The S&P/ASX 200 Index (Index:^AXJO) is on track to post its fifth straight session of gains, but not all stocks are partaking in the merrymaking!

The top 200 stock benchmark added 0.2% in morning trade as the reopening of the global economy is emboldening the bulls.

This is despite the fact that the number of new daily COVID-19 cases worldwide hit another record high of 106,000 cases on Wednesday.

At risk of sounding like a coronavirus wet blanket, I should point out that not all ASX shares are having a good time. Here are two that are slumping today after top brokers downgraded their recommendation on these ASX stocks.

Can’t cut your way to growth

One laggard is the TechnologyOne Ltd (ASX: TNE) share price, which dropped 1.8% to $9.63 at the time of writing.

Its underperformance may have something to do with UBS urging investors to cut and run even though management delivered a good first half profit result.

But good isn’t good enough in the broker’s book. Management’s guidance on Software as a Service (SaaS) annual recurring revenue of $133 million for FY20 may be a solid 31% increase over last year, but it’s well below UBS’ forecast of $164 million.

“We forecast 2H20E non-R&D/SaaS opex will need to reduce 10% yoy (ex-AASB16 impacts) to hit the bottom end of the guidance range (8% PBT growth) with a 14% reduction required to hit the top end (12% PBT growth),” said the broker.

“COVID-19 impacts will likely contribute to this from reduced travel and marketing expenditure. A significant step up in incremental SaaS ARR is also required (+$25m hoh) as well as $18m in 2H20 Initial Licence Fees.”

UBS downgraded the stock to “sell” from “neutral” with a price target of $8.20 a share.

Knocked down

Another stock in the doldrums today is the Fletcher Building Limited (ASX: FBU) share price. The New Zealand-based building supplies group dropped 2.8% to $3 after Citigroup cut its rating on the stock to “neutral” from “buy” following management’s latest update.

“Fletcher Building’s skew to NZ and exposure to residential construction has led to very weak recent sales trends,” said the broker.

“While sales improved in May 2020, they are still down 10%-20% on budget. Fletcher Building’s own forecasts indicate that construction activity will drop much further in FY21e.”

Infrastructure construction is the only bright spot on the horizon for the group, but it only contributes to around a quarter of Fletcher’s total sales.

The timing of the aggressive shutdown of the NZ economy to contain COVID-19 also couldn’t come at a worse time. Citi noted that the quarter typically makes up 40% to 45% of the group’s full year earnings.

The broker’s price target on the stock is NZ$3.50 a share.

More reading

• Top brokers name 3 ASX 200 shares to sell today
• ASX 200 down 0.2%: Afterpay hits a record high, Aristocrat Leisure update disappoints
• Why ASX 200 iron ore miners are your best bet for dividends right now
• How to invest $1,000 in ASX 200 shares like Warren Buffett today
• Why I’d invest $1,000 in this ASX tech share today

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

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One area of the share market which I think has a lot of potential is the payments industry.

Cash and credit card usage has been declining over the last few years and several companies are aiming to take advantage of this by disrupting the industry with innovative solutions.

Two ASX payments shares which I think are destined for big things are listed below. Here’s why they could be great long term investments:

Afterpay Ltd (ASX: APT)

This payments company is rapidly disrupting the industry with its buy now pay later offering. Its success has been so great, the word Afterpay is used by many as a verb now for buying something and paying for it in instalments. In addition to this, with millions of consumers using its platform in the ANZ, UK, and U.S. markets, it has become a must have for retailers.

There were concerns that Afterpay’s business model could struggle during tough times. Not only have sales remained very strongly, but its bad debts have remained stable during the pandemic. The has been driven by the flexibility of its model, which has allowed it to lower its risk without stifling its growth. In light of this and its global expansion opportunity, I believe Afterpay is well-placed to be a long term market beater.

Pushpay Holdings Group Ltd (ASX: PPH)

Another payments company which I think is destined for big things is Pushpay. It is a growing donor management platform provider for the faith, not-for-profit, and education sectors. Pushpay’s innovative solutions simplify engagement, payments, and administration, allowing users to increase participation and build stronger relationships with their communities. It also means the day of handing around the hat in church for cash donations are over.

I’ve been very impressed with its performance over the last few years and particularly in FY 2020. Earlier this month it reported a 33% increase in operating revenue to US$127.5 million and a 1,506% jump in EBITDAF to US$25.1 million. Pleasingly, management is confident there will be more strong growth this year. It expects to double its operating earnings in FY 2021 despite the coronavirus pandemic. Looking further ahead, it is aiming to capture a 50% share of the medium and large church segments. This is estimated to be worth US$1 billion in annual revenue. Given the quality of its offering and its recent acquisition, I believe it can achieve this goal and drive strong earnings growth over the next decade.

More reading

• A global tech giant wants to challenge Afterpay
• ASX 200 down 0.2%: Afterpay hits a record high, Aristocrat Leisure update disappoints
• Where to invest $20,000 into shares right now
• Why Afterpay, AMA, NRW, & Santos shares are racing higher
• Why I’d invest $1,000 in this ASX tech share 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 PUSHPAY FPO NZX. 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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On Wednesday I looked at three ASX shares that brokers have given buy ratings to this week.

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

Here’s why these brokers are bearish on them:

Computershare Limited (ASX: CPU)

According to a note out of Morgan Stanley, its analysts have retained their underweight rating and $11.00 price target on this share registry company’s shares. The broker notes that Computershare has reaffirmed its guidance for a 20% decline in management earnings per share. While this is being seen as a positive, it still has concerns over falling margin income over the next couple of years due to low interest rates. The Computershare share price is trading at $12.79 today.

TechnologyOne Ltd (ASX: TNE)

Analysts at UBS have downgraded this enterprise software company’s shares to a sell rating with an increased price target of $8.20. The broker has been looking through TechnologyOne’s half year update and notes that its revenue fell a touch short of its expectations. This may make it difficult for it to deliver on its full year expectations. Outside this, the broker has concerns over its lofty valuation. Prior to today, its shares were trading at 51x estimated full year earnings. At the time of writing they are changing hands for $9.70.

Treasury Wine Estates Ltd (ASX: TWE)

A note out of the Macquarie equities desk reveals that its analysts have retained their underperform rating but lifted the price target on this wine company’s shares slightly to $9.60. The broker notes that other wine producers have seen an uptick in demand in China recently. While this is a positive, it does have concerns that Treasury Wine Estates could be hit with tariffs given the frosty Australia-China relationship. The company’s shares are trading at $9.82 this afternoon.

More reading

• The latest ASX stocks hit by broker downgrades today
• ASX 200 down 0.2%: Afterpay hits a record high, Aristocrat Leisure update disappoints
• Why ASX 200 iron ore miners are your best bet for dividends right now
• How to invest $1,000 in ASX 200 shares like Warren Buffett today
• Why I’d invest $1,000 in this ASX tech share 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 Treasury Wine Estates 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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At lunch on Thursday the S&P/ASX 200 Index (ASX: XJO) looks set to end its winning streak. The benchmark index is currently down 0.2% to 5,562.7 points.

Here’s what is happening on the ASX 200 today:

Afterpay hits 5 million U.S. active customers.

The Afterpay Ltd (ASX: APT) share price hit a record high today after the release of a U.S. update. That update reveals that after launching in the U.S. two years ago, there are now 5 million active customers on its buy now pay later platform in the country. Impressively, the company has experienced a surge in customer additions during the pandemic. Management revealed that 1 million of these active customers have joined during the last 10 weeks.

Aristocrat Leisure half year update.

The Aristocrat Leisure Limited (ASX: ALL) share price is tumbling lower on Thursday after its half year update fell short of expectations. For the six months ended March 31, Aristocrat recorded a 7% increase in operating revenue to $2,251.8 million and a 12.8% decline in normalised NPATA to $368.1 million. Although its top line growth was stronger than expected (due to its Digital business), its NPATA fell well short of Goldman Sachs’ estimate for a 2% decline to $416 million.

Big four banks drop lower.

The big four banks are all trading lower at lunch and acting as a major drag on the ASX 200. The worst performer in the group has been the Westpac Banking Corp (ASX: WBC) share price. The shares of Australia’s oldest bank are down 1% at lunch.

Best and worst ASX 200 performers.

The best performer on the ASX 200 on Thursday has been the NRW Holdings Limited (ASX: NWH) share price with a massive 23% gain. Investors have been buying the infrastructure contractor’s shares after it revealed unaudited revenue of $1.6 billion for the 10 months to April 30. This is greater than any revenue it has achieved during a full 12 months. The worst performer has been the Aristocrat Leisure share price with a 5% decline after its half year update disappointed.

More reading

• ASX 200 mining services share storms 27% higher on record revenue result
• Why Aristocrat Leisure, Bigtincan, Clover, & Megaport shares are dropping lower
• Why Afterpay, AMA, NRW, & Santos shares are racing higher
• The hidden threat to big banks that may be worse than a housing collapse
• Why ASX 200 iron ore miners are your best bet for dividends right now

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. 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 NRW Holdings Limited (ASX: NWH) share price has popped 27.88% this morning on the back of a positive trading update. The company announced record revenue and pushed forward its interim dividend decision, which had previously been deferred to August.

About NRW Holdings

NRW Holdings is a provider of diversified services to the mining, energy, civil infrastructure and urban development sectors throughout Australia.

The company delivers a wide range of services including civil expertise, contract mining, drill and blast, specialist maintenance, and industrial engineering. 

With this, NRW supports more than 100 projects around Australia. Its client base comprises big ASX names like BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO), and Newcrest Mining Limited (ASX: NCM).

What did NRW Holdings announce?

This morning, NRW revealed its FY20 performance to the end of April remains strong despite the effects of COVID-19. Notably, it has seen no material change to planned activities in its 4 business divisions of civil, mining, drill and blast, and mining technologies.

In terms of financial performance, NRW reported revenue of $1.6 billion for the 10 months to April 2020. This represents record revenue compared to any previous full financial year. For reference, NRW posted $1.1 billion of revenue for FY19.

Meanwhile, earnings before interest, tax, depreciation and amortisation came in at $177 million. This was up 22.9% from FY19, as the company integrates last year’s $116 million BGC Contracting acquisition into its business.

Importantly, NRW also revealed an improvement in net debt, which stood at $115 million at the end of April 2020. This compares to the company’s $154 million net debt position at the end of last year. NRW expects to report much lower debt of around $60 million by the end of FY20 following reviews of equipment rental agreements.

Outlook and interim dividend

NRW noted it is on track to meet its FY20 revenue guidance of $2 billion for the full year. Commenting on the performance of the business, CEO Jules Pemberton said: 

We have had to make significant changes to the way we work but have been able to safely do that whilst supporting our clients to meet project objectives and day-to-day operational requirements.

Importantly for income investors, NRW has resolved to pay its interim dividend of 2.5 cents per share on 9 June 2020. In late March, the company announced its intention to defer this interim dividend, pending a review to be held in August. However, given NRW’s continued strong performance, the review was brought forward.

More reading

• ASX 200 down 0.2%: Afterpay hits a record high, Aristocrat Leisure update disappoints
• Why Afterpay, AMA, NRW, & Santos shares are racing higher
• ASX 200 starts the week strongly, up 1.3%
• 3 ASX commodity opportunities this week
• ASX 200 weekly wrap: Negative oil price breaks ASX’s winning streak

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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If I had $20,000 to invest with right now, there are four ASX shares that I’d want to invest in.

The current coronavirus economic conditions make it hard to know what’s going to happen next. But I believe that society will get through this in the next couple of years. Once we’re through the worst of this the ultra-low interest rates will make shares seem very attractive.

Here are the four shares I’d buy with $20,000 right now:

Pushpay Holdings Ltd (ASX: PPH) – $6,000

I think Pushpay is one of the most promising shares to invest in on the ASX. It’s an electronic donation business which predominately services large and medium US churches. It was on a good growth trajectory before COVID-19, but the current conditions have accelerated that growth.

Being able to electronically donate to your church is very useful in a socially distancing world where cash isn’t ideal. Pushpay’s FY20 was strong and in FY21 the company is expecting earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) to approximately double.

The Pushpay share price has been a strong performer recently, but the increased growth more than makes up for that in my opinion.

Brickworks Limited (ASX: BKW) – $5,000

I think Brickworks is one of the best value ASX 200 shares at the moment. When you take its defensive & reliable assets of its Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares and 50% stake of the industrial property trust at book value, you’ll see that combined value essentially supports the Brickworks market capitalisation.

The rest of the business – its building products divisions – come for free. I think that’s a useful way to look at it because construction earnings are going to be down because of the coronavirus impacts.

Until construction comes back, which may be sooner than some expect, investors will get to collect the grossed-up dividend yield of 6.1%.

Magellan Global Trust (ASX: MGG) – $5,000

This is a listed investment trust (LIT) which invests in the best global shares. Some of its top holdings include Alibaba, Alphabet, Atmos Energy, Microsoft, Tencent, Facebook, Visa, Mastercard, Reckitt Benckiser and Novartis.

The LIT is invested in businesses which could prove to be quite defensive in the face of the coronavirus, their growth may even accelerate due to customer habits changing.

Despite the fees, Magellan Global Trust’s net return is impressive and regularly outperforms its global benchmark. Particularly over longer time periods.

As a bonus the LIT is a decent income share, it targets a 4% distribution yield. It’s currently trading at a small discount to its net asset value (NAV).

PM Capital Global Opportunities Fund Ltd (ASX: PGF) – $4,000

This is a listed investment company (LIC) which also invests in global shares. It’s always looking for unloved global shares that could make strong returns.

It’s invested in various ideas such as alternative investment managers, house builders in Europe, resources and others. That translates into share holdings like KKR & Co, Freeport-McMoRan Copper and Cairn Homes.

PM Capital Global Opportunities Fund has an attractive trailing grossed-up dividend yield of 6.3%.

It’s trading at 15% discount to the weekly net tangible assets (NTA) at 15 May 2020.

Foolish share takeaway

I really like all of these shares for different reasons. I think Pushpay could be the strongest performer over the next three to five years, but Brickworks could be very reliable whilst the two global investment businesses offer good portfolios for investors to get exposure to.

More reading

• Save your future self from financial misery
• Why AP Eagers, Lendlease, Pushpay, & ResMed shares are sinking lower
• 3 shares now trading at crazy cheap prices
• Why these ASX shares have just stormed to record highs
• Is the ASX 200 getting too far ahead of itself?

Motley Fool contributor Tristan Harrison owns shares of MAGLOBTRST UNITS, PM Capital Global Opportunities Fund Ltd, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, PUSHPAY FPO NZX, and Washington H. Soul Pattinson and Company 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 S&P/ASX 200 Index (ASX: XJO) looks set to continue its positive run on Thursday. In late morning trade the benchmark index is up 0.2% to 5,583.1 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

The Aristocrat Leisure Limited (ASX: ALL) share price is down 4.5% to $26.13 following the release of its half year update. For the six months ended March 31, Aristocrat posted a 7% increase in operating revenue to $2,251.8 million. However, due to margin weakness, the company posted a 12.8% decline in normalised NPATA to $368.1 million. As a comparison, Goldman Sachs was expecting a 6% increase in revenue to $2.2 billion and a 2% decline in NPATA to $416 million.

The Bigtincan Holdings Ltd (ASX: BTH) share price has fallen 5% to 72 cents. This follows the successful completion of its institutional placement. The sales enablement software platform provider raised $35 million at a discount 67 cents per share. It will now aim to raise up to $5 million via a share purchase plan. These funds will be used to accelerate key strategic priorities.

The Clover Corporation Limited (ASX: CLV) share price is down 2.5% to $2.47. This appears to have been driven by a broker note out of UBS. Although its analysts note that Clover is expecting a strong fourth quarter, they suspect this is partly due to inventory restocking pulling forward demand. In light of this and its strong share price performance, it has downgraded its shares to a neutral rating with a $2.50 price target.

The Megaport Ltd (ASX: MP1) share price has fallen 4% to $13.24. Investors have been selling Megaport’s shares after it revealed that its founder and chairman, Bevan Slattery, has sold 5 million shares. This represents 3.27% of the company’s issued capital. The sale was underwritten by UBS at a price of $13.00 per share and distributed to institutional investors. Mr Slattery still owns just over 13 million shares.

More reading

• ASX 200 down 0.2%: Afterpay hits a record high, Aristocrat Leisure update disappoints
• Top ASX 200 gaming share on watch after half year update
• 5 things to watch on the ASX 200 on Thursday
• Why this ASX 200 stock could surge higher tomorrow
• Why ALS, Clover, Computershare, & EML Payments shares are storming higher

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 Clover Limited and MEGAPORT FPO. The Motley Fool Australia owns shares of and has recommended BIGTINCAN FPO. The Motley Fool Australia has recommended MEGAPORT 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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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to maintain its winning streak. The benchmark index is currently up 0.3% to 5,588.4 points.

Four shares that are climbing more than most today are listed below. Here’s why they are racing higher:

The Afterpay Ltd (ASX: APT) share price is up 3.5% to $44.41. Investors have been buying the payments company’s shares after the release of a U.S. update this morning. According to the release, the Afterpay platform has continued its meteoric growth in the market even during the pandemic. This has seen the number of active U.S. customer hit 5 million. Management revealed that 1 million of these have joined during the last 10 weeks.

The AMA Group Ltd (ASX: AMA) share price has jumped 5.5% to 68 cents. This gain has been driven by a market update from the crash repairer this morning. That update revealed that AMA is well-funded to support the business during an extended period of disruption. It also believes the headwinds it is facing now will soon turn to tailwinds and notes that vehicle travel levels are beginning to return to normal levels as restrictions continue to ease.

The NRW Holdings Limited (ASX: NWH) share price has rocketed 24% higher to $2.05. The catalyst for this strong gain has been a trading update by the infrastructure contractor. According to the update, NRW delivered unaudited revenue of $1.6 billion for the 10 months to April 30. This represents record revenue for the company compared to any previous full financial year. The company’s EBITDA came in at $177 million for the 10 months, pre-adoption of AASB16.

The Santos Ltd (ASX: STO) share price has stormed 3.5% to $5.30. This follows a jump in oil prices overnight after data revealed a surprise drop in U.S. stockpiles. It isn’t just Santos which is storming higher. The S&P/ASX 200 Energy index is up a solid 2% at the time of writing.

More reading

• ASX 200 down 0.2%: Afterpay hits a record high, Aristocrat Leisure update disappoints
• ASX 200 mining services share storms 27% higher on record revenue result
• Why I’d invest $1,000 in this ASX tech share today
• Afterpay share price on watch after hitting 5 million active US customers
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor James Mickleboro 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 biggest single risk factor facing the big four ASX banks may not be as worrisome as another growing threat.

While all eyes are on the large provisioning set aside by our largest mortgage lenders due to fears of consumer and SME loan defaults, its $63 billion of commercial property loans that’s keeping bankers awake at night.

This is according to a report in the Australian Financial Review quoting unnamed senior banking executives.

Dividend and earnings threat

This could be a surprise to many as the attention is placed on over indebted households and small businesses most exposed to the devastating COVID-19 shutdown.

This is why the National Australia Bank Ltd. (ASX: NAB) share price was under the most pressure during the coronavirus fallout as it is most exposed to small business lending.

But Westpac Banking Group (ASX: WBC), Commonwealth Bank of Australia (ASX: CBA) and Australia and New Zealand Banking Group (ASX: ANZ) are also under pressure with the big four collectively setting aside more than $5 billion to due with problem loans.

Loan provisions under threat

Provisioning may have to increase if commercial property loans become as big a risk factor as the AFR is suggesting.

That means the big dividend cuts we’ve seen over the past three months may be a more permanent feature than what many are forecasting.

Bankers are worried because large companies and multinationals may decide they do not need large expensive offices in the CBD anymore.

Structural risks to ASX banks

The COVID-19 lockdown that forced record numbers of Australians to work from home is driving this rethinking. Aussies are equally if not more productive working from home. Law practices, accounting firms and investment banks may be tempted to economise by saving on rent.

If this happens, landlords will be forced to write-down the value of their prime properties. This will be a problem for the big banks who are using these high-end addresses as loan collateral.

While the $63 billion worth of such loans sound tiny relative to the mortgage books of the big four (CBA’s alone is worth around $500 billion), it’s still potentially big enough to trigger an earnings collapse in bank profits.

Another overlooked risk factor

Meanwhile, there’s a second possible structural change looming. As highlighted in my article this week, mega mall operators could also be forced to change their business model as the coronavirus shut-in accelerated the shift to online shopping.

I suspect these shopping destinations have reached their peak in terms of their strategic value and we could also see write-downs in these assets.

Structural change takes years to manifest. The fact that bankers are already starting to worry about some of these trends is a warning to investors not to take their eye off these emerging challenges.

More reading

• ASX 200 down 0.2%: Afterpay hits a record high, Aristocrat Leisure update disappoints
• Are CBA shares a 2020 dividend trap?
• Are NAB shares a bargain buy?
• Why the Commonwealth Bank share price is the best buy among the Big 4 banks
• ASX 200 down 0.2%: Big four banks lower and TPG announces demerger plans

Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, National Australia Bank Limited, and Westpac Banking. Connect with me on Twitter @brenlau.

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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