Coles Group Ltd (ASX: COL) shares haven’t been having a good time of late.

Since 19 March 2020, the S&P/ASX 200 Index (ASX: JXO) has risen an extraordinary 21%. Over the same period, the Coles share price has fallen more than 12% from above $17 to where they sit today (at the time of writing) at $15.02.

Of course, from a year-to-date perspective, it’s a bit of a different story. Since the dawn of 2020 (which feels like a lifetime ago), the ASX 200 is still down 13.4%, whilst Coles shares have essentially been flat.

So what’s going on here? And more importantly, for investors, is the Coles share price a buy today?

Hot Coles or not?

The first thing to note is that Coles’ former parent company has been selling Coles shares like there’s no tomorrow. At the start of 2020, Wesfarmers Ltd (ASX: WES) owned a 15% stake in Coles – leftover from the demerger that occurred back in November 2018 (at around $12.80 a share).

Fast forward to today, and Wesfarmers has trimmed back its remaining stake in Coles to around 5%. Yes, Wesfarmers sold a ~5% chunk of its Coles stake in February this year, followed by another ~5% tranche in late March.

With Wesfarmers seeing no value in Coles, should investors take the hint?

These transactions don’t merit too much thought, in my view. Yes, Wesfarmers probably doesn’t see too much meaningful growth in Coles’ future. But that’s understandable, seeing as Coles is a very mature business with almost complete market saturation.

It was also an easy avenue for Wesfarmers to raise cash, seeing as the Coles share price held up extraordinarily well in the market crash we saw in March. And Wesfarmers is the kind of company that’s always looking for new pathways to invest down.

Are Coles shares a buy right now?

So here’s how I see Coles shares today: a defensive, mature company with a reasonably safe dividend. Nothing more, nothing less.

For investors who prioritise ASX dividend income, Coles remains a great option in my view. On current prices, Coles shares are offering a 2.78% dividend yield, which comes with full franking credits (giving it a grossed-up yield of 3.97%). If you identify with these goals, the Coles share price is in the buy zone right now, in my view.

But if you’re looking to substantially grow your wealth over years or even decades, Coles is probably not the best bet to make. There are a plethora of ASX shares out there that offer better growth prospects, so perhaps your cash is better served in something else.

More reading

• Will the Wesfarmers share price climb higher in 2020?
• 3 ASX blue chip shares to put into your retirement portfolio
• 3 ASX shares Warren Buffett couldn’t ignore today
• 1 key trait to look for with most top ASX growth shares
• 3 quality ASX dividend shares for income investors to buy today

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. 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.

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The Over the Wire Holdings Ltd (ASX: OTW) share price is charging higher today on the back of a business update and new strategic partnership.

Over the Wire is a telecommunications, cloud and IT solutions provider that specialises in converged voice and data networks, data centres, and hosted infrastructure solutions for corporate clients.

The company owns a carrier-level network with points of presence in all major Australian capital cities and Auckland, New Zealand.

What did Over the Wire announce?

This morning, the company revealed that the current pandemic and associated restrictions have generated strong demand for its voice offering, resulting in higher volumes. This increase in voice volumes has positively offset the delay in some data services due to customer site access restrictions during lockdown.

What’s more, Over the Wire’s exposure to customers in the hardest-hit industries of retail, hospitality and travel is limited, with those most affected representing less than 3% of its recurring base.

While COVID-19 has affected its non-recurring business, recent orders from customers indicate the company is now likely to deliver more than 70% of its non-recurring revenue forecast.

On the whole, Over the Wire noted that it continues to generate positive operational cash flow, maintains a strong balance sheet, and its recurring business is in line with expectations.

The company remains confident of being within 3% of consensus, which comprises revenue of $90.4 million and earnings before interest, tax, depreciation and amortisation (EBITDA) of $17.4 million.

Commenting on business performance, managing director Michael Omeros said:

“Although the COVID-19 pandemic has created uncertainty and challenging market conditions our team has shown focus and resilience which should be commended. We are satisfied with how the business is currently tracking and confident about achieving positive growth into next financial year.”

Partnership with NEXTDC Ltd (ASX: NXT)

On top of the business update, Over the Wire also announced a strategic partnership with S&P/ASX 200 Index (ASX: XJO) share NEXTDC. Over the Wire will migrate core elements of its network and private cloud infrastructure into NEXTDC’s tier 4 facilities.

Over the Wire described this partnership as a “foundational building block” that will bring its network closer to many of the world’s leading cloud providers and cloud on-ramp services. Additionally, the partnership will allow Over the Wire to further develop its multi-cloud strategy in conjunction with its current private cloud offering.

“NEXTDC forms an integral part of our multi-cloud strategy and we are excited to be on the journey with NEXTDC, as they continue to build out next generation data centres that are enabling the growth of the digital economy,” said Mr Omeros.

At the time of writing, the Over the Wire share price is sitting 6.35% higher at $3.18 after soaring as much as 10.7% at around midday. Like most small-cap ASX growth shares, Over the Wire shares took a tumble in the wake of COVID-19 and are currently down 30% year to date.

More reading

• 3 fantastic ASX growth shares I would buy and hold for decades
• New to investing? Put $500 into these top ASX 200 shares
• Where to invest $5,000 in ASX growth shares today
• Where to invest $20,000 into ASX shares right now
• 3 explosive ASX growth shares to buy

Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Over The Wire Holdings Ltd. The Motley Fool Australia has recommended Over The Wire Holdings Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Australia’s top brokers have been busy adjusting their estimates and recommendations again, leading to the release of a large number of broker notes this week.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX 200 shares are in the buy zone:

A2 Milk Company Ltd (ASX: A2M)

According to a note out of UBS, its analysts have retained their buy rating and NZ$22.00 (A$20.55) price target on this fresh milk and infant formula company’s shares. Although the broker suspects that market share gains have slowed, it remains confident that a2 Milk Company is on course to deliver a strong result in FY 2020. In addition to this, UBS isn’t concerned by the recent launch of a2-only products from rivals such as Bellamy’s. It believes a2 Milk Company’s strong brand loyalty will help it fend off the competition. I agree with UBS and believe a2 Milk Company would be a great option for investors.

Nearmap Ltd (ASX: NEA)

Analysts at Goldman Sachs have retained their buy rating and lifted the price target on this aerial imagery technology and location data company’s shares to $2.55. According to the note, the broker was pleased with Nearmap’s market update on Thursday. It is performing better than it expected, which has led to Goldman increasing its forecasts. The broker is now forecasting its annualised contract value growing by a compound annual growth rate of 18% between FY 2019 and FY 2022. The broker also notes that Nearmap has a $2.9 billion opportunity in its current markets, which is materially more than its estimate for revenue of $130 million in FY 2022. I agree with Goldman Sachs and feel Nearmap could be a great long term option.

Telstra Corporation Ltd (ASX: TLS)

A note out of the Macquarie equities desk reveals that its analysts have retained their outperform rating but trimmed the price target on this telco giant’s shares slightly to $3.90. The broker has reduced its earnings estimates slightly to account for negative impacts of the pandemic. Nevertheless, Macquarie believes Telstra will continue to generate sufficient cash flow to maintain its 16 cents per share dividend over the coming years. This equates to a fully franked 4.9% dividend yield. I think Macquarie is spot on and Telstra remains a great option for investors. Especially those in search of income.

More reading

• Ready to invest your first $1,000? Try these 2 ASX shares
• Should you worry about geopolitical events in investing?
• 3 cheap ASX 200 shares I’d buy today
• ASX 200 down 1.2%: Westpac tumbles, Appen reaffirms guidance, Costa CEO to retire
• Will the Wesfarmers share price climb higher in 2020?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Nearmap Ltd. and Telstra Limited. The Motley Fool Australia owns shares of A2 Milk. 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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In afternoon trade the S&P/ASX 200 Index (ASX: XJO) is being weighed down by profit taking in the banking sector. At the time of writing the benchmark index is down 1% to 5,792.5 points.

Four shares which have not let that hold them back are listed below. Here’s why they are charging higher:

The Afterpay Ltd (ASX: APT) share price is up almost 2.5% to $47.15. Investors appear to be taking advantage of a pullback in the payments company’s share price on Thursday to top up their positions. Profit taking led to Afterpay’s shares sliding around 7% yesterday.

The Austal Limited (ASX: ASB) share price is up over 5% to $3.20 after upgrading its revenue and earnings guidance. This morning the shipbuilder advised that its FY 2020 revenue will hit ~$2 billion, while its earnings before interest and tax (EBIT) will be “no less than $125 million”. As a comparison, the company was previously expecting revenue of at least $1.9 billion and EBIT of no less than $110 million.

The Kogan.com Ltd (ASX: KGN) share price has jumped 7% to a record high of $11.32. This is despite there being no news out of the ecommerce company on Friday. However, its shares have been on a tear this month after it revealed very strong sales and profit growth during the pandemic. Investors appear optimistic that the crisis has accelerated the structural shift to online shopping.

The Northern Star Resources Ltd (ASX: NST) share price has surged 7.5% higher to $14.78. Investors have been buying the gold miners today after the price of the precious metal rebounded overnight. This was driven by escalating tensions between the United States and China. It isn’t just Northern Star rising strongly. The S&P/ASX All Ordinaries Gold index is up a solid 3.2% at the time of writing.

More reading

• ASX 200 down 1.2%: Westpac tumbles, Appen reaffirms guidance, Costa CEO to retire
• The best performing ASX 200 stock today may have more room to climb
• 10 quality ASX shares to buy in June
• 5 things to watch on the ASX 200 on Friday
• 4 ASX fintech shares to make you rich

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

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Investing your first $1,000 into the share market is a very exciting event in anyone’s life. But it can also be nerve-racking. Where to put it? There are literally thousands of investments to choose from, just on the ASX alone.

That’s why I’ve found 2 ASX shares that I would be very happy to recommend to a beginner with their first $1,000 to spend. Both shares can be bought and held with very little active management or effort, which I think is a perfect arrangement for anyone wanting to dip their toes into ASX shares for the first time.

Magellan High Conviction Trust (ASX: MHH)

This share is actually a listed investment trust (LIT), which is a collection of underlying shares that is managed on investors’ behalf. In this way, I think it’s a great option for a beginner’s first $1,000 investment. Magellan High Conviction Trust aims to amass a concentrated portfolio of 8–12 of the shares that Magellan’s management team views as the ‘best in the world’. These currently include well-known names like Google-owner Alphabet, Microsoft, Visa and Alibaba.

These companies are world-class and have a truly global presence. As such, I think this is a great investment for your first $1,000 – or for any investor, in truth. MHH also aims to pay out a 3% cash distribution each year, which can either be taken in cash as some passive income, or else re-invested for a discount.

VanEck Australian Equal Weight ETF (ASX: MVW)

One of the criticisms I hear most of your typical S&P/ASX 200 Index (ASX: XJO) exchange-traded funds (ETFs) is regarding their high concentration towards ASX banks and miners.

Whilst this is true of a conventional ASX 200 ETF, this fund from VanEck operates a little differently. That’s because it assigns each company in the ASX 200 an equal investment, rather than giving larger companies a bigger slice of the pie. As such, your larger shares like Commonwealth Bank of Australia (ASX: CBA) get the same slice of this ETF as your smaller companies like WiseTech Global Ltd (ASX: WTC).

Since this ETF’s inception in 2014, it has comfortably outperformed the ASX 200 index, so that’s enough validation for your first $1,000 investment in itself, in my view.

As such, I think this equal-weighted ETF is a great choice for any beginner investor, who wants an equally cut ‘slice of Australia’. Again, it’s managed entirely on your behalf – meaning you can just ‘set and forget’ it if you so wish.

More reading

• 3 cheap ASX 200 shares I’d buy today
• ASX 200 down 1.2%: Westpac tumbles, Appen reaffirms guidance, Costa CEO to retire
• Will the Wesfarmers share price climb higher in 2020?
• 2 ASX 200 tech shares I’d like to buy today
• Why I think the CSL share price is a strong buy today

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares), Magellan High Conviction Trust, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares) and Visa. The Motley Fool Australia owns shares of WiseTech Global. The Motley Fool Australia has recommended Alphabet (A shares). 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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Investors in the share market can be sent into a flurry of worry by geopolitical events. Should you worry about them when it comes to investing?

There is growing concern about what’s happening with the two superpowers of the world, China and the US.

Western countries aren’t happy with how things are going in Hong Kong with a new security law passed by China. The Chinese don’t like that Australia was pushing for an inquiry into the coronavirus. The US election could turn out to be a real mess with how things are going with the ongoing spread of the coronavirus.

Geopolitical events can cause big shudders in the share market. Just look what happened during the trade war. Each tweet from President Trump caused the market to react negatively or positively.

Keep geopolitical events in mind

I do think it’s important to be aware of what’s going on. Sometimes an event can cause the earnings and valuation of shares to move dramatically higher or lower. Look what happened with Bellamy’s. Look how changing oil prices have an obvious huge effect on shares like Woodside Petroleum Limited (ASX: WPL) and Santos Ltd (ASX: STO).

Politics can have a big effect on returns. The decisions about the NBN were decided by politicians and this has had a huge effect on Telstra Corporation Ltd (ASX: TLS).

But don’t give it too much weight

We also need to keep in mind that geopolitical events will keep happening. There probably isn’t going to be a time when we all agree with what the leaders of Australia, the US, China are all doing. 

Geopolitical events have been happening for many centuries. We should expect that things will keep changing. There wouldn’t be any share market volatility if there were no surprises.  

The share market reached an all time high in February 2020 despite all previous (and ongoing) problems. As investors we need to stay optimistic for the long-term or else we’ll end up missing out on gains.

More reading

• 3 cheap ASX 200 shares I’d buy today
• 3 dirt cheap ASX shares to buy before it is too late
• Is the Telstra share price a buy?
• 5 things to watch on the ASX 200 on Friday
• Where will the Telstra share price be next year?

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra 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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ASX 200 shares have had a wild ride in 2020 with the S&P/ASX 200 Index (ASX: XJO) slumping 13.47% lower.

However, it hasn’t been all bad news with some companies surging in value. While I think the ship has sailed on some ASX growth shares like Afterpay Ltd (ASX: APT), there are still some Aussie companies I’d like to buy.

Here are a few at the top of my watchlist as we head into June 2020.

3 ASX 200 shares I’d like to buy today

I don’t mind a bit of a speculative play in a diversified portfolio and that’s where Woodside Petroleum Limited (ASX: WPL) comes in.

I think the geopolitics and ongoing oil price war will make the Woodside Petroleum share price volatile in 2020. The Aussie oil producer’s shares are down 33.8% this year but where there is risk there is potential reward.

OPEC+ has slashed production in recent months and the global economy is starting to hum back to life. That’s good news for Woodside with higher demand for oil and energy expected over the coming months.

For a less speculative play, I think Westpac Banking Corp (ASX: WBC) is worth a look. The ASX 200 bank share has fallen 27.86% lower this year but could be in the buy zone.

We know Westpac has had its fair share of issues over the last 12 to 18 months and I think a share price correction is justified given the uncertainty created by the coronavirus pandemic. We could also see real estate come under pressure and further writedowns.

Having said that, the share market is inherently forward-looking. Also, Westpac is still churning out billion-dollar profits. I think it will continue to be a strong ASX 200 dividend share if I’m investing for the next decade.

Finally, Domain Holdings Australia Ltd (ASX: DHG) is definitely on my list of cheap shares I’d buy today.

Many Aussies are hoping to see a property correction in 2020 before buying into the market. However, I’m not so sure this will happen. There is a lot of support for owner-occupiers and property investors right now. While we might see the market adjust slightly in September, I still think listings will recover which will be good news for this ASX 200 media share.

Foolish takeaway

These are just a few themes that I think are going to impact ASX 200 shares in 2020. That being said, it’s important to be strategic with your investments and make sure you’re looking at the next 10 years rather than the next 10 weeks.

More reading

• Ready to invest your first $1,000? Try these 2 ASX shares
• Should you worry about geopolitical events in investing?
• ASX 200 down 1.2%: Westpac tumbles, Appen reaffirms guidance, Costa CEO to retire
• Why Costa, Freedom Foods, Sonic, & Westpac shares are tumbling lower
• Will the Wesfarmers share price climb higher in 2020?

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

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The RTG Mining Inc. (ASX: RTG) share price skyrocketed this morning to be up by as much as 124.64% in early trade. At the time of writing, the small-cap ASX mining share is sitting 81.16% higher for the day at 12.5 cents per share. 

RTG Mining is a mining and exploration company dual-listed on both the ASX and Toronto Stock Exchange. The company has built 7 gold mines in 5 countries on 3 continents and is currently focused on progressing its 8th development project, Mabilo, a high-grade copper-gold mine in the Philippines.

The Mabilo Project is currently in the final stages of permitting and near-term production is anticipated.

Why the RTG Mining share price has gone through the roof

This morning, RTG Mining announced that Mt Labo Exploration and Development Corporation, which holds the Mabilo Project, has been granted a mining license. 

The Mines and Geosciences Bureau (MGB) has approved the expansion of the current Mineral Production Sharing Agreement for the Nalesbitan Project (another RTG project with “excellent” copper porphyry potential) to include the Mabilo Project.

As a result, the Mabilo Project has been granted a Declared Mine Feasibility Study and Environmental Clearance Certificate.

“Mt. Labo has been working closely over an extended period with the MGB to secure this important milestone for the project and is deeply appreciative of the considerable effort and support provided by the MGB,” the announcement read.

Recent capital raising

Today’s update comes on the back of a capital raising that was announced last week. RTG Mining received commitments to raise approximately US$6 million (~A$9.2 million) in a private placement to Australian and international institutional and sophisticated investors – priced at 5.7 cents per share.

The proceeds of the placement will be used to continue to support the advancement of the Mabilo Project towards start-up, and also pursue new potential business development opportunities. Additionally, RTG Mining will use the funds to partially repay its corporate loan facility.

More reading

• Ready to invest your first $1,000? Try these 2 ASX shares
• Should you worry about geopolitical events in investing?
• 3 cheap ASX 200 shares I’d buy today
• ASX 200 down 1.2%: Westpac tumbles, Appen reaffirms guidance, Costa CEO to retire
• The best performing ASX 200 stock today may have more room to climb

Motley Fool contributor Cathryn Goh 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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At lunch on Friday the S&P/ASX 200 Index (ASX: XJO) is on course to end the week with a day in the red. The benchmark index is down 1.2% to 5,779.5 points.

Here’s what has been happening on the market today:

Big four banks tumble.

After a series of exceptionally strong gains, the big four banks have run out of steam on Friday. All four banks are trading lower and acting as a major drag on the ASX 200’s performance today. The worst performer in the group is the Westpac Banking Corp (ASX: WBC) share price with a 5% decline. However, its shares are still up over 16% since the start of the week.

Appen annual general meeting update.

The Appen Ltd (ASX: APX) share price is trading flat after releasing its annual general meeting presentation. The artificial intelligence company advised that it has orders in hand of $350 million year to date. This compares to its revenue of $536 million in FY 2019. As a result, it has reaffirmed its guidance in FY 2020. It expects to grow its operating earnings to between $125 million and $130 million.  

Costa CEO to retire.

The Costa Group Holdings Ltd (ASX: CGC) share price has come under pressure today after the horticulture company dropped a bombshell at its annual general meeting. Costa revealed in its annual general meeting update that its long-serving CEO intends to retire within the next nine months after over 10 years leading the company. Costa also advised that the majority of its produce was in demand and receiving favourable prices. Though, it did warn on increasing operating costs relating to the pandemic.

Best and worst ASX 200 performers.

The Austal Limited (ASX: ASB) share price is the best performer on the ASX 200 on Friday with a 9% gain. This morning the ship builder increased its profit guidance for FY 2020. The worst performer has been the Virgin Money UK PLC (ASX: VUK) share price with a 9% decline. Profit taking in the banking sector is weighing on the UK bank’s shares.

More reading

• Ready to invest your first $1,000? Try these 2 ASX shares
• 3 cheap ASX 200 shares I’d buy today
• The best performing ASX 200 stock today may have more room to climb
• Appen share price falls after positive update fails to impress
• Why Costa, Freedom Foods, Sonic, & Westpac shares are tumbling lower

James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Austal Limited. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO. The Motley Fool Australia owns shares of Appen Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Austal Limited (ASX: ASB) share price surged higher this morning after the shipbuilder surprised the market with a profit upgrade.

The Austal share price rallied 10.6% to $3.35 at the time of writing – making it the best performer on the S&P/ASX 200 Index (Index:^AXJO).

The Mayne Pharma Group Ltd (ASX: MYX) share price and Northern Star Resources Ltd (ASX: NST) share price were in distant second and third spots with gains of around 6%-7% each.

Rare profit upgrade despite COVID-19

Just meeting guidance is already a cause for celebration, just look at the ALS Ltd (ASX: ALS) share price when it reported its profit results this week.

Austal did one better. The group said that its FY20 revenue will hit around $2 billion while its earnings before interest and tax (EBIT) will be “no less than $125 million”.

This contrasts with its previous forecast of revenue of at least $1.9 billion and EBIT of no less than $110 million.

What’s lifting Austal’s share price

There are a few factors floating Austal’s boat. Management pointed to continued strong performance across its business and the COVID-19 fallout having less of an impact on its operations than it originally feared.

The recent contract win to build new patrol vessels for the Australian government is also helping, along with confirmation that it will be receiving research and development tax credits in the US.

The fifth factor behind the upgrade is the exchange rate. The stronger for longer US dollar means its Australian dollar denominated results will get an extra lift.

Defensive growth

“Austal’s continued strong performance across our shipyards in the USA, Australia, Philippines and Vietnam during the COVID-19 pandemic has provided confidence to increase the Company’s FY2020 earnings guidance at this time,” said its chief executive David Singleton.

It doesn’t mean the coronavirus crisis won’t drag on the group in the future periods, but at least Austal seems to have weathered the global shutdown well.

This is a much-needed shot in the arm for Austal’s shareholders. The stock sank at the start of the month when the group said it failed to win a tender to build the Guided-Missile Frigates FFG(X) for the US Navy.

Should you buy Austal’s shares?

While Austal’s pipeline of work is still looking pretty full, winning that lucrative contract would have secured its earnings for many years to come.

However, the stock is still good value in my view even without FFG(X). The fact is, most brokers weren’t expecting Austal to be successful anyhow, so not getting that contract doesn’t mean a downgrade.

Austal remains one of my key industrial picks for 2020.

More reading

• ASX 200 down 1.2%: Westpac tumbles, Appen reaffirms guidance, Costa CEO to retire
• 5 things to watch on the ASX 200 on Friday
• Top brokers pick the latest ASX shares to buy today
• 5 things to watch on the ASX 200 on Thursday
• The ASX 200 stock hit by the Brazilian COVID-19 wave

Brendon Lau owns shares of Austal Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Austal 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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