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Eli Lilly CEO Talks Coronavirus Treatment Progress: ‘This Is An Important Bridge Therapy’
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How to value the big four ASX banks
Yesterday, I explored how some of the current issues facing the ASX banks could be impacting their ‘bankability’. But to understand how banks are valued in the first place, you need to recognise how they differ from other type of stocks. For example, unlike regular industrial stocks, banks make money from borrowing, lending and aiding the flow of money throughout the economy. This makes them highly vulnerable to the economic cycle, and as an investor you need to know when they’re out of the money.
You need to tread carefully when using a price-to-earnings ratio (P/E) and dividend yield to gauge how attractive ASX bank shares might be. That’s because bad debts or one-off items can compromise the sustainability of bank dividends, as shareholders discovered in 2007 when they were slashed to help prop up badly needed bank capital.
It’s also important to understand that banks require some peculiar evaluation criteria when it comes to assessing their intrinsic value and business performance. If you do want to use the P/E ratio to help value and compare one bank share against another, then it must be used alongside some bank-specific financial ratios.
While some valuation principles are equally applicable to all companies, there are a number of complications specific to banks. These include determining leverage – due to being both borrower and lender – regulatory impact, capital expenditure and interest margins.
Key ratios
Net interest margin (NIM): A bank’s primary income source is the difference between the interest income from its loan book, and interest paid out to depositors. Typically expressed as a percentage of the average loans outstanding over the period under review, this is known as the ‘net interest margin’ (NIM). A high ratio indicates bank efficiency. While you won’t find it in official financial statements, most banks disclose this average somewhere near the front of their detailed annual reports.
Cost to income ratio: Measures a bank’s operating expenses as a percentage of its total income. The lower the ratio, the better the bank is at controlling costs and most brokers prefer banks with a cost to income ratio of less than 50%.
Bad debts ratio: Measures a bank’s provisioning for when a client can’t meet their repayments and a debt goes bad. The higher the number of bad loans, the higher you really want the net interest margin to be, otherwise it could wipe out a hefty chunk of profit.
Return on assets: As a useful efficiency measure for banks, ROA indicates how profitable a bank is relative to its total assets. Calculated by dividing annual earnings by its total assets, ROA is displayed as a percentage – the higher the better – and should reveal how competent management is at using its assets, like mortgages to generate earnings.
Tier 1 capital ratio: Is a litmus test of a bank’s capital strength. It’s arrived at by isolating the amount of ‘tier 1 capital’ – the highest quality capital – then identifying the proportion of ‘risk-weighted assets’. Capital ratios in the big four and Macquarie range between 10.8% and 12.2%.
Price to book ratio: Is the value you would see if the business was liquidated and liabilities paid out. A ratio of 1 indicates shareholders can only expect a return of book value. A ratio above 1 indicates the extent to which shareholders are potentially exposed to market risk.
Standout ASX bank shares to buy now
Based on its forecasted pre-provision operating profit per share growth over the next 3 years, Goldman Sachs’ preferred major bank exposure is National Australia Bank Ltd (ASX: NAB). It expects NAB’s revenue momentum to remain superior to its peers, driven by its overweight exposure to SME lending. While NAB has taken the lowest provision for bad debts, at 0.38%, its credit impairment charge as a percentage of loans is also considerably lower than its peers.
At a share price of $17.95, the bank is still trading 40% down on its 52-week high of $30.00. Goldman Sachs also reiterates a buy on Australia and New Zealand GrpLtd (ASX: ANZ) shares, which at $18.05 are still trading 38% down on their 52-week high of A$29.30.
Based on its strong deposit franchise, Commonwealth Bank of Australia (ASX: CBA) is seen as more vulnerable to the medium-term impact of lower rates. The bank also has the highest exposure to more competitive mortgages relative to its peers. Based on a valuation that’s more expensive in relative and absolute terms, Goldman Sachs concludes that NAB and ANZ offer a more attractive entry point at current levels.
Similarly, while Westpac Banking Corp (ASX: WBC) has demonstrated better expense control, stronger margins, and better than expected housing growth, the stock is not regarded as a buy. This is due to risk of higher investment spend, plus the risk of elevated fines and asset quality deterioration. At $17.36, Westpac shares are trading at a 42% discount to its 52-week high of $30.05.
Market uncertainty over banks’ fortunes is reflected in buy, hold and sell consensus broker recommendations on ANZ, NAB and Westpac. However, brokers unanimously agree that Commonwealth Bank is not a buy, with 12 out of 15 seeing it as a strong sell.
Despite the recent rally, bank share prices still suffer from a negative sentiment overhang that pre-dates COVID-19. Yet if the GFC is any proxy, the post-crisis period bodes well for the sector.
For 5 more shares set for post-COVID-19 growth, don’t miss the free report below.
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One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…
Another is a diversified conglomerate trading over 40% off its high, all while offering a fully franked dividend yield over 3%…
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More reading
- The big oil price recovery and bounce in ASX oil stocks are bringing out the bears
- 5 things to watch on the ASX 200 on Tuesday
- I don’t normally buy ETFs, but I would buy these 2
- Where to invest $10,000 into ASX shares immediately
- How bankable are the big four ASX bank shares in 2020?
Motley Fool contributor Mark Story 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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Canopy Growth: Things Are Worse Than Thought, Says Jefferies
What is the worst thing an investor could hear from a market share leader? According to Jefferies’ analyst Owen Bennett, it is probably the need to "understand what consumers want.”And that’s just what Canopy Growth (CGC) has said. According to the analyst, the Canadian cannabis producer’s disappointing FQ4 results indicate “things are worse than thought.”Canopy's Q4 net revenue came in at C$107.9 million, well below the C$128.9 million estimate and down by 13% from the previous quarter. The enormous overall net loss of C$1.3 billion, amounted to C$3.72 per share, far worse that the Street’s expectation of C$0.59 per share. Cue investors running to the exit door and a drop of 20% in the following trading session.Bennett recently upgraded Canopy’s rating from Sell to Hold, based on the reasoning “top line pressures were better understood,” and under the impression cost saving actions were moving the company in the right direction.Pointing out the slim bull case for Canopy rested on “increased focus on cost structure and profit delivery,” the analyst believes the turnaround appears more sluggish than anticipated as evidenced by operating expenses. Instead of improving, these increased by 17% compared to the previous quarter.Additionally, looking ahead, Canopy reduced expectations, describing FY21 as a “transition year,” and taking off the table previous forecasts for when it would achieve positive adjusted EBITDA.Along with the letdown of the report, the tone coming from Canopy’s direction has not impressed Bennett, who said, “While it said it is addressing certain headwinds with a shift into value and more high THC offerings, what really concerned us was commentary around needing to "understand what consumers want", and "servicing different segments". This is just basics and an issue we flagged over 12 months ago when initiating (Canopy having a catch all brand with no segmentation) and is something that in our view should be addressed prior to legalisation, not over a year into it, and especially from a market share leader.”To this end, Bennett reiterated a Hold and has a C$22.00 (US$16) price target on Canopy shares. (To watch Bennett’s track record, click here)Most of Wall Street echoes a neutral point of view, with TipRanks analytics exhibiting Canopy Growth as a Hold. Based on 15 analysts tracked by in the last 3 months, 2 say Buy, 10 suggest Hold, while 3 recommends Sell. Meanwhile the 12-month average price target stands at C$22.44, which aligns with where the stock is currently trading. (See Canopy Growth stock analysis on TipRanks)To find good ideas for cannabis stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
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Attention Biotech Investors: Mark Your Calendar For June PDUFA Dates
Despite the FDA tied up with COVID-19-related activities, May turned out to be a positive month for biopharma companies from the perspective of drug approvals. Three new molecular entities were approved during the month and several other drugs also received the nod.Meanwhile, Blueprint Medicines Corp (NASDAQ: BPMC) faced disappointment at the FDA altar, as its NDA for avapritinib for treating fourth-line gastrointestinal stromal tumor was clamped with a complete response letter.Here are the key PDUFA dates scheduled for the unfolding month.Merck's Antibiotic Combo Up Before FDA For Label Expansion * Company: Merck & Co., Inc. (NYSE: MRK) * Type of Application: sNDA * Candidate: Recarbrio * Indication: hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia * Date: June 4Recarbrio is a combination of imipenem, a penem antibacterial, cilastatin, a renal dehydropeptidase inhibitor, and relebactam, a betalactamase inhibitor, indicated for the treatment of complicated urinary tract infections and complicated intra-abdominal infections.Viela Eyes Commercial Status With its Autoimmune Disorder Drug Approval * Company: Viela Bio Inc (NASDAQ: VIE) * Type of Application: BLA * Candidate: inebilizumab * Indication: neuromyelitis optica spectrum disorder, or NMOSD * Date: June 11The FDA accepted the BLA for the investigational anti-CD19 monoclonal antibody on April 27, 2019. NMOSD is a rare autoimmune disease characterized by unpredictable attacks that often lead to severe, irreparable disability including blindness and paralysis.The company said in its first-quarter earnings release it has begun preparations for potential regulatory approval, hiring and training market access and sales teams and deploying MSLs. The company expects to commercialize the drug shortly after.Can Merck's Wonder Cancer Drug Snag Another Approval * Company: Merck * Type of Application: sBLA * Candidate: Keytruda * Indication: solid tumors * Date: June 16 * Merck announced April 7 FDA acceptance of the application with priority review. Keytruda as a monotherapy is being evaluated for treating adult and pediatric patients with unresectable or metastatic solid tumors with tissue tumor mutational burden-high, as determined by an FDA-approved test, who have progressed following prior treatment and who have no satisfactory alternative treatment optionsUltragenyx Seeks Label Expansion For Partnered Drug To Treat Low Serum Phosphate Levels * Company: Ultragenyx Pharmaceutical Inc (NASDAQ: RARE) and Kyowa Kirin * Type of Application: sBLA * Candidate: burosumab * Indication: hypophosphatemia * Date: June 18The FDA accepted the application for priority review Feb. 27. Burosumab is a fully human monoclonal IgG1 antibody, which works against the phosphaturic hormone FGF23. This hormone reduces serum levels of phosphorus and active vitamin D by regulating phosphate excretion and active vitamin D production by the kidney.It has already been approved for the treatment of X-linked hypophosphatemia in adult and pediatric patients 6 months of age and older. The companies are now seeking label expansion to include the indication FGF23-related hypophosphatemia associated with phosphaturic mesenchymal tumors that cannot be curatively resected or localized.Epizyme Looks To Strike It Rich With Another Tazemetostat Approval * Company: Epizyme Inc (NASDAQ: EPZM) * Type of Application: sNDA * Candidate: tazemetostat * Indication: follicular lymphoma * Date: June 18Tazemetostat was initially approved for epithelioid sarcoma in January, and has been sold under the brand name Tazverik. The regulatory application, which was accepted for priority review, seeks approval for the drug for patients with relapsed or refractory follicular lymphoma who have received at least two prior lines of systemic therapy.Can Second Time Be Charm For Nabriva? * Company: Nabriva Therapeutics PLC – ADR (NASDAQ: NBRV) * Type of Application: NDA * Candidate: Contepo * Indication: complicated urinary tract infection or cUTI * Date: June 19Nabriva's original NDA was rejected by the FDA in April 2019, with the regulatory agency handing down a complete response letter on the pretext of issues related to facility inspections and manufacturing deficiencies at one of Nabriva's contract manufacturers.The company resubmitted the application in late December, and the FDA acknowledged the resubmission in mid-January.Evoke Knocks The FDA Altar After A Prior Rejection * Company: Evoke Pharma Inc (NASDAQ: EVOK) * Type of Application: NDA * Candidate: Gimoti * Indication: diabetic gastroparesis * Date: June 19Evoke faced a rejection at the FDA altar once, and resubmitted the application, which was accepted for review in January. GimotI is a nasal spray product candidate for the relief of symptoms in adult women with acute and recurrent diabetic gastroparesis.See also: These 6 Coronavirus Vaccine Candidates Are The Likeliest To Succeed, Says Morgan Stanley Karyopharm Blood Cancer Drug On Track For Second Approval? * Company: Karyopharm Therapeutics Inc (NASDAQ: KPTI) * Type of Application: sNDA * Candidate: Selinexor * Indication: relapsed or refractory diffuse large B-cell lymphoma * Date: June 23Karyopharm announced on Feb. 19 FDA acceptance of the regulatory application, which sought accelerated approval for oral Selinexor tablets for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma, not otherwise specified, who have received at least two prior therapies.Selinexor was approved in July 2019 as a combo treatment option along with dexamethasone for the treatment of adult patients with relapsed refractory multiple myeloma, who have received at least four prior therapies.Zogenix's Hopes For No Jitters On Seizure Drug Review * Company: Zogenix, Inc. (NASDAQ: ZGNX) * Type of Application: NDA * Candidate: Fintepla * Indication: seizures associated with Dravet syndrome * Date: June 25Zogenix's regulatory filing for Fintelpa was accepted for priority review in November 2019, with a PDUFA date of March 25. The FDA extended the review period by three months to give itself time to look at the additional data provided by the company.Heron Expects Gain From Pain Drug Review * Company: Heron Therapeutics Inc (NASDAQ: HRTX) * Type of Application: NDA * Candidate: HTX-011 * Indication: post-operative pain * Date: June 26Heron's HTX-011 is a combo drug consisting of bupivacaine and a low dose of non-steroidal anti-inflammatory drug meloxicam, and is a non-opioid pain drug. The NDA was originally submitted in October 2018, and in response to the application, the FDA issued a complete response letter in April 2019, citing the need for additional CMC and non-clinical information.Heron resubmitted the NDA in October 2019, and in February the company said the FDA extended the review period by three months, rendering the PDUFA data on June 26.If approved HTX-011 will compete with Pacira Biosciences Inc's (NASDAQ: PCRX) Exparel, Guggenheim Securities analyst Dana Flanders said in a recent note. Citing the firm's post-operative pain survey, Flanders said HTX-011 is likely to see significant growth at the expense of Exparel. The analyst said price point may be key in driving significant uptake.Can Chiasma Cross The FDA Hurdle This Time Around? * Company: Chiasma Inc (NASDAQ: CHMA) * Type of Application: NDA * Candidate: Mycapssa * Indication: acromegaly * Date: June 26The FDA accepted Chiasma's originally submitted NDA in August 2015.Mycapssa, or octreotide capsules, is an oral drug being evaluated for the maintenance therapy of adult patients with acromegaly. A complete response letter was issued by the FDA in April 2016, seeking an additional clinical trial to establish the efficacy. Following a resubmission in Dec. 2019, the FDA accepted the application in January, giving it a PDUFA date of June. 26.Acromegaly is a hormonal disorder that is caused by the production of too much hormone by the pituitary gland during adulthood, causing bone size to increase.Related Link: Merck's Coronavirus Plan Of Attack: 2 Partnerships, M&A Deal Aimed At Treatment, Vaccine DevelopmentIntercept's Wait For NASH Drug May Not End * Company: Intercept Pharmaceuticals Inc (NASDAQ: ICPT) * Type of Application: NDA * Candidate: Obeticholic acid * Indication: fibrosis due to non-alcoholic steatohepatitis * Date: June 26NASH has become a tough nut to crack for biotech companies, with no approved drug yet despite a plethora of ongoing research. Intercept filed the NDA in November 2019 following positive Phase 3 results from the GENERATE study. The PDUFA date, which was originally fixed as March 26, was extended by three months.However, dimming the prospects, the company informed earlier this month an Adcom meeting scheduled tentatively for June 9 was postponed by the FDA. The company, therefore, indicated the review period is likely to be extended.See more from Benzinga * The Week Ahead In Biotech: ASCO, Menlo And Merck FDA Decisions, IPOs In The Spotlight * The Daily Biotech Pulse: ASCO Presentations Begin, Altimmune Pops On Insider Buying, Immutep Gets R&D Grant(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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3 cheap ASX manufacturing shares for the supply chain boom
In the wake of COVID-19, supply chains are already moving to become more local. For instance, there were acute shortages in healthcare, car parts and construction. In South Korea, Hyundai closed its plants due to a lack of car parts. Moreover, we all felt the impacts of a lack of hand sanitiser and face masks in the early days.
When we talk about Australian manufacturers, thoughts go immediately to PPE manufacturer Ansell Limited (ASX: ANN) or shipbuilder Austal Limited (ASX: ASB). Yet there are several smaller companies selling at share prices I believe are below their intrinsic value.
Local supply chain manufacturing
Reliance Worldwide Corporation Ltd (ASX: RWC) manufactures and sells plumbing accessories – a core product in the residential and commercial supply chains. Over the past 4 years since its initial public offering (IPO), the company has grown its sales by an average of 46.5%. At the same time, it is continually improving its net profits.
Reliance has been acquiring companies to provide a comprehensive product offering. In addition, it operates in Australia, the UK and the US, providing exposure to the US housing market. The Reliance share price is selling at a price-to-earnings ratio of 20.51. This is well below the company’s 10 year P/E average and I believe Reliance is currently selling at a discount to its intrinsic value.
Orora Ltd (ASX: ORA) manufactures packaging products. This includes bottles, boxes, cartons and aluminium cans. It operates in Australia and the US. Over the 6 years since its IPO, Orora has an average return on capital employed (ROCE) of 11%. This is a measure of how well the company can transform available capital into earnings. As companies move to localise supply chains, Orora is likely to see increased sales.
This share has a one-off payment this year after the sale of one of its business. When combined with the dividend payment, this share pays a 18.8% yield (based on last Friday’s share price). However, it must be purchased before the ex-dividend date of 19 June.
High tech manufacturing
Of the 3 companies, Electro Optic Systems Hldg Ltd (ASX: EOS) is the smallest. It manufactures components for the defence and space sectors. Sales for this company have doubled for the past 2 years. It has recently completed the acquisition of Audacy Corporation, a US satellite communications company, which will provide the manufacturer with greater product diversity. Electro Optic provides high technology solutions, including the space situational awareness network in conjunction with the United States.
The SpaceX launch over the weekend, combined with the recent Space Force announcement in the US and increases in defence spending, will likely see an increase in sales for this ASX mid cap. These are considered security critical areas. In my opinion, it would be a mistake to leave these areas in any concentrated and offshore manner, given the lessons from COVID-19.
Our free report has 5 cheap shares for growing wealth for life.
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One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…
Another is a diversified conglomerate trading over 40% off its high, all while offering a fully franked dividend yield over 3%…
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See for yourself now. Simply click here or the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.
More reading
- SpaceX creates new era for this mid-cap ASX share
- These 5 ASX 200 shares were last week’s biggest winners
- Leading brokers name 3 ASX 200 shares to buy right now
- Real wealth from 3 roaring mid caps in May
- Why Austal, CSL, Fortescue, & Star shares are charging higher today
Daryl Mather owns shares of Austal Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Austal Limited and Reliance Worldwide Limited. The Motley Fool Australia owns shares of and has recommended Electro Optic Systems Holdings Limited. The Motley Fool Australia has recommended Ansell Ltd. and 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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The Energy Transition Is an Oil Refinery Making Renewable Diesel
(Bloomberg) — In a sign of changing times, a U.S. oil refining company is converting one of its plants into a producer of clean fuel.HollyFrontier Corp.’s Cheyenne refinery will stop using crude oil and be repurposed to pump out renewable diesel, which is typically made from soybean oil, recycled cooking oil and animal fats. That’s after processing margins plummeted on the collapse in fuel demand due to Covid-19-related lockdowns. Besides, the old facility’s maintenance costs were “uncompetitive,” and the government is promoting cleaner fuel production.It’s the latest example of how the traditional fossil fuel industry is changing amid rising calls for the protection of the environment and increased demand for green sources of energy. Cheaper renewable energy projects have already led to decreasing coal output across the U.S., and now — in the wake of oil’s historic crash — some fuel producers are grappling with diminished returns from turning crude into fuel.“Demand for renewable diesel, as well as other lower carbon fuels, is growing and taking market share based on both consumer preferences and support from substantial federal and state government incentive programs,” Mike Jennings, chief executive officer of HollyFrontier, said in a statement Monday.The company expects to spend $125 million to $175 million to re-purpose Cheyenne to produce about 90 million gallons per year of renewable diesel by the first quarter of 2022. The plant will stop consuming crude oil at the end of July this year, and 200 workers will be laid off, according to HollyFrontier.The conversion plan comes as dozens of small refineries nationwide brace for a big spike in costs to comply with the Renewable Fuel Standard, which mandates they blend biofuel into gasoline or buy tradable credits to comply. For years, many small refineries have won exemptions from the mandate, but under a federal appeals court ruling in January, only refineries that have continually been granted waivers can count on getting them in the future.HollyFrontier is effectively shedding the Cheyenne refinery’s biofuel-blending obligation under the RFS and transforming it into a plant that stands to benefit from the program.Using the converted plant, HollyFrontier will be able to produce not just renewable diesel encouraged by the RFS but also compliance credits that can be sold separately. However the transition comes with other costs, as fewer workers will be necessary to run the converted plant. The RFS is effectively forcing the closure of a plant that generated tax revenue and jobs for Wyoming and mandating its replacement be a smaller plant that employs far fewer people to sell fuel to California, said a refining industry official who asked not to be named discussing industry strategy.Senator John Barrasso, a Republican from Wyoming, called the job cuts at the Cheyenne refinery “devastating.” Although the Covid-19 pandemic has hurt oil refineries, Barrasso also pinned blame on the Environmental Protection Agency’s handling of the Renewable Fuel Standard.“EPA has failed to protect small refineries from unreasonable compliance costs under the Renewable Fuel Standard,” Barrasso said in an emailed statement. “Congress mandated the agency protect refineries under the Clean Air Act” and “relief from the RFS is critical to small refineries.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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Where to invest $5,000 into ASX 200 shares immediately
This afternoon the Reserve Bank will make a decision on the cash rate. While there is speculation that rates could go to zero today, I’m not overly convinced this will be the case.
However, what I am convinced about, is that rates will remain at ultra low levels for a long time to come.
In light of this, if I had $5,000 in a savings account and no immediate use for it, I would invest it into the share market.
Three top ASX 200 shares I would buy right now with these funds are named below:
Appen Ltd (ASX: APX)
Appen is a leading developer of high-quality, human annotated datasets for machine learning and artificial intelligence (AI). It has a team of over one million crowd-sourced experts preparing the data for the models of some of the world’s biggest tech companies. This is a vital part of the process and demand for its services is growing very strongly. And given the importance of AI and machine learning for big business, I expect this to be the case for a long time to come. In light of this, I believe Appen is well-placed to deliver strong earnings growth over the next decade.
Aristocrat Leisure Limited (ASX: ALL)
The Aristocrat Leisure share price has fallen heavily this year because of the pandemic. While its performance has inevitably been impacted by the crisis, I believe the selloff has been overdone. Especially given how I expect the gaming technology company to bounce back strongly when the crisis passes. This is due to its industry-leading poker machines and its growing digital business. The latter is experiencing very favourable tailwinds right now and is generating material recurring revenues.
Bravura Solutions Ltd (ASX: BVS)
Bravura Solutions is a growing financial technology company which offers a range of solutions to the wealth management and funds administration industries. While the company has a number of products in its portfolio, I’m most positive on the Sonata wealth management platform. This next generation wealth management platform has been a key driver of Bravura Solutions’ growth over the last few years. The good news is that I expect more of the same in the future thanks to it sizeable market opportunity.
And if you have some funds leftover, these five recommendations below look like potential market beaters…
NEW. The Motley Fool AU Releases Five Cheap and Good Stocks to Buy for 2020 and beyond!….
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One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…
Another is a diversified conglomerate trading over 40% off its high, all while offering a fully franked dividend yield over 3%…
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See for yourself now. Simply click here or the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.
More reading
- 3 ASX 200 resources shares to buy today
- 5 things to watch on the ASX 200 on Tuesday
- 3 ASX 200 tech shares to buy and hold beyond 2025
- Why Woolworths shares are offering a rare buying opportunity today
- In your 50s? Here are the 2 best ASX 200 shares to buy now
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 Bravura Solutions Ltd. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended Bravura Solutions 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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3 ASX 200 resources shares to buy today
There are some great value ASX 200 resources shares to buy right now. The S&P/ASX 200 Index (ASX: XJO) is down 12.94% in 2020 but the Aussie resources sector has so far underperformed the benchmark index.
It takes a savvy investor to sniff out value in such a complicated industry. For instance, you have to work out if ASX gold shares are better than iron ore shares.
While the Alumina Limited (ASX: AWC) share price is down 33.91% this year, others like Newcrest Mining Limited (ASX: NCM) have climbed higher.
So, where are the best value Aussie mining shares right now?
3 ASX 200 resources shares to buy today
Speaking of Newcrest, I think it could be in the buy zone. The Aussie gold miner’s shares are up 4.11% this year and could be climbing higher.
Investors are certainly bullish on the ASX 200 resources share. I’m not a big gold investor myself but Newcrest is certainly outperforming. If global gold prices remain high, the Newcrest share price could be one to watch.
But it’s not the only ASX gold miner that’s potentially in the buy zone right now. I think St Barbara Ltd (ASX: SBM) is worth watching this year. The Aussie gold miner’s shares have surged 17.75% in 2020 thanks to high commodity prices.
I also think some of the large ASX miners could be undervalued.
BHP Group Ltd (ASX: BHP) is one that I’ve got my eye on. BHP shares have been making a steady recovery in recent weeks but are still down by 8.79% in 2020.
If we see iron ore prices continue to climb, BHP could be a bargain at $35.71 per share. The Aussie miner is far from a safe bet, but it does boast a $169.1 billion market capitalisation.
Foolish takeaway
There are a number of ASX 200 resources shares that could be undervalued in 2020. I think buying into the sector is a speculative play, but could be a valuable addition to a well-diversified portfolio.
For more long-term buying options, check out these 5 ASX shares today!
NEW. The Motley Fool AU Releases Five Cheap and Good Stocks to Buy for 2020 and beyond!….
Our experts here at The Motley Fool Australia have just released a fantastic report, detailing 5 dirt cheap shares that you can buy in 2020.
One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…
Another is a diversified conglomerate trading over 40% off its high, all while offering a fully franked dividend yield over 3%…
Plus 3 more cheap bets that could position you to profit over the next 12 months!
See for yourself now. Simply click here or the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.
More reading
- Where to invest $5,000 into ASX 200 shares immediately
- 5 things to watch on the ASX 200 on Tuesday
- 3 ASX 200 tech shares to buy and hold beyond 2025
- Why Woolworths shares are offering a rare buying opportunity today
- In your 50s? Here are the 2 best ASX 200 shares to buy now
Motley Fool contributor Ken Hall 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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These ASX shares just zoomed to multi-year highs
On Monday the S&P/ASX 200 Index (ASX: XJO) was on form and charged notably higher.
While a good number of ASX shares pushed higher with the market, some climbed so strongly they hit multi-year highs or better.
Three ASX shares that achieved this milestone are listed below. Here’s why they are flying high right now:
Dicker Data Ltd (ASX: DDR)
The Dicker Data share price continued its positive run and hit an all-time high of $8.22 on Monday. When the leading computer hardware and software distributor’s shares hit that level, it meant they were up 66% in 12 months. Investors have been buying the company’s shares after its strong performance in FY 2019 and even stronger start to FY 2020 despite the pandemic. Dicker Data recently revealed that its first quarter profits grew 36.3% on the prior corresponding period to $18.4 million. Pleasingly, it appears confident this strong form can continue. The company revealed that it intends to lift its fully franked dividend by 31% to 35.5 cents per share this year.
Fortescue Metals Group Limited (ASX: FMG)
The Fortescue share price was on form again and raced to a record high of $14.80. Investors have been fighting to get hold of the iron ore producer’s shares after the price of the steel making ingredient surged higher over the last 12 months. This has been driven largely by supply disruptions and robust demand. The spot iron ore price is currently trading above US$100 a tonne. This leaves Fortescue in a very strong position to profit greatly thanks to its low costs and improving production grades.
Zoono Group Ltd (ASX: ZNO)
The Zoono share price hit a multi-year high of $2.48 on Monday. This biotech company’s shares have been strong performers during the pandemic. This is due to the increasing demand it is experiencing for its surface and hand sanitisers. Demand has been so strong the company reported third quarter revenue of NZ$15.7 million, which was up from just NZ$1.75 million during the entire first half. The big question will be whether this level of sales can be maintained once the crisis passes. Investors appear to be betting that this is the new normal and hand sanitation has changed forever.
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More reading
- Why you might want to own ASX mining shares in 2020
- 5 winning ASX dividend shares to buy in June
- How our richest Australians are getting richer
- 3 ASX biotech shares that have soared higher today
- Why Austal, CSL, Fortescue, & Star shares are charging higher today
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data 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 strong ASX dividend shares to buy right now
Later today the Reserve Bank will hold its monetary policy meeting for June. According to the latest cash rate futures, the market is currently pricing in a 45% probability of a rate cut to zero.
While I’m not convinced rates will go lower again, I do expect them to stay at these lowly levels for at least a couple of years.
In light of this, I continue to believe that investors should look for a source of income from the share market instead of term deposits or savings accounts.
But which shares should you buy? Three top ASX dividend shares I would buy for income are listed below:
Coles Group Ltd (ASX: COL)
I think this supermarket operator would be a good option for income investors. This is because I believe Coles is well-placed to deliver solid earnings growth over the next decade thanks to its refreshed strategy and defensive business. And with Coles intending to pay out upwards of 90% of its earnings to shareholders, this bodes well for its dividends in the future. At present I estimate that its shares offer a fully franked 3.9% FY 2021 dividend.
VanEck Vectors Australian Banks ETF (ASX: MVB)
I think the big four banks are all trading at attractive levels for investors. But if you’re not sure which bank to buy ahead of the others, then you could just buy a piece of them all. You can do this by buying the VanEck Vectors Australian Banks ETF. You’ll also get a slice of the regional banks and investment bank Macquarie Group Ltd (ASX: MQG) as well. I estimate that its units will provide investors with a partially franked yield of at least 5% in FY 2021.
Wesfarmers Ltd (ASX: WES)
A final dividend share I would buy is Wesfarmers. I think the conglomerate is capable of growing its earnings and dividends at a solid rate over the next decade. This is thanks to the quality and growth potential of its portfolio of assets and potential earnings accretive acquisitions in the near future. Based on its last close price, I estimate that its shares offer a fully franked 3.6% FY 2021 dividend yield.
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This fully franked “under the radar” company is currently trading more than 24% below its all-time high and paying a 6.7% grossed-up dividend.
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More reading
- Why Woolworths shares are offering a rare buying opportunity today
- These ASX shares are set to get a big boost from the next big government stimulus
- 5 winning ASX dividend shares to buy in June
- 3 best stocks for ASX 200 investors in retirement to buy now
- Is the Woolworths share price cheap today?
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The post 3 strong ASX dividend shares to buy right now appeared first on Motley Fool Australia.
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