There is a belief among conservative retail investors that the largest publicly listed companies produce the most reliable returns.

They got to the top by ruling their market and have plenty of cash – so it makes sense, right? The cliché “too big to fail” comes to mind.

Paul Moore, chief investment officer at Sydney’s PM Capital, has now shattered that theory.

Moore this week compared the top 10 biggest companies by market capitalisation at the turn of each decade since the 1980s. And he found the turnover in the club mind-blowing.

“It is rare for a stock to be in the top 10 at the start of one decade and to still be there at the start of the next decade ten years later,” he said on Livewire.

“For example, in 1990 there were two survivors from the 1980 list, and in 2010 there were three survivors from the 2000 list. Since 1980 there have been no more than 30% ‘survivor’ stocks.”

Top 10 shares by market capitalisation
1980	1990	2000	2010	2020
IBM (NYSE: IBM)	Nippon Telegraph And Telephone Corp (TYO: 9432)	Microsoft Corporation (NASDAQ: MSFT)	Exxon Mobil	Apple
AT&T Inc (NYSE: T)	Bank of Tokyo-Mitsubishi	General Electric	PetroChina Company Limited (SHA: 601857)	Microsoft
Exxon	Industrial Bank of Japan	NTT Docomo Inc (TYO: 9437)	Apple Inc (NASDAQ: AAPL)	Amazon.com Inc (NASDAQ: AMZN)
Standard Oil	Sumitomo Mitsui Financial Group Inc (TYO: 8316)	Cisco Systems Inc (NASDAQ: CSCO)	BHP Group Ltd (ASX: BHP)	Facebook Inc (NASDAQ: FB)
Schlumberger NV (NYSE: SLB)	Toyota Motor Corp (TYO: 7203)	Walmart Inc (NYSE: WMT)	Microsoft	Alphabet Inc Class C (NASDAQ: GOOG)
Royal Dutch Shell Plc (AMS: RDSA)	Fuji Bank	Intel Corporation (NASDAQ: INTC)	Industrial And Commercial Bank Of China (SHA: 601398)	Alphabet Inc Class A (NASDAQ: GOOGL)
Mobil	Dai-Ichi Kangyo Bank	Nippon Telegraph And Telephone Corp	Petroleo Brasileiro SA Petrobras (BVMF: PETR4)	Johnson & Johnson (NYSE: JNJ)
Atlantic Richfield	IBM	Exxon Mobil Corporation (NYSE: XOM)	China Construction Bank (SHA: 601939)	Visa Inc (NYSE: V)
General Electric Company (NYSE: GE)	UFJ Bank	Lucent Technologies	Royal Dutch Shell Plc (AMS: RDSA)	Nestle
Eastman Kodak Company (NYSE: KODK)	Exxon	Deutsche Telekom AG (ETR: DTE)	Nestle SA (SWX: NESN)	Procter & Gamble Co (NYSE: PG)
Survivors from previous decade:	2	2	3	3
Source: PM Capital; Table created by author

So what does this mean?

The frequent turnover means a company currently among the largest has very little upside. In fact, it will be a struggle to just maintain the status quo and stay one of the largest.

So why would any investor put money into a company that has few upward prospects?

“An investor is more likely to pick the top for those stocks than get in at the bottom or at reasonable valuations,” Moore said.

“Smart investors may want to consider how exposed they, and their managed funds, are to the top 10 stocks.”

Buying up these giants goes against the classic axiom of not letting past performance dictate investment decisions.

The rise of index funds and exchange-traded funds (ETFs) has exacerbated the problem. The most-owned stocks become even more overheated because passive funds are obliged to buy into them. 

Then they become larger and the funds have to buy even more – it’s a self-feeding cycle.

Which companies will make the top 10 in 2030?

Moore said wise investors would try to figure out the top 10 of the next decade.

And the arrival of the coronavirus pandemic and market crash presented a “once-in-a-lifetime” chance to pick out sunken “quality cyclical and industrial” shares.

“For example, commodity stocks post COVID-19 were at an all-time low compared to the rest of the market,” he said.

“Stocks like Teck Resources Ltd (NYSE: TECK) and Freeport-McMoRan Inc (NYSE: FCX) have gained significant ground since the March lows but their valuations remain reasonable when considered against their long term outlooks.”

The winning shares in the next 10 years would be those that drive “secular trend shifts”, such as copper usage in global electrification, according to Moore. Those positioned for the forthcoming cyclical economic recovery would do well too.

“While they are unlikely to all end up in the top 10 of the MSCI World Index, we believe they will grow at a greater rate than the overall market and provide adequate investment returns.”

More reading

• ASX 200 Weekly Wrap: ASX 200 on track for a top month
• The Aussie dollar is near a 2-year high. Here’s what it means for ASX shares
• These ASX dividend shares have been named as buys
• 10 most searched shares in Australia
• Better buy: Alibaba vs. Amazon

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Tony Yoo owns shares of Alphabet (A shares) and Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Facebook, Microsoft, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Intel and Johnson & Johnson and recommends the following options: long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short January 2022 $1940 calls on Amazon, and long January 2022 $1920 calls on Amazon. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and Facebook. 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 least two experts think the Bapcor Ltd (ASX: BAP) share price is a buy.

An overview of Bapcor

According to the ASX, Bapcor has a market capitalisation of around $2.4 billion.

Bapcor is the largest auto parts business in Australasia. It has a variety of businesses. Burson Auto Parts provides parts quickly to mechanics across the country. It has a variety of wholesale specialist businesses including AAD, it also recently acquired the Commercial Truck Parts Group which provides parts for light and heavy commercial trucks. It has a retail segment with its key business being Autobarn. Bapcor has service businesses such as Midas and ABS. Finally, the company has a growing presence in Asia, with a network in Thailand.

Recent trading update

The company recently gave a trading update about how it performed in the first quarter of FY21.

It reminded investors that government restrictions were imposed in Victoria and Auckland which had a negative impact on trading operations in those places. However, despite those impacts, Bapcor said its businesses have continued to perform extremely well.

Burson Trade revenue was up 10%, with same store sales growth of 7.7% – it was up 17% excluding Victoria. New Zealand revenue grew by 6% on same store sales growth of 4%. Retail revenue soared 47% higher, with Autobarn same stores sales going up 36%. Finally, specialist wholesale revenue went up 45%, though excluding acquisitions revenue went up 18%. Overall, group revenue went up by 27%.

Bapcor CEO Darryl Abotomey commented in the company’s trading update about the company’s defensive qualities: “The automotive market is a resilient industry and historically has performed strongly in difficult economic circumstances. Recent trading is another example of its resilience assisted by the increase in sales on second hand cars, reduction in use of public and shared transport modes as well as government stimulus. We envisage that the impacts of COVID-19, including the expected increase in domestic tourism and increased use of vehicles and will continue to drive the Bapcor businesses.”

What the experts think of the Bapcor share price

The WAM investment team at WAM Capital Limited (ASX: WAM) said that Bapcor has benefited from an increase in domestic travel, reduced usage of public transport and increased second-hand car sales. WAM Capital said the ASX share has a strong balance sheet and it believes it’s well placed to make earnings accretive acquisitions.

At the end of October 2020, Bapcor was one of the 20 largest positions in the WAM Capital portfolio.

The Motley Fool Dividend Investor rates the Bapcor share price as a buy. The team recently commented on Bapcor’s trading update, with the following commentary:

“Bapcor’s business tends to show strong resilience even in weak economic environments, and the last few months have shown that is again the case. Its strong sales are — in part — thanks to the increase in sales of second hand cars, reduction in public transport and government initiatives such as Job Keeper and other support packages.

A reason for the strong first quarter is pandemic-related and, for this reason we think it would be a mistake to extrapolate future performance based on the growth rates of the last few months. Nevertheless, it is pleasing to see the company is capitalising on current tailwinds within its industry.

According to Commsec estimates, at the current Bapcor share price it’s trading at under 18x FY23’s estimated earnings. Bapcor currently offers a trailing grossed-up dividend yield of 3.5%.

More reading

• Wilson Asset Management thinks these 2 ASX shares are a buy
• 2 rapidly growing ASX shares rated as buys
• Wilson Asset Management (WAM) thinks these 2 ASX shares are a buy
• Top fundie, Wilson, names ASX shares to buy
• ASX 200 Weekly Wrap: ASX continues to hit post-COVID highs

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

The post Is the Bapcor (ASX:BAP) share price a buy? appeared first on Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) made it 4 out of 4 weeks in the green last week, as the index reached yet another post-March high. It was a week of gentle ups and downs for the ASX 200, which had climbed as high as 6,700 points in intra-day trading on Wednesday before retreating away from these highs on Thursday and Friday.

These gains, coming after what have been some spectacular rises over the preceding weeks, have put the ASX 200 on track to have one of its best months of the year so far (barring a cataclysmic day of trading today). The increases also briefly wiped out the year’s losses mid week, and put the ASX 200 ahead for the year for the first time since late February. But alas, it was not to last, for at Friday’s close, the index remains down 1.3% year to date.

Even so, it has been a spectacular month. Since Friday 30 October, the ASX 200 has notched up gains worth 11.4%. That’s a pretty remarkable feat considering the index usually delivers, on average, an annual return far lower than that. At Friday’s close, the ASX 200 has now delivered a rise of more than 45% since the lows of 23 March. We still remain 7.8% away from the all-time high of 7,162 points we saw back on 20 February.

However, we can’t say the same for the United States markets, which, last week, broke an all-time high – with the Dow Jones Industrial Average Index (DJX: .DJI) crossing the 30,000-point threshold for the first time in history.

Wine and cheese?

But, back to the ASX. What were some of the big stories of the week? Well, perhaps the biggest event of note happened on Friday, when the Chinese government announced that, effective 28 November, tariffs (import taxes) would be placed on all Australian wines over the weekend. This decision was supposedly made in response to alleged ‘dumping’ of Aussie wines into the Chinese market at uncompetitive pricing. That’s an allegation the Australian government denies is valid, according to reporting in the Australian Financial Review (AFR) on Friday. However, it didn’t stop shares of the ASX’s biggest wine producer, Treasury Wine Estates Ltd (ASX: TWE) from going into freefall. The Treasury Wine share price plunged 11.25% on Friday to $9.23 before the company quickly placed it in a trading halt, which will be effective until 1 December.

In other news last week, we also got wind that Bega Cheese Ltd (ASX: BGA)  has successfully purchased Lion Dairy & Drinks from Japanese giant Kirin Holdings Co Ltd for $534 million. This portfolio includes well-known brands like Juice Brothers, Farmers Union, Big M, Pura, Yoplait, Dairy Farmers and Dare. Bega picked up the iconic Vegemite brand from US giant Mondelez International Inc (NASDAQ: MDLZ) back in 2017. Investors enthusiastically embraced the move when it was announced on Friday, with the Bega share price rising 7.11% to $5.42 in response.

How did the markets end the week?

Well. The ASX 200 started the week at 6,539.2 points and finished up at 6,601.1 points for a healthy week-to-week gain of 0.95%. Monday kicked things off with a 0.3% gain, which was supplemented on Tuesday with another 1.3% on top. Wednesday added 0.6%, but Thursday and Friday saw the mood dampen for ASX investors, delivering 0.7% and 0.53% losses respectively. Those 2 days were only the fifth and sixth days of losses in November so far. However, it wasn’t enough to break the ASX 200’s winning streak, and the index finished up in the green, making it 4 out of 4 weeks of gains.

Meanwhile, the All Ordinaries Index (ASX: XAO) also had a strong week, rising from 6,739.9 points to 6,816.8 points, a week-to-week gain of 1.14%.

Which ASX 200 shares were the biggest winners and losers?

In our most salacious segment, we look at the shares that topped and bottomed the ASX 200 charts the previous week. So put the kettle on while we start with the worst-performing ASX 200 shares from last week:

Worst ASX 200 losers	% loss for the week
Virgin Money UK (ASX: VUK)	(12.64%)
Megaport Ltd (ASX: MP1)	(9.71%)
Northern Star Resources Ltd (ASX: NST)	(8.41%)
Pro Medicus Limited (ASX: PME)	(6.82%)

Last week’s wooden spoon went to British bank, Virgin Money UK. Investors evidently weren’t too impressed with the company’s full-year results, which were released last week, and included a 77% collapse in net profits.

Data company, Megaport, was also in the wars, although this move appears to be driven by shifting sentiment rather than concrete numbers or any market announcements out of the company.

Gold miner, Northern Star, was also out of favour last week. Like all ASX gold miners, money has been shifting away from Northern Star shares as demand for ‘save haven’ assets like gold dries up in the expectation of a successful COVID-19 vaccine.

Let’s now turn to last week’s winners:

More reading

• Is the Westpac (ASX:WBC) share price a buy?
• These are the 10 most shorted shares on the ASX
• 3 ASX dividend shares with 5%+ yields to buy today
• 5 things to watch on the ASX 200 on Monday
• Top brokers name 3 ASX shares to sell next week

Sebastian Bowen owns shares of Mondelez International, National Australia Bank Limited, Newcrest Mining Limited, and Telstra Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends MEGAPORT FPO and Pro Medicus Ltd. 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 Macquarie Group Limited, Telstra Limited, and Treasury Wine Estates Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET, Transurban Group, Wesfarmers Limited, and Woolworths Limited. The Motley Fool Australia has recommended MEGAPORT FPO and Pro Medicus 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 ASX 200 Weekly Wrap: ASX 200 on track for a top month appeared first on Motley Fool Australia.

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Is the Westpac Banking Corp (ASX: WBC) share price a buy? One fund manager from Pengana Capital Group Ltd (ASX: PCG) thinks that it is.

What’s Westpac?

Westpac is one of the biggest ASX banks. Indeed, it’s one of the biggest companies in Australia.

Some readers may not know that Westpac operates several other retail brands including RAMS, Bank of St George and Bank of Melbourne.

What has happened recently with the bank?

The Westpac share price has gone up by almost 18% since 4 November 2020, with news of the high effective rate of the Moderna vaccine and the BioNTech-Pfizer vaccine coming during the last few weeks.

Whilst it’s still down 21% from where it was on 21 February 2020, it has actually risen 45% since the COVID-19 crash bottom of 23 March 2020.

It was at the start of this month (November) that the company reported its FY20 result. That seems like a long time ago, it was just before the US election.

Westpac reported that its cash earnings fell by 62% to $2.61 billion and statutory net profit after tax (NPAT) dropped by 66% to $2.29 billion. Excluding notable items, cash earnings still fell by 34% to $5.23 billion.

The big four ASX bank said that its net interest margin (NIM), which measures how much profit a bank makes from its loans, fell by 4 basis points to 2.08%.

Its common equity tier 1 (CET1) capital ratio was 11.13%, which was above the Australian Prudential Regulation Authority (APRA) benchmark of 10.5% to be unquestionably strong.

The bank said at that 28 October 2020, $16.6 billion of Australian home loans were being deferred (which is represented by 41,000 mortgage accounts). This has reduced from $54.7 billion which was represented by 146,000 mortgage accounts.

It also had $1 billion in Australian small business loans in deferral (represented by 4,300 small business customers). This has reduced from $10.1 billion.

Westpac did pay a fully franked final dividend of 31 cents per share. At the current Westpac share price that equates to a grossed-up dividend yield of 2.2%.

Why does Pengana think the Westpac share price is a buy?

Pengana fund manager Rhett Kessler revealed that his fund was increasing its exposure to the banks.

He said there are a number of reasons to want to increase exposure to the banks.

He thinks the big banks, like Westpac, may benefit from a meaningful reduction of the loan deferrals. Banks can grow from accelerated loan growth supported by low interest rates and first homeowner support. Westpac and other banks could be beneficiaries from the supportive federal budget, improving housing finance approvals and house prices holding up better than expected. The final reason to like the banks is that they may have lower than anticipated loss provisioning.

Pengana continues to focus on companies that have resilient business models, robust balance sheets, competent management and are available at a reasonable price. It also focuses on owning businesses that have demonstrated a track record of “having the power” in their various stakeholder relationships.

According to earnings estimates on Commsec, the Westpac share price is valued at 12x FY23’s estimated earnings. The Commsec estimate for Westpac’s dividend in FY23 is $1.20 per share, which would equate to a grossed-up dividend yield of 8.4%.

More reading

• ASX 200 Weekly Wrap: ASX 200 on track for a top month
• Which of these ASX bank shares offers the highest dividend?
• The real earnings growth driver for ASX bank stocks in FY21 isn’t what you think
• CBA and Zip were among the most traded shares on the ASX last week
• Why Origin, Qantas, Webjet, & Westpac shares are storming higher

Motley Fool contributor Tristan Harrison 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 Is the Westpac (ASX:WBC) share price a buy? appeared first on Motley Fool Australia.

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Every Monday I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Webjet Limited (ASX: WEB) remains the most shorted share on the ASX after its short interest lifted slightly to 13.3%. Short sellers are not giving up on this online travel agent despite a surge in its share price this month thanks to COVID-19 vaccine optimism.
• Western Areas Ltd (ASX: WSA) has seen its short interest slide to 11%. Short sellers have been targeting the nickel producer after a weak start to the financial year and lower than expected grades led to management downgrading its production guidance.
• Myer Holdings Ltd (ASX: MYR) has seen its short interest remain flat at 9.7%. Although there is currently takeover speculation surrounding this department store operator, it hasn’t scared off short sellers just yet. They appear to believe Myer will struggle in the current operating environment.
• Speedcast International Ltd (ASX: SDA) still has short interest of 9.4%. The communications satellite technology provider’s shares remain suspended while it undertakes a recapitalisation.
• InvoCare Limited (ASX: IVC) has short interest of 8.6%, which is down week on week yet again. A number of short sellers appear to have been closing positions after the funerals company announced acquisitions in the pet cremation industry.
• Inghams Group Ltd (ASX: ING) has 8.3% of its shares held short, which is flat week on week. Although the poultry company revealed an improvement in its performance in FY 2021, some short sellers aren’t giving up on this trade just yet.
• Mesoblast Limited (ASX: MSB) has seen its short interest remain flat at 8.3%. Unfortunately for short sellers, the Mesoblast share price continued to surge higher last week. Investors have been buying its shares after it announced a major deal with pharma giant Novartis that could be worth upwards of US$1.25 billion.
• Metcash Limited (ASX: MTS) has seen its short interest rise to 8.2%. Short sellers appear to believe the wholesale distributor isn’t performing as well as you might expect during the pandemic. We won’t have to wait long to find out, its half year results are due next week.
• Tassal Group Limited (ASX: TGR) has entered the top 10 with short interest of 8.1%. Short sellers don’t appear to believe management will deliver on its earnings growth guidance in FY 2021 due to COVID headwinds.
• Flight Centre Travel Group Ltd (ASX: FLT) has short interest of 8.1%. Short sellers have been closing positions amid an improving outlook in the travel sector due to the COVID vaccines.

More reading

• Top brokers name 3 ASX shares to sell next week
• Is the Webjet (ASX:WEB) share price a buy today?
• These were the best performing ASX 200 shares last week
• ASX 200 drops on Friday
• Why Beach, Bravura, Flight Centre, & Treasury Wine shares are dropping lower

Motley Fool contributor James Mickleboro 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 and InvoCare 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 These are the 10 most shorted shares on the ASX appeared first on Motley Fool Australia.

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With interest rates continuing to slide, it has become almost impossible for income investors to generate a sufficient level of income from traditional interest-bearing assets.

The good news is that the Australian share market is home to a large number of dividend shares offering notably better yields.

Three that come highly rated are listed below. Here’s what you need to know about them:

Aventus Group (ASX: AVN)

Aventus is the owner and operator of 20 large format retail parks across Australia and counts major retailers such as ALDI, Bunnings, Officeworks, and The Good Guys as tenants. Its high weighting to everyday needs has been a huge positive this year and has allowed it to collect the majority of its rent as normal despite the pandemic.

Analysts at Goldman Sachs have a buy rating and $2.76 price target on its shares. They also estimate that the current Aventus share price currently offers a forward 6.1% dividend yield.

Fortescue Metals Group Limited (ASX: FMG)

Fortescue is one of the world’s leading iron ore producers. It has world class, ultra-low cost operations which have been generating high levels of free cash flow for many years. This is particularly the case this year, with iron ore price climbing to US$123.63 a tonne on Friday. This compares to Fortescue’s current C1 costs of US$12.74 per wet metric tonne.

At present, Macquarie has an outperform rating and $20.00 price target on its shares. It is forecasting a $1.64 per share fully franked in FY 2021. Based on the current Fortescue share price, this equates to a massive 8.8% dividend yield.

Telstra Corporation Ltd (ASX: TLS)

This telco giant has an increasingly positive outlook thanks to the easing of the NBN headwind, the arrival of 5G internet, and its T22 strategy. The latter is cutting costs and simplifying its business. Management also announced provisional plans to split into three separate entities. This is expected to unlock value for shareholders.

Credit Suisse appears to be a fan of its plan and recently put an outperform rating and $3.85 price target on its shares. It is also expecting the company to maintain its fully franked 16 cents per share dividend for the foreseeable future. Based on the latest Telstra share price, this represents a 5.1% dividend yield.

More reading

• The Telstra (ASX:TLS) dividend yield is 8 times greater than term deposits
• Telstra faces $50 million fine for ‘unconscionable conduct’
• 2 ASX dividend shares with 6%+ yields to buy
• Here’s why this broker says the Telstra (ASX:TLS) share price is cheap
• 2 cheap ASX shares to buy right now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended AVENTUS RE UNIT. 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 ASX dividend shares with 5%+ yields to buy today appeared first on Motley Fool Australia.

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Respected fund manager Wilson Asset Management (WAM) has recently identified two ASX shares that it owns in its portfolio.

WAM operates several listed investment companies (LICs). Two of those LICs are WAM Capital Limited (ASX: WAM) and WAM Research Limited (ASX: WAX).

There’s also one called WAM Leaders Ltd (ASX: WLE) which looks at the larger businesses on the ASX.

WAM says WAM Leaders actively investors in the highest quality Australian companies.

The WAM Leaders  portfolio has delivered gross returns (that’s before fees, expenses and taxes) of 9.9% per annum since inception in May 2016, which is superior to the S&P/ASX 200 Accumulation Index average return of 6.4%.

These are the two ASX shares that WAM outlined in its most recent monthly update:

BlueScope Steel Limited (ASX: BSL)

BlueScope Steel is the third largest manufacturer of painted and coated steel products globally. According to the ASX, BlueScope has a market capitalisation that’s getting close to $9 billion.

WAM pointed out that in October, the ASX share announced that it expects first half FY21 earnings before interest and tax (EBIT) of around $340 million, which would be a 30% increase on the prior period.

The fund manager explained: “Australian steel products and the Asia and North America building products are expected to deliver improved results. BlueScope has benefited from monetary and fiscal stimulus globally, which has led to increased infrastructure spend from governments, strong demand for steel domestically and in Asia and the recovery of the US automotive industry, which has led to steel spreads continuing to push higher globally.”

Further to that, BlueScope Steel managing director and CEO Mark Vassella commented: “All operating segments are performing well and momentum has continued to build as we approach the end of the first half of FY21. Residential alterations and additions activity, demand for detached new housing, and growth in demand for e-commerce warehouse and logistics facilities are all robust and US automotive industry demand is recovering strongly.”

According to Commsec, the BlueScope Steel share price is valued at 10x FY23’s estimated earnings.

Challenger Ltd (ASX: CGF)

Challenger is a large investment manager focused on delivering annuity streams to customers, usually retirees. According to the ASX, it has a market capitalisation of close to $4 billion.

The annuity leader recently released its quarterly update for the three months to 30 September 2020. It showed a 4% increase in group assets to $89 billion and a 46% growth in annuity sales on the prior corresponding period. Funds under management (FUM) went up by 5% for the quarter, including $3.6 billion of net inflows. At the time, the company said it has made significant progress deploying the ‘life’ cash balance into higher yielding investments. Total life net inflows for the quarter were $114 million.

WAM said: “Challenger trades closely to its net tangible asset (NTA) backing and we believe there is significant value, particularly in the funds management business, that is not appreciated by the market or reflected in the underlying NTA.”

The ASX share reaffirmed its FY21 normalised net profit before tax guidance range of between $390 million and $440 million. Earnings are expected to be weighted toward the second half of FY21, reflecting the majority of rental abatements supporting life’s property tenants recognised in the first half and the progressive development of life’s cash and liquids over the year.

According to Commsec, the Challenger share price is valued at 12x FY23’s estimated earnings.

More reading

• Fund managers have been buying Galaxy Resources (ASX:GXY) and this ASX share
• ASX stock of the day: Challenger (ASX:CGF) shares up 6%
• Why BlueScope, Home Consortium, IAG, & Kogan shares are dropping lower
• BlueScope (ASX:BSL) share price on watch as takeover rumours swirl
• Revealed: Shares that’ll shoot up with a COVID-19 recovery

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger 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 Wilson Asset Management thinks these 2 ASX shares are a buy appeared first on Motley Fool Australia.

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If you’re interested in adding a little exposure to the small side of the market to your portfolio, then you might want to take a look at the shares listed below.

Here’s what you need to know about these rapidly growing ASX small cap shares:

Bigtincan Holdings Ltd (ASX: BTH)

Bigtincan is a leading provider of enterprise mobility software globally. Its software helps businesses increase their sales win rates, reduce expenditures, and improve customer satisfaction. This is achieved by pulling everything from sales content management, coaching and training, document automation, and internal communications into one intuitive, custom-tailored, sales enablement platform.

Demand has been very strong for its platform and continues to be the case today. Management recently reaffirmed that it expects annualised recurring revenue (ARR) in the range of $49 million to $53 million in FY 2021. This represents a 37% to 48% increase year on year. This is still only scratching at the surface of its $6 billion market opportunity.

Analysts at Canaccord Genuity are very positive on its outlook. They have put a buy rating and $1.40 price target on its shares. The Bigtincan share price was changing hands for $1.19 at Friday’s close.

MyDeal.com.au Limited (ASX: MYD)

MyDeal.com.au is an online retail marketplace provider that recently landed on the Australian share market following its initial public offering (IPO). It has a focus on furniture, homewares, appliances, technology, baby products, and hardware.

As with many online retailers, MyDeal has been a strong performer this year. During the first quarter of FY 2021, the company delivered gross sales growth of 317% to $56.67 million. This was driven by the accelerating shift to online shopping and a 268% increase in active customers to 669,897 compared to the prior corresponding period.

Analysts at RBC Capital Markets are positive on the company’s prospects. They initiated coverage on MyDeal with a buy rating and $1.60 price target. The broker thinks the company is at an inflection point as annualised gross transaction value exceeds $200 million and customer numbers approach 700,000.

More reading

• Why the Bigtincan (ASX:BTH) share price charged 4% higher today
• MyDeal (ASX:MYD) share price jumps 7% but tipped to go even higher
• 3 small cap ASX tech shares growing at a rapid rate
• 2 ASX small cap shares tipped for big things
• 2 ASX growth shares to buy in November

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 and recommends BIGTINCAN FPO. The Motley Fool Australia has recommended BIGTINCAN FPO. 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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On Friday the S&P/ASX 200 Index (ASX: XJO) once again finished a very positive week in a subdued manner. The benchmark index dropped 0.5% to 6,601.1 points.

Will the market be able to bounce back from this on Monday? Here are five things to watch:

ASX 200 futures pointing higher.

The Australian share market looks set to start the week on a very positive note. According to the latest SPI futures, the ASX 200 is expected to rise 39 points or 0.6% at the open. This follows a solid end to the week on Wall Street on Friday, which saw the Dow Jones rise 0.1%, the S&P 500 climb 0.25%, and the Nasdaq jump 0.9%. The S&P 500 closed at a new record high.

Oil prices mixed.

Energy producers including Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) will be on watch today after a mixed finish to the week for oil prices. According to Bloomberg, the WTI crude oil price dropped 0.4% to US$45.53 a barrel and the Brent crude oil price climbed 0.4% to US$48.18 a barrel. Despite this mixed finish, oil prices recorded their fourth successive weekly gain.

Gold price sinks lower.

Gold miners such as Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could start the week in the red after the gold price tumbled lower on Friday night. According to CNBC, the spot gold price sank 1.3% to US$1,788.1 an ounce. This was driven by optimism over the global economic recovery.

Treasury Wine to return.

The Treasury Wine Estates Ltd (ASX: TWE) share price crashed 11% lower on Friday before being placed in a trading halt. The wine company’s shares are likely to emerge from their halt this morning with a response to the Chinese Ministry of Commerce announcing tariffs on all Australian wine imports. This follows a review of the preliminary findings of an anti-dumping investigation into Australia’s wine exports. Tariffs will range from between 107% to more than 200%. In FY 2020 the company generated almost half of its earnings from the Asia market.

Zip Co annual general meeting.

The Zip Co Ltd (ASX: Z1P) share price will be one to watch today when it holds its annual general meeting. Although the buy now pay later provider has only recently released a trading update, it could still provide investors with a snapshot of how it is performing in November. A further update on its international expansion plans and progress could also be on the cards.

More reading

• 5 things to watch on the ASX 200 next week
• Are gold and bitcoin both ‘safe havens’?
• These ASX dividend shares offer yields of at least 4%
• These were the worst performing ASX 200 shares last week
• These were the best performing ASX 200 shares last week

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

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Heightened geopolitical risks across Europe and the coronavirus pandemic mean that there continues to be a threat of a second stock market crash. As such, many companies trade on low valuations that suggest investors have priced in a period of difficulty.

This could mean there are buying opportunities for investors who can look beyond short-term risks and instead focus on long-term growth potential.

Buying cheap shares and holding them for the long run has allowed investors to benefit from improving economic conditions in the past. A similar outcome could take place over the coming years.

The threat of a second stock market crash

Predicting when a stock market crash will occur is always an extremely difficult task. As this year’s market downturn showed, bear markets can come into existence with little or no prior warning. Therefore, anticipating them ahead of their occurrence is not an exact science.

However, today’s elevated risks mean that there may be a higher chance of a decline in stock prices over the coming months. Political risks in Europe remain at high levels, while the coronavirus pandemic could continue to disrupt the economic outlook over the coming months. This may lead to more difficult trading conditions for a wide range of businesses that causes investor sentiment to deteriorate.

Buying cheap shares today

The threat of a second stock market crash means that investors are demanding wider margins of safety from shares at the present time. As such, some companies are trading at prices that are significantly below their historic averages. This means that there may be buying opportunities available for long-term investors who can accept the prospect of short-term paper losses in return for gains in the coming years.

Furthermore, there is no guarantee that a market fall will occur in the near term. Certainly, the stock market is very unlikely to make uninterrupted gains in the long run. However, it could surge to new record highs on the back of fiscal and monetary policy stimulus. This could mean that today’s low valuations are extremely attractive, since they may be pricing in a market decline that does not occur for many years.

Long-term gains

Buying undervalued shares when the threat of a stock market crash is relatively high has been a profitable strategy for many years. It has enabled investors to use the market’s cycle to their advantage.

Of course, value investing may not be popular at the present time. Many investors are more focused on growth prospects for businesses across a variety of sectors. However, over time, the appeal of bargain shares is likely to be recognised by investors as the economic outlook improves. This may mean that today’s undervalued shares deliver market-beating returns that has a positive impact on your portfolio’s performance.

More reading

• Why these All Ords shares have been smashed this month
• Why these All Ords shares have almost doubled in value this month
• 2 exciting small cap ASX shares to buy
• These ASX tech shares have been tipped for big things
• Forget Bitcoin and gold’s rising prices! I’d invest money in crashing shares to retire rich

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.

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