I recently took a closer look at two ASX shares with highly contrasting stories in 2020.

I’m talking about Treasury Wine Estates Ltd (ASX: TWE) and Elders Ltd (ASX: ELD) – both consumer staples players with fortunes that have gone in opposite directions this year. 

At the time of writing, the Elders share price is the best performing consumer staples stock so far in 2020, with its share price climbing by 74% year to date (YTD). By contrast, the Treasury Wine share price has been the worst performer in the sector – with its share price plunging by around 44%.

Why the Treasury Wine share price has plunged in 2020

Treasury Wine is an iconic Australian company which was established in 1843, and was split from its parent Foster’s in 2011. It’s a well-known, global wine producer with an international portfolio of wine brands such as Penfolds, Beringer, Lindemans, Wolf Blass, Rosemount Estate and more. The company owns over 13,000 hectares of vineyards.

Unfortunately, Treasury Wine has become collateral damage of two major events this year – the coronavirus pandemic and Australia’s political spat with China.

China is currently launching an antidumping investigation into Australian winemakers’ exports to the country. Although most analysts have regarded the investigation as politically motivated, it nevertheless could have a significant impact on Treasury Wine’s future growth. This is due to the fact that China alone contributed 25% of the company’s profits in FY20, making it an extremely crucial market for Treasury Wine.

In addition, Treasury Wine faces competition from big retailers in Australia, where liquor stores owned by grocery giants Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL) still account for over 50% of total off-premises wine sales, a significant portion of which is the retailers’ private label brands. 

In its full-year results in August, Treasury Wine reported a 36% fall in net profit to $260.8 million, as the COVID-19 pandemic shut restaurants around the world, subsequently causing a United States wine glut. The company paid an 8 cent final dividend, fully franked, which is down 60% on the FY19 final dividend.

Why the Elders share price has sky-rocketed in 2020

Elders is an Australian agribusiness company that provides livestock, feed, wool agency services, grain, and real estate to rural customers primarily in Australia and New Zealand. It also operates red meat supply chains in Indonesia and China. It has 180 years of experience in the industry. 

The Elders share price is having a remarkable run in 2020 despite facing the impacts of drought, bushfire, and COVID-19. It managed to record a $52 million statutory net profit after tax according to its half year results announced in March. This represented a 90% increase from the previous year. 

The company’s revenue was also boosted by the recent acquisition of Australian Independent Rural Retailers (AIRR), which contributed $8.6 million to earnings before interest and tax (EBIT).

COVID-19 appears not to have had a significant financial impact on Elders, as prices of cattle and sheep continued increasing this year. The company’s FY21 earnings will partially depend on the winter crop harvest, which commenced in October.

Foolish takeaway

Both Treasury Wine and Elders are iconic Australian companies with long histories. The two businesses have had a contrasting year to date with regard to their financial and share price performance. External factors such as the pandemic and China appear likely to continue affecting Treasury Wine in the short term. Elders’ main markets are closer to home, and its fortunes have always been tied to Australia’s population growth and favourable weather patterns for its crops.

More reading

• Extreme levels of demand AND future growth prospects. Are you invested in these niche ASX shares?
• Why Rural Funds (ASX:RFF) is a great ASX dividend share
• Coca-Cola Amatil (ASX:CCL) share price jumps on M&A speculation
• New Chinese government threat leaves these ASX mining stocks on tenterhooks
• Top brokers name 3 ASX shares to buy next week

Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool Australia has recommended Elders 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 Resmed CDI (ASX: RMD) share price spiked more than 8.5% last Friday following an upbeat quarterly business update from the company. The strong result has attracted a series of share price upgrades from big brokers. Here’s the rundown. 

First quarter update

Resmed’s quarterly update reflected positive trends across the business and an all round solid performance. Its revenues increased 10% to $751.9 million, up 9% on a constant currency basis while net operating profit increased 27%. 

“During the quarter, we continued to support the global COVID-19 pandemic response, providing ventilators, masks, and circuits to countries in need around the world,” said Mick Farrell, Resmed’s CEO. The company’s 9% increase in revenue was driven by strong sales in its mask product portfolio and increased demand for ventilators, partially offset by a decrease in demand for its sleep devices. 

Revenue in combined Europe, Asia and other markets grew by 10% on a constant currency basis, primarily driven by sales across device and mask product portfolios, including increased demand for ventilators due to COVID-19. 

The business also experienced a 7% decrease in selling, general and administrative expenses for the quarter. These expenses improved to 21.1% of revenue compared to 24.6% in the same period of the prior year. These changes were mainly due to savings in travel and other cost management measures as a result of the pandemic. 

Broker upgrades 

The Resmed share price is in recovery mode following a disappointing FY20 result back in August. The positive Q1 update has enabled the ASX share to claw back most of its August sell down.

A series of broker updates came about on Monday after the quarterly was digested. Credit Suisse Group AG (NYSE: CS) raised the Resmed share price target from $28.00 to $31.00 and upgraded its rating from neutral to outperform. It anticipates a strong uptick in earnings growth as COVID-19 supports key healthcare segments where the company operates. 

Macquarie Group Ltd (ASX: MQG) also upgraded its rating from underperform to neutral and raised its Redmed share price target from $20.00 to $27.25. It notes a significant rebound in the underlying business in September and upgraded earnings forecasts. 

Finally, Morgan Stanley (NYSE: MS) raised its Resmed share price target from $25.90 to $27.00 and retained an equal weight rating. The quarterly trading update came out ahead of its expectations. 

More reading

• Top brokers just upgraded the ResMed (ASX:RMD) share price and this other ASX stock
• These were the 5 best performing ASX shares last week
• ASX 200 Weekly Wrap: ASX 200 has another shocker as US election approaches
• These were the best performing shares on the ASX 200 last week
• Why AMP, Fortescue, JB Hi-FI, & ResMed shares are charging higher

Motley Fool contributor Lina Lim 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 has recommended ResMed Inc. 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 Westpac Banking Corp (ASX: WBC) share price is having another nasty day today, falling 0.42% to $17.72 a share at the time of writing. This might not come as much of a surprise – Westpac shares have been trading pretty much at this level since early June.

The Westpac share price remains depressingly low in 2020, still down 26% year to date. In fact, you’d have to go back to the depths of the global financial crisis in early 2009 to find a time before 2020 that Westpac shares were this low.

The move yesterday comes after Westpac released its full-year results for the 12 months ending 30 September. You can see our full coverage here, but long story short, it wasn’t a pretty sight. Net profits were down 66%, and earnings per share (EPS) were down 63% to 72.5 cents.

But it was interesting to see what Westpac would pull out of its hat in terms of dividends. This ASX bank declined to even pay an interim dividend this year in light of the coronavirus pandemic, in addition to a record $1.3 billion fine. It was the first time Westpac hasn’t paid a biannual dividend since 1986.

Westpac finally coughs up a dividend

That, no doubt, would have been disappointing for shareholders, who had to watch Westpac’s banking stable mates Commonwealth Bank of Australia (ASX: CBA), Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB) all pay interim dividends earlier in the year. In fact, Commonwealth Bank shareholders have ‘only’ seen their dividends fall from $4.31 per share in 2019 to $2.98 a share in 2020.

But the drought for Westpac has finally broken. Westpac revealed that it will be paying a final dividend of 31 cents per share on 18 December, fully franked at 30%. That will come as some relief for shareholders, but pales in comparison to what they are used to. Last year, Westpac paid out $1.74 per share in dividends, and in 2018, $1.88.

On the current Westpac share price, this new dividend of 31 cents a share (assuming 62 cents a year) would give shareholders an annualised dividend yield of 3.48%, or 4.97% grossed-up with full franking. While Westpac might get back to its former glory days of $1.88 in annual dividend payments eventually, the banking sector is facing strong headwinds right now, including near-zero interest rates and a sluggish Australian economy. It might not be the 6–8% dividend yield that Westpac shareholders have been used to, but this is the new reality for the ASX banking sector.

More reading

• Glory days of ASX bank shares are gone: fundie
• What to expect from the NAB (ASX:NAB) FY 2020 result
• 5 things to watch on the ASX 200 on Tuesday
• Westpac (ASX:WBC) reports FY20 result, ASX 200 up 0.4% today
• 3 ASX 200 shares that received broker upgrades last week

Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank 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 Auswide Bank Ltd (ASX: ABA) share price is up 6.22% today after a business update for the first quarter of FY21.

The regional bank reported strong growth metrics for the quarter. These include:

• Net profit after tax of $5.566 million, up 36.22% vs previous corresponding period
• Net interest margin of 1.99%, up from 1.89% in first quarter of FY20
• Loan book volume is up by 7.24% to $3.381 billion vs previous corresponding period

Auswide Bank managing director Martin Barrett welcomed the result, saying:

We have made an excellent start to FY21 with a first quarter that has delivered a pleasing performance across our key financial targets. We continue to make strong progress delivering on our strategic plan and improving the capability of the bank.

Auswide also reported it has provided COVID-19 related assistance to impacted customers during the first quarter. At 30 September, this loan assistance has fallen to 3.3% of Auswide’s loan book compared to almost 9% at the end of FY20.

Briefly about Auswide Bank

Auswide is a fully-licensed regional bank with a strong focus on residential mortgages in Queensland.

According to its FY20 full year report, the bank’s loan book carries credit quality with 72% of the loans having a loan-to-valuations (LVR) ratio of 80% or less. Its loan payment in arrears stood at 0.39%, a historic low.

In April, credit rating agency Fitch downgraded Auswide’s long-term issuer default rating of BBB+ from stable to negative, citing uncertainties in outlook due to the coronavirus pandemic.

At the same time, the agency praised Auswide for having a solid loan book and strong risk management controls.

And the Auswide Bank share price…

The Auswide Bank share price is down around 12% for the year. This compares with the 19% decline in the financial sector index measured by ASX 200 Financial ex- A-REIT Sector Index (ASX: XXJ).

The share price is trading at $5.29 at the time of writing, up 6.22% amid a broader rise in the market. At the current price, Auswide’s market cap stands at $212 million.

More reading

• Summer is coming, and none too soon for ASX retail landlords
• Melbourne Cup tips inside (yes, really!)
• ASX 200 has explosive start to trading ahead of RBA decision
• Sandfire Resources (ASX:SFR) share price lower amid China copper ban rumours
• Macquarie’s latest ASX “buy” idea has a 10% yield

Motley Fool contributor Eddy Sunarto 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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If you’ve read the Game of Thrones books – there are 5 so far – or watched the HBO series – 8 seasons – you’ll be familiar with the phrase, “Winter is coming.”

It’s the catchphrase for House Stark, the guardians of north Westeros. And it means you best get prepared for a lengthy rough patch ahead.

I read all the books long before HBO got wind of them. But I stopped watching the show around mid-season 6, when the storyline got ahead of the books. I’m still waiting for author George R R Martin to finish penning the last few instalments.

He’s a notoriously slow writer. And his books are massive. But I think it’s worth waiting to get the plot and dialogue straight from the man himself. Then I’ll tune back in for the rest of the Hollywood version.

Anyhow, winter in Westeros is no fun at all. And while we’ve been spared zombie attacks, I think most Aussies can commiserate with what a rough winter we’re emerging from. Atop the tragic loss of lives and severe illnesses, we’ve endured lockdowns, an economic recession, lost jobs, and wild share price moves on the ASX.

But the worst may well be behind us.

Summer is coming

Noting the relative strength of the Aussie housing market and fairly upbeat consumers, HSBC chief ANZ economist Paul Bloxham put a spin on the Stark’s catchphrase in this morning’s Australian Financial Review (AFR), saying:

Summer is coming. We’ve got very low levels of COVID-19 and a reopening economy is a clear sign things are picking up. There’s rising consumer sentiment and a pick-up in timely indicators for the housing market.

The housing market and consumer sentiment – both critical drivers of Australia’s economy – should receive another boost later today when the Reserve Bank of Australia (RBA) announces its decision on an interest rate cut and new quantitative easing (QE) measures.

Former Future Fund chief executive Mark Burgess is not putting much stock in the power of the rate cut. After all we’re likely talking about a 0.15% reduction here, taking the official cash rate from the current record low 0.25% down to a new uber-low 0.10%. That’s unlikely to make or break many investment or hiring decisions.

But Burgess has very different view on the RBA’s QE decisions (quoted by the AFR):

If they do QE, that would say to the government we’ve got your back on debt. If they don’t participate in QE, then that may lead to a tightening in fiscal settings. In Australia we still have a surplus mindset. The debt-is-bad philosophy could change. Doing QE says we don’t have to respond to that debt too soon.

We’ll know soon what the RBA decides. But regardless of the central bank’s move this month, Australia is in an enviable global position to begin opening back up domestically, and just in time for Christmas.

Unfortunately, the picture is far more dire in the northern hemisphere.

A tale of 2 sectors

In a tale of 2 sectors, manufacturing activity in major northern economies like China, the European Union and the US is up, while brick-and-mortar retailers continue to struggle.

However, the rapidly spreading pandemic could see manufacturing falter as northern winter progresses.

According to the AFR, TD Securities said in a note:

The recovery in the [US] manufacturing sector continues to impress. Indeed, the sector is well entrenched in expansion territory, registering its sixth consecutive month above the 50 mark. Despite October’s solid outturn, the US manufacturing sector’s outlook is not without a few hurdles. The rapid resurgence in new COVID-19 cases in the US and across the Atlantic constitutes a downside risk to the broader economic recovery.

As for brick-and-mortar retailers, Bloomberg reports:

America’s ailing malls suffered a pair of body blows over the weekend as two major landlords followed their ever-growing list of bankrupt tenants into Chapter 11 protection.

Pennsylvania Real Estate Investment Trust and CBL & Associates Properties Inc. sought protection from creditors Sunday, citing pandemic-induced pressures on their tenants and, in turn, themselves. Together the two REITs account for some 87 million square feet of real estate across the U.S., according to court papers.

ASX retail landlords

Australia’s near victory over the coronavirus is something to be celebrated. But it certainly hasn’t come without costs.

The S&P/ASX 200 Index (ASX: XJO), up 2.03% this morning, is still down 9% in 2020.

But the pain hasn’t been universal.

Many ASX online retailers’ share prices have soared during the lockdowns and social distancing. Like the Kogan.com Ltd (ASX: KGN) share price, up 180% year-to-date.

But most brick-and-mortar retailers saw a big drop in business during the southern winter as lockdowns bit hard. Many have sought to delay or renegotiate their rental terms, which in turn has put pressure on their landlords.

Take Scentre Group (ASX: SCG), for example. The company owns and runs Westfield retail assets across Australia and New Zealand, which in ordinary times see hundreds of millions of shoppers pass through the doors each year.

With its tenants struggling, Scentre’s share price is down 43% for the year.

But as ANZ’s Paul Bloxham said, “Summer is coming.”

And with the economy reopening, those 3 words could be music to the ears of Australia’s beaten down brick-and-mortar retailers and their struggling landlords.

More reading

• Here’s what the US election means for investors
• Why REITs led the pack on the ASX today
• ASX property shares buoyed by latest market data
• Is the Adore Beauty (ASX:ABY) share price in the buy zone?
• The Mosaic (ASX:MOZ) share price comes alive, up 5%

Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia has recommended 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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It is, usually, the race that stops a nation.

But this year, it feels like we’ve stopped already.

There are fewer Melbourne Cup events this time around.

Even the usually trusty ‘gather ’round the telly in the office’ vibe will be tested with many of us working from home.

Strangest still is that the 2020 Cup will be run in front of empty stands.

What is the Cup without the marquees, the guests, the glamour and the crowds?

I assume the broadcasters will throw a little ‘canned’ crowd noise over the footage, like the footy coverage has been doing, to create a little atmosphere, but is it the same when we know there’s no-one there?

Me? I’m not so worried. 

I’m an introvert, I work from home and, frankly, I’ve never, ever been a contender for ‘fashions on the field’.

But it just feels strange.

The build-up isn’t quite the same. The anticipation isn’t really there.

The race is, perhaps, a singularly appropriate metaphor for 2020.

Now, if you’ve been reading these pieces for any length of time, you’ll know that I tend to have an investing point to make.

The story and the investing ‘moral’ aren’t confected: they’re usually just inspired by whatever event I describe at the top, and my re-telling it is a way to share my own thought process and conclusions.

So, you might expect a seamless, clever (hey, let a bloke dream) segue from the paragraphs above into some investing moral just below.

Not so fast.

See, once a year, we indulge in a little Melbourne Cup fun.

We’re not fans of gambling on sports or racing, generally speaking. The house, as you know, always wins.

But we’re not completely boring, either.

We’ll be watching the Cup. Some of us will have a small once-a-year flutter, just to get into the spirit of things.

And, frankly, given the year we’ve all had, I can’t begrudge anyone a small punt just for the fun of it.

As investors, though, we’re pretty ordinary tipsters.

(Including our old mate, Burgo, who thought he could tip us a winner last year, and, well… didn’t. To be fair, we got a place out of him, but that was it!)

What we have done, though, is to bring back our regular tipster, Lewy.

Lewy gave us three tips last year, and one of his placegetters, Vow and Declare, was first past the post. If you’d put a few bucks each way on each of his tips, you came out ahead.

So, we’ve asked Lewy for his tips for this year’s Cup.

(We haven’t asked Burgo this year. You can thank me later.)

As ever, we don’t recommend making a habit of betting on the nags, but consider this one of two official Foolish exemptions (the other is two-up on ANZAC Day). Here are Lewy’s thoughts:

“Tuesday sees another cracking edition of the Melbourne Cup. It is arguably one of the best renewals of the past decade with impressive winners, and flashing light defeats, coming out of all the key lead up races like the Cox Plate & Caulfield Cup. The northern hemisphere raiders are back once again and there is certainly no shortage of talent that has managed to traverse challenging travel protocols to get to the southern hemisphere, just in time for Tuesday.

“The Cox Plate is the race I have landed on as the one most likely to provide this year’s Cup winner. Sir Dragonet ($11) was so impressive at Moonee Valley that he must be the starting point. I like that he won that race by an ever-increasing margin suggesting the extra distance of the Cup might even suit him better. Russian Camelot ($13) was brave when 3rd in the Cox Plate working early and having to make his run a long way from home. I am expecting a quieter ride here which should give him every chance to test Sir Dragonet late. Best roughie could be The Chosen One ($41).  He is flying this prep and was super in the Caulfield Cup, finishing just behind a couple (Verry Elleegant & Anthony Van Dyck) who are significantly shorter in the market on Tuesday. Best of luck.”

So, there you have it: Sir Dragonet, Russian Camelot and The Chosen One.

(Though to be fair to Lewy, he sent those before he knew I drew The Chosen One in the office sweep. That’s not a good omen… consider yourself warned.)

So, enjoy!

Don’t go silly, of course, but I reckon after the past 6 months we’ve earned a little fun today.

A couple of bucks each way on a few horses, a glass of something bubbly if that’s your thing, and cheer home whatever horse you fancy – even if you are just choosing by colours or your favourite number.

Oh, and remember; past performance is no guarantee of future returns… right Burgo?

More reading

• ASX 200 has explosive start to trading ahead of RBA decision
• Sandfire Resources (ASX:SFR) share price lower amid China copper ban rumours
• Macquarie’s latest ASX “buy” idea has a 10% yield
• These were the best performing ASX tech shares in October 
• Why the Senex (ASX:SXY) share price has rocketed 7% higher today

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The S&P/ASX 200 Index (ASX: XJO) has leapt up this morning propelled by strong improvement signals in the economy and ahead of the decision by the Reserve Bank of Australia (RBA). In the past 24 hours, the market has received news of rising house prices, increases in new home loans, and a continuing high month-on-month increase in job ads. 

This has forced up a number of ASX 200 shares by over 4% in this morning’s trading. 

ASX 200 shares up in early trading

At the time of writing, the Brambles Limited (ASX: BXB) share price is up by 6.07%. Brambles has announced a 6% increase in revenues for Q1FY21. The company has also updated its FY21 guidance for revenue to 2-4% at constant exchange rates, with an improvement in underlying profits. 

The nation’s largest ASX 200 energy companies have all recorded surges of over 4% in the morning’s trade. Early reports say that Russia has indicated it may extend the OPEC production costs for an additional three months. Thus increasing the likelihood of cutting the current oil glut. 

At the time of writing, the Woodside Petroleum Limited (ASX: WPL) share price is up by 5.23%, Oil Search Limited (ASX: OSH) is up by 5.51%, Santos Ltd (ASX: STO) is up by 4.73%, and Origin Energy Ltd (ASX: ORG) is up by 4.61%.  

All of these ASX 200 companies have recently delivered Q1FY21 results, with Santos reporting record quarterly production and sales volumes. Moreover, Oil Search recorded an 11.2% increase in sales versus the previous quarter and 16.7% higher than the previous corresponding period in FY19. 

Among others, two ASX 200 real estate companies with exposure to the residential sector, have also seen their share prices rise. Stockland Corporation Ltd (ASX: SGP) is up by 4.01% in the morning’s trade. This company has recently reported net quarterly sales of 1,799 residential houses. This is the highest the company has reported for three years.

Meanwhile, Mirvac Group (ASX: MGR) has seen its share price jump up by 3.05%. Q1 leads rose by 34% compared to the previous quarter, placing them above pre-COVID-19 levels. 

Foolish takeaway

At present, the market is expecting the RBA to cut interest rates a further 15-basis points to 0.1 per cent. In addition, there are hopes that it will release a formal statement of quantitative easing.  ASX 200 shares continue to surge at the time of writing. 

More reading

• Macquarie’s latest ASX “buy” idea has a 10% yield
• Why the Brambles (ASX:BXB) share price is surging higher today
• How to prepare your portfolio for economic recovery
• 5 things to watch on the ASX 200 on Tuesday
• What is the best US election outcome for ASX shares?

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

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The Sandfire Resources Ltd (ASX: SFR) share price has dropped 9% this morning to $4.04 before recovering slightly to $4.08 at the time of writing. This came as the copper producer denied media speculation that China is set to ban Australian copper imports.

What did the company say?

Sandfire Resources said it was aware of reports in the international media that China was seeking to impose a ban on imports of Australian copper. Questioning the reliability of the media reports, Sandfire Resources said it was in contact with key customers and was not aware of any reason for a ban. 

The company also stated it was confident that it could increase sales to existing and new customers in non-Chinese markets if required. According to Sandfire, global copper concentrate markets for high quality copper concentrate were highly competitive.

The company advised its Degrussa operations have remained in full production in the December quarter. It will maintain its production guidance for the 2021 financial year of 67,000–70,000 tonnes of copper and 36,000–40,000 ounces of gold.

Sandfire settles lawsuit

Sandfire Resources also announced this morning that it had settled its legal claim against Adriatic Metals PLC (ASX: ADT). The company previously brought a claim against Adriatic Metals in July over dilution of its shareholding in the company. Sandfire Resources argued that Adriatic Metals had failed to adhere to its anti-dilution right set out in the collaboration and strategic partnership deed agreed to by the 2 companies. 

According to the announcement, the case was finalised with an agreement that Sandfire Resources would be allowed to purchase 4,830,156 Chess depository interests in Adriatic Metals for $1.79 per share. Shares in Adriatic Metals were last trading for $2.28 at the time of writing. 

About the Sandfire Resources share price

Sandfire Resources is a minerals exploration and production company with assets in Australia, the United States and Africa. Sandfire Resources has been listed on the ASX since 2004. 

Earlier in October, Sandfire Resources announced that it had acquired an 85% interest in the Red Bore copper project. The project is adjacent to the company’s existing DeGrussa Copper-Gold asset in Western Australia.

In the quarter to 30 September 2020, Sandfire Resources had record copper production of 19,400 tonnes and gold production of 11,683 ounces. C1 cash costs in the September quarter were 53 cents per pound. 

The Sandfire Resources share price is up 48.36% since its 52-week low of $2.75. However, it is down 30.85% since the beginning of the year. The Sandfire Resources share price is down 31.66% since this time last year.

More reading

• Why the OZ Minerals (ASX:OZL) share price hit a 10-year high today

Motley Fool contributor Chris Chitty 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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It may have been high growth tech stocks that have dominated in 2020, but the latest ASX “buy” idea from a leading broker may be what’s needed for 2021.

The fact is, the price-earnings (P/E) expansion trade may have largely run its course and yield could be the soup du jour for the new year.

New ASX winners for 2021?

It was the collapsing interest rates and liquidity pump from global central banks that fuelled the P/E expansion trade.

But rates are approaching the lows in the cycle. And while we could still see more stimulus injected into the global economy, I suspect high yield stocks won’t be playing second fiddle for much longer.

If this comes to pass, Macquarie Group Ltd’s (ASX: MQG) latest “buy” pick will be even better placed to outperform the S&P/ASX 200 Index (Index:^AXJO) over the next 12-months

Deterra share price is the latest buy idea from Macquarie

The broker initiated coverage on the Deterra Royalties Ltd (ASX: DRR) share price with an “outperform” recommendation today.

“The stock offers the unique combination of lower sensitivity to iron ore price movements than its peers and a strong production growth outlook, with volumes expected to increase 2.5-fold over the next three years,” said Macquarie.

“Our positive view on DRR is underpinned by the company’s firm dividend policy of 100% earnings payout, with dividends expected to be fully franked.”

Rivers of gold in iron ore

Deterra is paid royalties from BHP Group Ltd’s (ASX: BHP) South Flank project. While Deterra is only expected to pay a modest dividend this calendar year, this is expected to ramp up over the next few years as South Flank reaches full production.

Macquarie is forecasting dividends to total 13 cents a share in FY21, 22 cents in FY22 and 26 cents the year after.

This means the DRR share price could be yielding 6.5% in FY23, or around 9.3% if franking is included.

Why Deterra could be a 10% yield stock

But Macquarie’s estimates may prove to be too conservative if the iron ore price holds around current levels for the next few years.

“Buoyant iron-ore prices underpin strong earnings upgrade momentum for DRR,” explained the broker.

“At spot prices DRR’s dividend yield rises to 4% for CY21, 8% in CY22 and ~9-10% for CY23 and beyond.”

High-yield in a low rate environment

These estimates do not include franking, so investors who qualify for the tax refund will be laughing to the bank.

While the growth rate in fiscal and monetary stimulus may have peaked, ultra-low interest rates are likely to stay for a few years, at least.

I think high-yield stocks will experience strong demand for the foreseeable period.

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Motley Fool contributor Brendon Lau owns shares of BHP Billiton Limited and Deterra Royalties Ltd. Connect with me on Twitter @brenlau.

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

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October proved to be a volatile month for the S&P/ASX 200 Index (ASX: XJO) and All Ordinaries Index (ASX: XAO) with both indices giving up most of their gains. Many ASX 200 tech shares, however, were able to outperform the market, partly due to positive quarterly business updates. Here are some of the top ASX 200 tech share performers in October. 

Audinate Group Ltd (ASX: AD8)

The Audinate share price is eyeing its pre-COVID levels following the company’s capital raising in July and positive October AGM. Audinate believes it is driving transformation in the audio visual industry as networked digital connectivity is replacing traditional, point-to-point analogue cabling and software-based systems are replacing hardware systems. Audinate values the digital media networking market at more than $1 billion in size and reports its products as having more than eight times the adoption rate of their closest competitors. 

Audinate’s presentation provided the market with a much needed 1Q21 trading update. Its revenue chart points to a gradual recovery with August-September revenues returning to pre-COVID levels. The company’s unaudited revenue for 1Q21 amounted to USD$5.2 million and unaudited earnings before interest, tax, depreciation and amortisation (EBITDA) of AUD$0.3 million. With the business largely getting back on track, the Audinate share price delivered an almost 24% return in October. 

Praemium Ltd (ASX: PPS) 

Praemium was a standout ASX 200 tech share performer after the company’s strong quarterly update saw its share price surge more than 22% in October. The quarterly highlighted a surge in Praemium’s Australian platform funds under management (FUA) to $15 billion with the inclusion of its Powerwrap acquisition. Also reported was a record FUA level of $3.5 billion for its international platform following an increase of 7% over the quarter as well as FUA for its Virtual Managed Accounts of $12.8 billion, an increase of 12% for the quarter. 

The market was pleased with the company’s results and continued investment into platform enhancements. However, as the ASX 200 started to give back its gains in the latter half of October, so did the Praemium share price. Praemium finished October with a return of around 22% from a peak of almost 40%. 

Afterpay Ltd (ASX: APT)

The Afterpay share price is the gift that keeps on giving, delivering a 20.88% return in October. The company announced a first of its kind partnership with Westpac Banking Corp (ASX: WBC) to offer savings accounts and cash flow tools to customers. This is another milestone in building out Afterpay’s financial service ecosystem and potentially taps into Westpac’s rich customer data.

Afterpay also announced its highly anticipated quarterly update. Many big brokers were impressed with its figures and business updates. Macquarie Group Ltd (ASX: MQG) raised its Afterpay share price target from $90.00 to $97.50 and Morgan Stanley (NYSE: MS) retained its overweight rating and price target of $115. 

More reading

• Glory days of ASX bank shares are gone: fundie
• What to expect from the NAB (ASX:NAB) FY 2020 result
• 5 things to watch on the ASX 200 on Tuesday
• 2 exciting small cap ASX shares that should be on your watchlist
• Westpac (ASX:WBC) reports FY20 result, ASX 200 up 0.4% today

Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AUDINATEGL FPO and Praemium Limited. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended AUDINATEGL FPO and Praemium 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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