• Why the Reliance Worldwide share price is outperforming today

    growth shares to buy

    The Reliance Worldwide Corporation Ltd (ASX: RWC) share price is defying the market drop today after a top broker upgraded the stock.

    Shares in the plumbing products supplier jumped 2.7% during lunch time trade to $3.05 when the S&P/ASX 200 Index (Index:^AXJO) shed 0.7% of its value.

    The broader market weakness is driven by growing fears of a second wave of COVID-19 infections with new cases popping up in a food market in China.

    Reliance upgrade

    But this new risk factor is unlikely to change the bullish view on the stock by the analysts at Credit Suisse.

    The broker upgraded Reliance to “outperform” from “neutral” following its survey of US contractors. What the broker discovered was that the outlook for the sector is a lot brighter than what it was expecting.

    Credit Suisse thought that the repair and remodel (R&R) segment would be hard hit by the coronavirus shutdown. Households would be afraid of inviting contractors into their homes to quote on jobs or undertake projects.

    But that thesis was proven to be either incorrect or very short-lived.

    Unexpected jump in home renovations

    “[The survey] complied by our US team is now showing a positive 3-month outlook, having improved materially in May,” said Credit Suisse.

    “Our industry discussions also suggest that initial reticence over inviting contractors onto premises has been overwhelmed by increased WFH [work-from-home] usage related maintenance and ‘nesting’ behaviour.”

    Weakness in the UK

    However, the group’s UK operations may not experience a rapid rebound. There are mixed readings from the region with up to 65% of construction sites shut in May.

    Since then, around 80% of sites have reopened and hardware retailers like Kingfisher have reported double-digit like-for-like sales growth.

    On the other hand, suppliers like Grafton reported a 50% drop in UK distribution sales for May due to restricted trading.

    Not all bad news

    The broker expects Reliance’s sales in Europe, Middle East and Africa (EMEA) to be down 20% to 30% in the current period.

    The good news is that this sets a low bar for FY21. Even if lacklustre trading conditions prevail, Reliance should still be able to post a 2% increase in EMEA sales in the next financial year.

    The broker’s 12-month price target on the stock is $3.25 a share.

    Reliance isn’t the only building related stock to be in the spotlight today. The Boral Limited (ASX: BLD) share price jumped 5.5% to $3.67 at the time of writing as it announced that Zlatko Todorcevski will take over as CEO from Mike Kane.

    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!

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    Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Reliance Worldwide Limited. The Motley Fool Australia has recommended Reliance Worldwide 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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  • Leading brokers name 3 ASX 200 shares to buy right now

    finger pressing red button on keyboard labelled Buy

    With so many shares to choose from on the S&P/ASX 200 Index (ASX: XJO), it can be hard to decide which ones to buy.

    The good news is that brokers across the country are doing a lot of the hard work for you.

    Three top shares that leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

    Appen Ltd (ASX: APX)

    According to a note out of the Macquarie equities desk, its analysts have commenced coverage on this artificial intelligence company’s shares with an outperform rating and $38.00 price target. The broker believes that Appen’s Relevance segment has a sizeable opportunity in a fragmented and growing data preparation market. I agree with Macquarie and believe Appen is one of the best buy and hold options for investors.

    IDP Education Ltd (ASX: IEL)

    Analysts at Morgan Stanley have retained their overweight rating and $17.50 price target on this student placement and language testing company’s shares. Although the broker acknowledges that there is a lot of uncertainty due to the pandemic, it appears to believe the company will be in a stronger position once the crisis passes. I think that Morgan Stanley is spot on and believe IDP Education could be a great long term investment.

    Seven Group Holdings Ltd (ASX: SVW)

    A note out of Goldman Sachs reveals that its analysts have reiterated their buy rating and lifted their price target on this diversified investment company’s shares to $21.00. The broker is a fan of Seven Group due to an attractive combination of near-term earnings resiliency and longer-term cyclical growth. It notes that the company is benefiting from healthy mining activity and better than expected construction activity. While it isn’t a share which I’m a big fan of, I think that Goldman makes some very good points. This could make it worth taking a closer look.

    And here are more top shares which analysts have just given buy ratings to…

    5 ASX stocks under $5

    One trick to potentially generating life-changing wealth from the stock market is to buy early-stage growth companies when their share prices still look dirt cheap.

    Motley Fool’s resident tech stock expert Dr. Anirban Mahanti has identified 5 stocks he thinks are screaming buys. And you can buy them now for less than $5 a share!

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    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 Idp Education Pty Ltd. The Motley Fool Australia owns shares of Appen 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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  • Atlanta Police Chief Quits After Officer Shot and Killed a Black Man

    Atlanta Police Chief Quits After Officer Shot and Killed a Black ManJun.14 — Atlanta has become the new focus of the nationwide U.S. racism protests after the city police chief resigned following the killing of a black man by a white officer. More than 3 dozen people were arrested after protesters set fire to the restaurant where the shooting happened. Bloomberg’s Jodi Schneider reports on “Bloomberg Markets: Asia.”

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  • These are last week’s best performing ASX shares

    asx growth shares

    The post coronavirus rally came to a halt last week as the S&P/ASX 200 (ASX: XJO) fell 2.5%, finishing the week at 5,847.8. The shortened trading week started positively, following the US market higher on Tuesday. But gains were erased later in the week as the US Federal Reserve Chair warned economic recovery could take significant time. 

    The coronavirus pandemic took the US from the lowest unemployment rate in 50 years to the highest in 90 years over just 2 months. In Australia, the unemployment rate hit 6.2% last month, above the 5.9% jobless peak during the Global Financial Crisis. 

    Fears of a second wave of infections both at home and in the United States caused investors to take a bearish stance. Travel shares were hit hard with Webjet Limited (ASX: WEB) shares falling 12%, Flight Centre Travel Group Ltd (ASX: FLT) shares down 7.1%, and Corporate Travel Management Ltd (ASX: CTD) shares down 4.4%. 

    Bank shares were also in the firing line following their strong May rally, with all 4 major banks losing ground. Investors retreated to safe haven in gold shares which recorded modest gains. Below we’ll take a look at the 5 best performing ASX shares with the top share price gains last week. 

    IPH Limited (ASX: IPH)

    Shares in IPH rose 6.6% to $7.61, making it one of the best performing ASX shares for the week. This followed the announcement that subsidiary AJ Park would acquire New Zealand intellectual property firm, Baldwins. 

    IPH’s services include the protection, commercialization, enforcement, and management of intellectual property. IPH was the first intellectual property firm to list on the ASX in 2014. The share price has more than tripled since the IPO and it’s become the leading IP services firm in the Asia Pacific region. 

    The Baldwins acquisition will give the merged businesses greater depth. IPH will focus on quality rather than quantity when it comes to acquisitions. The acquisition should add around $2 million to annual EBITDA, positively impacting enterprise value. 

    TPG Telecom Limited (ASX: TPM)

    TPG Telecom shares rose 3.9% last week to finish the week at $8.20. The company announced a special dividend, expected to be between 49 cents and 52 cents per share. Although, this is subject to its proposed merger proceeding. 

    TPG plans to merge with Vodafone via a scheme of arrangement. Its shareholders are due to vote on the scheme on 24 June. The merger will combine complementary network infrastructure and is expected to generate cost and capital expenditure synergies. 

    Vodafone CEO Inaki Berroeta said:

    “Through its increased strength and scale, the merger is expected to deliver stronger returns to shareholders than either business could achieve on a standalone basis.”

    Under the scheme, Vodafone will acquire 100% of TPG shares. Following completion, Vodafone shareholders will own 50.1% of the merged group and TPG shareholders 49.9%. If TPG shareholders vote for the scheme it will become effective on 29 June. 

    Mineral Resources Limited (ASX: MIN)

    Also among the best performing ASX shares last week were Mineral Resources. Shares in the company rose 3.8% to close the week at $20.44. The company shared no news to prompt the price increase, but it may benefit from the strong rise in iron ore prices. 

    Mineral Resources provides mining services to clients throughout Western Australia and the Northern Territory. It operates mining sites in the Pilbara and Goldfields regions and ships product through Utah Point and Esperance. Its iron ore assets comprise known deposits and prospective targets across the Pilbara and Yilgarn regions. 

    In the quarter containing March, Mineral Resources produced 3.4 million wet metric tonnes of iron ore, a 28% increase over the prior corresponding period. The mining services business performed strongly with second-half mining services EBITDA expected to be similar to the first half ($172 million). 

    Coca-Cola Amatil Ltd (ASX: CCL)

    Coca-Cola Amatil shares gained 3.7% last week to finish the week at $9.14. Nonetheless, shares remain well down from their February peak of over $13. The beverage company’s peak trading times of Easter, ANZAC Day, and Ramadan were adversely impacted by the April lockdown measures. The April volume of beverages sold was down 33%. 

    Widespread outlet closures and restricted trading impacted margins and immediate consumption channels, with volume transitioning to lower margin channels. The adverse impact on earnings and cash flow has been partially mitigated by tightened cost management and reduced capital expenditure. 

    Trade improved marginally in May thanks to easing in restrictions with volumes in the first 3 weeks down 26% on the prior corresponding period. Coca-Cola gained market share across Australia, Indonesia, and New Zealand over the lockdown period. 

    Managing Director Alison Watkins said:

    “We are confident that our strong balance sheet, ample liquidity, robust cash flows, and solid credit ratings place us in a strong position financially and operationally to trade through this period and emerge a stronger and better business.”

    Newcrest Mining Limited (ASX: NCM)

    Newcrest Mining shares rose 3.6% last week to reach $30.09 on Friday. The gold miner benefitted from the flight to safe-haven assets in the latter part of the week. Newcrest released an exploration update last week revealing strong drilling results at the Havieron and Red Chris Projects. 

    CEO Sandeep Biswas said,

    “We are excited by the drilling results at Havieron and Red Chris. At Havieron we have returned our best drill result to date and with the step out drilling result we see real potential to further expand this orebody. Getting underground is now the priority and we continue to progress the work to commence decline development by the end of this calendar year or early 2021.”

    Newcrest recently completed its $200 million share purchase plan following a $1 billion institutional placement in April. Newcrest will use these funds to ensure the strength of its balance sheet and fund future growth options. The company’s FY20 guidance has not been impacted by COVID-19, likely part of the reason why it was among the best performing ASX shares last week. The company expects to produce 2,100 – 2,200koz of gold along with 140 – 145kt of copper during the financial year. 

    For more shares that are performing well in the current climate, take a look at the report below.

    3 “Double Down” stocks to ride the bull market higher

    Motley Fool resident tech stock expert Dr. Anirban Mahanti has identified three stocks he thinks can ride the bull market even higher, potentially supercharging your wealth in 2020 and beyond.

    Doc Mahanti likes them so much he has issued “double down” buy alerts on all three stocks to members of his Motley Fool Extreme Opportunities stock picking service.

    *Extreme Opportunities returns as of June 5th 2020

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    Motley Fool contributor Kate O’Brien 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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  • Hong Kong’s Rich Are Preparing for a Worst-Case Scenario

    Hong Kong’s Rich Are Preparing for a Worst-Case ScenarioJun.14 — Hong Kong seems to have avoided a wave of capital outflows that many feared after Beijing moved to impose a national security law on the city, but there is still growing anecdotal evidence that the city’s rich are increasingly hedging their bets by opening offshore bank accounts and applying for alternative passports. Bloomberg’s Eric Lam reports on “Bloomberg Markets: China Open.”

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  • Healius share price soars 20% on news of $500 million sale

    The Healius Ltd (ASX: HLS) share price is up by 20.36% at the time of writing, following a market update this morning announcing the sale of its medical centres. 

    What’s moving the Healius share price?

    The company announced the sale of Healius Primary Care, its medical centres business, to BGH Capital for $500 million. The proceeds will be used for investments and to pay down debt.

    Commenting on the sale, Healius managing director and CEO, Dr Malcolm Parmenter said:

    This sale is consistent with our strategy of simplifying our portfolio and focusing on our leading and scalable diagnostics and day hospital business, in order to deliver on our mission of seeking and sustaining life-enhancing healthcare through people who care.

    The proceeds will strengthen the company, reducing our net debt and freeing up capital for investment, while enabling shareholders to realise the value of the Medical Centres business, which has not been reflected in our share price.

    Healius expects to receive a total of $470 million from the sale after costs. The transaction is expected to be completed by the end of 2020 and will be subject to approval by the foreign investment review board.

    The company also announced that it has seen growth in its diagnostics business since the economy started to reopen following shutdowns. This has been supported by testing for the coronavirus in its pathology labs. Healius announced that its day hospitals, dental and IVF businesses were also moving back toward pre-coronavirus levels following the lifting of restrictions.

    How has the Healius share price performed in 2020?

    The Healius share price is up 58.33% since its 52-week low reached in April. The company’s share price performance for the year to date has been steady, rising 10.14% since the beginning of January. The Healius share price has fallen 4.10% since this time in 2019, but is now significantly closer to its 52-week high of $3.32. 

    Looking for shares to help you grow your wealth? Don’t miss the free report below.

    3 “Double Down” Stocks To Ride The Bull Market

    Motley Fool resident tech stock expert Dr. Anirban Mahanti has stumbled upon three under-the-radar stock picks he believes could be some of the greatest discoveries of his investing career.

    He’s so confident in their future prospects that he has issued “double down” buy alerts on each of these three stocks to members of his Motley Fool Extreme Opportunities stock picking service.

    *Extreme Opportunities returns as of June 5th 2020

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

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  • What Sony Analysts Like About The PlayStation 5 Presentation

    What Sony Analysts Like About The PlayStation 5 PresentationSony Interactive Entertainment (NYSE: SNE) unveiled its next-gen PlayStation 5 console Thursday along with an impressive line of games.Both exclusive and third-party titles were highlighted during "The Future of Gaming" event. The responses to the PS5 have been positive, a good sign considering that a price point for both consoles have not been revealed.Primary, Digital PlayStation Console Could Boost Sales: The presentation primarily focused on the lineup of games for the PS5, but Sony also revealed two versions of the next-gen console: the PS5 and the PS5 Digital Edition. "We were somewhat surprised that Sony announced a digital version of the PS5 without an optical drive, in addition to the traditional model with an optical drive," BofA Securities analyst Mikio Hirakawa wrote in a note. BofA believes the market consensus estimate for the PS5 hardware price is $499. The addition of the digital console is expected to help boost sales by launching with a price cheaper than the primary PS5.See Also: Sony Finally Reveals What The Playstation 5 Looks LikeMorgan Stanley sees the console as likely to be priced high, targeting "hardcore users," analyst Masahiro Ono said in a note. Factors such as the design of the hardware as well as the "near life-like images offered" in-game will boost prices, the analyst said.The added value could give room for Sony to take a risk with premium prices, especially with the addition of the digital version of the PS5. Key Titles Help Push Excitement: The first presentation of the PS5 showcased 26 new titles in a mixture of first-party exclusives and third-party additions. Among those, titles like "Spider-Man: Miles Morales" will seemingly coincide with the PlayStation 5's launch. This will help motivate day-one purchases. BofA Securities analysts believe the PS5's software lineup meets expectations.Morgan Stanley analysts "do not expect the market's view on initial sales expectation to change sharply." Special attention was given to titles like "Spider-Man: Miles Morales" and "Horizon Forbidden West," the only two sequels to "popular PS4 titles that ranked within the top 20 in cumulative copies sold."Sony Analyst RatingsBofA Securities maintains a Buy rating with an $80.24 price objective. Morgan Stanley maintains an Equal-weight rating.Latest Ratings for SNE DateFirmActionFromTo Mar 2020OppenheimerInitiates Coverage OnOutperform Oct 2019Gabelli & Co.Initiates Coverage OnBuy Mar 2019JefferiesDowngradesBuyHold View More Analyst Ratings for SNE View the Latest Analyst RatingsSee more from Benzinga * GTA Online As A Standalone PS5 Title Could Be More Important Than You Think * 'Spider-Man: Miles Morales' Confirmed To Be Standalone Title(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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  • Keep a watch on the Zip Co share price and 1 other ASX tech this June

    man hitting digital screen saying buy now pay later, BNPL, Afterpay share price, Openpay share price, Zip Co share price

    Last week, the United States Nasdaq hit a fresh, all-time high. This was driven largely by the tailwinds of its FAANG tech giants. I believe this trend is likely to continue given the changes in consumer behaviour resulting from the coronavirus pandemic. This includes an increase in people globally working and learning from home. As tech continues to outperform the general market, I feel the Zip Co Ltd (ASX: Z1P) share price as well as that of Tyro Payments Ltd (ASX: TYR) could be two to watch this June. 

    The Zip Co share price 

    Earlier this month, Zip Co announced the acquisition of QuadPay. The acquisition enables the company to compete directly with buy now, pay later (BNPL) giant Afterpay Ltd (ASX: APT) for the lucrative $5 trillion US retail market. QuadPay is a simple, BNPL product that allows customers to pay for their purchases via 4 interest-free instalments over 6 weeks. The merchant gets paid up front with risk and fraud liability absorbed. QuadPay already has more than 1.5 million customers in the US and 3,500 merchants on board. It delivered an annualised revenue of $70 million for the quarter ending March 2020. This is a transformational acquisition that lifts the status of the Zip Co business to that of a truly global BNPL leader. The company now has operations across Australia, New Zealand, South Africa, the UK and the US.

    The US in its sights

    To fast track its growth in the US, Zip Co is raising $200 million in funding. The capital is being provided by Susquehanna International Group (SIG). SIG is one of the largest privately-held financial services firms globally. The company will provide Zip Co with $100 million in convertible notes and up to an additional $100 million in warrants. This means Zip Co shares will be progressively diluted as $10 million of notes are converted into shares every six months. 

    Zip Co updated the market last week on its performance for the month ending 31 May. This update reiterated the strong business environment for the company. Monthly revenue was up 78% year-on-year. Customer numbers increased 63% to 2.1 million. And customer repayment success rates were on par with or higher than pre-COVID-19 rates.

    All things considered, Zip Co is undergoing a significant transformation. The company is transitioning from a local BNPL platform to a global BNPL leader. The Zip Co share price has responded nicely following a 70% surge between 29 May and 3 June. So does the Zip Co share price represent a solid, long-term buy? Personally, I would wait for the concerns regarding a second wave of coronavirus in China and the recent market sell-off to subside before jumping in. However, I do believe the company’s acquisition of QuadPay makes Zip Co a top ASX tech share to watch moving forward. 

    The Tyro Payments share price 

    Tyro is the fifth largest merchant acquiring bank behind Australia’s big four banks. The company’s customers consist largely of SME businesses operating in the health, hospitality and retail sectors. Tyro represents one of many businesses that have been significantly impacted by lockdown measures. During peak restriction periods across April and May, Tyro’s customer transaction values declined by 38% and 18% respectively, compared with the prior corresponding periods. 

    Tyro’s transaction volumes for June (up until 12 June), however, have increased by 6%. This indicates early signs of increased economic activity and business slowly returning to ‘normal’. Continued easing of restrictions should see improved transaction values. Particularly as more consumers are able to partake in increased leisure activities. NSW, for example, has increased the amount of customers that pubs, clubs, cafes and restaurants can hold from 20 to 50 in June. WA is also considering allowing stadiums to operate at a limited capacity of approximately 25%. I believe that, for Tyro Payments, the worst is now behind it. As such, it could be an ASX tech share that can outperform over the coming months.  

    A V-shaped recovery could surface extremely rare opportunities for investors. Check out our free report below for the hidden gems that are often missed by most investors.

    3 “Double Down” Stocks To Ride The Bull Market

    Motley Fool resident tech stock expert Dr. Anirban Mahanti has stumbled upon three under-the-radar stock picks he believes could be some of the greatest discoveries of his investing career.

    He’s so confident in their future prospects that he has issued “double down” buy alerts on each of these three stocks to members of his Motley Fool Extreme Opportunities stock picking service.

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    Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Tyro Payments and ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T 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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  • Insiders have been buying these ASX 200 shares

    Businessman paying Australian money, ASX shares

    Every so often, I like to take a look to see which shares have experienced meaningful insider buying.

    This is because insider buying is often regarded as a bullish indicator, as few people know a company and its intrinsic value better than its own directors.

    A number of shares have reported meaningful insider buying this week. Here are a couple which have caught my eye:

    Bendigo and Adelaide Bank Ltd (ASX: BEN)

    According to a change of director’s interest notice, one of this regional bank’s directors has been buying shares this month. The notice reveals independent director Vicki Carter picked up 6,015 shares through an on-market trade on 10 June 2020. These cost an average of $7.98 per share, which equates to a total consideration of $48,000.

    With the bank’s shares down almost 40% from their 52-week high, it appears as though this director sees value in them at the current level. One broker that would agree is Ord Minnett. Last week its analysts upgraded Bendigo and Adelaide Bank’s shares to an accumulate rating with an $8.10 price target.

    Ramsay Health Care Limited (ASX: RHC)

    A change of director’s interest notice reveals that one of this private hospital operator’s non-executive directors has just made a sizeable purchase of shares. According to the notice, Dr Claudia Süssmuth Dyckerhoff PhD purchased 2,500 Ramsay shares through an on-market trade on 12 June 2020. Dr Dyckerhoff paid an average of $66.25 per share, which equates to a total consideration of $165,625.

    As with Bendigo and Adelaide Bank, the Ramsay share price is down materially from its high. This has been driven partly by the disruption to its operations caused by the pandemic. Interestingly, Ord Minnett also appears to see this share price weakness as a buying opportunity. Earlier this month its analysts reiterated their accumulate rating and lifted their price target on the company’s shares to $78.25.

    And here are more top shares which I think insiders should be buying…

    3 “Double Down” Stocks To Ride The Bull Market

    Motley Fool resident tech stock expert Dr. Anirban Mahanti has stumbled upon three under-the-radar stock picks he believes could be some of the greatest discoveries of his investing career.

    He’s so confident in their future prospects that he has issued “double down” buy alerts on each of these three stocks to members of his Motley Fool Extreme Opportunities stock picking service.

    *Extreme Opportunities returns as of June 5th 2020

    More reading

    Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ramsay Health Care 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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  • 3 ASX dividend shares to buy and replace a term deposit

    asx dividend shares

    ASX dividend shares can replace a term deposit if you buy them for income.

    The income on offer from the bank is very low these days. It’s not really a surprise considering how low the RBA interest rate is at just 0.25%.

    If capital protection is your main focus then term deposits may still be the most appropriate choice. Investing in shares opens you up to the volatility of the share market. Shares can help overcome the long-term negative of inflation. Just be aware that share prices can go down sometimes.

    Here are three ASX dividend shares that you could buy to replace the income of a term deposit:

    Share 1: Rural Funds Group (ASX: RFF)

    Rural Funds has a great business model to deliver good income and growth. It’s a farmland landlord that aims to increase its distribution by 4% per annum. That’s a decent growth rate for an ASX dividend share.

    It can do that thanks to two main factors. The first reason is that rental indexation is built into its rental contracts. Rent is contracted to grow each year by a fixed 2.5% annual increase or grow by CPI inflation, plus market reviews.

    The other helpful factor is that Rural Funds is re-investing around 20% of its adjusted funds from operations (AFFO) into productivity improvements at its farms for the tenant. This boosts the value of the farm and increases the rental income.

    It’s invested across a diverse farming portfolio of cattle, cotton, macadamias, almonds and vineyards. It currently has a forecast FY21 distribution yield of 5.7%. I think that’s a solid starting yield for an ASX dividend share.

    Share 2: Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

    I believe Soul Patts is one of the best ASX dividend shares. It has paid a dividend every year since it started in 1903. Soul Patts has also grown its dividend every year since 2000. It currently has a grossed-up dividend yield of around 4.4%

    Soul Patts owns a diversified portfolio of listed and unlisted businesses. Each year Soul Patts receives a stream of investment income from its holdings. After paying for operating costs, Soul Patts then pays out most of the net cashflow to shareholders. In FY19 it retained about 20% of its net cashflow to re-invest for more opportunities to grow the cashflow and dividend in future years.

    The ASX dividend share is invested in ASX businesses like TPG Telecom Ltd (ASX: TPM), Brickworks Limited (ASX: BKW), Australian Pharmaceutical Industries Ltd (ASX: API), Milton Corporation Limited (ASX: MLT) and Clover Corporation Limited (ASX: CLV).

    Share 3: Whitefield Limited (ASX: WHF)

    Whitefield is one of the oldest listed investment companies (LICs) on the ASX. It was founded in 1923.

    Its portfolio is largely focused on ASX blue chips. Some of its biggest holdings are CSL Limited (ASX: CSL), Commonwealth Bank of Australia (ASX: CBA), Wesfarmers Ltd (ASX: WES), Woolworths Group Ltd (ASX: WOW), Macquarie Group Ltd (ASX: MQG) and APA Group (ASX: APA).

    It has a higher focus on ‘industrial’ businesses and aims to outperform the S&P/ASX 200 Industrials Accumulation Index over rolling 5-year periods.

    The ASX dividend share has a very reliable record over the last 25 years, with no dividend cuts. It’s not guaranteed that the dividend won’t be cut in the future. However, I think it’s a good sign that the company has maintained the dividend even during times like the GFC.

    One of the other attractive things about Whitefield is its reasonably low operating cost. According to Whitefield, its operating expense ratio is approximately 0.40% of gross assets.

    It currently has a grossed-up dividend yield of 6.5%.

    Foolish takeaway

    Each of these ASX dividend shares have solid dividend records and attractive starting yields. If I had to start with one it would be Soul Patts because of its consistent dividend growth and diversification.

    But none of these dividend shares are going to shoot the lights out with capital growth. These growth shares may be much better for long-term share price returns…

    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!

    *Extreme Opportunities returns as of June 5th 2020

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

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