The BHP Group Ltd (ASX: BHP) share price has come under pressure on Wednesday and dropped lower.

In afternoon trade the mining giant’s shares have fallen over 3% to $37.59.

Is this a buying opportunity?

One leading broker that sees the BHP share price weakness as a buying opportunity is Ord Minnett.

This morning the broker retained its accumulate rating and $42.00 price target. This price target implies potential upside of almost 12% for its shares over the next 12 months.

If you add dividends into the equation, this potential return stretches to upwards of ~16%.

According to the note, BHP’s iron ore production and shipments came in ahead of the broker’s forecasts during the June quarter. Though, the average price realised of US$77.36 a tonne, was a touch short of expectations.

Looking ahead, the broker feels that the mining giant’s iron ore production guidance of 244 Mt to 253 Mt and shipments guidance of 276 Mt to 286 Mt for FY 2021 might prove too conservative.

In light of this and strong iron ore prices, the broker sees potential upside risk to its earnings estimates for the year ahead.

Combined with its favourable commodity mix, attractive valuation, and outlook, it continues with its positive rating on the company’s shares.

Should you invest?

I agree with Ord Minnett and would be a buyer of BHP’s shares right now.

While I also like Fortescue Metals Group Limited (ASX: FMG) and Rio Tinto Limited (ASX: RIO), BHP remains my preferred pick due to the diversification of its operations, its strong balance sheet, and its growth opportunities.

Another positive is its dividend yield. The consensus estimate is for a fully franked dividend yield of over 4% in FY 2021. However, if iron ore prices remain strong, I suspect this yield could be even more generous.

More reading

• BHP’s share price tumbles with this other ASX miner after being hit by broker downgrades
• Why Afterpay, BHP, Cann, & Mesoblast shares are tumbling lower
• Are you ready to invest in ASX shares?
• Are ASX 200 shares overvalued right now?
• 5 things to watch on the ASX 200 on Wednesday

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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I try to regularly invest into ASX shares. At least once a month. A few months ago I was investing very regularly because I saw a number of cheap opportunities during the crash.

But the ASX has recovered strongly since March 2020. Over the past two months alone the S&P/ASX 200 Index (ASX: XJO) has gone up just over 10%.

I still think there is a lot of uncertainty in the local and global economy. COVID-19 impacts are being felt around the world and government economic support is starting to wind down. Many businesses seem like less obvious winners at the current prices.

My recent investing has kept the above uncertainty in mind. These are two ASX shares I’ve bought in recent weeks:

WCM Global Growth Ltd (ASX: WQG)

This is a listed investment company (LIC), its job is to invest in shares listed outside of Australia. The Australian dollar continues to strengthen against the US dollar, it’s now worth US$0.71. The stronger the Australian dollar is the cheaper it is to buy US shares.

At the current WCM Global Growth share price of $1.30 the ASX share is trading at a 13% discount to the pre-tax net tangible assets (NTA) at 17 July 2020. Thankfully I bought shares at around $1.25.

I liked the idea of buying a quality LIC at a double digit discount to its NTA. But I also like the investment style of WCM, a California-based asset manager. WCM aims for businesses with an expanding economic moat. One of the main ways it measures this is with a rising return on invested capital, as opposed to a large but static or declining moat. The other key factor that WCM looks for is a corporate culture that supports the expansion of the economic moat.

At the end of June 2020 its five largest holdings were: Shopify, West Pharmaceuticals, MercadoLibre, Visa and Stryker. Just under half of the ASX share’s portfolio is invested in IT and healthcare. I like the long-term outlook for these two sectors. 

Its investment style has performed well. Its investment performance, after fees, has been 20.15% per annum over the past three years.

I think this LIC is a solid ASX share, it even pays a partially franked dividend yield of 3.1%.

WAM Microcap Limited (ASX: WMI)

WAM Microcap is another LIC. It targets ASX share small caps with market capitalisations under $300 million at the time of acquisition.

There have been few Australian investment managers that have performed as well as Wilson Asset Management’s WAM Microcap over the past three years. Since inception in June 2017, WAM Microcap’s portfolio has returned an average of 15.9% per annum (before fees, expenses and taxes), outperforming the S&P/ASX Small Ordinaries Accumulation Index by 10% per annum. Over the past three months the WAM Microcap’s portfolio has returned 32.9%, outperforming the index by 9%.

Future strong performance is definitely not guaranteed, but I think WAM Microcap’s team has shown they can identify good value ASX shares.

I think small caps can produce very strong returns, you just have to choose the right ones. I’m happy to get a fair amount of my small cap exposure with WAM Microcap and receive a good dividend along the way.

At the current WAM Microcap share price of $1.38 it offers a grossed-up dividend yield of 6.2%, though luckily I recently bought shares at a price of around $1.25.

I believe that WAM Microcap will deliver strong total shareholder returns over the next few years from here. However, it tends to fall very hard during market uncertainty, so I may wait until the next market drop to buy more shares.

At the end of June 2020 it had a solid cash weighting of 17.2% to buy beaten-up opportunities if the market drops again.

Foolish takeaway

I really like both of these ASX shares. I think international shares and small cap ASX shares could outperform the broad ASX share market over the longer-term. At today’s prices I’d probably buy WCM Global Growth again due to the high Aussie dollar and the discount to the NTA. But I’d love to buy even more WAM Microcap shares at the right time.

More reading

• 2 ASX shares for growth and dividends
• How to create a yearly income of $65,000 in dividends
• Get paid huge amounts of cash to own these ASX dividend shares
• 3 ASX dividend shares for every income investor’s portfolio
• 4 top ASX dividend shares you should never sell

Motley Fool contributor Tristan Harrison owns shares of WAM MICRO FPO and WCM Global Growth Limited. 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 Osteopore Ltd (ASX: OSX) share price surged over 30% around lunch time today before being rapidly sold down to a more modest gain of just 2.4% (at time of writing). The ASX medical share rallied following an announcement from the company regarding its development of a new 3D printed bone implant. 

What did Osteopore announce?

In a release to the market shortly after midday today, the company announced it has signed an Exclusive Option to licence novel 3D printed modular bone implant technology being developed at the Queensland University of Technology (QUT). 

The technology has shown encouraging early stage results for regrowth of long bone defects in patients who have lost more than six centimetres of bone to injury or disease. Additionally, the technology has the potential to disrupt the supply chain model of customised implants. 

Osteopore and QUT will collaborate to generate sufficient clinical data to support regulatory submissions to the Therapeutic Goods Administration (TGA), United States Food and Drug Administration (FDA) and European regulators. As a result, the evaluation of the technology could potentially lead to an opportunity to acquire it. 

The agreement between the parties will progress through two stages. The first stage is to gather clinical data and stage two is regulatory approval and commercialisation. In stage two, Osteopore could have exclusive worldwide licence to commercialise the technology. 

However, the company has advised that this project has a long development pathway and commercialisation of any product could take years. Worst case scenario, there may not be a product at all.

Terms of the agreement and potential market opportunity

Ostopore will provide $40,000 in cash, plus in-kind support and has secured a $100,000 non-dilutive grant from QUT. Under any future commercial agreement with QUT, the company would need to provide a market entry fee of $100,000 and provide royalties with a potential range of 2-6%. 

The market has significant growth potential according to a Boston Consulting Group report published in 2015. In a more recent publication released in March 2018, Boston Consulting reported the compound annual growth rate (CAGR) for reconstructive implant in orthopaedic and spine as being 5.1%. As a result, the global market potential is expected to be $30 billion by 2022. 

About this ASX medical share

According to its website, Ostepore specialises in the production of 3D-printed, bioresorbable implants that are used in conjunction with surgical procedures to assist with the natural stages of bone healing. 

Since the announcement, and following its considerable but short-lived rally, the Ostepore share price has settled at 64 cents at the time of writing.  

More reading

• 2 breakthrough ASX healthcare shares
• 3 innovative ASX shares to buy
• Osteopore share price storms 270% higher on distribution deal

Motley Fool contributor Matthew Donald 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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I think one of the best ways for investors to grow their wealth is to make long term investments in quality shares with strong business models and positive outlooks.

Three shares that tick a lot of boxes for me are listed below. I think they could provide outsized returns for their shareholders and potentially allow investors to retire rich. Here’s why I like them:

Appen Ltd (ASX: APX)

Appen is the global leader in the development of high-quality, human-annotated training data for machine learning and artificial intelligence. It has a team of 1 million+ crowd-sourced workers spread out across the globe. Its sizeable team allows the company to collect and label high volumes of image, text, speech, audio, and video data used to build and improve artificial intelligence models. Given the growing importance of artificial intelligence and machine learning and Appen’s leadership position in its field, I feel it is well-placed to continue growing its earnings at a strong rate long into the future.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

Another growth share to consider buying is Domino’s. I think the pizza chain operator could be a long term market beater thanks to its strong market position, positive sales targets, and its bold expansion plans. Domino’s is aiming to grow its global store network by 7% to 9% per annum for the next 3 to 5 years. It is also targeting same store sales growth of 3% to 6% per annum over the same period. If the company is able to at least maintain its margins, this should lead to strong earnings growth over the coming years and drive the Domino’s share price higher.

ResMed Inc. (ASX: RMD)

A final growth share to consider buying is this medical device company. ResMed has a portfolio of cloud-connected devices which care for people with sleep apnoea, chronic obstructive pulmonary disease, and other chronic diseases. The sleep treatment market is tipped to grow strongly over the next decade, which I believe puts ResMed in a position to continue growing its earnings at an above-average rate for some time to come.

More reading

• 2 five star ASX healthcare shares to buy in July
• Why Kogan and these popular ASX shares just hit record highs
• 5 things to watch on the ASX 200 on Wednesday
• Why Morgans thinks the Afterpay share price could be a reporting season hero
• ResMed share price rockets to record highs

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended Domino’s Pizza Enterprises Limited and ResMed Inc. 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 like to keep an eye on the substantial shareholder notices that are released to the ASX. This is because these notices give you an idea of which shares large investors, asset managers, and investment funds are buying or selling.

Two notices that have caught my eye this week are summarised below. Here’s what these fund managers have been buying:

iSelect Ltd (ASX: ISU)

A change of interests of substantial holder notice reveals that Thorney International and its subsidiary Thorney Technologies Ltd (ASX: TEK) have been buying more of this comparison website operator’s shares. According to the notice, the fund manager has recently added a further ~4.2 million shares to its holding, lifting its total to just under 24.1 million shares. This represents an 11.04% stake in iSelect.

The iSelect share price fell to a record low earlier today and is now down by a massive 74% since this time last year. Judging by its purchases, it would appear as though analysts at Thorney believe this selloff has been overdone and left its shares trading at an attractive level.

Kogan.com Ltd (ASX: KGN)

According to a notice of initial substantial holder, FMR LLC, better known as Fidelity Investments, has been buying this ecommerce company’s shares. The notice reveals that Fidelity has been adding to its existing position since 23 June and now owns a total of 5,353,238 shares. This is the equivalent of a 5.08% stake in the company.

Over the last 30 days, Fidelity picked up a total of 2,559,265 shares. It was buying as low as $14.80 in June and as high as $17.94 last week. Given that the Kogan share price is currently changing hands for $17.41, it would appear as though this fund manager still sees value in the company’s shares at the current level.

More reading

• Where to invest $20,000 into ASX shares right now
• Why Kogan and these popular ASX shares just hit record highs
• ASX 200 jumps 2.6% on vaccine hopes and jobkeeper
• These ASX eCommerce shares are riding the online shopping wave
• Kogan share price rockets higher after delivering impressive Q4 growth

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 Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com 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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The federal government may have written off the chances of a snap-back for the economy, but this doesn’t mean a V-shape recovery is off the table for all.

If anything, the sharp rebound is already unfolding for some miners with Citigroup noting a big rebound in demand for copper from China.

Australia is lucky to enjoy China’s unrelenting love for our commodities as the Morrison government extended its six-month wage support programs yesterday till the end of 2020, if not beyond.

It’s an admission that the government’s initial expectations for a rapid reinflation of our COVID-19-stricken economy was way too optimistic.

Copper miners outperforming the ASX 200

At least our copper miners have something to cheer about with the OZ Minerals Limited (ASX: OZL) share price jumping 2.8% to a nine-year high of $13.34 during lunch time trade.

Its fellow copper producer isn’t doing too badly too. The Sandfire Resources Ltd (ASX: SFR) share price climbed 0.5% to $5.57 when the S&P/ASX 200 Index (Index:^AXJO) tumbled 1.2% at the time of writing.

The preliminary read on Citigroup’s China copper end-use tracker (CCET) jumped 5.5% year-on-year (y/y) for June – the highest growth rate since May 2018.

Chinese metal demand

“This is the second positive y/y growth print this year, following +2.5% y/y in May 2020, pointing to a ‘V’ shaped recovery in Chinese end-use copper demand, having bounced back from -28% y/y growth in February 2020 (the steepest monthly y/y decline on record),” said the broker.

“The construction, automotive, and electronics sectors have been particularly strong in recent months.

“The broad based nature of end use improvement in China means demand should be similarly strong for other metals.”

These other metals include aluminium, zinc, nickel, silver and platinum group metals (PGMs). The data bodes well for other ASX miners too like the South32 Ltd (ASX: S32) share price and Alumina Limited (ASX: AWC) share price.

Australia’s V-shape recovery dream

Given the strong recovery in key sectors of the Chinese economy, one has to wonder if Australia can follow a similar path out of the coronavirus shutdown.

Australia is a few months behind China as the Asian giant appeared to have contained the virus outbreak in Wuhan around March.

But it isn’t realistic for us to think about the road to recovery when Victoria hasn’t yet seen a turning point in COVID-19 cases. The state recorded 484 new cases in the last 24 hours – its highest daily toll since the pandemic.

New South Wales is also desperately trying to gain control as a small outbreak of the disease is threatening to snowball.

Perhaps it’s all the more reason to be overweight on ASX miners as they aren’t exposed to the local economy.

More reading

• QBE share price rises despite expected half year loss
• Are ASX tech shares in a bubble?
• Top brokers name 3 ASX 200 shares to buy today
• BHP’s share price tumbles with this other ASX miner after being hit by broker downgrades
• Kanye West – ASX shares for his US presidential campaign

Motley Fool contributor Brendon Lau owns shares of OZ Minerals Limited and South32 Ltd. 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 QBE Insurance Group Ltd (ASX: QBE) share price rose 2.8% this morning before being sold off to now trade at a modest 1.7% gain. This was despite the insurer announcing it expects to report a net loss for the half year to 30 June 2020. QBE has forecast a statutory loss after tax of around $750 million for the half year. 

Impacts of COVID-19 

COVID-19 is expected to have an underwriting impact of $335 million. This includes $150 million of net incurred claims, $115 million in additional risk margin, $50 million in premium concessions and $20 million of expenses including motor vehicle premium refunds. The pandemic has impacted multiple lines of business including property (business interruption), reinsurance, workers’ compensation, trade credit, and lenders mortgage insurance. 

The benefit of reduced personal motor claims frequency was returned to customers through premium refunds. While the landscape remains uncertain, QBE currently estimates total COVID-19 related costs will be around $600 million pre-tax. This includes $265 million of potential further net claims that could emerge over the next 12 – 18 months, as well as a net investment loss of around $125 million as a result of extreme market volatility. 

Catastrophe and prior accident claims 

Catastrophe claims increased to $310 million during the half, up from $180 million in 1H FY19. This exceeded QBE’s $250 million allowance and reflected the devastating impacts of the bushfires in Australia coupled with east coast storm and hail activity. The half year result will also include adverse net prior accident year claims development of around $120 million. Lower risk-free rates used to discount net outstanding claims are expected to impact the underwriting result by around $335 million. 

How has the QBE share price been performing? 

The QBE share price fell from a February high of over $15 to a low of $7.32 in March. It has since recovered 34% to currently trade at $9.83. This is slightly ahead of the broader S&P/ASX 200 (ASX: XJO) which has recovered 33% from its March low. QBE conducted an $825 million capital raise in April in order to lift its regulatory capital. This provided the company with the capital strength to navigate a range of severe economic scenarios. 

Despite the disruption caused by the pandemic, insurance trading conditions have strengthened, with renewal rate increases averaging 8.7% during the half compared with 4.7% during 1H FY19. QBE Group CEO, Pat Regan, said, “Despite the impact of COVID-19, I am encouraged by the strong underlying trends evident in the result. Notwithstanding significant uncertainty surrounding the enduring impact of the COVID-19 pandemic, our greatly strengthened capital base positions us well to capitalise on accelerating pricing momentum and emerging organic growth opportunities”.  

More reading

• The ASX sector that’s heading for a V-shape recovery
• Are ASX tech shares in a bubble?
• Top brokers name 3 ASX 200 shares to buy today
• Why Baby Bunting, Beach Energy, QBE, & Resolute shares are pushing higher
• BHP’s share price tumbles with this other ASX miner after being hit by broker downgrades

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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ASX tech shares have been dominating the S&P/ASX 200 Index (ASX: XJO) news lately.

Whether it’s Zip Co Ltd (ASX: Z1P) or Xero Limited (ASX: XRO) making new all-time highs, or Afterpay Ltd (ASX: APT) teaming up with Chinese tech giant Tencent Holdings, there has certainly been a lot of buzz in this sector.

This wouldn’t have been hurt by the fact that ASX tech shares have been amongst some of the best performers since the ASX 200 bottomed out in late March. For example, Afterpay shares have risen more than 800% since 23 March. The Zip share price is also up around 400% over the same period.

We saw a similar pattern over on the US markets. Growth and tech stocks like Tesla, Amazon, Apple, Microsoft and Square have soared since March. Tesla is up around 333% in the last 4 months, whilst Amazon has gained nearly 90% (an incredible move for a US$1 trillion+ company) and Square is up ~233%.

But these kinds of moves tend to get investors’ blood boiling – and not in a good way. According to reporting in the Australian Financial Review (AFR), money is pouring into tech-themed exchange-traded funds (ETFs), both in Australia and around the world.

Are tech stocks in a bubble?

This has been fuelled by the FOMO-inducing performances of the companies above and others – and investors have noticed. For example, the ASX tech-tracking BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC) is up nearly 90% from 23 March, largely due to the Afterpay share price.

The ASX ETF that tracks the US tech-heavy NASDAQ index – the BetaShares Nasdaq 100 ETF (ASX: NDQ) – has also been a winner for ASX investors, climbing 27% since 23 March to a new record high of $25.97 just yesterday.

As has the more globally focused ETFS Morningstar Global Tech ETF (ASX: TECH), also up 27% over the same period.

This stellar and rapid performance has got some investors worried though.

This is some of what the AFR had to say:

“If history is any guide, the tech ETF boom has two inevitable consequences: retail investors joining the tech party too late and getting burned, and issuers launching tech funds to meet demand.”

The AFR also quotes Chris Brycki, CEO of Stockspot:

“History shows the worst time to buy a thematic ETF is when a lot of products get issued in a hot market. Investors want tech and issuers are happy to ‘feed the ducks when they are quacking’… With hindsight, tech ETFs were a great investment a decade ago. It is hard to argue they are as attractive now. Apple and other trillion-dollar tech giants might maintain their growth rates, but it is much harder from here. Most people buying tech shares today are doing so because they have done well in the recent past, which is not a sound strategy.”

Foolish takeaway

It’s hard to argue with these sentiments in my view. There will be some exceptions of course, but I do think that most tech stocks are getting into ‘exuberant’ territory at their current pricing levels. No one wants to call time on a raging party, but it has to end at some point. And you don’t want to be left without a seat when the music does stop.

More reading

• The ASX sector that’s heading for a V-shape recovery
• QBE share price rises despite expected half year loss
• Top brokers name 3 ASX 200 shares to buy today
• BHP’s share price tumbles with this other ASX miner after being hit by broker downgrades
• Kanye West – ASX shares for his US presidential campaign

Sebastian Bowen owns shares of Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS, ETFS Morningstar Global Technology ETF, Xero, and ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS. 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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