Stock Pick

  • These were the best performing shares on the ASX 200 in July

    Investor riding a rocket blasting off over a share price chart

    Although the S&P/ASX 200 Index (ASX: XJO) dropped a disappointing 2% lower on the final day of the month, it still managed to record a gain in July. The benchmark index rose 0.5% to end at 5927.8 points.

    While a good number of shares climbed higher last month, some recorded stronger than average gains. Here’s why these were among the best performers on the ASX 200 in July:

    The Netwealth Group Ltd (ASX: NWL) share price was the best performer with an impressive 33.9% gain. Investors were buying the investment platform provider’s shares following the release of its quarterly update. At the end of the fourth quarter, Netwealth’s funds under administration (FUA) had climbed to a sizeable $31.5 billion. This means the company grew its FUA by $8.2 billion or 35% during the financial year. Which is all the more impressive when you consider that it recorded a negative market movement of $0.9 billion for the year.

    The ALS Ltd (ASX: ALQ) share price was on form and stormed 29.4% higher last month. The catalyst for this appears to be the testing services company’s annual general meeting. That update revealed that it is performing reasonably positively considering the tough trading conditions. One broker that was pleased with its update was Macquarie. Its analysts put an outperform rating and $9.00 price target on ALS’ shares.

    The Orocobre Limited (ASX: ORE) share price wasn’t far behind with a surprising 28.6% gain in July. Investors were buying the lithium miner despite the price of the battery making ingredient continuing to weaken. One positive, though, was that the company has cut its costs materially. During the fourth quarter Orocobre achieved its lowest cash cost of sales for 3 years at US$3,920 a tonne. However, with a realised average price of US$3,913 a tonne, it is still making a loss.

    The Fortescue Metals Group Limited (ASX: FMG) share price was a very positive performer in July and recorded a 25.7% gain. The iron ore producer’s shares were in demand with investors last month due to a strong iron ore price and the prospect of another bumper profit result in FY 2020. Fortescue doesn’t look likely to disappoint. Late on in the month it released its fourth quarter update and revealed total shipments of 178.2mt. This was ahead of guidance and achieved with a C1 cost of US$12.94 per wet metric tonne. This compares very favourably to its average realised selling price of US$81 a dry metric tonne.

    Legendary stock picker names 5 cheap stocks to buy right now

    Motley Fool resident tech stock expert Dr. Anirban Mahanti has stumbled upon five stocks he believes could be some of the greatest discoveries of his investing career.

    These little-known ASX stocks are growing like gangbusters, yet you can buy them today for less than $5 a share. Click here to learn more.

    See these 5 cheap stocks

    More reading

    Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Netwealth. 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 These were the best performing shares on the ASX 200 in July appeared first on Motley Fool Australia.

    from Motley Fool Australia https://ift.tt/39KSWRt

  • 5 things to watch on the ASX 200 next week

    Last week was a disappointing one for the S&P/ASX 200 Index (ASX: XJO). A poor finish to the week led to the benchmark index falling 1.6% over the period to 5,927.8 points.

    Investors will no doubt be hoping for better next week. Ahead of another eventful week, I thought I would take a look to see what we should be watching out for.

    Here are five things to watch next week:

    ASX futures flat.

    The ASX 200 looks set to have a subdued start to the week. According to the latest SPI futures, the ASX 200 is expected to fall 1 point at the open on Monday. This is despite a positive end to the week on Wall Street on Friday, which saw the Dow Jones rise 0.45%, the S&P 500 push 0.8% higher, and the Nasdaq index jump 1.5%. The latter was supported by the Apple share price, which surged 10% higher after its quarterly update. The tech giant is now the world’s most valuable company.

    REA Group results.

    The REA Group Limited (ASX: REA) share price will be one to watch on Friday when the property listings giant releases its full year results. According to CommSec, analysts are expecting the company to deliver a full year net profit after tax of $263.12 million. This will be a decline from $295.5 million in FY 2019, which isn’t a bad result all things considered. A final dividend of 51 cents per share is also expected to be declared.

    Reserve Bank meeting.

    On Tuesday the Reserve Bank of Australia will meet to discuss the cash rate. At present, the market is pricing in a 57% probability of a rate cut to zero at the meeting. While this means a cut is reasonably unlikely, it certainly is in play. Especially given the recent strengthening of the Australian dollar versus the greenback.

    BWP results.

    Bunnings Warehouse landlord BWP Trust (ASX: BWP) is scheduled to release its full year results on Tuesday. In June the company revealed that it has been collecting rent largely as normal during the pandemic. As a result, it expects to declare a second half distribution of 9.27 cents per unit. This will bring its full year distribution to 18.29 cents per unit, up 1% on the prior financial year. According to CommSec, analysts expect a full year profit of $117 million.

    Insurance Australia results.

    All eyes will be on the Insurance Australia Group Ltd (ASX: IAG) share price on Friday when it hands in its full year results. According to CommSec, the market is expecting the insurance giant to post a net profit after tax of $444.83 million. Last month the company advised that no final dividend would be declared. It commented: “While IAG recognises many shareholders will be disappointed with no final dividend, it believes it is important to adhere to its long-established dividend payout policy and to maintain a strong capital position in the current uncertain environment.”

    Where to invest $1,000 right now

    When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

    See The 5 Stocks

    *Returns as of June 30th

    More reading

    Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA 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 5 things to watch on the ASX 200 next week appeared first on Motley Fool Australia.

    from Motley Fool Australia https://ift.tt/33kkgoi

  • 3 reasons why I think the stock market will recover after this pandemic

    bull and bear standing on bar chart, asx 200 bull market crash

    The stock market has a long track record of recovery. Therefore, even though the coronavirus pandemic could cause further challenges for a large number of businesses, the long-term prospects for equity investors could be very positive.

    With the world economy also having an encouraging track record of returning to positive growth after recessions, and major economies enacting stimulus packages, the turnaround potential for shares appears to be high.

    As such, now could be the right time to buy a diverse range of shares in order to benefit from a recovery after the pandemic.

    Stock market track record

    It’s easy to look back on previous stock market downturns and fail to appreciate the mood among investors when they were in full swing. For example, a glance at the long-term performance of major indices such as the S&P 500 makes the tech bubble seem like a blip on its path to growth. However, at the time, there were major concerns among investors regarding the outlook for the economy. This caused many stocks to collapse in value, which left many investors with serious losses.

    However, equities went on to recover from the tech bubble, and from other declines such as the financial crisis, to post strong returns. Therefore, even though investor sentiment is relatively weak at the present time, and further challenges could yet be ahead in the short run, the prospect of a recovery for stock prices seems to be high. Its track record is very solid, with investors who buy while risks are high having often been among the major beneficiaries during a subsequent recovery.

    Economic improvements

    Any stock market recovery is often predicated on the prospect of an economic recovery. On this front, the prospects for long-term investors are relatively bright. The world economy may face threats such as geopolitical risks in Europe, and a continued rise in coronavirus cases, but it has always been able to return to positive growth following its recessions.

    Certainly, the current recession could be greater than has been experienced for many years. However, confidence among consumers and businesses is likely to recover over time. For long-term investors, this could mean that now is an attractive opportunity to buy shares.

    Stimulus packages

    The stock market rebound has been aided greatly by fiscal and monetary policy stimulus packages introduced in a variety of major economies. Furthermore, policymakers have made it clear that further stimulus is available should it be required.

    This could significantly aid the recovery in equity prices over the coming years from the present pandemic. It may help to provide liquidity to a wide range of businesses, which could help them to survive the short run. It may also encourage asset price growth over the long run, which took place following the financial crisis. This could aid the performance of stock prices, and help you to improve your financial position over the coming years.

    Legendary stock picker names 5 cheap stocks to buy right now

    Motley Fool resident tech stock expert Dr. Anirban Mahanti has stumbled upon five stocks he believes could be some of the greatest discoveries of his investing career.

    These little-known ASX stocks are growing like gangbusters, yet you can buy them today for less than $5 a share. Click here to learn more.

    See these 5 cheap stocks

    More reading

    Motley Fool contributor Peter Stephens 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.

    The post 3 reasons why I think the stock market will recover after this pandemic appeared first on Motley Fool Australia.

    from Motley Fool Australia https://ift.tt/30jf5TA

  • Here’s how to start investing with $5k

    Child holding cash and scratching head

    Investing is like many things in life – the hardest part can be just getting started! If you’re financially organised enough to have some funds to start your investment journey, congratulations! Here are the next steps to building your investment portfolio. 

    Roadblocks

    Fear and uncertainty are two of the biggest roadblocks that prevent people from taking action to realise their plans. If you knew what the outcome of a decision would be, you would know how to make the decision. But we don’t know what the future holds. 

    Investing can be confusing – there are so many options to consider – shares, options, exchange-traded funds (ETFs), bonds…the list goes on. We all want to make optimal choices about how to invest our money. The key is to understand your goals, understand your options and match the two appropriately. 

    When we buy a share, we are essentially taking a gamble on the future profitability of a company. We can’t know ahead of time what this will be. What we can do is thoroughly research the company, its market, and the prevailing economic forces to make an informed decision. Then, we can monitor the progress of our investments and any changes in their operating environments. 

    Goals and time frames

    Share prices fluctuate on a daily basis. Individual share prices react to company-specific factors as well as economy-wide factors. The market as a whole can be volatile. Over time, however, higher risk shares tend to outperform lower risk asset classes such as bonds. Over the last 100 years, ASX shares have, on average, provided a real return (after inflation) of 6%. 

    Naturally, there have been times when shares have returned less than than ‘risk-free’ assets. During the GFC (global financial crisis) the S&P/ASX 200 (ASX: XJO) fell more than 53%. This is one of the reasons why investors in ASX shares should have a time horizon of at least around 5 years. Equities are typically a longer-term investment as time helps to mitigate short-term risk and smooth out fluctuations in price and performance. If you’re going to need your capital in the next couple of years, you may be better off choosing a lower risk option like a term deposit. 

    Diversification

    The price of individual ASX shares moves daily (sometimes dramatically) and often without much notice. But not all ASX share prices move the same way at the same time. By spreading your money across a variety of shares, your overall return will be less volatile. This is known as diversification. Diversifying involves building a portfolio of multiple holdings across different industries and sectors. 

    A diversified portfolio will be less exposed to the impact of events affecting a particular company or industry. This leaves the portfolio holder less exposed – if a particular business or sector isn’t performing well, you won’t lose all your money. Some companies in your portfolio may perform better than others, improving overall returns.  

    Diversification can occur not just across the share market, but across asset classes. ASX shares are an obvious place to start an investment portfolio, but there are also international shares, government and corporate bonds, and property. The returns on these asset classes are not perfectly correlated so holding a basket of them reduces the overall risk of your portfolio. 

    Investments

    So where to invest your $5,000? This will depend on what you’re trying to achieve. If you’re looking for long-term capital growth, you may want to consider high growth companies such as Appen Ltd (ASX: APX) and Afterpay Ltd (ASX: APT). If you’re looking to generate income, you will instead look to ASX shares with a track record of paying dividends like Fortescue Metals Group Limited (ASX: FMG) or AGL Energy Limited (ASX: AGL).

    To achieve maximum market exposure and sufficient diversification, including some ETFs could be a good option. ETFs are funds which are traded on the stock exchange like ordinary shares. The funds hold assets such as shares, bonds, commodities, or other investments. Because ETFs hold multiple assets and usually charge low management fees, they are a popular choice for diversification. 

    The Betashares Australia 200 ETF (ASX: A200) provides exposure to the largest 200 companies listed on the ASX based on market capitalisation. The S&P/ASX 200 (ASX: XJO) changes quarterly as companies’ market capitalisations rise and fall. In the most recent quarterly update, Mesoblast Limited (ASX: MSB), Megaport Ltd (ASX: MP1), Omni Bridgeway Ltd (ASX: OBL), and Perseus Mining Limited (ASX: PRU) joined the index. Estia Health Ltd (ASX: EHE), Jumbo Interactive Ltd (ASX: JIN), Mayne Pharma Group Ltd (ASX: MYX), and Pilbara Minerals Ltd (ASX: PLS) were removed. 

    ASX shares you use 

    Investors can also find it useful to invest in companies that they are actually a customer of. After all, if you think a company provides a good product or service, others probably will too. Becoming a shareholder in these companies means you stand to receive a portion of the money you spend with a company back in the form of dividends. 

    For example, do you shop at Coles Group Ltd (ASX: COL) or Woolworths Group Ltd (ASX: WOW)? Do you buy online at Kogan.com Ltd (ASX: KGN) or Temple & Webster Group Ltd (ASX: TPW)? Do you use buy now, pay later services like those offered by Afterpay or Splitit Ltd (ASX: SPT)? If so, it may be worth investigating the investment potential of these companies. 

    International shares

    To mix things up a bit, it can be worth adding some international exposure to your portfolio. The VanEck Vectors MSCI World ex Australia Quality ETF (ASX: QUAL) provides exposure to some of the largest listed companies in the world outside of Australia. The fund provides access to 300 international shares in a single trade. Top holdings include Apple Inc, Microsoft Corp, Facebook Inc, Visa Inc, Johnson & Johnson, Alphabet Inc, MasterCard Inc, Procter & Gamble Inc, and Roche Holding AG. 

    Foolish takeaway 

    Deciding how much of your $5,000 to invest in each option will depend on your risk profile and investment goals. If you are comfortable with more risk, you may devote more funds to growth shares. If you are more risk averse, a more conservative portfolio may be appropriate. 

    5 stocks under $5

    We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.

    And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

    See the 5 stocks

    *Extreme Opportunities returns as of June 5th 2020

    More reading

    Kate O’Brien owns shares of Appen Ltd and Mayne Pharma Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and Temple & Webster Group Ltd. 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 owns shares of AFTERPAY T FPO, Appen Ltd, COLESGROUP DEF SET, and Woolworths Limited. The Motley Fool Australia has recommended Kogan.com ltd, MEGAPORT FPO, and Temple & Webster Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

    The post Here’s how to start investing with $5k appeared first on Motley Fool Australia.

    from Motley Fool Australia https://ift.tt/2Da7D4C

  • Here’s how to start investing with $5k

    Child holding cash and scratching head

    Investing is like many things in life – the hardest part can be just getting started! If you’re financially organised enough to have some funds to start your investment journey, congratulations! Here are the next steps to building your investment portfolio. 

    Roadblocks

    Fear and uncertainty are two of the biggest roadblocks that prevent people from taking action to realise their plans. If you knew what the outcome of a decision would be, you would know how to make the decision. But we don’t know what the future holds. 

    Investing can be confusing – there are so many options to consider – shares, options, exchange-traded funds (ETFs), bonds…the list goes on. We all want to make optimal choices about how to invest our money. The key is to understand your goals, understand your options and match the two appropriately. 

    When we buy a share, we are essentially taking a gamble on the future profitability of a company. We can’t know ahead of time what this will be. What we can do is thoroughly research the company, its market, and the prevailing economic forces to make an informed decision. Then, we can monitor the progress of our investments and any changes in their operating environments. 

    Goals and time frames

    Share prices fluctuate on a daily basis. Individual share prices react to company-specific factors as well as economy-wide factors. The market as a whole can be volatile. Over time, however, higher risk shares tend to outperform lower risk asset classes such as bonds. Over the last 100 years, ASX shares have, on average, provided a real return (after inflation) of 6%. 

    Naturally, there have been times when shares have returned less than than ‘risk-free’ assets. During the GFC (global financial crisis) the S&P/ASX 200 (ASX: XJO) fell more than 53%. This is one of the reasons why investors in ASX shares should have a time horizon of at least around 5 years. Equities are typically a longer-term investment as time helps to mitigate short-term risk and smooth out fluctuations in price and performance. If you’re going to need your capital in the next couple of years, you may be better off choosing a lower risk option like a term deposit. 

    Diversification

    The price of individual ASX shares moves daily (sometimes dramatically) and often without much notice. But not all ASX share prices move the same way at the same time. By spreading your money across a variety of shares, your overall return will be less volatile. This is known as diversification. Diversifying involves building a portfolio of multiple holdings across different industries and sectors. 

    A diversified portfolio will be less exposed to the impact of events affecting a particular company or industry. This leaves the portfolio holder less exposed – if a particular business or sector isn’t performing well, you won’t lose all your money. Some companies in your portfolio may perform better than others, improving overall returns.  

    Diversification can occur not just across the share market, but across asset classes. ASX shares are an obvious place to start an investment portfolio, but there are also international shares, government and corporate bonds, and property. The returns on these asset classes are not perfectly correlated so holding a basket of them reduces the overall risk of your portfolio. 

    Investments

    So where to invest your $5,000? This will depend on what you’re trying to achieve. If you’re looking for long-term capital growth, you may want to consider high growth companies such as Appen Ltd (ASX: APX) and Afterpay Ltd (ASX: APT). If you’re looking to generate income, you will instead look to ASX shares with a track record of paying dividends like Fortescue Metals Group Limited (ASX: FMG) or AGL Energy Limited (ASX: AGL).

    To achieve maximum market exposure and sufficient diversification, including some ETFs could be a good option. ETFs are funds which are traded on the stock exchange like ordinary shares. The funds hold assets such as shares, bonds, commodities, or other investments. Because ETFs hold multiple assets and usually charge low management fees, they are a popular choice for diversification. 

    The Betashares Australia 200 ETF (ASX: A200) provides exposure to the largest 200 companies listed on the ASX based on market capitalisation. The S&P/ASX 200 (ASX: XJO) changes quarterly as companies’ market capitalisations rise and fall. In the most recent quarterly update, Mesoblast Limited (ASX: MSB), Megaport Ltd (ASX: MP1), Omni Bridgeway Ltd (ASX: OBL), and Perseus Mining Limited (ASX: PRU) joined the index. Estia Health Ltd (ASX: EHE), Jumbo Interactive Ltd (ASX: JIN), Mayne Pharma Group Ltd (ASX: MYX), and Pilbara Minerals Ltd (ASX: PLS) were removed. 

    ASX shares you use 

    Investors can also find it useful to invest in companies that they are actually a customer of. After all, if you think a company provides a good product or service, others probably will too. Becoming a shareholder in these companies means you stand to receive a portion of the money you spend with a company back in the form of dividends. 

    For example, do you shop at Coles Group Ltd (ASX: COL) or Woolworths Group Ltd (ASX: WOW)? Do you buy online at Kogan.com Ltd (ASX: KGN) or Temple & Webster Group Ltd (ASX: TPW)? Do you use buy now, pay later services like those offered by Afterpay or Splitit Ltd (ASX: SPT)? If so, it may be worth investigating the investment potential of these companies. 

    International shares

    To mix things up a bit, it can be worth adding some international exposure to your portfolio. The VanEck Vectors MSCI World ex Australia Quality ETF (ASX: QUAL) provides exposure to some of the largest listed companies in the world outside of Australia. The fund provides access to 300 international shares in a single trade. Top holdings include Apple Inc, Microsoft Corp, Facebook Inc, Visa Inc, Johnson & Johnson, Alphabet Inc, MasterCard Inc, Procter & Gamble Inc, and Roche Holding AG. 

    Foolish takeaway 

    Deciding how much of your $5,000 to invest in each option will depend on your risk profile and investment goals. If you are comfortable with more risk, you may devote more funds to growth shares. If you are more risk averse, a more conservative portfolio may be appropriate. 

    5 stocks under $5

    We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.

    And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

    See the 5 stocks

    *Extreme Opportunities returns as of June 5th 2020

    More reading

    Kate O’Brien owns shares of Appen Ltd and Mayne Pharma Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and Temple & Webster Group Ltd. 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 owns shares of AFTERPAY T FPO, Appen Ltd, COLESGROUP DEF SET, and Woolworths Limited. The Motley Fool Australia has recommended Kogan.com ltd, MEGAPORT FPO, and Temple & Webster Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

    The post Here’s how to start investing with $5k appeared first on Motley Fool Australia.

    from Motley Fool Australia https://ift.tt/2Da7D4C

  • Bankruptcy Risks Mount for Embattled American Airlines

    Bankruptcy Risks Mount for Embattled American AirlinesIt has been a rough year for American Airlines (NASDAQ:AAL) stock, but the biggest hits are yet to come. The second quarter was the most turbulent in history for the legacy carrier.Source: GagliardiPhotography / Shutterstock.com Year over year, revenue fell to $1.62 billion, an 86.5% drop. From passenger revenue to the cargo business, there were no positive headlines that emanated from the earnings report.However, that isn't surprising. Everyone knows that the novel coronavirus pandemic severely dented the U.S. economy. Airlines, cruises and any other sector that require social gathering are firmly in the dumps.InvestorPlace – Stock Market News, Stock Advice & Trading TipsBut if you focus on AAL in particular, you will find that the airline is in much more trouble than any of its peers. Unfortunately, that has more to do with the company's response to the crisis rather than the prevailing situation. * 10 Gaming Stocks That Will Power Through the New NormalIn a puzzling strategy, when most airlines have decided to streamline operations and cut spending, American Airlines chose to go down a different route. It seems it's trying to already lay the groundwork for an eventual Chapter 11 filing, through pacifying all stakeholders, except shareholders.Taking into account the enormous debt load and the improbability of positive free cash flow for the next few years, I would say it's time to part ways with AAL stock. Debt Is Choking the Life Out of AAL StockThe biggest controversy surrounding airlines for a while has been their penchant for repurchasing stock to boost stock value. According to a Bloomberg article, American Airlines bought back over $12.5 billion of stock despite having negative cumulative free cash flow.So, you can understand that the issues with American and some of its peers are not new, nor can they be totally blamed on Covid-19. At a time when the company should have been using its resources to increase earnings, AAL chose to focus on share repurchases.As a result, when the virus struck, the airline was caught napping. In Q2, revenues fell 84.6% in comparison to the year-ago period. Operating loss came in at $2.49 billion, a sharp contrast to the operating income of $1.15 billion in 2019.Meanwhile, as operational matrices were getting hammered, AAL was busy raising debt. At the end of June, total liquidity stood at $10.2 billion. The company is expected to receive $4.75 billion under the CARES Act, while AAL itself has launched an offering of $2.5 billion of senior secured notes.However, the average daily cash burn rate in Q2 was $55 million, the highest among its peer group. Delta Air Lines (NYSE:DAL) has brought down its cash burn to $27 million in June; United Airlines (NASDAQ:UAL) is burning $25 million per day as per its latest quarterly reports.Airline traffic is not returning to normal anytime soon. In the meantime, AAL has to contend with an additional $2 billion in interest costs and high cash burn. Non-existent revenues and negative FCF are already sizeable headaches. Increasing interest costs just exacerbate bankruptcy risks. A Weird StrategyWhen you hear from AAL execs these days, you often wonder if we're in the middle of 1992's Unforgiven. In that excellent western epic, Clint Eastwood essays the role of an aging gunslinger who's brought in for one last round with a gang of bandits.When Chief Revenue Officer Vasu Raja says things like, "swing for the fences," or "we're going to go bold" in response to the virus, he doesn't instill a lot of confidence in equity investors. Instead, these words inspire fear that the management is in over its head.During the company's Q1 earnings call, Raja said that the airline did not have plans to shutter any hubs. This comes in sharp contrast to the strategies employed by other carriers that are flying fewer routes and streamlining operations to save costs.Raja says the strategy will help keep morale up, a perplexing statement. Won't confidence take more of a beating if the company can't make interest payments and heads into bankruptcy proceedings? In that situation, loyal employees will lose their jobs, and investors will be left with nothing as AAL folds under a mountain of debt.This "go big or go home" strategy is worrying shareholders and analysts alike. Investors want to see management taking result-oriented steps that can reduce cash burn. They want to see debt go down, older fleets retired and a substantial reduction in operating costs. There is nothing to suggest that operating low-income yielding hubs will lead to long-term profits or heightened morale. Final Take on AAL StockAirline traffic will take time to return to normal levels. Even if we have a Covid-19 vaccine by the fall, you cannot immunize large swathes of the population overnight. However, that's not the problem here. AAL management has chosen to go down a reckless route in response to the pandemic. Instead of hunkering down, it has decided to keep costs up and pile on debt. That is not a prudent strategy.The airline doesn't have the cash to keep paying the debt in a prolonged slowdown. It's looking more and more likely that it will have to file for Chapter 11 sometime in the future. None of its debt matures before 2022, but high-interest costs could force its hand.It's high noon for AAL stock, and the carrier has come to the showdown without any bullets.Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. He has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio. He does not directly own the securities mentioned above. More From InvestorPlace * Why Everyone Is Investing in 5G All WRONG * America's 1 Stock Picker Reveals His Next 1,000% Winner * Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company * Radical New Battery Could Dismantle Oil Markets The post Bankruptcy Risks Mount for Embattled American Airlines appeared first on InvestorPlace.

    from Yahoo Finance https://ift.tt/2DlqEkh

  • Here’s How GE Stock Could Almost Double in 18 Months

    Here’s How GE Stock Could Almost Double in 18 MonthsGeneral Electric (NYSE:GE) fell in late July after the industrial giant reported second quarter numbers which were, quite frankly, pretty ugly and GE stock paid the price.Source: testing / Shutterstock.com Revenues fell 20%. Industrial profit margins fell more than 10 points. Free cash flow came in at negative $2.1 billion.It was an ugly print.InvestorPlace – Stock Market News, Stock Advice & Trading TipsAnd Wall Street reacted appropriately, selling GE stock back to essentially its lowest levels since the 1990s.I think it's time to buy the dip. Mostly because I believe a Covid-19 vaccine is just around the corner, and that widespread distribution of that vaccine among the general populous will spark a broad rebound in most of GE's industrial end-markets in 2021. * 10 Gaming Stocks That Will Power Through the New Normal This rebound will converge on what is a deeply discounted valuation on GE stock, and ultimately cause shares to nearly double from here.Here's a deeper look. A Covid-19 Vaccine and GE StockWith respect to Covid-19, I believe the base case scenario is that we get at least one vaccine (and maybe multiple) approved by October or November, and broad population distribution of those vaccines by early 2021.My bullishness here comes to down a few things.One, the world has put all of its resources into finding a vaccine. The result is that we now have over 140 pre-clinical Covid-19 vaccines out there, 19 Covid-19 vaccines in Phase I trials, 12 vaccines in Phase II trials and 5 vaccines in Phase III trials.The notable vaccines in the later stages of development – such as those from Moderna (NASDAQ:MRNA) and AstraZeneca (NYSE:AZN) – have passed their trials with flying colors.In other words, the world put all of its resources into finding a Covid-19 vaccine. We now have several which look like they are on the cusp of being approved. That's the power of human innovation. And human innovation has a long, several-thousand-year track record of trumping crisis after crisis.Two, health experts are now starting to say that October/November vaccine approval is both plausible and even likely. Most notably, Dr. Anthony Fauci, who is widely perceived as the world's foremost authority on Covid-19, recently said that a Covid-19 vaccine is possible in October, and likely in November.Three, mass production of a vaccine has already started. Pretty much everyone, ranging from the companies making the vaccines to the U.S. government, believes that we will have, at least, several hundred million vaccine doses ready to go by early 2021.All in all, I think it's quite likely that we get a Covid-19 vaccine by October or November, and that such a vaccine is easily and broadly accessible to the U.S. public by early 2021. Big Rebound Potential in the Industrial EconomyEasy and broad access to a Covid-19 vaccine will greatly diminish the public threat of coronavirus and spark rapid economic activity normalization.This is especially true in many of General Electric's industrial end-markets.Consumers will start flying again. Airlines will start ordering planes again. And GE's Aviation unit will rebound meaningfully.The healthcare industry will normalize. Covid-19 hyper-focus will give way to a return to normal procedures and surgeries. This return to normal will create elevated demand for many of the services and products which GE Healthcare sells to hospitals across the world.The Power business will rebound, too, as broader industrial economic activity recovers.All in all, GE's 2021 will be a lot different than its 2020. Revenues will rebound sharply. Margins will recover to and above 2019 levels (thanks, in part, to management's commitment to slimming operations and gutting the expense model).Ultimately, profits will rebound in a big way.So will GE stock. General Electric Stock Is Too CheapGE stock is dirt cheap today.The stock trades at 0.6-times trailing sales. That's low. The stock's five-year-average trailing sales multiple is closer to 1.5.Given this depressed valuation base, it's not hard to see GE stock doubling from here over the next 18 months.Here's the math.GE's revenues were $95 billion in 2019. They'll collapse this year. Rebound in 2021. And then likely recover to 95% of 2019 levels by 2022 as GE's industrial end-markets get "back to normal". Assuming so, that puts GE's 2022 revenues at $90 billion.Profit margins were around 10% in 2019. Again, they'll collapse this year. Rebound in 2021. And almost fully recover to 2019 levels by 2022.On those assumptions, I think GE can do about about 80 cents in earnings per share by 2022. Throw a typical industrials sector 15-times forward earnings multiple on that. You get a 2021 price target for GE stock of $12.That's nearly 100% above where shares trade today. Bottom Line on GE StockGE stock is depressed today because the global industrial economy is depressed.But, if a Covid-19 vaccine is broadly distributed to the general public in 2021, then global industrial economic activity will rebound sharply over the next 18 months. As it does, GE's core Aviation, Healthcare and Power businesses will post huge growth over the next two years.Alongside that huge growth, GE stock could fly higher. By as much as 100% given today's depressed valuation.Luke Lango is a Markets Analyst for InvestorPlace. He has been professionally analyzing stocks for several years, previously working at various hedge funds and currently running his own investment fund in San Diego. A Caltech graduate, Luke has consistently been rated one of the world's top stock pickers by various other analysts and platforms, and has developed a reputation for leveraging his technology background to identify growth stocks that deliver outstanding returns. Luke is also the founder of Fantastic, a social discovery company backed by an LA-based internet venture firm. As of this writing, he did not hold a position in any of the aforementioned securities. More From InvestorPlace * Why Everyone Is Investing in 5G All WRONG * America's 1 Stock Picker Reveals His Next 1,000% Winner * Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company * Radical New Battery Could Dismantle Oil Markets The post Herea€™s How GE Stock Could Almost Double in 18 Months appeared first on InvestorPlace.

    from Yahoo Finance https://ift.tt/2EI1RaP

  • Notable Insider Buys: AT&T, Kinder Morgan And More

    Notable Insider Buys: AT&T, Kinder Morgan And More* Insider buying can be an encouraging signal for potential investors during periods of uncertainty. * The executive chair of an energy infrastructure firm has returned to the buy window. * None of the featured stocks saw a gain in the past week.Conventional wisdom says that insiders and 10% owners buy shares of a company for one reason — they believe the stock price will rise and they want to profit from it. So insider buying can be an encouraging signal for potential investors, particularly during periods of uncertainty.Insiders continued to add shares despite overall market volatility and economic uncertainty. Here are some of the most noteworthy insider purchases reported in the past week.Kinder Morgan The Kinder Morgan Inc (NYSE: KMI) executive chair of the board, Richard Kinder, has resumed his buying. He picked up 300,000 more shares of this Houston-based energy infrastructure giant early last week at $14.10 to $14.15 each. That totaled more than $4.24 million. Kinder was a frequent buyer of shares last year.CNBC's Jim Cramer was negative on Kinder Morgan recently. The stock retreated about 1% last week and was last seen at $14.10 a share. That is within Kinder's latest purchase price range. The share price is up less than 12% since the year-to-date low during the pandemic panic-selling back in March, which is about the time of his last listed share purchase.BlackstoneA 10% owner of Blackstone Group Inc (NYSE: BX) has indirectly acquired 200,000 shares of this asset management firm for $17.00 apiece. That totaled $3.40 million and came in the wake of an in-line earnings report that prompted target price hikes at some analysts.There was also bullish options activity on Blackstone recently. The shares closed down more than 4% for the week to $53.28 a share. The share price is almost 5% lower since the beginning of the year but up more than 44% since the year to date low in March. The stock has a consensus target price of $61.29.AT&TA director purchased 100,000 AT&T Inc. (NYSE: T) shares via trust recently. Prices ranged from $29.615 to $29.83 a share, and the total for the transaction came to almost $2.97 million. That director, who is board chair at Seagate Technologies, now has an AT&T stake of 300,000 shares.Jim Cramer also commented on this telecom's cash flow and dividend recently. Its shares ended last week essentially flat at $29.58, which is just below the above purchase price range. The stock is about 4% higher since its year-to-date low in March, and it has a $32.50 consensus price target.See also: Insider Buys And Sells: What To Know And How To Leverage Using Benzinga ProNote that there was some amount of insider buying at eHealth, Inc. (NASDAQ: EHTH), Intel Corporation (NASDAQ: INTC) and Synchrony Financial (NYSE: SYF) reported last week as well.At the time of this writing, the author had no position in the mentioned equities.Keep up with all the latest breaking news and trading ideas by following Benzinga on Twitter.See more from Benzinga * Barron's Picks And Pans: AutoNation, Overstock.com, SPACs And More * Benzinga's Bulls And Bears Of The Week: Apple, Boeing, Facebook And More * Notable Insider Buys: Guess, FedEx And More(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

    from Yahoo Finance https://ift.tt/3k5keXc

  • Exclusive: Eastman Kodak top executive got Trump deal windfall on an ‘understanding’

    Exclusive: Eastman Kodak top executive got Trump deal windfall on an 'understanding'Eastman Kodak Co on Monday granted its executive chairman options for 1.75 million shares as the result of what a person familiar with the arrangement described as an “understanding” with its board that had previously neither been listed in his employment contract nor made public. One day later, the administration of President Donald Trump announced a $765 million financing deal with Eastman Kodak, and in the days that followed the stock soared, making those additional options now held by executive chairman Jim Continenza worth tens of millions. The decision to grant Continenza options was never formalized or made into a binding agreement, which is why it was not disclosed previously, according to the person familiar with the arrangement.

    from Yahoo Finance https://ift.tt/30iq3sv

  • Top brokers name 3 ASX shares to buy next week

    Brokers trading shares

    Last week saw a large number of broker notes hitting the wires once again. Three buy ratings that caught my eye are summarised below.

    Here’s why brokers think investors ought to buy them next week:

    Aristocrat Leisure Limited (ASX: ALL)

    According to a note out of UBS, its analysts have retained their buy rating and $29.60 price target on this gaming technology company’s shares. The broker notes that an industry survey shows that Aristocrat’s gaming machine sales fell less than expected during the June quarter. It also shows that its games are in demand, with three out of the top five premium leased machines belonging to Aristocrat. Though, it has warned that its second half earnings could underwhelm due to casino closures. I agree with UBS and believe Aristocrat Leisure would be a great long term investment option.

    Corporate Travel Management Ltd (ASX: CTD)

    A note out of Ord Minnett reveals that its analysts have upgraded this corporate travel company’s shares to a buy rating with an improved price target of $12.97. According to the note, Ord Minnett believes it has more than enough liquidity to ride out the pandemic. It notes that this is a luxury that many of its competitors do not have. In light of this, the broker appears to believe Corporate Travel Management could come out of the crisis in a stronger position. Although I think Ord Minnett makes some great points, I intend to wait for the crisis to pass before considering an investment.

    CSL Limited (ASX: CSL)

    Another note out of UBS reveals that its analysts have retained their buy rating and $331.00 price target on this biotherapeutics company’s shares ahead of its full year results in August. According to the note, the broker expects CSL to deliver a 15% increase in profit in FY 2020. And while it notes that CSL is facing headwinds in FY 2021, it appears optimistic that its vaccine sales will offset some of this. I agree with UBS on this one as well and would be a buyer of its shares.

    Legendary stock picker names 5 cheap stocks to buy right now

    Motley Fool resident tech stock expert Dr. Anirban Mahanti has stumbled upon five stocks he believes could be some of the greatest discoveries of his investing career.

    These little-known ASX stocks are growing like gangbusters, yet you can buy them today for less than $5 a share. Click here to learn more.

    See these 5 cheap stocks

    More reading

    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. 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 Top brokers name 3 ASX shares to buy next week appeared first on Motley Fool Australia.

    from Motley Fool Australia https://ift.tt/33i9wGU