The Redbubble Ltd (ASX: RBL) share price has been an exceptionally strong performer on Thursday.

At one stage today the ecommerce company’s shares were up a massive 25% to a record high of $6.02.

In afternoon trade the Redbubble share price has given back a good portion of these gains but is still up a sizeable 8% to $5.20.

Why is the Redbubble share price on fire on Thursday?

Investors have been fighting to get hold of Redbubble’s shares following the release of an impressive first quarter update.

That update revealed that Redbubble’s strong growth has continued into FY 2021, with Marketplace Revenue growing 116% over the prior corresponding period to $147.5 million.

Pleasingly, margin expansion led to its gross profit growing at an even quicker rate of 149% to $64.5 million.

But perhaps best of all, was that Redbubble delivered first quarter earnings before interest and tax (EBIT) of $22.1 million. This compares to a loss before interest and tax of $1.5 million a year earlier.

How did this compare with expectations?

According to a note out of Goldman Sachs, Redbubble delivered quarterly revenue in line with its expectations.

It commented: “Marketplace revenue (product & shipping) for the Redbubble Group (Redbubble & TeePublic marketplaces) in 1Q21 was A$147.5mn, up 116% on pcp (+122% in cc.) and in line with our expectation of A$146.8mn.”

One metric which is outpacing the broker’s forecasts is its gross profit margin.

“Gross profit margin for Redbubble Group was 43.7% in 1Q21, versus 37.8% in 1Q20 and 41.6% in 4Q20. This is currently materially ahead of our FY21E expectation of 39.2%,” Goldman explained.

This ultimately led to its EBIT margin also tracking significantly ahead of Goldman Sachs’ expectations for a margin of 9.6% in FY 2021.

It said: “Redbubble Group 1Q21 operating EBIT was A$24.8mn, up from A$0.0mn in 1Q20. This excludes A$2.7mn in other income/ expenses in 1Q21. Operating EBIT margin was 16.8% (for context, 4Q20 was 4.7% and GSe FY21E 9.6%).”

Is Redbubble a buy?

While Goldman Sachs has retained its buy rating and $5.20 price target on its shares, I suspect it will revisit its valuation in the near term.

One thing the broker will no doubt be weighing up when reassessing its valuation is the sustainability of its margins, which are being positively impacted by heightened sales of fashionable face masks during the pandemic.

Goldman commented: “We would expect the market to focus on the sustainability of the strength on GP Margin and the contribution that face masks may be making to its revenues (noting that in its August update, face masks were around 28% of revenues in July).”

If it believes these strong margins are sustainable, I suspect a price target increase could be coming.

More reading

• Why Bank of Queensland, BHP, Pro Medicus, & Redbubble shares are charging higher
• Redbubble (ASX:RBL) share price on watch after delivering stellar Q1 growth
• 3 unstoppable ASX shares to buy with $3,000
• The Redbubble (ASX:RBL) share price is up 320% in 2020: Can it go higher?
• 3 ASX tech shares to buy and hold for the next decade

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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The BHP Group Ltd (ASX: BHP) share price was up 2.60% at the time of writing today at $36.96. This came after the company’s 2020 AGM yesterday.

What did the AGM discuss?

BHP chair Ken MacKenzie outlined the resource producer’s financial highlights at the AGM.

In the year to 30 June 2020, BHP had earnings of US$22.1 billion and an earnings before interest, taxes, depreciation and amortisation (EBITDA) margin of 53%. Free cash flow was US$8.1 billion.  Net debt for the group was US$12 billion at 30 June 2020 which, according to the chair, was at the bottom of the group’s target range. Shareholder returns were 120 US cents per share in the 2020 financial year, representing a pay out ratio of 67%. The company had a 17% return on capital employed in FY2020.

Mr MacKenzie pointed to the issues facing the world over the year to 30 June 2020 including social unrest in Chile, bushfires in Australia and the COVID-19 pandemic. However, he said that BHP had performed “solidly” over the period despite global adversity.

He described BHP’s products as essential for global economic growth and for a transition to a lower carbon world. He said the company’s priorities remained the same as they had been over the last 3 years. These were safety, portfolio, capital discipline, capability and culture and social value.

Mr MacKenzie reiterated the company’s push toward copper and nickel and its plan to divest a number of coal assets currently held by BHP.

BHP CEO Mike Henry also addressed the AGM and highlighted that BHP was committed to a 30% reduction in operational emissions over the next decade with a plan to reduce these emissions to a net zero by 2050.

Mr Henry said the company was currently moving toward ‘future facing’ commodities including copper, nickel and potash. This would take place as growth in demand for iron ore, metallurgical coal and oil and gas slowed.

The CEO added the company was investing in long-term growth while maximising the value of its current assets. He said while the outlook for commodities was uncertain, there was some optimism from the “strength and consistency” of the economic recovery underway in China.

About the BHP share price 

BHP is a major resources producer with interests in iron ore, coal, copper, nickel, potash, oil and gas. BHP has been listed on the ASX since 1961 and has a history dating back to 1885.

Earlier this month, BHP announced that it would acquire an additional 28% interest in the Shenzi oil asset from Hess for US$505 million.

The BHP share price is up 53.43% since its 52-week low of $24.05, however, it has fallen 5.26% since the beginning of the year. The BHP share price is up 2.27% since this time last year.

More reading

• Countries are panic buying food and this isn’t reflected in ASX agriculture stocks
• Why Bank of Queensland, BHP, Pro Medicus, & Redbubble shares are charging higher
• ASX 200 up 0.9%: Big four banks rise, Pro Medicus jumps, miners charging higher
• Why it’s always a good time to buy blue chip ASX shares
• 5 things to watch on the ASX 200 on Wednesday

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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It isn’t only Aussie shoppers that are guilty of panic food buying. Countries are rushing to snap up agricultural products and this could be a good sign for some ASX stocks.

I don’t believe this news is factored into the share prices of listed agribusinesses, but that could soon change.

It seems that countries from Egypt to China are scurrying to boost their strategic food reserves, reported Bloomberg.

Countries joining the food buying spree

Jordan is holding record wheat reserves and Egypt, the world’s top buyer of the grain, took the unusual step of tapping international markets during its local harvest and has boosted purchases by more than 50% since April.

Taiwan also indicated it will add to its food reserves and China is buying to feed its growing hog herd, according to Bloomberg.

Agriculture prices on the rise

The shopping spree comes at a time when the resurgence of COVID-19 in many parts of the world is disrupting global supply chains.

The disruption and increased demand are pushing prices for food up. Floods in China and bad harvests in Turkey and Morocco are also contributing to food inflation.

The Bloomberg Agriculture Subindex, which measures key farm goods futures contracts, jumped by nearly 20% since June.

Drivers for the agri boom

Experts who were interviewed point to a fundamental shift from “just in time” to “just in case”.

So far, it’s only a relatively small group of countries that are worried about being caught out. But if other governments joined the fray, we could see higher food prices through 2021.

Australia’s most important trading partner will have no small part to play in this trend. China is single-handedly supporting the iron ore price, much to the benefit of BHP Group Ltd (ASX: BHP) and friends.

China’s impact on food prices

The Asian giant could have a similar effect for commodities as it looks to build on its colossal food reserves as part of its five-year plan.

The irony is that China is punishing Australia by restricting imports of our barley, beef and wine. It no doubt has other sources to buy from, but it may have to loosen the block to reign in higher prices.

ASX stocks to benefit from rise of agriculture

As I mentioned earlier in the piece, I don’t believe investors have caught on to the potential agriculture boom.

Some ASX agriculture-exposed stocks that could benefit from this possible thematic include the Costa Group Holdings Ltd (ASX: CGC) share price, Nufarm Limited (ASX: NUF) share price and Graincorp Ltd (ASX: GNC) share price – just to name a few.

More reading

• Why the BHP (ASX:BHP) share price is up on AGM news
• Why Bank of Queensland, BHP, Pro Medicus, & Redbubble shares are charging higher
• ASX 200 up 0.9%: Big four banks rise, Pro Medicus jumps, miners charging higher
• Why it’s always a good time to buy blue chip ASX shares
• 5 things to watch on the ASX 200 on Wednesday

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

The Motley Fool Australia owns shares of and has recommended COSTA GRP 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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I think that there are some high-quality ASX dividend shares that are worth considering buying for income because they are growing their dividends like clockwork.

It’s pretty difficult to find growing income at the moment. Many employers are doing it tough, so pay rises are likely harder to come by at the moment. Many businesses are being more careful with their capital, so growing dividends are harder to find as well.

Leaving your money in the bank isn’t going to earn much money because Australia’s official interest rate is now just 0.25% and could go even lower.  

There are still a few great ASX dividend ideas out there that continue to grow their dividends for investors, such as these two:

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

Soul Patts is an investment conglomerate which has been listed since 1903, so it’s one of the oldest listed businesses in Australia. It started as a pharmacy business but it has diversified into many different businesses since then.

Many of its current biggest holdings started as much smaller investments and grew over time. Names like TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW) and Clover Corporation Limited (ASX: CLV) were much smaller when Soul Patts first invested in them.

It owns a diversified portfolio of plenty of other ASX shares like Magellan Financial Group Ltd (ASX: MFG), Milton Corporation Limited (ASX: MLT), Bki Investment Co Ltd (ASX: BKI) and Australian Pharmaceutical Industries Ltd (ASX: API).

As many readers would know, the more diversified a portfolio is, generally the lower risk it is. Soul Patts has a good amount of diversification and is increasing its diversification, particularly with the unlisted portfolio of businesses. It has investments in Ampcontrol, agriculture, resources, swimming schools and financial services.

Soul Patts is a great ASX dividend share because it has grown its dividend every year for 20 years in a row. No other ASX businesses has a record as good as that. It funds its dividend from the investment income it receives from its investments, minus operating expenses.

At the current Soul Patts share price, it offers a trailing grossed-up dividend yield of 3.3%.  

APA Group (ASX: APA)

In my opinion, APA is the best infrastructure business to go for on the ASX.

It owns a vast network of 15,000km of natural gas pipelines around Australia with a presence in every mainland state and the Northern Territory. It also owns or has interests in gas storage facilities, gas-fired power stations and renewable energy generation (wind and solar farms). APA owns, or manages and operates, a portfolio of assets and delivers half the nation’s natural gas usage.

I believe the outlook for APA is looking better in recent months with the Australian government championing a focus on gas to help Australia’s recovery. Reasonable energy prices are an important factor for both households and manufacturing. Gas is something that Australia has a lot of, but you need pipelines like APA’s to help move it around the country.

APA has one of the other best dividend records on the ASX. It has increased its distribution every year for the past decade and a half. That’s really reassuring as an ASX dividend share.

The infrastructure business funds its distribution from the annual cashflow that it generates each year. That cashflow is steadily growing as more energy projects come online from its investing.

COVID-19 is causing a bit of an impact on APA’s business. But I think that APA will slightly grow its distribution in FY21.

At the current APA Group share price it offers a trailing distribution yield of 4.5%.

More reading

• Why Brickworks, Flight Centre, Whitehaven, & Zip shares are dropping lower
• 2 robust ASX 200 blue chip shares to buy today
• 2 ASX growth shares I’d buy today for growth and income
• 5 things to watch on the ASX 200 next week
• How to replace your entire wage with ASX dividend shares

Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Clover Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of APA Group. 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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Today, Virgin Australia Holdings Ltd (ASX: VAH) shares remained suspended as the company announced that its CEO would step down. The Virgin share price was 8.6 cents before trading in the company was suspended in April this year.

What was in the announcement?

According to the announcement, current Virgin CEO, Paul Scurrah, will step down upon the financial close of the company’s sale to United States private equity firm, Bain Capital. This is expected to take place in early November and former Jetstar CEO, Jayne Hrdlicka will take charge of the company.

The embattled airline has been in voluntary administration since April 2020 after COVID-19 restrictions effectively shut down the travel industry. Virgin has previously announced huge staff cuts and asset sales in preparation for the sale to its new owners, which has been approved by creditors. 

Mr Scurrah commented on his departure stating; “I am proud of that work that has been completed to date to transition the business and remove complexity, allowing the airline to compete effectively once demand returns.”

After the business has been sold to Bain Capital and demand returns for travel services, Virgin will operate as a rebooted airline that is being referred to as Virgin 2.0. However, it has been reported that Virgin will not become a budget carrier, instead operating as a ‘hybrid’ airline that will offer the Virgin experience at competitive prices. 

Deloitte partner and Virgin administrator, Vaughan Strawbridge, commented on the CEO’s departure stating; “It is a testament to his leadership that we have been able to complete this sale and the business is well positioned to play its vital role in the rebuilding of the Australian aviation industry and economy more broadly.”

Bain will pay $3.5 billion for Virgin which includes a capital injection of $125 million the private equity firm made in July to help Virgin remain solvent. Virgin bondholders will get around 13 cents in the dollar from the sale, according to media reports. Virgin shareholders will get nothing from the deal.

More reading

• The moment Virgin Australia CEO knew the airline was in trouble

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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One of the best performers on the S&P/ASX 200 Index (ASX: XJO) on Thursday has been the Eagers Automotive Ltd (ASX: APE) share price.

At one stage today the auto retailer’s shares were up as much as 9% to $12.20.

In afternoon trade the Eagers Automotive share price has dropped back a touch but is still up 7% to $11.99 at the time of writing.

Why is the Eagers Automotive share price zooming higher?

Investors have been buying the company’s shares today after it released a trading update for the nine months ended 30 September.

According to the release, Eagers Automotive, formerly known as AP Eagers, recorded an underlying operating profit before tax from continuing operations of $96.6 million for the nine months. This represents a sizeable 45.4% increase on the prior corresponding period.

This is all the more impressive when you consider that Eagers Automotive’s first half underlying operating profit before tax was down 24% to $40.3 million.

Based on this, it would appear as though third quarter underlying operating profit before tax was $56.3 million, which is 39.7% greater than what it achieved in the entire first half.

What were the drivers of this growth?

Management advised that vehicle sales have rebounded strongly in the Australian states and territories which are not currently locked down.

This follows the historical lows experienced during April and May 2020 when nationwide restrictions were in place.

Also supporting its impressive profit growth was its cost reduction program.

Management explained: “While customer orders have been strong, supply constraints caused by global manufacturer factory closures during the June quarter have resulted in lower vehicle deliveries to customers. The reduced inventory position combined with the company’s cost reduction programs, initiated following the merger with AHG and in response to COVID-19, have led to a strong rebound in Eagers Automotive’s underlying trading performance.”

More reading

• ASX 200 Weekly Wrap: Budget, US election sparks 5% surge in ASX shares
• These were the best performing shares on the ASX 200 last week
• ASX 200 up 0.4%: Big four banks push higher, Westpac upgraded, ARB impresses
• Meet the latest ASX small cap stock that’s racing ahead during COVID
• 5 ASX shares held by leading fund managers

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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When hunting for a reliable income stream and capital growth, ASX commercial property shares have historically ranked highly on investors’ wish lists.

As well they should.

With no end in sight for today’s record low interest rates, which may edge even closer to zero when the Reserve Bank of Australia meets on 3 November, investors today are more desperate than ever to put their money to work for them.

As Ross Lees, the head of funds management for Centuria Capital, told the Motley Fool last week:

People are buying real estate because they want income. Interest rates have gone down. If you can get the right real estate with good quality tenants, I think you’re really well positioned into the next couple of years.

Lees is spot on there.

But the question facing ASX investors today is, just what is the right real estate?

When COVID-19 snuck onto Australia’s shores in late January, it quickly set off a series of events that drastically changed the face of commercial real estate markets. Fast forward to October and no one knows when – or even if – Australia’s property markets will ever look like they did in 2019.

A stark divergence in real estate fortunes

According to Colliers International, as reported by Commercial Real Estate, the first 3 quarters of 2020 (through to 30 September) saw a 58% decline in commercial real estate transactions in Australia. And remember, those 9 months include January and February, when the coronavirus had yet to have an impact.

Retail deals over the 9 months dropped by 29% while office deals fell a dramatic 75%.

But it’s not all bad news for commercial property. Industrial transactions recorded by Colliers were up 5.6% over the first 9 months of 2019.

While the viral shift of people working and shopping from home has dragged on the office and retail markets, it’s seen a big boost for e-commerce. And in turn ushered in growing in demand for warehouse and logistics facilities to support that.

According to Ross Lees:

We’ve seen a huge acceleration in e-commerce. The industrial sector already had a big tailwind behind it, and that’s just really pushed it along. In the last 2 months, we’ve been the largest acquirer of industrial real estate in Australia…

The opportunity in industrial is the revolution in e-commerce, how companies respond to it, what they do in their supply chains and how that can drive industrial demand.

Colliers believes the 5.6% growth in industrial deals would have been significantly higher if not for a shortage of prime assets for sale. The firm estimates there’s some $26 billion of capital, primarily from institutional investors, interested in the industrial sector.

Gavin Bishop, head of industrial capital markets at Colliers International, says:

Given that just $3.57 billion has traded so far in 2020 [in industrial transactions], it highlights the significant mismatch between supply and demand and the significant volume of unsatisfied capital looking to be placed. As a result of this, we expect that additional assets will be brought to market in 2021 as groups look to capitalise on the continued strength of the industrial and logistics market.

Will ASX office shares bounce back?

It’s far too early to sound the death knell for the office market.

While the coronavirus has hyper-accelerated the pace of changes that were already taking place when it comes to CBD office space, many workers – and their bosses – are eager to see a return to shared work spaces.

Cushman & Wakefield’s NSW managing director of commercial real estate, Simon Fenn remains bullish on the office market outlook.

As Commercial Real Estate notes, Fenn expects “office sales volumes to increase in the final quarter of the year and to be higher again in the first half of 2021 – provided the COVID-19 virus is contained”.

Containing the virus is, of course, the big and highly unknown caveat here.

Nonetheless, Ross Lees also remains optimistic on the future of the office market, though he believes it will likely be less centralised with solid public transport connections and close to amenities. And the buildings themselves will likely need some amending.

As Ross states:

We’ve focused on making sure that the buildings are in a situation where tenants feel comfortable returning to work. Priorities have been making safe work plans, places where people want to come.

How have these ASX office and industrial shares performed?

We’ll tie this off with a quick look at the performance of some leading industrial and office funds.

First up for the office sector is Centuria’s real estate investment trust, the Centuria Office REIT (ASX: COF). At the current share price, the REIT pays an annual dividend yield of 8.3%. Year-to-date the share price is down 29%.

Next up is the Australian Unity Office Fund (ASX: AOF). The fund pays an annual dividend yield of 6.2%. Year-to-date the share price is down 24% since 2 January.

Turning to the industrial sector, the Centuria Industrial REIT (ASX: CIP) pays an annual dividend yield of 5.6%. The share price is down 2.5% in 2020.

Then there’s the APN Industrial REIT (ASX: ADI). It pays an annual dividend yield of 4.5%. Year-to-date the share price is 8.6%.

For some comparison, the S&P/ASX 200 Index (ASX: XJO) is down 7.0% in 2020.

With the share prices of the office funds having fallen further, their current yields are certainly more attractive.

The question every investor needs to ask themselves before investing for income though, is what’s the long-term outlook for capital gains?

More reading

• ASX 200 up 0.9%: Big four banks rise, Pro Medicus jumps, miners charging higher
• 5 things to watch on the ASX 200 on Thursday
• Is Transurban’s (ASX:TCL) share price 18% undervalued?
• ASX 200 finishes lower, Afterpay (ASX:APT) shares rise
• ‘Vomit buying’: How fundie spent $110m during COVID-19 crash

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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Althea Group Holdings Ltd (ASX: AGH) shares are soaring higher today following the company’s release of its quarterly update. At the time of writing, the Althea share price is trading 8% higher at 54 cents.

Let’s take a look and see how Althea performed for the September quarter.

What’s driving the Althea share price higher?

The Althea share price is marching higher today after the company delivered a strong result for the period ending 30 September, despite COVID-19 restrictions remaining in place.

Althea highlighted an increase in total group revenue of $2.1 million, up 32% on the prior quarter. The record amount was achieved by the launch of Althea’s online platform for medical cannabis products in Australia. In addition, its United Kingdom segment grew by 104% on a month-by-month basis, to record more than $75,000 in revenue.

Cash receipts for the three months came to $2 million, representing a 36% increase from the June period. Althea advised it expects to break-even within the March 2021 quarter.

The company also revealed it added 943 patients in Australia, a 27% jump, bringing the total number of patients to 9,683. The number of healthcare professionals that have prescribed Althea’s cannabis products rose to 696, up 18% on the June period.

The company’s subsidiary, Peak Processing Solutions, continued to reach company milestones during the reporting period. Customers have committed to sales worth over $650,000 following the grant of its health licence.

Althea disclosed it holds a cash position of $6.98 million and is in a good position to accomplish its growth strategies. 

Management commentary

Althea CEO, Josh Fegan, commenting on the robust performance, said: 

The September quarter has been an important period for the Company, as we have continued strong quarter on quarter growth, with a 32% increase in revenues from the previous reporting period. With Peak Processing Solutions having received its Standard Processing License from Health Canada last month and already entering into commercial agreements with customers, our shareholders can continue to expect strong revenue growth for the December 2020 quarter.

Our patient numbers have also continued to experience a strong increase in Australia and with revenue more than doubling in the UK in September, we anticipate companywide break-even within the March 2021 quarter.

Should you invest?

The Althea share price has been on the rise over the last three months, outstripping the All Ordinaries Index (ASX: XAO) by over 40%. Of course past performance is no guarantee of future performance and, personally, I’m inclined to sit on the side lines with today’s Althea share price.

I think that, while the company shows potential for growth, the medical cannabis industry is too volatile for me. In light of this, I prefer to look elsewhere to grow my wealth in what I believe are safer and more stable sectors.

More reading

• Is it time to buy into these three ASX cannabis shares?

Motley Fool contributor Aaron Teboneras 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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On Wednesday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three ASX shares that have just been given sell ratings by brokers are listed below.

Here’s why these brokers are bearish on them:

Bank of Queensland Limited (ASX: BOQ)

A note out of the Macquarie equities desk reveals that its analysts have downgraded this regional bank’s shares to an underperform rating with an improved price target of $6.00. Although the broker was reasonably pleased with its FY 2020 result, it remains cautious on its outlook and suspects that growth will remain subdued. In light of this and its strong recent share price gains, it doesn’t see value in its shares at the current level. The Bank of Queensland share price is trading at $6.91 this afternoon.

Ramsay Health Care Limited (ASX: RHC)

Analysts at Morgan Stanley have retained their underweight rating and $61.00 price target on this private hospital operator’s shares. This follows the announcement of an updated agreement with the UK’s NHS, which it feels could impact its earnings in the country. Outside this, the broker has concerns over industry pressures. It also suspects that affordability issues for private health insurance could increase due to higher unemployment. The Ramsay share price is trading at $67.81 on Thursday.

Zip Co Ltd (ASX: Z1P)

Another note out of the Macquarie equities desk reveals that its analysts have retained their underperform rating but lifted their price target on this buy now pay later provider’s shares to $4.95. This follows the release of a first quarter update which was largely in line with Macquarie’s expectations. The broker notes that the current quarter is hugely important. And while it expects the growth of its US-based QuadPay business to accelerate, a lot will depend on PayPal’s launch of its competing product. If PayPal’s BNPL product is a success, it fears it could have a big impact on QuadPay’s future growth rates. The Zip share price is down 6.5% to $7.08 this afternoon.

More reading

• Why Bank of Queensland, BHP, Pro Medicus, & Redbubble shares are charging higher
• ASX 200 up 0.9%: Big four banks rise, Pro Medicus jumps, miners charging higher
• Why IDP Education, WiseTech, Zip, & Zoono shares are tumbling lower today
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 finishes lower, Afterpay (ASX:APT) shares rise

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 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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Christmas could come early for the Coles Group Ltd (ASX: COL) share price on reports that it’s gearing up for record sales during the holiday season.

The supermarket chain is anticipating record sales as it will have one million more mouths to feed in December and January, reported the Australian Financial Review.

The news report is yet to inspire investors as the Coles share price slipped 0.9% to $17.92 during lunch time trade.

In contrast, the Woolworths Group Ltd (ASX: WOW) share price gained 0.7% to $39.09 and the Metcash Limited (ASX: MTS) dipped 0.2% to $3.

Coles share price gears for one million extra shoppers

Readers on this site shouldn’t be surprised about the big Christmas supermarket rush. I’ve reported last week about this “phenomenon” with Credit Suisse upgrading Coles shares to “buy”.

Australia will have a full house this festive season as Aussies can’t go on their regular overseas vacation due to COVID-19.

The federal and state governments are running campaigns to convince locals to holiday domestically instead. This is not only good news for the local tourism industry, but for our supermarkets too.

How this Christmas will be different

But this tailwind may not be as strong as some bulls like to believe. The chief executive of Coles, Steve Cain, told the AFR that says celebrations are likely to be smaller due to social restrictions.

Also, the economic impact from the pandemic is pushing more Aussies onto struggle street.

Coles is planning the Christmas shopping bash, including a new collectables program, with these factors in mind.

It’s doing this by offering smaller serving sizes and semi-prepared food like prosciutto-wrapped saddle of lamb and stuffed Tasmanian salmon roast.

“We think this will be the biggest Christmas ever by far, given the circumstances – it will be a lot better than Easter,” Mr Cain told the AFR.

“With one million more Australians around, and with a more limited food service offering, this year it’s going to be a summer of more frequent, smaller entertaining going on – that’s what we’ve tried to cater for.”

Read through for the Woolworths share price

You can bet that Woolies will be thinking the same thing! I have also heard anecdotally that Woolworths is reducing staff hours at some of its Melbourne stores.

I don’t think it’s due to weakening sales, even though sales are cycling through a COVID high, but an effort to pad margins.

Margins are the key thing I will be looking at for Woolworths as its recent results showed a lack of operating leverage. This is probably due to a sharp but temporary increase in costs to operate in a COVID stricken world.

The proof will be in the Christmas pudding.

More reading

• 2 blockbuster blue chip ASX shares to buy
• Top brokers name 3 ASX shares to buy today
• Why I like ASX consumer staples shares in the current climate
• Revealed: ASX Christmas winners and losers
• Why Woolworths is too expensive right now

Motley Fool contributor Brendon Lau owns shares of Woolworths Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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