap ASX shares to buy
• Top brokers name 3 ASX 200 shares to buy today
• Why the Treasury Wine share price is sinking today
• De Gray Mining share price lifts on strong results

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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Many of Australia’s top brokers have been busy adjusting their financial models 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:

CSL Limited (ASX: CSL)

According to a note out of Citi, its analysts have retained their buy rating and $334.00 price target on this biotherapeutics company’s shares ahead of its full year results release. Although it has concerns about the impact of the coronavirus on plasma collections, it isn’t enough for a change of rating. It believes CSL’s shares are good value after their recent pullback and holds firm with its buy rating. I agree with Citi on CSL and would be a buyer of its shares today.

Corporate Travel Management Ltd (ASX: CTD)

Analysts at Morgans have upgraded this travel company’s shares to an add rating with a $12.85 price target. According to the note, the broker made the move on valuation grounds after a sharp pullback in the Corporate Travel Management share price. This has left it trading at a sizeable discount to the broker’s valuation. In addition to this, it believes that corporate travel demand has been stronger than expected recently and it could surprise to the upside in FY 2021. Another positive is its current liquidity. The broker estimates that this will be enough to last until the end of FY 2022 if necessary. While I think Morgans makes some great points, I’m staying clear of the travel sector until the crisis passes.

Ramsay Health Care Limited (ASX: RHC)

A note out of the Macquarie equities desk reveals that its analysts have retained their outperform rating but trimmed the price target on this private hospital operator’s shares to $72.50. Although the broker notes that Ramsay is operating in an environment where elective procedures are being pushed back because of the pandemic, it feels investors should overlook this and focus on the future. Macquarie’s analysts remain very positive on Ramsay’s long term outlook and believe it is well-positioned for growth once the pandemic passes. I agree with Macquarie and feel Ramsay would be a great buy and hold option.

More reading

• Why the Treasury Wine share price is sinking today
• ASX marching higher despite COVID-19: Where should you invest?
• Why this ASX miner that’s missing the rally is one of my key picks for FY21
• ASX 200 down 1.15%: NAB downgraded, Telstra asset sale, gold miners rocket
• Coronavirus: What does lockdown mean for ASX retail shares like JB Hi-Fi?

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 CSL Ltd. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. The Motley Fool Australia has recommended Ramsay Health Care 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 Treasury Wine Estates Ltd (ASX: TWE) share price is marching lower today, down by 2.37% to $10.73 at the time of writing

This drop is likely being somewhat driven by the broader losses associated with the S&P/ASX 200 Index (ASX: XJO) today, but a top broker’s rating of “Overweight” for the stock this morning is definitely adding to the Treasury Wine share price’s woes.

What did the broker say?

A note out of Morgan Stanley revealed that wine exports to China were down by as much as 16% in the June quarter on a year-on-year basis. Notably, Morgan Stanley saw this as a better than expected result, and in fact an improvement relative to the previous March quarter.

Although the broker didn’t specify the likely causes behind this, the 2 that come to mind are the diminished consumption of premium wines in Asian markets due to COVID-19 restrictions, as well as heightened Australia–China diplomatic tensions generally creating a headwind for exports.

The company has forecast a 14% decline in FY20 operating income for its Asian markets to reflect the greater difficulty in one of its key operating environments.

Despite lower consumption, Morgan Stanley retained a current price target on Treasury Wines at $13.50, suggesting the stock may be currently undervalued by as much as 25%.

In providing a forecast for the coming 12 months over FY21, the broker expected full-year dividends of 29.70 cents per share, and earnings per share of 46 cents. On this basis, Treasury Wines could foreseeably pay out a 2.7% fully-franked dividend yield to its shareholders over the next year.

Should you invest?

I’m a big fan of the brands sold by Treasury Wine, including most famously Penfolds, Wolf Blass and the less well-known 19 Crimes brand.

While the company has been hard-hit by this year’s bushfires and Australia–China diplomacy, I see a lot of upside for the company to perform strongly over the medium to long-term. The Penfolds brand has been liquid gold for Treasury Wine for decades, and I expect this to continue to a large extent moving forward.

Notwithstanding this, I expect the wine-maker to take a short-term hit for FY20 and FY21 due to the current economic recession and the impact this has on consumers’ willingness to spend on luxury goods such as expensive wines.

Thus, now may be the time for prospective investors to buy into Treasury Wine, with the hope the Treasure Wine share price may get back to its September 2019 highs of as much as $19.47.

More reading

• Top brokers name 3 ASX 200 shares to buy today
• ASX marching higher despite COVID-19: Where should you invest?
• Why this ASX miner that’s missing the rally is one of my key picks for FY21
• ASX 200 down 1.15%: NAB downgraded, Telstra asset sale, gold miners rocket
• Coronavirus: What does lockdown mean for ASX retail shares like JB Hi-Fi?

Motley Fool contributor Toby Thomas owns shares of Treasury Wine Estates Limited. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates 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 De Gray Mining Limited (ASX:DEG) share price has bolted more than 6% in early trade after the company released strong drilling results.

Highlights from De Gray’s results

Earlier today, De Gray released drilling results from the western extension of the Aquila site at the Hemi Gold Discovery in Western Australia. The results were collected from shallow aircore and RC drilling at the western end of Aquila.

The report highlights included;

• 16m @ 3.7g/t Au from 43m including 10m @ 5.4g/t in HERC141 (ending in mineralisation)
• 16m @ 2.1g/t Au from 44m in BWAC783 including 4m @ 3.5g/t
• 13m @ 1.8g/t Au from 71m in BWAC908 including 2m @ 3.8g/t
• 8m @ 1.6g/t Au from 56m in BWAC800

The results confirm shallow gold mineralisation over approximately 400 metres in the north-south direction. De Gray’s management noted the potential in a larger extension of the Aquila gold system. As a result, further drilling is planned for Aquila with the strike potential now spanning more than 1.6km.

What does De Gray Mining do?

De Gray is a mining company based in Western Australia that focuses in gold exploration and development activities. The company has 100% ownership of the Mallina Gold Project in the Pilbara region and is also the site of the Hemi Gold Project.

The Hemi Project is made up of various zones including; Aquila, Brolga, Brolga South and Crow. De Gray has noted thick and high-grade mineralisation across the project and expects the site to deliver high value given the size, grade continuity and growth potential.

In late April, De Gray completed a $31.2 million capital raising in order to fund the ongoing exploration of the Hemi Project. The company’s share price has reflected the optimisim of the new project, having rallied more than 280% since late April. The De Gray share price has also been assisted by the surge in the spot gold price in 2020.

At the time of writing, the De Gray share price is trading more than 5% higher for the day at around 84 cents after hitting an intra-day high of 85.5 cents.

More reading

• De Grey share price rising following mine extensions
• Azure Minerals share price rockets 24% on acquisition news
• Why De Grey, Openpay, Woodside, & Zip shares are dropping lower
• De Grey Mining share price plunges another 13% lower today
• Why the De Grey share price rocketed more than 107% in June

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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One area of the share market which I believe is home to a number of promising small caps is the healthcare sector.

Thanks to positive tailwinds and their impressive technology and products, I believe there are companies at this side of the market that are well-placed to grow at a strong rate over the next decade.

Two which I rate highly are listed below. Here’s why they could be worth adding to your watchlist:

Telix Pharmaceuticals Ltd (ASX: TLX)

The first small cap healthcare share to look at is Telix Pharmaceuticals. It is a clinical-stage biopharmaceutical company developing an advanced pipeline of molecularly-targeted radiation (MTR) products. MTR is an approach which chemically links radioactive isotopes to targeting molecules specific to cancer cells.

Telix has an advanced pipeline of therapies which address clear unmet medical needs in high-value oncology segments. This includes areas such as renal cancer, prostate cancer, and glioblastoma. One of the key products in its pipeline is TLX591. This is a metastatic prostate cancer radionuclide therapy, which management estimates provides Telix with a $2 billion sales opportunity in late-stage disease alone. I believe the company has a lot of potential and could prove to be a great long term investment.

Volpara Health Technologies Ltd (ASX: VHT)

Another small cap healthcare share to look at is Volpara. It is a medical technology company which has been growing at an incredible pace over the last few years. This strong form continued in FY 2020 when Volpara delivered a 153% year on year increase in revenue.

The key driver of this growth was the increasing demand for its software which leverages artificial intelligence imaging algorithms to assist with the early detection of breast cancer. At the end of the financial year, the company’s installed software base covered over 27% of US women screened for breast cancer. I’m confident that its growing footprint and recent acquisitions will lead to similarly strong growth in FY 2021.

More reading

• Volpara share price on watch as strategy update announced
• 3 exciting small cap ASX shares to put on your watchlist immediately
• ASX 200 down 0.4%, Credit Corp and Temple & Webster impress
• 3 quarterly updates you might have missed: Alcidion, Mach7, & Telix
• 4 top small cap ASX shares to watch in FY 2021

James Mickleboro owns shares of TELIXPHARM DEF SET. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of VOLPARA FPO NZ. The Motley Fool Australia has recommended VOLPARA FPO NZ. 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 off its lows but remains on course to finish the day in the red. At the time of writing the benchmark index is down 0.6% to 6,002.8 points.

Four shares that are falling more than most today are listed below. Here’s why they are tumbling lower:

The Cochlear Limited (ASX: COH) share price is down 3% to $191.84. This may have been driven by a broker note out of UBS this morning. Its analysts are bearish on the hearing solutions company and expect it to report a sharp decline in profits later this month. It also sees risks around FY 2021 due to rising infection numbers, which could push back elective surgeries. As a result, it has retained its sell rating and $160.50 price target on its shares.

The National Australia Bank Ltd (ASX: NAB) share price is down 2% to $16.79. Weakness in the banking sector and a broker note out of Macquarie appear to be weighing on its shares today. According to the note, the broker has downgraded NAB’s shares all the way from outperform to underperform with a $17.50 price target. It notes that NAB has a high weighting to the SME market, which is struggling during the pandemic.

The Tabcorp Holdings Limited (ASX: TAH) share price has dropped 3% to $3.50. This may also have been driven by a broker note out of Macquarie. This morning the broker downgraded the gambling company’s shares to a neutral rating from outperform. It made the move amid concerns over the challenges facing its wagering and media businesses.

The Telstra Corporation Ltd (ASX: TLS) share price is down 1.5% to $3.43. This follows the announcement of the sale of its data centre complex in Clayton, Victoria, to Centuria Industrial REIT (ASX: CIP). According to the release, the two parties have agreed a price of $416.7 million. Telstra’s CEO, Andrew Penn, notes that the sale is part of the company’s T22 strategy which is cutting costs and simplifying its business. Telstra has secured a long term lease at the compex.

More reading

• ASX 200 down 1.15%: NAB downgraded, Telstra asset sale, gold miners rocket
• ASX shares that could get a boost from Victoria’s shutdown
• Telstra share price on watch after major asset sale announcement
• ASX 200 jumps 2% higher, Afterpay soars
• 3 high quality blue chip ASX 200 shares to buy

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 owns shares of and has recommended Telstra Limited. 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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