The S&P/ASX 200 Index (ASX: XJO) climbed by just over 1% today to 5,956 points.

Here are some of the highlights from the share market:

SEEK Limited (ASX: SEK)

SEEK released an announcement today, noting media speculation relating to potential corporate activity involving Chinese employment platform Zhaopin.

The ASX 200 employment business said that in line with its previously disclosed investments strategy, it will regularly assess strategic options to maximise the long term growth aspirations of its investments.

With that in mind, SEEK said that Zhaopin and its shareholders are holding discussions with a number of parties to assess whether the introduction of new investors could better support Zhaopin’s long term growth aspirations. These discussions may or may not lead to changes with Zhaopin.

According to The Information, that potential investor is Alibaba which may invest hundreds of millions of dollars. The investment could lead to collaborations between Zhaopin and Alibaba which would see the employment business have access to Alibaba’s large customer base.

Spark New Zealand Ltd (ASX: SPK)

The New Zealand business released details of a three-year strategy covering FY21 to FY23. The Spark share price rose by nearly 2% today. 

Spark has a number of goals by 2023.

It wants to be primarily wireless with around 80% of relationships on wireless technology. Spark wants to be the leading cloud custodian by bringing the best of private and public cloud together. It’s aiming to have 5G and the internet of things deployed everywhere with unconstrained mobile capacity.

Finally, the business is aiming to have a top decile culture, defined by inclusivity and growth.

Spark Chair Justine Smyth said: “Our next three year strategy builds on the strong foundations we have built over the last three years and remains focussed on what matters most – our customers, our people and supporting New Zealand’s economic transformation.”

The CEO of Spark, Jolie Hodson, said: “Our investment in 5G, edge computing and network slicing will open up new opportunities in wireless and will enable smart business solutions beyond connectivity alone. Our end to end digital services capability across cloud, security and service management positions us well to accelerate digital transformation as businesses adapt to COVID-19.

“We see significant opportunities for growth in IoT, as New Zealand transitions to future ways of working and pursues productivity improvements across all sectors.”

Gold Road Resources Ltd (ASX: GOR) dividend policy

ASX 200 gold miner Gold Road Resources made an announcement today about its dividend policy.

The company said it will target an annual aggregate dividend payout of 15% to 30% of free cash flow for each calendar year in two half yearly payments. The free cashflow is defined as cashflow before debt and dividends.

It will also pay out franking credits. At 31 December 2019 it had $65.7 million of franking credits available for shareholders.

The payment of any dividend will be subject to maintaining a minimum net cash balance of $100 million.

Gold Road will announce any dividend payments when announcing its future full year or half year results.  

Gold Road Resources’ Chair Tim Netscher said: “In less than a year since we declared commercial production at Gruyere, I am pleased to be in a position to announce a dividend policy. The company is debt free and building a strong cash balance.

“The dividend policy seeks to share our strong cash flow generation with our shareholders whilst still allowing us to prioritise ongoing operations and growth opportunities.”

It’s expected that the inaugural dividend will be declared for the six month period ending 31 December 2020. The free cash flow for that period will inform the dividend amount.

More reading

• Meet the ASX sector that is cum-consensus upgrade for FY21
• SEEK (ASX:SEK) shares surge 9% today. Here’s why.
• Bear vs Strong Bear: Choosing the right hedge for your portfolio
• Firefly (ASX:FFR) share price tanks despite further positive drill results
• Here’s how I would spend $10,000 on ASX shares right now

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended SEEK 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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There are a few ASX shares that I’d buy in a heartbeat if I were investing today.

One of the great things about the share market is that share prices are constantly changing. We always get opportunities to buy different businesses at different prices.

It’s going to be an interesting next few months. On the positive side for the share market it seems like a vaccine is getting closer and closer. However, I think the US election could throw up a lot of volatility, depending on how it goes down.

These are two ASX shares that I’d buy in a heartbeat if it were up to me:

Pushpay Holdings Ltd (ASX: PPH)

I think Pushpay could be one of the ASX shares most likely to do well over the next year and five years. Its current revenue base is quite defensive. It facilitates digital giving to clients like large and medium US churches. People are generous with their donations to their church, so I don’t think that’s going to see a heavy decline even with the US going through a COVID-19 recession.

It’s the potential growth that gets me particularly excited by Pushpay. In FY20 it added US$31.4 million of revenue, representing 32% growth of US$129.8 million. The company has a long-term goal of US$1 billion from the US large and medium church sector.

That US$31.4 million increase of revenue saw the gross profit margin increase from 60% to 65% in one year. I don’t know what Pushpay’s gross margin will be when it achieves US$200 million of revenue, but it seems like it could be materially higher than FY20.

It’s this scalability of ASX tech shares that makes them among the best businesses to own for their growth journey in my opinion.

In FY21 Pushpay is aiming to double its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) to at least US$50 million. The company may be able to comfortably beat that goal as it beat its guidance in FY20.

At the current Pushpay share price it’s trading at under 35x FY21’s estimated earnings.

A2 Milk Company Ltd (ASX: A2M)

I think A2 Milk is one of the best ASX growth shares that Aussies (and Kiwis) can buy.

Over the past month the market has sent the A2 Milk share price down by about 15%. That’s despite the company expecting more strong revenue growth in FY21 with an attractive EBITDA margin of at least 30%.

For a business like A2 Milk, I think the market is underestimating how much compound growth the business can still generate over the coming decade. In FY20 alone it grew revenue by 32.8% to NZ$1.73 billion and earnings per share (EPS) rose 33.5% to NZ 52.39 cents.

That result was delivered after many years of strong growth. In FY20 the business saw Chinese label infant formula revenue rise by 101% to NZ$337.7 million. I believe there’s a lot more growth that can come from China over the next few years.

The US is looking like a great market too for the ASX share. USA milk revenue increased by 91.2% and the distribution expanded to 20,300 stores across the country. Few ASX shares have that level of exposure to the two biggest economies in the world.

Plenty of other countries offer a longer-term growth runway for A2 Milk like Canada and then potentially Europe.

A2 Milk had a strong balance sheet at 30 June 2020 with a cash balance of NZ$854.2 million. That large cash pile can be used to expand A2 Milk’s manufacturing capabilities and may also lea dto distributions of profit to shareholders.

At the current A2 Milk share price it’s valued at 30x FY21’s estimated earnings.

Foolish takeaway

I think the valuations of both ASX shares look very reasonable to me when considering how much they could grow over the next three to five years. At the current prices I think Pushpay seems like a really good idea, particularly when you consider the potential to expand into other markets in the long-term. But A2 Milk could also be a strong buy today. 

More reading

• Why the A2 Milk (ASX:A2M) share price can outperform in 2021
• 5 quality ASX shares to buy in September
• Where to invest $20,000 into ASX shares right now
• Where I’d invest $20,000 into ASX shares right now
• Buy and hold these stellar ASX growth shares for 10 years

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended PUSHPAY FPO NZX. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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I think 2020 so far is a year that has been defined by finding winners on the stock market. The coronavirus pandemic brought with it a massive acceleration of certain trends in the economy. The share market rally we have all been enjoying for the past 6 or so months hasn’t been defined as much by the companies that might be left behind by these changes, more so the companies that look set to benefit the most. It’s been a ‘buy the winners, hold the losers’ kind of market in my eyes.

Think about it. We’ve seen ridiculous share price gains in tech shares. Zip Co Ltd (ASX: Z1P) up more than 400% since March. Sezzle Inc (ASX: SZL) up more than 1,800%. Over in the United States, we’ve similarly seen shares like Apple Inc (NASDAQ: AAPL), Tesla Inc (NASDAQ: TSLA) and Zoom Video Communications Inc (NASDAQ: ZM) shoot the moon.

Yet we haven’t seen a terminal decline in companies that are unquestionably struggling. Companies like Qantas Airways Limited (ASX: QAN) have fallen sure. But it was only 3 years ago when you could have picked up Qantas shares for the same price as what you can buy them for today. And there was an actual market for international travel back then.

So I’m here today to talk about some ASX shares that I think investors should avoid like the plague. I don’t have anything against these companies, I just don’t think they will make good investments today.

3 ASX shares I wouldn’t touch in 2020

Myer Holdings Ltd (ASX: MYR)

Poor old Myer… It was a struggling company before the pandemic, and now things are just not good for this Australian icon. Whilst I wish Myer well, I just don’t think that this is a company investors should bank on today. The winds of change are not filling Myer’s sails (or sales for that matter). I think e-commerce and online competition will continue to eat away at Myer, and I don’t think investors should hang around to watch.

Scentre Group (ASX: SCG)

Scentre is the owner of the Westfield brand of shopping centres, many of which coincidentally house a Myer store. The pandemic has been brutal for Scentre, with lockdowns effectively decimating its business model. While things are looking a little better for the group these days, I still don’t think that mall-owners are a great bet in 2020. Online shopping just isn’t good news for physical brick-and-mortar stores and Scentre has thousands of these stores paying rent every month. This isn’t a wagon I’m hitching to.

Afterpay Ltd (ASX: APT)

Afterpay has become a favourite ASX share for investors in 2020. But I think this is a company best avoided right now. The Afterpay share price is a case study in volatility. There are a lot of traders and speculators attracted to this share, and I think investing at anywhere near the current share price is a bad idea. Afterpay is a great company with a potentially bright future, but I would stay away from it until some of the hype has left the building on this one.

Foolish takeaway

Investing is a game of opportunity cost – when you invest in one company, you can’t invest in another. As such, I wish Afterpay, Scentre and Myer all the best, but I  just think there are better places to have your money in 2020 than these 3 companies.

More reading

• ASX 200 up 0.7%: Afterpay (ASX:APT) higher, QBE Insurance (ASX:QBE) lower on UK update
• Why Afterpay, Clinuvel, Kogan, & SEEK shares are storming higher today
• Apple, Amazon, Microsoft are bigger than EVERY unicorn combined
• 5 ASX shares to avoid in October
• Are biotech shares like Polynovo (ASX:PNV) a better buy than Afterpay?

Sebastian Bowen owns shares of Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple, Tesla, and Zoom Video Communications. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Apple and Sezzle 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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I think 2020 is the most important year in quite a while when it comes to choosing ASX dividend shares. The coronavirus pandemic and associated economic damage it has brought with it has changed the dividend game on the ASX.

The companies offering substantial and sustainable dividend income look completely different in 2020 compared to last year or the year before. Think about it, the ASX banks like Westpac Banking Corp (ASX: WBC) are no longer income stalwarts. And ‘safe’ infrastructure shares like Sydney Airport Holdings Pty Ltd (ASX: SYD) are running dry when it comes to shareholder income.

So here are 2 ASX dividend shares that I would choose for income in 2020 instead.

Telstra Corporation Ltd (ASX: TLS)

Telstra is my first choice for dividend income in 2020. As the ASX’s largest telco, I think Telstra benefits enormously from inelastic demand for its products and services (who wants to give up their internet connection these days?). That, in turn, gives Telstra the ability to pay a hefty dividend of 16 cents per share, which the company reaffirmed in its recent 2020 earnings report.

The Telstra share price has been sliding ever since this was released, however, as the market assumes the NBN rollout will damage its ability to pay this dividend again in 2021. However, I happen to think Telstra’s dividend is sustainable since it’s well-covered by free cash flow. Thus, I would be happy to snap Telstra shares up today for a trailing yield of 5.63% (or 8.04% grossed-up with full franking).

Coles Group Ltd (ASX: COL)

Coles is my second choice for a top dividend share for 2020. As a grocery business which sells food and household essentials, Coles also benefits from having an extremely inelastic earnings base (which was on full display in light of the panic buying we saw earlier in the year). As such, I think it deserves a presence in any dividend-focused portfolio.

I was very impressed with this supermarket giant’s dividend announcement last month, in which the company bumped up its 2020 final dividend by 14.6% to 27.5 cents per share. That means Coles will pay 57.5 cents per share in dividends in 2020, which gives the Coles share price a trailing yield of 3.37% (or 4.81% grossed-up) on current pricing. That contrasts well with arch-rival Woolworths Group Ltd (ASX: WOW), which instead cut its 2020 final dividend. A 3.37% yield might not make the front page, but I think it’s a good compromise in a year which has turned conventional ASX dividend wisdom on its head. Thus, I would also be happy to add Coles shares to any ASX dividend portfolio today.

More reading

• 3 retirement myths you can’t afford to believe
• Beat an RBA rate cut with these ASX dividend shares
• The best ASX blue chip shares to buy after the market selloff
• Are telco shares winners now that everyone’s staying home?
• 3 ASX dividend shares to buy in a downturn

Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited. 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 Kogan.com Ltd (ASX: KGN) share price continued its remarkable run on Wednesday and stormed higher again following the release of its latest business update.

The ecommerce company’s shares climbed as much as 9% to $20.97.

When the Kogan share price hit that level, it meant they were up a massive 180% since the start of the year.

Why is the Kogan share price up 180% in 2020?

Investors have been fighting to get hold of the company’s shares this year after the pandemic accelerated the shift to online shopping.

After a reasonably underwhelming first half to FY 2020, Kogan delivered a blockbuster full year result with stellar sales and profit growth.

For the 12 months ended 30 June 2020, Kogan reported a 39.3% increase in gross sales to $768.9 million and a 57.6% increase in adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) to $49.7 million.

This was underpinned by a 35.7% increase in active customers to 2,183,000. 

Can this strong form be maintained in FY 2021?

With its full year results, management noted that a “retail revolution [is] taking place” and believes the company is well-positioned to benefit.

Pleasingly for shareholders, this has so far proven to be very accurate in FY 2021. Although the majority of retail stores are open as normal in Australia, Kogan’s sales and earnings growth remains explosive.

This morning the company released its update for August and revealed that its gross sales grew more than 117% year on year during the month.

Things were even better in respect to its earnings. Kogan’s EBITDA grew by more than 466% over the prior corresponding period. This was despite a significant increase in its marketing costs.

Also growing strongly was its active customer numbers. During August, Kogan added an incremental 152,000 active customers. This brought its total customers to a sizeable 2,461,000. Management notes that this is the largest monthly increase in its history.

Is it too late to invest?

While Kogan is far from a bargain buy at 44x estimated FY 2021 earnings, I feel it is still a great long term option.

I believe the shift to online shopping still has a long way to go and Kogan is well-placed to benefit. It also has the option to accelerate its growth in the future with value accretive acquisitions following its capital raising this year.

More reading

• Kogan (ASX:KGN) share price rises 9% on trading update
• Why Afterpay, Clinuvel, Kogan, & SEEK shares are storming higher today
• Where to invest $20,000 into ASX shares right now
• ASX shares to own now for the Santa Claus rally of all time
• Can the Harvey Norman (ASX:HVN) share price push higher in 2021?

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 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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I believe that nearly everyone has the capability of reaching a good retirement fund number. However, you can’t let some retirement myths get in the way.

Not many people want to work their whole life. Retirement is definitely possible, even if you’re only just starting out. 

There are some important myths not to believe:

Myth 1: “I can’t do it”

This is the biggest one. Whilst not everyone will be able to create a good retirement fund, I think superannuation will be able to help most people get to a good retirement number. You need to ensure you are engaged with your superannuation account, know what assets you’re investing in and know that it’s not costing you tons in fees. 

According to the Australian Bureau of Statistics (ABS), at November 2019 the average weekly total earnings per week was $1,256.20 which equates to about $65,300 per year.

Assuming you earn enough per month, Australians are entitled to be paid superannuation to the value of 9.5% of their wage. The average wage amount suggests annual payments of $6,000 into your superannuation account.

According to Moneysmart’s compound interest calculator, if $6,000 a year is invested into shares in your super and your shares return an average of 10% per annum then you’d have $1 million in just over three decades from now.

It shows you could become a millionaire just with your mandatory superannuation contributions over 30 years. What if you earned more than the average Australian wage? Could you voluntarily add more into your superannuation account? What happens if you invest additional money outside of super?

For most people, I think they can reach a good retirement number.

Myth 2: The 4% rule

A safe withdrawal rate (SWR) is the number that tries to work out how much you can withdraw from your retirement fund each year to live well whilst not eating into your nest egg savings. A 4% SWR is a commonly used rate. In the past that may have worked, but in this new world I think withdrawing 4% each year could be too much.

It can be dangerous to think that your portfolio will be able to fund your lifestyle at the same level through all stages of an economic cycle. Imagine if you retired one year before the GFC. You could end up eating into your portfolio balance to live and then it doesn’t recover as much as it’s meant to because you’ve eaten into the (beaten-down) capital value.

I do believe that retirees still need to invest at least some of their funds in growth assets. Retirement could last three or four decades – and you need to expect there will be some hefty medical bills along the way. I’m not sure how appropriate bonds are now that interest rates are at rock-bottom levels. I think shares are the answer. 

A 4% withdrawal rate could be too much to be called “safe”. I think it would be better to lower that expectation to a 3% rate. Or, to only live off the dividends paid out by reliable and growing ASX shares like Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

Myth 3: Many ASX blue chips are safe

I’ve never been much of a fan of many ASX blue chips because I always thought that they offered little growth and their business models weren’t that defensive.

Investing in names like Westpac Banking Corp (ASX: WBC) and Telstra Corporation Ltd (ASX: TLS) may have seemed like a safe option because they’re ‘blue chips’. But they both have seen heavy share price falls over the last few years and there have been huge dividend cuts. That’s not been safe at all. 

Just because something pays a dividend doesn’t mean it’s a good ASX dividend share in my opinion. I think names like Soul Patts, APA Group (ASX: APA) and Brickworks Limited (ASX: BKW) are safer options for long-term income.

A business is only a safe dividend share if it can fund that dividend with reliable (and growing) earnings. Businesses like CSL Limited (ASX: CSL) and Wesfarmers Ltd (ASX: WES) have demonstrated profit growth during COVID-19. I also like dividend ideas like Rural Funds Group (ASX: RFF) and WAM Microcap Limited (ASX: WMI).

More reading

• 2 top ASX dividend shares I would buy for income this week
• Beat an RBA rate cut with these ASX dividend shares
• Here’s how I would spend $10,000 on ASX shares right now
• The ASX shares set to gain from government’s gas-led recovery
• Top brokers name 3 ASX shares to buy today

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

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At the time of writing, the Bell Financial Group Ltd (ASX: BFG) share price was up 7.02% to $1.22. The rise in the Bell Financial share price came after the company released a presentation which was given at the Bell Potter Emerging Leaders Conference this morning.

What was in the announcement?

According to Bell Financial Group, it successfully conducted more than 70 equity capital markets transactions this year prior to 31 August 2020, raising over $1.4 billion in new equity capital and earning $48.1 million in fees, an increase of 20% compared to the prior corresponding period (pcp). 

The company stated that it had 325 financial advisers servicing 500,000 retail, wholesale and institutional client accounts. Bell Financial Group earned $71.6 million in gross brokerage revenue in 2020 prior to 31 August 2020, an increase of 14% compared to the pcp. 

According to the company, it had consistent long-term growth in its superannuation accounts with $3.6 billion in funds under advice and $12.7 million in revenue during 2020 prior to 31 August 2020, an increase of 3% on the pcp. 

Bell Financial Group stated that revenue from its third party platform was $15.9 million in 2020 prior to 31 August 2020, a 31% increase on the pcp. The company announced that its third party trading platform had delivered $4.1 million in profit before tax in 2020 prior to 31 August 2020. Bell Financial Group had $22.2 billion in sponsored holdings, up 9% on the pcp. It had 197,000 client accounts and $220 million in client cash.

According to the company, its Bell Potter Capital division had consistent revenue and earnings growth. The company stated that it was the only non bank margin lender in the Australian marketplace. It had a loan book in 2020 to 31 August 2020 of $410 million, down 26% on 2019. Its cash book was $442 million in the year to August 2020, up 31% on the pcp. Bell Potter Capital had net revenue of $9.9 million in 2020 prior to 31 August 2020, an increase of 32% compared to the prior year. Profit before tax in 2020 to 31 August 2020 for Bell Potter Capital was $3.2 million, up 128.% compared to the pcp. 

Bell Financial Group had funds under advice of $54.4 billion in the first half of 2020, down 7% compared to December 2019.

The company had revenue of $177 million in 2020 prior to 31 August 2020, this was compared to $158 million at the same time in 2019. Bell Financial Group had net profit after tax of $23.3 million in 2020 prior to 31 August 2020 and earnings per share of 7.3 cents. Earnings per share saw an increase of 23.7% compared to the pcp.

The company had no core debt and $65.5 million in net cash at 31 August 2020.

About the Bell Financial share price

Bell Financial provides stockbroking, investment and financial advisory services in Australia to retail, institutional and corporate clients. It has been listed on the ASX since 2007.

The Bell Financial share price is up more than 154% from its 52-week low of 48 cents, however, it is down 2.4% since the beginning of the year. The Bell Financial share price is up 28.42% since this time last year.

More reading

• 3 ASX shares I wouldn’t touch with a 10-foot pole
• 2 top ASX dividend shares I would buy for income this week
• The Kogan (ASX:KGN) share price is up 180% in 2020: Is it still a buy?
• 3 retirement myths you can’t afford to believe
• Meet the ASX sector that is cum-consensus upgrade for FY21

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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Talk about going against the grain. While analysts have pared earnings expectations for this financial year, one ASX sector could be about to enjoy consensus upgrades!

The economic rebound from the COVID-19 fallout will take longer to eventuate than experts were predicting in the early days of the pandemic.

Most ASX stocks won’t see earnings return to FY19 levels until FY22 at least. It’s only our miners like BHP Group Ltd (ASX: BHP) that is driving much of the earnings growth on the S&P/ASX 200 Index (Index:^AXJO) for this financial year.

Margin to fuel upgrade

Earnings upgrades will be hard to come by in this environment. Just ask Macquarie Group Ltd (ASX: MQG), which revealed a shock profit warning.

But ASX-listed petrol station operators look well placed to surprise on the upside, according to Morgan Stanley.

“Retail margins in 2H20 continue to outperform our forecasts, and with volumes likely recovering in late 2020 as Victoria comes out of lockdown,” said the broker.

“Retail fuel margins for July (18c/L), August (17c/L) and September (21c/L) remain well above 2019 average margins of 14c/L.”

Viva to benefit more than Ampol

The expanding margin benefits Viva more than Ampol. Every one cent a litre change in retail margins equates to around a 12%, or $24 million, movement in net profit for Viva. In contrast, Ampol’s net profit will move by 7%, or $34 million.

The competition watchdog has been silent on the “profiteering” by fuel retailers so far, probably because these companies need bigger margins to offset the drop in volume to stay afloat.

VEA share price and ALD share price at turning point?

It’s also worth noting that the Viva Energy Group Ltd (ASX: VEA) share price and Ampol Ltd (ASX: ALD) share price are lagging the market. Viva shed around 16% while Ampol tumbled 31% over the past year when the ASX 200 lost 12%.

But if Morgan Stanley is right, these stocks could see their fortunes turn and it isn’t only the fatter than expected margin that will drive the re-rating.

Volume recovery in 2021

“Apple mobility data suggest that Australian driving volumes in September (down 10%) have improved since August (down 15%) from January base levels, weighed by Victoria (down ~50%),” explained Morgan Stanley.

“However, we think retail performance will accelerate in the next 12 months as volumes recover after Victoria eases lockdown restrictions.”

Foolish takeaway

The reluctance for commuters to return to public transport due to worries about catching COVID-19 is also another positive trend for volumes.

It will be interesting to see if the ACCC starts to wave a big stick if margins don’t narrow as volumes recover.

Morgan Stanley reiterated its “overweight” (or “buy”) recommendation on Viva and Ampol.

More reading

• SEEK (ASX:SEK) shares surge 9% today. Here’s why.
• Bear vs Strong Bear: Choosing the right hedge for your portfolio
• Firefly (ASX:FFR) share price tanks despite further positive drill results
• Here’s how I would spend $10,000 on ASX shares right now
• Brokers upgraded JB Hi-Fi (ASX:JBH) share price and this other ASX stock to “buy” today

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

The Motley Fool Australia owns shares of and has recommended Macquarie 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.

The post Meet the ASX sector that is cum-consensus upgrade for FY21 appeared first on Motley Fool Australia.

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I think exchange traded funds (ETFs) can be great additions to a balanced portfolio.

This is because they allow you to invest across a large and diverse number of shares through just a single investment.

But which ETFs should you buy today? Three of the best ETFs in my opinion are listed below. Here’s why I would buy them:

BetaShares NASDAQ 100 ETF (ASX: NDQ)

My favourite ETF is the BetaShares NASDAQ 100 ETF. This ETF gives investors access to 100 of the biggest non-financial companies on the legendary Nasdaq index. These means investors will be getting a slice of a large number of tech giants such as Apple, Microsoft, and Netflix. Due to the positive outlooks of the majority of the companies in the ETF, I believe it can generate strong returns for investors over the next decade. Another positive is a recent pullback following a tech selloff on Wall Street. This gives investors an opportunity to buy in at a more attractive price.

BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC)

Another option for investors to consider buying is the BetaShares S&P/ASX Australian Technology ETF. It is the Australian equivalent of the BetaShares NASDAQ 100 ETF and a great option if you don’t already have exposure to the tech sector. Included in the fund are the likes of Afterpay Ltd (ASX: APT), Appen Ltd (ASX: APX), and Xero Limited (ASX: XRO). I believe this ETF has the potential to outperform the broader ASX 200 index by a decent margin over the long term.

iShares Global Healthcare ETF (ASX: IXJ)

A final option to consider is the iShares Global Healthcare ETF. This exchange traded fund gives investors a piece of some of the largest healthcare companies across the world. This includes giants such as CSL Ltd (ASX: CSL), Johnson & Johnson, Novartis, and Pfizer. Given the expected increase in demand for healthcare services over the next few decades, I believe it is a great place to invest with a long term view.

More reading

• BrainChip (ASX:BRN) and Zip (ASX:Z1P) were among the most traded shares on the ASX last week
• Investing $1,000 into these ASX shares could be a very smart move
• 3 five-star ASX stocks to buy right now
• 3 ways Aussies can buy Tesla (NASDAQ:TSLA) shares
• 3 exotic ASX tech ETFs you might want to add to your portfolio today

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 BETANASDAQ ETF UNITS, CSL Ltd., and Xero. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen Ltd. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS. 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 Buy BetaShares NASDAQ 100 ETF (ASX:NDQ) and these outstanding ETFs today appeared first on Motley Fool Australia.

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The outlook for global mobility and travel is looking increasingly grim as many countries enter a second or third wave of COVID-19. Has the market already priced in the worst case scenario and now be a time to start picking up ASX travel shares? Or should investors wait for a proper restart of flying or a vaccine before considering ASX travel shares? 

Could the worst be over? 

There are almost 30 million COVID-19 cases recorded around the world. Countries such as the US, India, Brazil and Russia account for more than 50% of the worlds cases. While COVID-19 will continue to be a trending topic, it appears that the markets have largely shrugged off its near-term impacts. The combination of record monetary stimulus and ultra-low interest rates have been able to buoy the global equity market, and it could be an opportunity to buy ASX travel shares at record low prices. 

ASX travel shares are hoarding cash

Household ASX travel shares such as Qantas Airways Limited (ASX: QAN), Flight Centre Travel Group Ltd (ASX: FLT) and Webjet Limited (ASX: WEB) have all focused on preserving liquidity, reducing costs while maintaining the flexibility to respond to changes in travel restrictions.

Taking a closer look at Qantas, the company experienced a significant drop in operating cash flow due to travel restrictions and border closures. To support the business, the company undertook a $1.36bn institutional placement and raised $1.75bn in new debt. By the end of FY20, the company held a significant $3.52bn in cash and $1.0bn in undrawn credit facilities.

Similarly, Flight Centre saw a 99.4% decrease in Australian outbound travel during Q4 with limited revenue generating opportunities. Like Qantas, the company has more than $1b in cash and liquidity for its survival. 

Interestingly, Webjet announced a change in substantial shareholding on Wednesday. Goldman Sachs now holds 5.01 per cent of Webjet as of 11 September. This does show some degree of institutional interest on the challenged sector. 

What post COVID-19 could look like

China has been one of the few countries to truly conquer COVID-19. Data from the Civil Aviation Administration of China showed that air passenger traffic rose to 45.35 million passenger trips in August. This represents more than 80% of that in the same period last year, and the highest level this year. China’s figures could be a beacon of hope as to what post COVID-19 could look like for ASX travel shares. The combination of pent up demand and potential travel bubbles could see a broad recovery for travel related businesses. 

Foolish takeaway

COVID-19 is still a significant challenge for Australia. Notwithstanding current travel restrictions and challenges, ASX travel shares are sitting on strong balance sheets with a focus on cutting costs. China has shown what a post COVID-19 world could look like, but it is difficult to tell when that world could come for Australians. I believe ASX travel shares have bottomed, but perhaps more time is needed to see business conditions improve. 

More reading

• Qantas (ASX:QAN) considers leaving Sydney
• Here are the 10 most shorted ASX shares
• 2 ASX shares that could rocket from viral cash hoarding
• This devastated sector is ripe for buying: fundie
• Is the Flight Centre (ASX:FLT) share price about to take off?

Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. 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.

The post Is now the time to be buying ASX travel shares?  appeared first on Motley Fool Australia.

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