Stock Pick

  • Where I would invest $5,000 into ASX shares in July

    business leader making money

    Interest rates are at record lows and look likely to remain that way for some time to come, possibly even years.

    In light of this, I believe investors would be better off putting any excess funds into the share market rather than leaving them to gather only paltry interest in a savings account.

    But where should you invest these funds? Here are three top shares I would invest $5,000 into in July:

    Appen Ltd (ASX: APX)

    The first ASX share I would invest $5,000 into is Appen. It is a global leader in the development of high-quality, human-annotated training data for machine learning and artificial intelligence (AI). I think Appen could be a great long term option due to the expected growth of the AI market. Management estimates that this market will be worth between US$169 billion and US$191 billion per annum by 2025. And with 10% of AI spending expected to be on the data labelling that Appen is a leader in, I believe it bodes very well for its future earnings growth. 

    BetaShares NASDAQ 100 ETF (ASX: NDQ)

    I believe the BetaShares NASDAQ 100 ETF is another great option for a $5,000 investment. This exchange traded fund gives investors access to tech behemoths such as Apple, Amazon, Facebook, Microsoft, Nvidia, and Google parent, Alphabet. Given how the majority of the 100 companies in the fund have very positive long term outlooks, I believe there is a high probability of it providing investors with stronger returns than the ASX 200 index over the next decade.

    Kogan.com Ltd (ASX: KGN)

    A final share to consider investing $5,000 into is Kogan. I think the fast-growing ecommerce company is well-placed to profit from the continued rise in online shopping and the growing popularity of its Kogan-branded products and Marketplace. Its expansion into potentially lucrative verticals such as energy and mobile should also be supportive of its growth. As should the $120 million it recently pulled in from a capital raising. Management intends to use these funds to make value accretive acquisitions in the near term.

    5 stocks under $5

    We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.

    And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

    See the 5 stocks

    *Extreme Opportunities returns as of June 5th 2020

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    James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS and Kogan.com ltd. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS and 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.

    The post Where I would invest $5,000 into ASX shares in July appeared first on Motley Fool Australia.

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  • Remdesivir Tied to Fewer Deaths; Japan Trace Fails: Virus Update

    Remdesivir Tied to Fewer Deaths; Japan Trace Fails: Virus Update(Bloomberg) — Texas hospitalizations topped 10,000 for the first time and California suffered its second-highest day of deaths. Florida’s biggest county had a record number of patients in its intensive-care units.New York will allow limited visitors into nursing homes and long-term facilities for the first time in months. Overall U.S. cases rose 1.9%, matching the average daily rise over the past week.Gilead Sciences Inc.’s remdesivir treatment reduced the mortality risk for Covid-19 patients by 62% compared to standard care, a new analysis of trial data showed. Japan is trying to fix its contact-tracing app after it failed to register new cases.Key Developments:Global Tracker: Cases top 12.4 million; deaths surpass 558,000Wuhan shows the world how economies may recoverTesting bottlenecks are keeping states from tamping down virusBillionaire’s empire unexpectedly thrives in BrazilBringing students back poses ultimate test for collegesTrump school-reopening gambit stokes fresh concernSubscribe to a daily update on the virus from Bloomberg’s Prognosis team here. Click VRUS on the terminal for news and data on the coronavirus.Japan’s Contact-Tracing App Fails (8:49 a.m. HK)Japan’s health ministry suspended the registration of positive cases on its contact-tracing smartphone app Cocoa as it worked to fix an error that left some people unable to enter their information.The ministry aims to get the feature running again next week, according to a statement. The ministry encouraged users to keep using the app, which had 6.5 million downloads across iOS and Android phones as of Friday evening. Mexico Cases Rise 6,891 to 289,174 (8:23 a.m. HK)Mexico reported 6,891 new confirmed cases, bringing the country’s total to 289,174, the Health Ministry said late Friday. Deaths rose by 665 to 34,191.San Francisco to Pause Reopening Salons, Parlors (7 a.m. HK)San Francisco will delay reopening businesses that provide personal services, including haircuts, massages, tattoos and manicures, from an originally planned restart on Monday. The city made a similar move earlier this week to halt re-openings of indoor dining and outdoor bars.“Re-opening businesses that will encourage gathering and interacting with people outside of your own household is not the safe thing to do right now,” Mayor London Breed said Friday in a statement. The city’s new cases have jumped to 7.4 per 100,000 people, well above the goal of 1.8 and the rate of 3.5 when re-openings began on May 18.Texas Hits Milestone (5:35 p.m. NY)More than 10,000 people were hospitalized with Covid-19 in Texas Friday, the first time the state has reached that benchmark. Cases there jumped by 9,765, an increase of 4.2% compared with the seven-day average of 3.9%. The state has added close to 10,000 cases for each of the last four days, and deaths have begun to spike in tandem, with another 98 fatalities exceeding the seven-day average.Governor Greg Abbott stepped up efforts to encourage people to wear masks, making the rounds of local television stations to warn that deaths are likely to rise in coming days. Though Abbott has issued a mask mandate for the state, he allowed counties to opt out if they had fewer than 20 active cases, and almost a third of Texas’ 254 counties have done so.California to Release Prisoners (4:30 p.m. NY)California plans to release about 7% of its prison population, roughly 8,000 non-violent offenders, to relieve pressure on a chronically overcrowded correctional system that’s now struggling with a spike in coronavirus cases.The move will enable prisons to maximize available space to implement physical distancing, isolation and quarantine efforts, the California Department of Corrections and Rehabilitation said in a statement. It estimated that about 8,000 currently incarcerated people could be eligible for release by the end of August.U.S. Cases Rise 1.9% (3:55 p.m. NY)U.S. cases rose by 59,782 from a day earlier to 3.14 million, according to data collected by Johns Hopkins University and Bloomberg News. The 1.9% jump matched the average daily increase over the past week. Deaths rose 0.7% to 133,677.Arizona reported 4,221 new cases, a 3.7% gain to 116,892 that matched the average rise of the previous seven days. The state also reported 44 new deaths, bringing the total to 2,082.Florida reported 244,151 cases, up 4.9% from a day earlier, compared with an average increase of 4.7% in the previous seven days. Deaths reached 4,102, a gain of 93, or 2.3%.California Has Second-Deadliest Day (2:21 p.m. NY)California reported 140 new virus deaths, second only to the 149 reported Thursday as the most yet for the pandemic. The 14-day average is 75, according to state health data.Total confirmed cases rose by 7,798, or 2.6%, pushing California’s total infections to 304,297. While the gain was less than the 3% average over the past seven days, the state’s outbreak has been accelerating: Infections have exceeded 300,000 just two weeks after crossing the 200,000 milestone.N.Y. Nursing Home Residents Get Visits (2:17 p.m. NY)With the number of cases in New York remaining relatively low, residents the state’s nursing homes and long-term facilities will be allowed to have visitors, health officials said. They must be virus-free for at least 28 days, and no more than two visitors will be allowed at a time.Visitors must have their temperature checked, wear face coverings, and socially distance during the visit, according to the guidance. Only 10% of the residents in each facility can be allowed visitors at any one time.Cases in the state, once the epicenter of the U.S. outbreak, remain low with 786 new infections and 8 deaths reported Friday. Of the 73,558 tests conducted in the state 786, or 1.06%, were positive.N.J. Transmission Drops below 1 (1:27 p.m. NY)New Jersey’s virus transmission rate dropped to 0.98, Governor Phil Murphy said Friday, “a good sign” that the state is making progress to reverse an uptick in Covid-19 transmission.Two days ago, the rate had reached 1.1, the highest in 10 weeks. The virus rate of transmission — a measure of how many people a carrier infects — was more than 5 at the pandemic’s March height in New Jersey. Any figure over 1 suggests the virus is spreading.Russia Triples Death Toll in Revised Data (12:33 p.m. NY)Russia reported 15,277 deaths linked to the virus in April and May, including 9,192 where Covid-19 was reported as the main cause. That compares with the 4,831 deaths reported previously by the government for those months.The earlier data didn’t include cases where the virus was present but not considered the main cause, but some regions, including the capital Moscow, began reporting those figures, as well. Using the new data, the death rate from the virus stood at 3.7%, three times the previously reported figure.The Statistics Service didn’t release June data. The government has faced questions about the much lower number of deaths attributed to the pandemic compared with other nations.Gilead’s Remdesivir Linked to Death Reduction (9:36 a.m. NY)Gilead Sciences Inc. said its remdesivir virus treatment is associated with a 62% reduction in the risk of death compared with the standard of care. The death rate with remdesivir was 7.6% at Day 14 versus 12.5% among those not taking remdesivir.The finding is based on an analysis that combines results from a Phase 3 trial and a “real-world” retrospective cohort of patients with severe disease, the company said, noting that it requires confirmation in prospective clinical trials.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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  • Has Apple Surged Too Far, Too Fast? Analyst Weighs In

    Has Apple Surged Too Far, Too Fast? Analyst Weighs InWith the market getting extra frothy, it is legitimate to wonder whether we are in the midst of a bubble. Despite the growing disconnect between Wall Street and Main Street, the surge has been almost relentless since the coronavirus inflicted meltdown in March. Tech stocks, in particular, have outperformed, including the world’ largest company by market cap – Apple (AAPL).It has become increasingly hard to keep up, as Apple has repeatedly notched new all-time highs recently. In a research note to clients, Deutsche Bank analyst Jeriel Ong ponders this exact issue.“AAPL's prior pre-COVID peak was ~$325 back in Feb-20,” Ong noted, “and we can't say that the fundamentals behind the stock for 2021 and beyond are ~15% better than the pre-COVID era as the present difference in all-time highs today vs. back then suggests.”Additionally, aside from “the speed and magnitude of the rebound,” going forward, Ong says, Apple’s surge is at risk of being derailed due to several possible elements. These include a contracting economy with high unemployment rates and less spending from “smaller wallets,” a second COVID-19 wave which will result in stores closing again and the risk of delays to the anticipated iPhone 12 launch.So, with these concerns laid out, is now the time for investors to step aside and come back after Apple has cooled off?Uh-uh. Looking ahead, the pluses outweigh the minuses.Ong explained, “Long-term, we see investors building more confidence in 4 drivers of the stock (iPhone, AirPods, Services, and GM mix shift) as the market continues to stabilize. Simply put, while we see the risks outlined above and perhaps negative catalysts on the horizon (maybe a weak 4Q guide as a result of a delayed next-gen iPhone launch?) ultimately we continue to believe the reward/positive catalysts outweigh the risks, at least at this point in time.”Therefore, Ong keeps his Buy rating intact, and somewhat surprisingly given the concerns, increases the price target. The figure moves up from $380 to $400. (To watch Ong’s track record, click here)Among the analyst fraternity, Apple remains a firm favorite. AAPL's Strong Buy consensus rating is backed by 1 Sell, 6 Holds and a resounding 26 Buys. However, the Street expects shares to decline by 8%, should the $355.52 average price target be met over the following months. (See Apple stock-price forecast on TipRanks)To find good ideas for tech stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. More recent articles from Smarter Analyst: * Aurora Cannabis (ACB): Transformation on Track * 3 “Strong Buy” Penny Stocks That Could See Outsized Gains * Amazon Is Said To Offer $100M In Stock Awards To Keep Zoox Talent * Walgreens Reports $1.7B Quarterly Loss, Cuts 4,000 Jobs Due To Covid-19 Impact

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  • Dollar cost averaging and how to use it to invest in ASX shares

    Share market strategy

    You may have heard the term ‘dollar cost averaging’ (DCA) used before. Whether you are just starting out or are a seasoned investor, using DCA can help significantly with securing the lowest buy price for your ASX shares.

    What is dollar cost averaging?

    The goal of DCA is to secure the lowest average buy price for a share over a specific period of time. When used correctly, DCA can reduce the impact of market volatility, provide you with more options and generate a higher, long-term return on your investment.

    This can be very useful in uncertain markets, such as the one we are currently in.

    Here’s how it works:

    Say I plan to purchase $10,000 worth of the (fictional) company, XYZ Co. XYZ shares are currently trading at $10 per share. If I invest all $10,000 today, then I am locked in at today’s prices of $10 and I can purchase 1,000 shares.

    However, if I spend $5,000 today and hold $5,000 in reserve, I can create a second buying opportunity, potentially at lower prices. In the example above, if I secure 500 shares today at $10 each and then the share price dips to $8 next week, I can use my $5,000 cash reserves to secure an additional 625 shares. This brings my total to 1,125 shares for my $10,000 spend.

    Waiting for a lower price to deploy my cash reserves has meant that I now have an additional 125 shares and that I have now paid an AVERAGE of $8.88 per share.

    How can dollar cost averaging help in a volatile market?

    Dollar cost averaging can be particularly effective in market crash scenarios and, in this case, it’s hard to beat as an investment strategy.

    Referring to the above example again, lets look at what could happen in a market crash, similar to what we have seen with COVID-19. In this scenario, I purchase $5,000 worth of my XYZ Co shares, trading at $10 a share and this gives me a holding of 500 shares. In a severe crash, a share price can drop dramatically. This might mean my XYZ holding falls to $4 a share.

    Normally, this would be a test of the nerves of even the most seasoned investors, however, a DCA strategy would mean that you would welcome this kind of volatility in the short term. I now have the opportunity to deploy my remaining $5,000 into XYZ shares at $4 per share, giving me an additional 1,250 shares! My holding is now 1,750 shares (75% more than if I spent all $10,000 in one transaction) and my average price is $5.71. This is a significantly better position to be in as an investor caught in a crash.

    As a variation to the above strategy, I could potentially split my $10,000 over 10 monthly purchases of $1,000. Again, this will give me the best average price over this period (10 months).

    Risks and costs

    Dollar cost averaging is effective in a falling market, however a rising market might mean you miss out on a larger position initially. This needs to be taken into account when you consider the use of DCA.

    Transaction costs can also be higher when using a DCA strategy, as you are paying your broker multiple times. For example, if a broker charges a flat rate fee of $10 per trade, you are now doubling (or multiplying) your fees with each subsequent purchase.

    Foolish takeaway

    Personally, I use dollar cost averaging every time I plan to invest for the long term. This has always provided me with a lower average entry, higher long-term returns and most importantly, peace of mind.

    While a market crash can be stressful, if you employ a DCA strategy, you will begin to welcome the short-term volatility, which can be quite a different investing experience!

    Where to invest $1,000 right now

    When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

    See The 5 Stocks

    *Returns as of June 30th

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    Motley Fool contributor glennleese 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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  • 2 ASX shares for strong retirement income

    Are you currently retired, or perhaps your approaching retirement soon and looking for a way to get some extra income?

    Either way, in my view, shares that pay strong dividend yields are a much more rewarding strategy than keeping your money in a savings account or term deposit, particularly given the current low interest rates.

    It’s also a good idea to try to build your ASX share portfolio with at least 10 companies to ensure a diversified portfolio. This way you get exposure to a broad spectrum of the market.

    So, with that in mind, I don’t think you can go past these 2 ASX shares: Wesfarmers Ltd (ASX: WES) and Macquarie Group Ltd (ASX: MQG). Both of these companies have strong market positions in their respective industries. They also both have strong product and geographic diversification.

    Wesfarmers

    Wesfarmers is a highly diversified company with operations in retail segments including general merchandise and office supplies. Wesfarmers also has market positions in industrial segments such as energy and fertilisers, and industrial and safety products. This high level of market diversification provides a strong buffer to any industry-specific challenges that may negatively impact any of its subsidiaries.

    Wesfarmers’ online offerings have seen strong demand during the coronavirus crisis as many consumers have stayed away from brick-and-mortar stores. All of Wesfarmers’ retail businesses have seen combined total online sales growth of 89% for the half-year so far till early June.

    Based on current earnings, Wesfarmers pays a strong forward dividend yield of 3.4%, fully franked

    I am confident that Wesfarmers is well placed for strong growth over the next year or two, particularly driven by rising sales at its Officeworks and Bunnings chains.

    Macquarie

    Macquarie is a global financial services business. Its strategy centres on international investment banking.

    I definitely prefer Macquarie as an investment option in the banking and financial segment to our big four major retail banks: Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd. (ASX: NAB) and Australia and New Zealand Banking Group (ASX: ANZ).

    In particular, Macquarie has less exposure to the local residential property market, which may come under increasing pressure in the months ahead.

    I am also attracted to Macquarie as an ASX share investment because it has become a more balanced and diversified business than it was in the past.

    Macquarie currently pays an attractive partially franked forward dividend yield of 3.5%.

    5 stocks under $5

    We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.

    And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

    See the 5 stocks

    *Extreme Opportunities returns as of June 5th 2020

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    Motley Fool contributor Phil Harpur owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, and Westpac Banking. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia owns shares of 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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  • Aurora Cannabis (ACB): Transformation on Track

    Aurora Cannabis (ACB): Transformation on TrackAurora Cannabis (ACB – Research Report) continues to confirm a strong transformation to a cannabis company focused on profitable growth while Canopy Growth (CGC – Research Report) is still chasing large market opportunities with wild spending. The company is now on track to spend about 25% of the SG&A as the largest Canadian cannabis stock while approaching the same revenue levels.The Edmonton-based company is a far better value on weakness despite having no major investor and struggling over the last year with a weak balance sheet. The company still has work to get done to reach EBITDA profits, but Aurora Cannabis is the far better stock with the transformation on track.Operational ExcellenceThe best part of the story is that Aurora Cannabis set a transformational target in February and the company is already hitting this goal. With the targets in sight on transforming SG&A costs, the company is now moving forward with consolidating production facilities to the low-cost areas with considerable capacity and eliminating the high-cost facilities no longer needed for the global opportunity that never materialized.Aurora Cannabis forecasts reaching an SG&A target of C$42 million in FQ1, thereby cutting operational expenses by an astonishing 50% in just a few months. Staff levels were cut by 25% to achieve these goals with some apparent high cost consultants let go as well.The company can now achieve EBITDA profits on substantially lower revenues. The good news is that consolidating production facilities will help improve gross margins with Pablo Zuanic of Cantor Fitzgerald forecasting an 8-point boost to gross margins.In prior quarters, Aurora Cannabis was stuck on mid-40s gross margins while clearly over producing inventory similar to the rest of the Canadian cannabis industry. The consolidation of five small facilities will help reduce costs that were averaging C$1.15 per gram while other industry players were down below C$1.00.Once the cannabis company reaches C$100 million in quarterly revenues, the new 50% gross margins will generate up to C$8 million in operating income. This metric assumes a stable C$42 million SG&A quarterly run rate as revenues rise.Focused OpportunityCanopy Growth highlighted how the once promising global opportunity is limited to the U.S., Canada and Germany. These three countries are set to account of C$63 billion or up to 90% of the global total addressable market by 2023.Aurora Cannabis is a strong player in both the Canadian cannabis market and Germany medical that make up the majority of the revenue TAM outside of U.S. Similar to Canopy Growth, both companies have recently entered the U.S. CBD market while being currently blocked from the massive C$42 billion TAM in the U.S. recreational and medical cannabis markets.The key here is that both companies have the same market opportunities and areas of focus, but one still plans to spend wildly on SG&A due to a C$2.0 billion cash balance while the other has become a strong operator due to the requirement to focus. Aurora Cannabis is on the path to positive EBITDA while Canopy Growth has no apparent EBITDA profit goals.TakeawayThe key investor takeaway is that the valuation equation for Aurora Cannabis remains far more compelling here as the market has pushed the stock back down to a market valuation of $1.4 billion. Canopy Growth is far too expensive at $5.7 billion with no meaningful improvement in financials while Aurora Cannabis is on schedule for solid EBITDA profits in FY21 starting in July.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.Disclosure: No position. More recent articles from Smarter Analyst: * 3 “Strong Buy” Penny Stocks That Could See Outsized Gains * Amazon Is Said To Offer $100M In Stock Awards To Keep Zoox Talent * Walgreens Reports $1.7B Quarterly Loss, Cuts 4,000 Jobs Due To Covid-19 Impact * Moderna Inks Deal With Rovi To Supply Potential Covid-19 Vaccine Outside U.S.

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  • 4 ASX shares to buy and hold forever

    hand holding hourglass with floating dollar signs, long term investing

    There are some ASX shares that could be candidates to buy and hold forever.

    It can be hard to find ideas for your portfolio that could be a ultra-long-term investment. Some businesses are in a rapidly changing industry. For example, I’m not sure I could invest in a share like Afterpay Ltd (ASX: APT) or Servcorp Limited (ASX: SRV) simply due to the unknown demand and profitability of those industries in the future. There will always be unknowns in investing, but there’s too many different outcomes for me.

    But I could see myself buying and holding these ASX shares forever:

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

    Soul Patts could be the best ASX share for a buy-and-hold-forever approach. It’s an investment conglomerate that has been around since the early 1900s. It has already shown that it can stand the test of time.

    The investment house owns a diversified portfolio of businesses such as TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), Australian Pharmaceutical Industries Ltd (ASX: API) and Clover Corporation Limited (ASX: CLV). It also owns some unlisted businesses outright like swimming schools and resources.

    Never needing to sell should also mean never having to cause capital gains tax events.

    As a bonus, at the current Soul Patts share price, it offers a grossed-up dividend yield of 4.3%.

    Xero Limited (ASX: XRO)

    Xero is a cloud accounting software business, one of the biggest and best in the world. It’s growing subscribers at a good rate in Australia, the UK and the US. In the FY20 result, total subscribers rose by 26% to 2.285 million and average revenue per user increased by 2% to NZ$29.93.

    There are only two things certain in life, death and taxes. Xero helps businesses operate and organise their financial information. The ASX share offers an array of different automation and time-saving tools. The numbers are also presented in a “beautiful” way.

    As long as there are businesses and tax, there will be demand for Xero’s accounting software services. It just needs to keep investing in development so that its product is the best for customers.

    However, at the current Xero share price I don’t think it’s a cheap buy right now.

    Infratil Ltd (ASX: IFT)

    Infratil is a diversified New Zealand business which is invested in a variety of different sectors.

    It’s involved with various energy projects, it owns 66% of Wellington Airport, it owns almost half of a data centre business, it owns half of Vodafone New Zealand, it owns a diverse commercial real estate portfolio, it’s involved with Australian Social Infrastructure Partners and it owns half of RetireAustralia which is the largest privately-held pure-play retirement operator in Australia.

    All of these divisions are long-term investments and the ASX share can continue to invest where it think will make good long-term returns. I think the company could add a lot of attractive diversification for long-term investors.

    At the current Infratil share price it offers a 3.3% dividend yield. COVID-19 has caused a bit of a selloff, so it could be an opportunistic buy.

    Rural Funds Group (ASX: RFF)

    Rural Funds is an agricultural real estate investment trust (REIT) which owns farms in a variety of different sectors: cattle, cotton, almonds, macadamias and vineyards.

    Farmland has been a useful asset for humanity for many hundreds of years. I don’t think that’s going to change in the next couple of decades.

    The ASX share aims to increase its distribution by 4% per annum. I think that’s a solid growth rate considering how low inflation and interest rates are at the moment.

    I’m not expecting huge growth from Rural Funds, but it’s the type of investment that can deliver solid compounding returns.

    At the current Rural Funds share price it offers a distribution yield of 5.6%.

    Foolish takeaway

    I’d be happy to own each of these ASX shares for at least a decade. At the current prices I’d probably go for Soul Patts first for its long-term history and diversification, but Infratil is also an interesting idea.

    5 stocks under $5

    We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.

    And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

    See the 5 stocks

    *Extreme Opportunities returns as of June 5th 2020

    More reading

    Tristan Harrison owns shares of RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Clover Limited and Xero. The Motley Fool Australia owns shares of and has recommended Brickworks, RURALFUNDS STAPLED, and Washington H. Soul Pattinson and Company Limited. 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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  • Turn $30,000 into $1,000,000 with ASX shares

    Investor in white shirt dreaming of money

    ASX shares can be a powerful tool to make your retirement dreams become a reality. Consistent, compounding returns can really add up if you give your portfolio time to grow.

    How to turn $30,000 into $1,000,000 with ASX shares

    Some investors would look at the above statement and think it just isn’t possible. I think it’s worth considering a few ASX shares in the past that have been able to do just that for their shareholders.

    1. CSL Limited (ASX: CSL)

    CSL is an ASX blue-chip share with a market capitalisation of $128.2 billion today. The CSL share price closed on Friday at $282.37 per share but the Aussie biotech company listed for a stock-split-adjusted $0.767 per share back in June 1994.

    That means $30,000 invested in the CSL IPO would have netted an investor 39,113 CSL shares. Multiplied by today’s share price, and assuming a buy and hold strategy, that would be worth an astonishing $11,044,378 today. 

    2. A2 Milk Company Ltd (ASX: A2M)

    A2 Milk is another top Aussie growth share that continues to climb higher. In fact, the ASX dairy share is up 38.4% this year alone. 

    If we rewind the clock a little bit, the A2 Milk share price was trading at $0.56 per share in April 2015. A $30,000 investment would, therefore, translate to holding 53,571 A2 Milk shares.

    Multiplied by Friday’s closing price of $19.40, that would mean a buy and hold investor’s investment would be worth a tidy $1,039,277 today.

    So, what’s the secret?

    There are a few things that obviously need to go right to turn $30,000 into $1,000,000 with ASX shares.

    The first thing you’ll notice is that both of these examples rely on a large dose of luck. Investing in IPOs is inherently risky and history has shown they tend to underperform.

    The other thing is that both examples of rocketing ASX shares required the investors to buy and hold. Behavioural economics tells us that generally, investors have a lopsided risk profile. Loss aversion, where you sell your winners too early and hold your losers too long, can be a real a problem for investors.

    It’s best to be patient and get out of your own way. Buy and hold your investments rather than overtrading and losing out in the long-run.

    Reinvesting any dividends back into shares can also be a powerful way to turbo-charge portfolio growth in the decades ahead.

    Foolish takeaway

    If you can choose high-quality ASX shares early in their growth path, you might be the next investor to turn a $30,000 investment into $1,000,000.

    5 stocks under $5

    We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.

    And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

    See the 5 stocks

    *Extreme Opportunities returns as of June 5th 2020

    More reading

    Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. 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.

    The post Turn $30,000 into $1,000,000 with ASX shares appeared first on Motley Fool Australia.

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  • Why the P/E ratio is a flawed metric in 2020

    Price to Earnings (P/E) Ratio, ASX shares

    As an aspiring investor, one of the first metrics you may come across is the price-to-earnings ratio (P/E ratio). The P/E ratio is often one of the key statistics anyone telling you about an ASX share will quote. But how useful is the P/E ratio in 2020? And how should you use this ratio when evaluating shares today?

    What is the P/E ratio?

    The P/E ratio is calculated by using a very simple equation: a company’s earnings per share (EPS) divided by its share price. For our purposes, we can assume that a dollar of earnings is  universally consistent. That is, a dollar of earnings is still a dollar, whether it comes from Woolworths Group Ltd (ASX: WOW) or Xero Limited (ASX: XRO). In this way, the P/E ratio is used to determine how ‘expensive’ companies are relative to each other. If one company’s P/E ratio is 10, it means you are paying $10 today for $1 of earnings. If another company’s ratio is 20, you are effectively paying twice as much for that same dollar. 

    Conventionally, companies that are growing revenue and earnings at a relatively fast rate attract a higher P/E ratio than those that are more mature and offer lower growth prospects.

    How should ASX investors use the P/E ratio in 2020?

    Normally, the P/E ratio is a great place to start when you are evaluating an ASX share as a potential investment. But 2020 has thrown a bit of a spanner in the works. Under ‘normal’ economic circumstances, a good-quality company can be expected to grow its earnings every year. This means that a company’s trailing P/E ratio (encompassing the previous 12 months) will be higher than its forward P/E ratio (which uses a company’s earnings guidance to hypothesise a future earnings ratio with today’s share price).

    But, as we know, 2020 has brought massive disruption to the economy in the form of the coronavirus pandemic. The lockdowns that were necessitated by the outbreak have resulted in a huge hit to the earnings of many ASX companies. And since we mostly use trailing P/E ratios, this impact doesn’t translate very effectively to current share prices. If a company has a share price of $20 and brought in $1 of earnings in FY20, then it will have a trailing P/E ratio of 20. But if this same company only brings in 50 cents of EPS in FY21, then its forward P/E ratio will be 40.

    Usually, markets are pretty savvy regarding a company’s immediate prospects. So, it’s likely this company’s shares would have been sold off when the impacts of the pandemic became evident. So if our company was sold down to $5 per share, its trailing P/E ratio would become 5 and its forward P/E ratio would become 10.

    You can see how these fluctuations could possibly throw an investor off their game.

    Foolish takeaway

    I think using the P/E ratio to evaluate your investments in 2020 is highly risky. As such, I feel it should only form a small part of your overall valuation process. It’s a useful metric, but also one that can distort reality and induce poor investment decisions. I usually only find this ratio useful when comparing different companies in the same sector at the best of times. As such, I’m not paying it too much attention at all in this most uncertain of years.

    5 stocks under $5

    We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.

    And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

    See the 5 stocks

    *Extreme Opportunities returns as of June 5th 2020

    More reading

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

    The post Why the P/E ratio is a flawed metric in 2020 appeared first on Motley Fool Australia.

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  • How I’d build a $100,000 share portfolio with ASX ETFs

    hand holding red briefcase stuffed with cash, investment portfolio

    Building a $100,000 share portfolio with just ASX exchange-traded funds (ETFs) isn’t as complicated as you might think. ETFs are an easy way to get broad-market diversification using a single ASX investment. As such, it’s relatively simple to build a highly diversified, internationally exposed portfolio with just 4 ASX ETFs. The hardest part is getting the $100,000 sum together! Here’s how I’d build the portfolio:

    Start with $30,000 in the iShares Core S&P/ASX 200 ETF (ASX: IOZ)

    This ETF simply tracks the S&P/ASX 200 Index (ASX: XJO) – which consists of the largest 200 publicly traded companies in Australia. This includes everything from Woolworths Group Ltd (ASX: WOW) and Commonwealth Bank of Australia (ASX: CBA) to Afterpay Ltd (ASX: APT) and Harvey Norman Holdings Limited (ASX: HVN). Think of it as a ‘slice of Australia’. The ASX 200 is a great index to have as a core of a portfolio as it has a focus on both growth and dividend income.

    Add $30,000 to the iShares Global 100 ETF (ASX: IOO)

    The ASX 200 is a good start, but now we’re throwing in some international diversification. This ETF tracks the largest 100 companies across the advanced economies of the world, including the United States, Japan, South Korea, Europe, and the United Kingdom. Some of its largest holdings are household names like Apple, Nestle, Samsung, Microsoft and Alphabet (sometimes called Google). These companies are the real movers and shakers in the global economy. As such I think some exposure to them through this ETF is a great addition to our portfolio.

    $20,000 for the BetaShares Nasdaq 100 ETF (ASX: NDQ)

    This ETF tracks the largest 100 companies on the US Nasdaq exchange. The Nasdaq is the second-largest US share market (behind the New York Stock Exchange) and tends to mostly house companies in the technology space. You’ll find all five of the ‘FAANG’ stocks here, being Facebook, Amazon, Apple, Netflix and Alphabet (which, being formerly known as Google, represents the ‘G’). You’ll also find Tesla, NVIDIA, Adobe and PayPal. In my view, there’s no better way to gain exposure to some of the hottest and best tech shares in the world than with this ETF. That’s why it makes our list today.

    Finish off with $20,000 for the BetaShares Asia Technology Tigers ETF (ASX: ASIA)

    Our final ASX ETF for the portfolio is this Asian, tech-focused fund. ASIA is the ’emerging market’s’ answer to the Nasdaq 100. This ETF tracks some of the biggest names in the Asian technology space. The list includes Tencent Holdings, which you may recognise from its recent investment in Afterpay. But there’s also the ‘eBay of China’ in Alibaba, the ‘Netflix of China’ in iQiYi, the ‘Google of China’ in Baidu and the ‘Amazon of China’ in JD.com. Tapping into tech trends in emerging markets like China is a good idea in the 21st century in my view, so this ETF is in our portfolio to make that happen.

    Where to invest $1,000 right now

    When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

    See The 5 Stocks

    *Returns as of June 30th

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    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) and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares) and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool Australia owns shares of AFTERPAY T FPO and Woolworths Limited. The Motley Fool Australia has recommended Alphabet (A shares) and 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.

    The post How I’d build a $100,000 share portfolio with ASX ETFs appeared first on Motley Fool Australia.

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