On Tuesday the S&P/ASX 200 Index (ASX: XJO) was out of form and sank notably lower after record new COVID-19 cases spooked markets. The benchmark index fell 1.7% to 6,051 points.

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

ASX 200 expected to drop lower again.

It looks set to be another tough day of trade for the Australian share market after COVID-19 cases continue to rise globally. According to the latest SPI futures, the ASX 200 is expected to open the day 26 points or 0.4% lower. In late trade on Wall Street, the Dow Jones is down 0.7% and the S&P 500 has dropped 0.25%. Pleasingly, the Nasdaq is defying the selloff and is up 0.45%. 

Coles Q1 update.

The Coles Group Ltd (ASX: COL) share price will be one to watch this morning when it releases its first quarter sales update. Expectations are high for the supermarket giant, with Goldman Sachs forecasting supermarket same store sales growth of ~7% for the quarter. According to a note out of the investment bank, it expects total first quarter sales of $9,365 million, up 7.7% on the prior corresponding period. 

Oil prices rebound.

It could be a better day of trade for energy producers such as Oil Search Limited (ASX: OSH) and Santos Ltd (ASX: STO) after oil prices rebounded overnight. According to Bloomberg, the WTI crude oil price is up 2.3% to US$39.45 a barrel and the Brent crude oil price has risen 1.7% to US$41.15 a barrel. Oil prices rebounded after an upcoming storm forced the shutdown of energy production in the U.S. Gulf of Mexico.

ANZ takes $528 million earnings hit.

The Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price could come under pressure after it became the latest big four bank to announce notable items that will impact its upcoming results. ANZ has announced that its second half 2020 cash profit will be impacted by an after tax charge of $528 million as a result of large notable items. This is expected to impact its common equity tier one capital by approximately 5 basis points. The notable items include remediation costs and accelerated software amortisation.

Gold price pushes higher.

It could be a good day for gold miners such as Evolution Mining Ltd (ASX: EVN) and Saracen Mineral Holdings Limited (ASX: SAR) after the gold price pushed higher. According to CNBC, the spot gold price is up 0.25% to US$1,910.1 an ounce following weakness in the U.S. dollar overnight.

More reading

• ANZ (ASX:ANZ) share price on watch after revealing $528 million earnings hit
• The ASX 200 sank almost 2% today
• Why the Probiotec (ASX:PBP) share price is trading higher
• Are Coles (ASX:COL) or Woolworths (ASX:WOW) shares a better ASX dividend buy today?
• Will COVID-19’s second wave crash share markets a second time?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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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Are you looking for some small cap ASX shares to add to your watchlist? Then I would highly recommend you take a look at the ones listed below.

Here’s why I think they have a lot of potential and are worth keeping a close eye on:

Avita Medical Ltd (ASX: AVH)

The first small cap ASX share to watch is Avita Medical. It is the global regenerative medicine company behind the exciting Recell system. This system allows healthcare professionals to produce a suspension of Spray-On Skin Cells using a small sample of the patient’s own skin. This suspension contains the cells necessary to regenerate the outer layer of natural, healthy skin and is prepared and applied at the point-of-care in as little as 30-minutes. While the company has a huge market opportunity already, it is seeking to extend Recell’s use to treat vitiligo. If successful, combined, the company will have a significant runway for growth over the next decade.

Over The Wire Holdings Ltd (ASX: OTW)

Another small cap to look at is Over The Wire. It is a telecommunications, cloud, and IT solutions provider which has been growing at a solid rate in recent years. For example, in FY 2020, the company delivered revenue of $87.6 million, up 10% on the prior corresponding period. I expect more of the same from the company in FY 2021 and beyond. Especially given its recent acquisition of Digital Sense Hosting for $27 million. It is a high-quality cloud business that provides a customisable and scalable cloud offering to Enterprise and Government customers.

Readytech Holdings Ltd (ASX: RDY)

Finally, I think ReadyTech is another small cap to add to your watchlist. It is a leading provider of mission-critical people management software for educators, employers, and facilitators of career transitions. Management notes that its software represents a new way to manage the complex human journey through study, work, and career transitions. Demand has been growing for its software, leading to ReadyTech delivering a 19.1% increase in revenue to $39.3 million in FY 2020.

More reading

• The ASX 200 sank almost 2% today
• Over the Wire (ASX:OTW) share price rockets to record high on acquisition plans

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 Avita Medical Limited, Over The Wire Holdings Ltd, and Readytech Holdings Ltd. The Motley Fool Australia has recommended Avita Medical Limited, Over The Wire Holdings Ltd, and Readytech Holdings 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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Buying crashing shares to retire early may seem like a risky strategy to many investors. They may view an uncertain economic outlook as a reason to avoid stocks and instead purchase other assets such as gold following its recent price rise.

However, the long-term prospects for the stock market seem to be relatively bright. Buying a range of high-quality businesses at cheap prices could lead to impressive returns that have a positive impact on your retirement plans.

A rising gold price

Of course, a rising gold price may seem more attractive than crashing shares at first glance. The precious metal has soared to a new record high this year as a combination of low interest rates and an uncertain economic outlook have increased demand for gold.

While this trend may continue in the short run, further growth may be more limited than many investors realise. Buying any asset when it is trading close to a record high can mean there is less capital growth potential versus buying a cheaper asset. And, while economic uncertainty may continue over the coming months, the track record of the global economy shows that a return to strong growth is likely. This may cause investor sentiment towards defensive assets such as gold to weaken, while riskier assets such as shares may become more popular as investors become less risk averse.

Buying opportunities among crashing stocks

Previous global economic downturns and bear markets suggest that buying crashing shares is a sound investment strategy. Ultimately, no bear market has ever persisted indefinitely. Therefore, investor sentiment and the operating conditions for undervalued companies are likely to improve over the coming years.

Furthermore, weak investor sentiment towards the stock market means that some high-quality businesses may be grossly undervalued. Even though they have difficult near-term futures, their solid financial positions and wide economic moats mean that they are very likely to recover in the long run. As such, buying them today when they are undervalued may provide significant capital growth potential for new investors that boosts their portfolio returns.

A long-term outlook

Of course, crashing shares could keep falling over the short run. There is a very real threat of a second market crash as a result of risks such as the US election and coronavirus. They may hold back global economic growth in the coming months and weigh on investor sentiment.

However, investors who have a long time period until they will retire are likely to have sufficient time available for the stock market to mount a successful recovery.

Therefore, while paper losses cannot be ruled out in the short run, buying crashing shares today while they are cheap could be a very profitable strategy that outperforms other assets such as gold. Over time, it may boost your portfolio returns and improve your chances of enjoying an early retirement.

More reading

• ANZ (ASX:ANZ) share price on watch after revealing $528 million earnings hit
• Why the Nick Scali (ASX:NCK) share price jumped today
• Tyro Payments (ASX:TYR) share price tumbles lower following AGM update
• Here’s why the Ainsworth Game (ASX:AGI) share price gained today
• Why the Corporate Travel Management (ASX:CTD) share price sank 7.5% lower today

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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The Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price will be one to watch on Wednesday.

This afternoon it became the latest big four bank to announce notable items that will impact its upcoming results.

What did ANZ announce?

ANZ has announced that its second half 2020 cash profit will be impacted by an after tax charge of $528 million as a result of large notable items. This is expected to impact its common equity tier one capital by approximately 5 basis points.

According to the release, the notable items include remediation costs and accelerated software amortisation.

Remediation charges recognised in the second half of 2020 will be $188 million after tax. These are largely related to an acceleration of remediation programs and product reviews across the bank.

Whereas changes to the application of ANZ’s software amortisation policy have resulted in a $138 million after tax charge being recognised in the second half.

The company revealed that these changes were made to reflect the increasingly shorter useful life of various types of software assets. This has been caused by rapidly changing technology and business requirements.

What about the rest?

The remaining charges of $202 million after tax include the write-down of goodwill in ANZ’s Pacific business, the impact of AASB 9 accounting changes on its investment in PT Panin, and restructuring charges.

ANZ’s Pacific business has had its goodwill written down by $77 million, restructuring charges total $41 million, and accounting changes make up the balance.

FY 2020 totals.

These latest notable items bring ANZ’s total for FY 2020 to $1,539 million, up materially from $231 million in FY 2019.

The biggest contributor has been the impairment of its Asian businesses, which totalled $815 million for the year. After which, customer remediation is once again a thorn in the bank’s side.

This year a total of $279 million is going towards customer remediation, following $475 million a year earlier.

More reading

• Is the ANZ (ASX:ANZ) share price a buy today?
• ASX 200 Weekly Wrap: ASX snaps winning streak… just
• 3 important rules to help you build wealth
• 5 things to watch on the ASX 200 next week
• What to expect from the ANZ Bank (ASX:ANZ) full year result next week

Motley Fool contributor James Mickleboro 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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Household furniture retailer Nick Scali Limited‘s (ASX: NCK) shares had jumped 3.92% higher by today’s market close. The surge in the Nick Scali share price came after the release of the company’s AGM address to shareholders this morning.

The share price reacted positively after managing director, Mr. Nick Scali, delivered an announcement that the company has revised its earning predictions previously announced in August 2020. It now expects company earnings before interest and taxes (EBIT) and net profit after tax (NPAT) in FY21 to be materially higher than previously reported. This is on the back of strong sales orders both in-store and on the company’s online platform. 

The rise in the Nick Scali share price today erased the decline seen yesterday when the company announced a trading update.

What else moved the Nick Scali share price?

Investors drove the Nick Scali share price higher after Mr. Scali also noted in his address today that, despite the difficulties faced this year with COVID-19 restrictions, the company still managed to deliver a flat profit growth in FY20 compared to FY19.

He highlighted that when stores were re-opened in late April, sales orders jumped by 70% compared to last year as pent-up demand and working-from-home arrangements encouraged consumers to purchase more household items.

The launch of the company’s e-commerce platform in April has also brought a windfall for Nick Scali. The average sale per customer on the platform is $1,800, where high-margin items like coffee tables and bedroom furniture continue to be best sellers.

Online orders have increased by 47% for the first quarter of FY21 compared to the last quarter of FY20. Also, due to the lead time of 8-11 weeks in fulfilling orders, sales orders made in the 4Q20 will be reported in the first quarter of FY21. 

Mr. Scali mentioned that after excluding figures from physical stores closed in Melbourne and Auckland as a result of COVID-19 restrictions, in-store sales orders actually grew by 59% in the first quarter this year.

Considering this strong growth in sales, the company has revised up its NPAT growth for the first half of FY21 from 50-60% to 70-80% more than FY20.

Mr. Scali also re-iterated the company’s strategy of buying retail properties and opening stores as owner-operators, as opposed to being tenants. The opening of a store in Auckland and the buying of a new property in Adelaide bring the company’s total network to 58 stores.   

More reading

• ASX 200 was mixed today, ends down 0.2%
• Why is the Nick Scali (ASX:NCK) share price falling today?
• Why Advance NanoTek, Macquarie Telecom, Nick Scali, & Viva Energy shares are dropping lower
• 3 ASX shares poised for huge growth in FY21

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

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The Tyro Payments Ltd (ASX: TYR) share price was out of form on Tuesday and dropped lower with the rest of the market.

The payments company’s shares ended the day 2.5% lower at $3.72.

Why did the Tyro share price drop lower?

Although Tyro released its annual general meeting update today, I suspect this decline had less to do with that and more to do with a selloff of tech shares.

After all, the S&P/ASX All Technology Index (ASX: XTX) dropped a sizeable 2.8% today, compared to a 1.7% decline by the benchmark ASX 200.

What about Tyro’s update?

Tyro’s update revealed that its solid growth has continued in FY 2021 despite the pandemic.

According to the release, the company’s Payments business has maintained its merchant acquisition momentum with 33,200+ merchants on its platform at 30 September 2020. This is up 8% on the prior corresponding period.

In addition to this, despite lockdowns and restrictions, the company has delivered growth in transaction value year to date.

As of 23 October, Tyro’s transaction value stood at $6.8 billion, up 5% on the same period last year. Impressively, that’s despite the company recording a 34.5% decline in transaction value in Victoria over the period.

Finally, the company recorded eCommerce transaction value of $6.7 million for the first quarter.

Over in the Banking business, things have been a bit quieter. Loan originations to 30 September 2020 were just $0.9 million, down a massive 95% on the prior corresponding period. Deposit balances stood at $76.6 million at the end of the quarter.

Outlook.

Due to the uncertain environment, the company isn’t providing any specific profit guidance for FY 2021.

However, management did speak about the future and particularly its recent alliance with Bendigo and Adelaide Bank Ltd (ASX: BEN).

It commented: “We expect to deploy more than 26,000 Tyro terminals in calendar 2021 for the alliance, increasing our terminal fleet to just above 89,000 terminals.”

“It is our expectation that Bendigo Bank’s business customers will generate approximately $5 billion in transaction value in FY22. Our gross profit share (after gross profit share to Bendigo Bank and before operating costs) from the Bendigo Bank cohort will be approximately $19 million in FY22,” management added.

More reading

• 5 major ASX 200 events this week
• 3 star ASX shares to buy for the rest of 2020
• 3 ‘opening up’ recovery ASX shares
• Why the Tyro (ASX:TYR) share price is sinking 6% lower today
• Why IDP Education, Perseus Mining, Lovisa, & Tyro shares are dropping lower

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 Tyro Payments. 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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Ainsworth Game Technology Limited (ASX: AGI) shares closed the day up 1.8%. There looks to have been some late afternoon profit taking, with the Ainsworth share price up more than 10% only an hour before market close at at 3pm AEST. This rollercoaster followed the release of the company’s 2020 annual report to the market this morning.

Still, Ainsworth’s share price gains today while the All Ordinaries Index (ASX: XAO) lost 1.7% demonstrates the old investor axiom that it’s not so much a share market but a market of shares.

Despite today’s gains, the Ainsworth share price remains down 62% year to date.

What does Ainsworth Game Technology do?

Ainsworth Game Technology develops, manufactures, sells and maintains gaming machines, or ‘pokies’ to you and me. Headquartered in Sydney, Ainsworth has operations across New Zealand, the United States, Europe and Asia.

The company manages all facets of its product’s life cycle, from conceptualisation and design through to production, distribution, installation, service and support.

Ainsworth shares first began trading on the ASX in 2001.

What’s moving the Ainsworth share price?

Ainsworth Games’ 2020 annual report confirmed some of the negative impacts the company has been suffering due to the fallout from COVID-19. These included a 37% decline in revenues and a 46% fall in profit in North America as well as a 26% decline in revenue in Australia. Also reported was a 39% drop in revenue and 59% fall in profits across the rest of the world, excluding Latin America.

On the positive front, the company reported it has made additional progress in accelerating the monetisation of its online, real money and social gaming. Ainsworth also reported it has gone live with several leading operators in the US state of New Jersey.

Addressing the results, chair Danny Gladstone said:

Our opportunities to operate and sell new machines were inhibited [by the pandemic] as customers temporarily closed venues and cut capital expenditure programs. The Loss after Tax for the year was $43 million. On a pre currency basis and excluding one-off items, the Loss before Tax was $35 million.

We closed the year with cash on hand of $26.5 million and a net debt position of $17.5 million. This followed the payment for the acquisition of MTD assets announced in early March 2020. MTD has performed resiliently and we remain confident that this acquisition will provide good returns over coming periods.

Our balance sheet and liquidity are also in a strong position. The current financing facilities have been re-negotiated with the previous financial covenants being replaced for the remaining term to de-risk the potential for breach.

With the Ainsworth share price enjoying a 10% intraday surge and closing 1.8% higher, investors look to have mostly priced in the bad news and focused instead on the good.

More reading

• Why the Corporate Travel Management (ASX:CTD) share price sank 7.5% lower today
• The ASX 200 sank almost 2% today
• $418 million logistics deal confirms strong outlook for REITs like this one
• Do you have to pay tax on your ASX shares? – A common question answered
• Why the Atomo (ASX:AT1) share price is flying 9% higher today

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

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The worst performer on the S&P/ASX 200 Index (ASX: XJO) on Tuesday by some distance was the Corporate Travel Management Ltd (ASX: CTD) share price.

The corporate travel specialist’s shares fell almost 7.5% to $16.68.

Why did the Corporate Travel Management share price sink lower today?

As well as being caught up in the market selloff, investors were selling Corporate Travel Management’s shares following the release of its annual general meeting presentation.

At the meeting, the company released an update on its performance during the first quarter of FY 2021.

According to the release, during the first quarter, Corporate Travel Management averaged revenue of $9.6 million and an underlying earnings before interest, tax, depreciation and amortisation (EBITDA) loss of $2.4 million per month. This led to an average cash burn of $5 million per month for the period.

Pleasingly, trading conditions have been improving, with the month of September its best since COVID-19. During the month, the company’s underlying EBITDA loss reduced to $1.6 million and its cash burn lowered to $3.5 million. But judging by the share price reaction, investors may have been expecting an even stronger month.

How are its operations performing?

Management revealed that its Australian operations have been performing positively during FY 2021 and were profitable during the first quarter.

Elsewhere, the company’s European operations are close to breakeven now and its US operations are experiencing positive activity. 

Finally, its Asia operations have been struggling, but look set to be boosted by a Singapore-Hong Kong travel bubble in the near future.

Despite its cash burn, Corporate Travel Management’s balance sheet remains strong. It has $120 million net cash and an additional $181.8 million in an unused committed facility.

Travel and Transport acquisition.

The company also provided the market with an update on its acquisition of US-based Travel and Transport.

The A$274.5 million acquisition of the leading North American corporate travel business is expected to complete on 30 October.

Management continues to expect it to be earnings per share accretive on a pro-forma calendar year 2019 basis. Pre-synergies it expects 10% accretion, post-synergies it is forecasting 30% accretion.

Outlook.

No guidance was given at the event, but the company’s Chairman, Ewen Crouch AM, spoke positively about the future.

In his closing remarks, he commented: “This turbulent year has highlighted the benefits of CTM’s highly flexible and resilient business model. The period ahead will undoubtedly present many challenges and opportunities. We have a clear purpose and a sound strategy and we are well positioned to return to profitability with a modest recovery of domestic travel this year.”

More reading

• The ASX 200 sank almost 2% today
• 5 things to watch on the ASX 200 next week
• 3 reasons I like the Corporate Travel (ASX:CTD) share price today
• Brokers name 3 ASX shares to buy right now
• ASX 200 sinks 2%, Corporate Travel (ASX:CTD) soars 8%

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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.

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The S&P/ASX 200 Index (ASX: XJO) dropped by around 2% today, falling by 1.7% to 6,051 points.

Here are some of the highlights from the ASX today:

Widespread selling

Overnight there was a selloff in international markets, seemingly on worries about a resurgence of global COVID-19 cases. The US election is also getting very close.

Investors sold off some ASX 200 shares quite heavily. The Avita Therapeutics Inc (ASX: AVH) share price dropped more than 4.5%, the Credit Corp Group Limited (ASX: CCP) share price fell more than 4.75% and the Regis Resources Limited (ASX: RRL) share price also dropped another 4.4%.

Some of the most popular buy now, pay later shares also got sold off. The Zip Co Ltd (ASX: Z1P) share price fell more than 5% and the Afterpay Ltd (ASX: APT) share price dropped more than 4.5%.

Corporate Travel Management Ltd (ASX: CTD)

At its AGM, the travel business announced a trading update for the first quarter of FY21.

It said that it had generated revenue of $9.6 million per month. Corporate Travel generated an underlying earnings before interest, tax, depreciation and amortisation (EBITDA) loss of $2.4 million per month. The company said that the cash burn was an average of $5 million per month.

However, September was the best month since the onset of COVID-19 with an underlying EBITDA loss of $1.6 million and the cash burn was down to $3.5 million.

Corporate Travel said that its Australia and New Zealand business was profitable for the quarter with positive signs of borders opening. In Europe the lockdowns are reducing activity but close to breakeven. The integration of Transport & Travel has started. In Asia the company pointed to the Singapore – Hong Kong travel bubble with more to come.

The ASX 200 travel business has zero drawn debt, with $120 million of net cash after the successful capital raising.

Corporate Travel’s share price dropped by around 7.5% today.

Bendigo and Adelaide Bank Ltd (ASX: BEN)

The share price of Bendigo Bank rose around 2% after giving an update for the first quarter of FY21.

Bendigo Bank said that its total lending continues to be a strength with year to date growth at 11% and residential lending at 16.1%, both of those rates being well above the system.

Management were pleased to report that the net interest margin (NIM) continues to be well managed, the bank saw the NIM rise by one basis point to 2.3%.

The regional bank also gave an update about its loan book. It said that 6,797 customer accounts remain on deferral, which was down 69% from the peak on 31 May 2020. The value of the accounts where repayments have been deferred is approximately $2.5 billion, down from the peak of $6.9 billion in June.

Customers transitioning away from deferral arrangements will continue to occur through the remainder of October and November as repayment deferral periods expire.

Blackmores Limited (ASX: BKL)

Blackmores also held its AGM today. One of the main bits of news from it was that Blackmores is going to divest its Global Therapeutics business for $27 million. It’s going to be sold to McPherson’s Ltd (ASX: MCP).

The business was only acquired in May 2016. Its product range draws upon traditional Chinese medicine in combination with contemporary herbal treatments.

Blackmores’ CEO Alastair Symington and his team has been reviewing Blackmores’ various brands to decide to what to divest. Global Therapeutics was deemed to be a non-core brand.

As part of the sale, the Fusion Health and Oriental Botanicals brands will also be sold. The transaction is scheduled for completion on 30 November 2020.

In reaction to the AGM update and the sale, the Blackmores share price rose 0.1%. 

More reading

• Do you have to pay tax on your ASX shares? – A common question answered
• Why the Probiotec (ASX:PBP) share price is trading higher
• Douugh and Ioupay were among the most traded shares on the ASX last week
• Will COVID-19’s second wave crash share markets a second time?
• Why Alcidion, Blackmores, Boral, & CogState shares are pushing higher

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 Avita Medical Limited and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Blackmores Limited and Corporate Travel Management Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Avita Medical 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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Marking one of the largest Australian industrial transactions of the year, Singapore-listed ARA LOGOS Logistics Trust (SGX: K2LU) has acquired $418 million of logistics assets on Australia’s eastern seaboard. Sydney-based logistics specialist Logos, which runs the trust, managed the deal.

Why did ARA LOGOS Logistics invest in Australian facilities?

As the Australian Financial Review reports, the trust’s manager – ARA Logos Logistics Trust Management Limited (a subsidiary of Logos) is bullish on the outlook for Australia’s industrial and logistics markets:

Australian industrial and logistics market, especially the eastern seaboard cities, continues to be highly sought after by investors due to its strong market fundamentals, limited supply and favourable demographics.

Industrial and logistics investment volumes for the year-to-date ending August 2020 have exceeded $3.5 billion… and 83 per cent of these transactions had taken place during the COVID-19 period since mid-March.

The outlook for Australia’s industrial market remains stable over the long term, underpinned by the fundamental role of logistics in keeping basic day-to-day necessities of Australians in supply, unprecedented infrastructure investment and growth in defensive downstream industries such as e-commerce.

Advantage ASX logistics shares

There were no ASX listed shares involved in the Logos deal. But the $418 million transaction does highlight the strength of shares involved in the Australian logistics sector while many office, residential and retail property-related shares remain under pressure.

One of the shares that’s currently on my radar is the APN Industria REIT (ASX: ADI).

The Australian real estate investment trust (REIT) owns a portfolio of 32 industrial and business park assets in Sydney, Melbourne, Brisbane and Adelaide.

The APN Industria share price is up more than 52% since the 23 March post-panic selling lows but is still down nearly 9% year to date. That puts it right on par with the performance of the All Ordinaries Index (ASX: XAO). Although today, APN Industria outperformed, with the share price falling 0.76% compared to a 1.77% loss from the All Ords by market close.

Now, the APN Industria share price is highly unlikely to see another 51% gain over the next 6 to 7 months. But with the growth of e-commerce continuing to drive demand for well-positioned warehouse and logistics facilities, I believe this is one ASX share to keep an eye on.

APN Industria also pays a 6.5% annual dividend yield, unfranked.

More reading

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Motley Fool contributor Bernd Struben 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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