The Afterpay Ltd (ASX: APT) share price was on form in August and was among the best performers on the S&P/ASX 200 Index (ASX: XJO).

The payments company’s shares continued their positive run and recorded an impressive 33.4% gain over the month.

Why did the Afterpay share price rocket higher in August?

Investors were buying Afterpay’s shares last month following a series of positive updates.

The first was a a surprise upgrade to its earnings before interest, tax, depreciation and amortisation (EBITDA) guidance for FY 2020.

Due to better than expected collections after the end of June, Afterpay’s net transaction losses were far lower than it first forecast. As a result, the company delivered a 73% increase in EBITDA to $44.4 million. This compares to its previous guidance of EBITDA in the range of $20 million to $25 million.

Also getting investors excited was news that the company’s global expansion will continue in FY 2021.

After launching in Canada in July, Afterpay will soon expand into the European market via the acquisition of Spain-based Pagantis for 50 million euros.

Pagantis provides a range of buy now pay later and traditional credit services across Spain, France, and Italy. It also has regulatory approval to operate in the Portugal market. Management notes that the addressable ecommerce market in these four countries exceeds 150 billion euros or $247 billion.

It currently has ~1,400 active merchants and ~150,000 active customers using its platform. Merchants and customers that are relevant to its European launch strategy will be invited to transition onto the re-configured product upon launch in the third quarter of FY 2021.

But its expansion plans don’t stop there. With its full year results, the company revealed that it is exploring opportunities in select Asian markets this year.

In order to do this, it has made a small acquisition of a Singapore-based company operating in Indonesia – EmpatKali. The company advised that it plans to leverage Tencent’s network and relationships to expand into these markets. Tencent is the owner of WeChat and a major Afterpay shareholder.

Is it too late to invest?

Although its shares are expensive, I still see value in them if you’re prepared to make a long term investment.

This is because I remain confident the company has the potential to become a giant of the payments industry over the next decade thanks to its first-mover advantage, strong market position, and popular brand.

More reading

• These market veterans believe a share market pullback is coming. Here’s their surprising advice…
• If you invested $10,000 in Kogan shares 5 months ago, here’s how much you’d have today
• 2 Warren Buffett quotes you need to read this week
• The Afterpay share price nears $100: buy, sell or hold 
• Why shares go low Mondays and high on Fridays

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 Mesoblast Limited (ASX: MSB) share price outperformed in August. Shares in the Aussie biotech are up 37.9% in the space of a month after a busy August earnings season. 

Why is the Mesoblast share price rocketing higher?

August was full of market-moving announcements from Mesoblast.

The ASX biotech share plummeted 37.0% in the space of 2 days after a US Food and Drug Administration (FDA) briefing note on one of its products.

The US regulator noted concerns of Mesoblast’s remestemcel-L product candidate as a treatment for pediatric steroid-resistant acute graft versus host diseases.

Mesoblast had a meeting with the US Oncologic Drugs Advisory Committee (ODAC) last month as part of its path towards FDA approval.

Those concerns saw the Mesoblast share price crash lower ahead of the meeting before rebounding strongly.

In fact, just days later, the ODAC voted in favour of approving the drug product. Investors piled back into the stock and sent the biotech share soaring to a new 52-week high.

Is it too late to buy Mesoblast?

I think you have to tolerate some risk to invest in ASX biotech shares. The nature of their business can result in volatile share price movements.

The Mesoblast share price closed 37.9% higher in August with a market capitalisation of $3.1 billion.

It’s important to remember that we’re investing for the long-term here. I think Mesoblast ticks a lot of boxes as a company with a strong product pipeline and promising future earnings.

There will be more volatility over a long enough time horizon. However, it’s important to drown out the noise and focus on the potential upside.

Are there other ASX biotech shares to buy?

CSL Limited (ASX: CSL) has proven just how successful Aussie biotech companies can be. Mesoblast has a long way to go before its anywhere near that stratosphere but the early signs are promising.

I’d also consider Polynovo Ltd (ASX: PNV) as a solid buy right now. Polynovo is another ASX biotech share with significant research and development activities and a huge addressable market.

More reading

• 2 ASX shares I would buy right now for both growth and income
• Where to invest $20,000 into ASX shares immediately
• Will the CSL share price return to its all-time high?
• Polynovo and 2 more ASX 200 shares to watch this week
• ASX 200 Weekly Wrap: Earnings drag ASX back to reality

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

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The Helloworld Travel Ltd (ASX: HLO) share price is one to watch after the Aussie travel company reported its unaudited full-year results.

Why is the Helloworld share price on watch?

The Aussie travel group reported underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $44.0 million. That’s compared to positive $73.5 million in the prior corresponding period.

Underlying profit before tax of $17.1 million resulted in a $70.0 million statutory loss after one-off costs and non-cash impairments. That was a sharp downgrade on FY19 figures, which saw Helloworld report a $50.8 million underlying profit before tax.

The coronavirus pandemic has hit the travel industry hard and that was reflected in the unaudited earnings result.

The Helloworld share price has fallen 60.1% in 2020 and was already under pressure before the pandemic.

Government stimulus including JobKeeper has helped maintain business operations despite the challenges in 2020.

The group also completed a $50.0 million equity raising in August, which has boosted liquidity and extended Helloworld’s runway beyond 2022.

Helloworld’s cash balance of $131.9 million as at 30 June 2020 increased to $174.8 million at 28 August thanks to the capital raising.

The travel company has now completed its New Zealand operational restructuring. However, Helloworld declined to provide FY21 guidance given the current uncertainty.

State and federal government restrictions have shut borders and restricted travel both domestically and overseas.

Positively, 90% of outstanding refunds have now been processed with 60% now received and paid out. Helloworld has paid out refunds of over $800 million across its corporate, wholesale and ticketing businesses in Australia and New Zealand.

The focus in FY20 has shifted to minimising cash burn and slashing costs. Helloworld reported its costs were now “under control” with short-term net operating cash outflows tightly managed since April 2020.

Foolish takeaway

The Helloworld share price is one to watch following the unaudited results. That’s especially the case given the current volatility in ASX travel shares.

It’s been a tough year for the Aussie travel agent but tighter cost controls and strong government support are positive for its short-term operations.

More reading

• The Helloworld share price surged 19% in early August. Here’s why it just lost ground

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Helloworld 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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Despite a shaky end to the month, the S&P/ASX 200 Index (ASX: XJO) overcame a difficult earnings season to record a solid gain in August.

The benchmark index climbed 132.7 points or 2.2% during the month to end it at 6,060.5 points.

Unfortunately, not all shares on the index climbed higher with it. Here’s why these were the worst performing ASX 200 shares in August:

Whitehaven Coal Ltd (ASX: WHC)

The Whitehaven Coal share price was the worst performer on the ASX 200 in August with a 32.9% decline. Investors were selling off the coal miner’s shares following the release of a very disappointing full year result. Due to a combination of weak coal prices and labour shortage issues, Whitehaven reported a 95% decline in underlying net profit after tax to $30 million in FY 2020. Unsurprisingly, this led to the company slashing its dividend down from 50 cents per share to just 1.5 cents per share.

Resolute Mining Limited (ASX: RSG)

The Resolute Mining share price was some way behind as the next worst performer with a 15% decline. The catalyst for this decline were concerns over rising tensions in Mali, where its key Syama operation is based. Last month Mali’s President Ibrahim Boubacar Keïta resigned after being detained by mutinying soldiers. During the June quarter, Resolute’s Syama gold operation contributed 63,705 ounces of gold production. This represents 59.4% of its total production of 107,183 ounces during the quarter.

Gold Road Resources Ltd (ASX: GOR)

The Gold Road share price was out of form last month and tumbled 15% lower over the period. This appears to have been driven by a slight pullback in the gold price and a bearish broker note out of Macquarie early in the month. Although Gold Road’s June quarter production was broadly in line with its expectations, its higher costs guidance disappointed. Macquarie downgraded Gold Road shares to an underperform rating with a $1.80 price target.

Treasury Wine Estates Ltd (ASX: TWE)

The Treasury Wine Estates share price wasn’t far behind with a 14.4% decline in August. Investors were selling the wine company’s shares following reports that the Chinese Ministry of Commerce has initiated an anti-dumping investigation into Australian wine exports into China. There are concerns that this will lead to China putting hefty import duties on Australian wine. This could put pressure on sales in the lucrative market.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Top ASX Stock Picks for September 2020
• Beat low interest rates with Coles and this ASX dividend share
• ASX 200 Weekly Wrap: Earnings drag ASX back to reality
• These were the worst performing ASX 200 shares last week

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.

The post These were the worst performing ASX 200 shares in August appeared first on Motley Fool Australia.

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On Monday the S&P/ASX 200 Index (ASX: XJO) gave back its early gains and started the week with a decline. The benchmark index fell 0.2% to 6,060.5 points.

Will the market be able to bounce back from this on Tuesday? Here are five things to watch:

ASX 200 expected to sink lower.

It looks set to be a disappointing start to the month for the ASX 200 on Tuesday. According to the latest SPI futures, the benchmark index is expected to fall 61 points or 1% lower this morning. This follows a mixed start to the week on Wall Street, which saw the Dow Jones fall 0.8%, the S&P 500 drop 0.2%, and the Nasdaq push 0.7% higher.

Reserve Bank meeting.

The Reserve Bank of Australia will be meeting this afternoon to discuss the cash rate. According to the latest cash rate futures, the market is pricing in a 56% probability of a rate cut to zero. While this means a cut is possible, it looks unlikely to be the case. The Westpac Banking Corp (ASX: WBC) economics team expects the cash rate to stay on hold at 0.25%.

Oil prices fall.

Energy producers including Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) could drop lower today after oil prices softened. According to Bloomberg, the WTI crude oil price is down 0.4% to US$42.80 a barrel and the Brent crude oil price has fallen 0.55% to US$45.56 a barrel.

Gold price edges higher.

The shares of Newcrest Mining Limited (ASX: NCM) and Resolute Mining Limited (ASX: RSG) will be on watch today after the spot gold price edged higher. According to CNBC, the spot gold price rose slightly to US$1,975.60 an ounce. However, that wasn’t enough to stop the precious metal from recording its first monthly decline in five months.

Shares trading ex-dividend.

This morning a number of ASX 200 shares are due to trade ex-dividend and could drop lower. These include tech share Appen Ltd (ASX: APX), diversified retailer Super Retail Group Ltd (ASX: SUL), conglomerate Woolworths Group Ltd (ASX: WOW), and engineering company Worley Ltd (ASX: WOR).

More reading

• Top ASX Stock Picks for September 2020
• Are ASX banks or miners buys for dividends?
• Where to invest $20,000 into ASX shares immediately
• Bank analyst tells investors to ‘stay away’ from ASX bank shares
• This ASX-listed company makes $5.7 million per employee

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of and has recommended Super Retail Group Limited. The Motley Fool Australia owns shares of Appen Ltd and 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.

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Later today the Reserve Bank will meet to discuss the cash rate.

According to the latest cash rate futures, the market is pricing in a 56% probability of a rate cut to zero.

While I’m not convinced there will be a rate cut today, that doesn’t necessarily mean I’m expecting a rate hike any time soon.

In fact, I think it could even be several years until the central bank lifts rates again. In light of this, I believe income investors should focus on ASX dividend shares for a source of income.

But which ones should you buy? I think these two dividend shares would be top options:

Dicker Data Ltd (ASX: DDR)

Dicker Data is a leading wholesale distributor of computer hardware and software in the ANZ region. It has been a very positive performer in FY 2020 and recently released a strong half year result. During the six months, Dicker Data reported an 18.1% increase in revenue to $1,006.1 million and a 23.6% lift in net profit after tax to $29.4 million.

Pleasingly, management expects demand to remain strong in the second half, which I expect to support a generous final dividend. Based on the current Dicker Data share price, I estimate that it offers a fully franked forward 4.75% dividend yield. The good news is that I don’t expect its growth to stop there. Looking further ahead, the construction of its new distribution centre is expected to expand operations and boost revenue growth once complete.

National Storage REIT (ASX: NSR)

Another dividend option to consider is this self storage operator. I’m a big fan of National Storage due to its strong market position and growth through acquisition strategy. This strategy helped the company overcome the negative impact of the pandemic and report a 9% increase in underlying earnings to $67.7 million in FY 2020.

Although management is expecting its earnings to be flat at best in FY 2021, I still expect it to provide investors with a generous yield. The company is forecasting earnings of 7.7 cents to 8.3 cents per share this year and a dividend pay out ratio of 90% to 100%. Based on the current National Storage share price, the middle of this range implies a 4.2% distribution yield.

More reading

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• Dicker Data share price surges following interim results
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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We asked our Foolish writers to pick their favourite ASX stocks to buy in September. 

Here is what the team have come up with…

Daniel Ewing: Adairs Ltd (ASX: ADH)

Adairs is my pick for the month of September – it has been a massive beneficiary of the shift to online retail and this is reflected in the strength of its share price in 2020. In picking this over competing retailers such as Nick Scali Limited (ASX: NCK), I’d cite the fact that it actually makes more money despite earning less revenue. Furthermore, while it has physical stores, for a lot of these stores Adairs has the option to walk away from the leases at any point if the coronavirus pandemic worsens. On top of this, it offers an attractive 3.16% yield.

Motley Fool contributor Daniel Ewing owns shares of Adairs Ltd.

Chris Chitty: Treasury Wine Estates Ltd (ASX: TWE)

In my opinion, Treasury Wine Estates is oversold. At the time of writing, its share price is up less than 18% from its 52-week low reached during widespread panic selling in March. The ASX 200 index has recovered more than 23% over the same period.

This underperformance has come since China announced that it would investigate Australian wine imports. However, all of Asia, including China, only made up a quarter of Treasury Wine’s consolidated net sales revenue in the 2020 financial year. Treasury Wine has sales in over 70 countries and in my opinion, it can achieve sales growth outside China. I think it will outperform over the long-term.

Motley Fool contributor Chris Chitty does not own shares in Treasury Wine Estates Ltd.

Lloyd Prout: Bigtincan Holdings Ltd (ASX: BTH)

In my view, Bigtincan is a great long-term buy-and-hold share for growth investors. Bigtincan develops software to increase efficiency and automate sales and marketing functions for enterprise clients.

The company reported a great set of FY20 results recently, with revenue growth of 56% to $31 million. This includes organic growth of 38%, which was at the top end of guidance range. The company had $71.9 million in cash and equivalents as at 30 June.

With a market capitalisation of $300 million–400 million, the share price will be volatile. But in my opinion, over the long-term as digitisation increases, the business and share price should thrive.

Motley Fool contributor Lloyd Prout owns shares in Bigtincan Ltd and expresses his own opinions.

Brendon Lau: Worley Ltd (ASX: WOR)

The contract engineering group posted a solid FY20 result that showed its controversial acquisition of ECR last year is paying off. The stock is looking cheap as it significantly underperformed the market. In my view, the big jump in revenue and earnings, together with a strong order book and an increase in synergies from ECR, will help trigger a re-rating in the stock.

Motley Fool contributor Brendon Lau owns shares of Worley Ltd.

Bernd Struben: Sydney Airport Holdings Pty Ltd (ASX: SYD)

Sydney Airport has seen much of its business evaporate in the face of COVID-19. While the share price has gained 19% from its March lows, it’s still down 39% since 6 December 2019. And while the company has historically been a reliable dividend payer, it did not pay a dividend on 30 June.

But people need air travel. Especially in Australia. And when they can do so again, I believe they will do so in droves. If you have a longer-term investment horizon (2 plus years), I believe Sydney Airport will exceed its December 2019 highs and recommence with regular dividends.

Motley Fool contributor Bernd Struben does not own shares in Sydney Airport Holdings Pty Ltd.

James Mickleboro: Appen Ltd (ASX: APX)

At the end of August, the Appen share price fell heavily after the release of its half year results. Although it delivered a 25% increase in revenue to $306.2 million and a 20% lift in statutory net profit after tax, investors appear to have been expecting an even stronger result from the artificial intelligence services company.

I think this share price weakness has created a buying opportunity for investors in September. Particularly given its very positive long-term growth outlook, thanks to the growing importance of machine learning and artificial intelligence and its leadership position in the market.

Motley Fool contributor James Mickleboro does not own shares in Appen Ltd.  

Glenn Leese: JB Hi-Fi Limited (ASX: JBH)

JB Hi-Fi is a leader in the consumer electronics space. The popular brand is a regular stop for shoppers, which is no surprise considering its sales, iconic branding and huge range of products. JB Hi-Fi operates through 3 subsidiaries, JB Hi-Fi Australia, JB Hi-Fi New Zealand and The Good Guys (acquired in 2017).

The share price has rewarded investors with a massive 150% growth over the last 6 months, with no signs of slowing down. An increase in working from home, online retail sales and demand for entertainment products have created the perfect storm for the consumer electronics company.

Motley Fool Contributor Glenn Leese does not own shares in JB Hi-Fi Limited.

Matthew Donald: NextDC Ltd (ASX: NXT)

NextDC delivered a solid FY20 result with revenue and earnings growth. It’s my top September stock pick because I believe it can continue increasing its number of customers, contract utilisation and interconnections.

It continues to develop data centres around Australia, driven by surging demand. Additionally, the growth of e-commerce should drive the NextDC share price higher now and into the future.

As testament to its growth story, it recently became a member of the S&P/ASX 100 Index (ASX: XTO) for the first time. I expect NextDC’s FY21 revenue and earnings to keep growing.

Motley Fool contributor Matthew Donald does not own shares in NextDC Ltd.

Phil Harpur: Megaport Ltd (ASX: MP1)

Megaport is an ASX tech share that provides a ‘network as a service’ offering. This enables enterprises to increase or decrease their fixed broadband bandwidth requirement according to their individual needs.

Megaport recently reported total revenues of $58.0 million for FY 2020. That was a very impressive 66% over the prior year. Monthly recurring revenue also grew very strongly, increasing by 57% on a year-on-year annualised basis. I believe that Megaport is well placed to continue to expand over the next 5 years, driven by the rising demand for cloud computing and the need for rapid network connectivity.

Motley Fool contributor Phil Harpur owns shares of Megaport Ltd.

Sebastian Bowen: Coles Group Ltd (ASX: COL)

Of all the dividend shares reporting their earnings last month, Coles was one of the most impressive in my view. As rival Woolworths Group Ltd (ASX: WOW) (along with many other dividend shares) delivered a dividend cut, Coles instead went the other way and increased its final dividend by 14.6%. As such, I think Coles is a great buy this September as a reliable ASX share for an uncertain world.

The Coles share price has also recently pulled back from all-time highs, so I think there is a strong buying case if this profile appeals to your investing temperament or goals going forward. 

Motley Fool contributor Sebastian Bowen owns none of the shares mentioned.

Ken Hall: Xero Limited (ASX: XRO)

Aussie tech shares impressed during the August earnings season with Afterpay Ltd (ASX: APT) and others rocketing higher. However, I have my eye on another member of the ‘WAAAX’ group: Xero. Xero reports its earnings off-cycle so the accounting software provider’s shares quietly crept higher in August.

Strong customer retention and acquisition are what I like. Yes, Xero shares trade at an exceptionally high price-to-earnings (P/E) ratio. However, I think the potential growth and addressable market on offer make that worth a look in September. I would hate to miss out on potential growth before its next earnings announcement.

Motley Fool contributor Ken Hall does not own shares in Xero Limited.

Nikhil Gangaram: 5G Networks Ltd (ASX: 5GN)

My pick for September is 5G Networks. The telecommunications company recently released a very promising financial report for FY20. For the full-year, 5G Networks reported that the company had doubled earnings before interest, taxes, depreciation and amortisation (EBITDA), whilst also highlighting a 700% increase in operating cash flow.

In my opinion, the company has genuine short and long-term revenue drivers. With the COVID-19 pandemic driving people to work from home, the cloud-based services offered by 5G Networks should see heightened demand. From a technical perspective, the 5G Networks share price is trading near all-time highs and is poised to rise further, in my view.

Motley Fool contributor Nikhil Gangaram does not own shares in 5G Networks Ltd.   

Daryl Mather: Jumbo Interactive Ltd (ASX: JIN)

Jumbo Interactive sells lottery tickets on license from Tabcorp Holdings Limited (ASX: TAH). Coronavirus lockdowns pushed more sales online, which resulted in the company increasing its active players by 9% and its FY20 EBITDA by 7.6% – even with 10 fewer major jackpots.

During the lockdown, the company re-signed its agreement with Tabcorp up to 2030, removing one of the larger risks for investors. The company has also signed 4 agreements with charities through FY20. This allows charities to use the platform to sell lottery tickets also.

I think Jumbo Interactive is under valued and well positioned for growth. 

Motley Fool contributor Daryl Mather does not own shares in Jumbo Interactive Ltd.

More reading

• These market veterans believe a share market pullback is coming. Here’s their surprising advice…
• Beat low interest rates with Coles and this ASX dividend share
• 2 ASX dividend shares with yields over 10%
• Where to invest $20,000 into ASX shares immediately
• Leading brokers name 3 ASX shares to buy today

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Jumbo Interactive Limited and MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends 5G NETWORK FPO and BIGTINCAN FPO. The Motley Fool Australia owns shares of and has recommended BIGTINCAN FPO and Treasury Wine Estates Limited. The Motley Fool Australia owns shares of Appen Ltd and COLESGROUP DEF SET. The Motley Fool Australia has recommended Jumbo Interactive Limited and 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.

The post Top ASX Stock Picks for September 2020 appeared first on Motley Fool Australia.

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Have you given any thought to what you’re going to do the next time the share market falls?

I’m not necessarily talking about the 37% plunge the All Ordinaries Index (ASX: XAO) suffered in February and March during the COVID-19 panic selling.

But US share markets are now back at or near record highs. And the All Ords has soared 37% from its 23 March lows, bringing it to less than 14% off its all-time highs. With that kind of historic share price growth in mind, it’s well worth considering your plan for any potential share price retracement.

And panic selling shouldn’t be on the agenda.

Let’s see what the smart money has to say.

What the experts are saying about share prices in 2020

Here are 4 market experts’ opinions, as quoted by Bloomberg:

Randy Frederick is the vice president of trading and derivatives at Charles Schwab & Co. He said, “I can’t see what’s going to change people’s perspective on why we should stop buying. If we continue to buy and we have a few more pullbacks, which I think is likely, people will just continue to jump in and buy those dips.”

Brian Belski is the chief investment strategist at BMO Capital Markets. In a note he wrote, “US stocks have exhibited an epic price recovery that not only is unprecedented but tests most major academic and common-sense assumptions.” On Friday he restored his forecast of approximately 4% further gains for the S&P 500 by year’s end.

Shawn Snyder is the head of investment strategy at Citi Personal Wealth Management. He said, “When investors believe that (the Fed will intervene), it gives them excess confidence and they’re willing to take on more risk and buy stocks even though valuations are high. There are several bears that have thrown in the towel.”

Victoria Fernandez is the chief market strategist for Crossmark Global Investments. Bloomberg notes that she wouldn’t be surprised to see a share market pullback sometime in 2020, but citing low interest rates she still expects the market to trend higher. “You’ve got these really low rates. That’s going to help drive the market.”

Foolish takeaway

Consensus opinion, and I’ll throw my hat in that ring, foresees some pullbacks ahead. But the same voices also see share markets trending higher, at least for the rest of the year.

That means you may want to consider any pullbacks as buying opportunities. And keep some powder dry — aka cash on hand — to take advantage of those bargains when they come along.

That doesn’t mean investing in any old shares that are losing value. What it means is looking for shares that are down during market pullbacks, which have good opportunities for strong share price rebounds.

I’ll leave you with 2 widely different examples.

First, blue-chip share Sydney Airport Holdings Pty Ltd (ASX: SYD).

Sydney Airport’s share price fell 48% from the implosion in air travel caused by the coronavirus. The Sydney Airport share price is up 25% from its March lows, but still down 32% year-to-date. If your investing horizon spans at least 2 years, Sydney Airport shares could well look like a bargain at today’s prices once people begin flying again (which they will).

If Sydney Airport’s share price falls during a wider market pullback, it could prove a great buying opportunity, in my view.

Second, growth stock Afterpay Ltd (ASX: APT).

Afterpay’s share price also got hammered by the virus, losing 78% from mid-February through March. But thanks to a 927% share price surge (yes, you read that correctly) from its 23 March lows, Afterpay has delivered its shareholders a gain of 199% so far in 2020.

If the Afterpay share price takes another tumble during any market retracement, this is one dip you may want to buy into.

More reading

• If you invested $10,000 in Kogan shares 5 months ago, here’s how much you’d have today
• 2 Warren Buffett quotes you need to read this week
• This ASX-listed company makes $5.7 million per employee
• The Afterpay share price nears $100: buy, sell or hold 
• Why shares go low Mondays and high on Fridays

Motley Fool contributor Bernd Struben 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.

The post These market veterans believe a share market pullback is coming. Here’s their surprising advice… appeared first on Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) dropped by 0.22% today to 6,060 points.

Here are some of the highlights from the ASX today:

Scentre Group (ASX: SCG) and Mosaic Brands Ltd (ASX: MOZ)

The Scentre share price went up by 5.4% today and the Mosaic Brands share price grew by 17.7%.

Mosaic announced that after successful negotiations with Scentre, all non-Victorian stores in Westfield shopping centres have now reopened.

But the commercial terms of the agreement remain confidential. Victorian stores remain closed because of stage 3 and stage 4 restrictions.

Mosaic will continue to negotiate with landlords nationally to achieve “commercially sound lease terms consistent with the fundamental shift the Group sees in the retail rental market”.

The retail company will seek to minimise future store closures, but it still anticipates closing 300 to 500 stores over the next 12 months to two years.

Mosaic chair Richard Facioni said: “We’re pleased to have reopened our Westfield stores over the weekend following a mutually agreeable outcome to our negotiations with Scentre Group.

“We have had a long-standing relationship with Westfield enabling us to reach a solution that worked for both parties. This is a good outcome for Mosaic and, in particular, the 400 affected team members. As we noted last week, shuttered stores work for no one.”

IOOF Holdings Limited (ASX: IFL)

IOOF announced its FY20 result and a large acquisition today.

Underlying net profit after tax (UNPAT) was down 34.9% to $128.8 million. UNPAT from continuing operations fell 32.3% to $124 million.

Statutory net profit after tax rose 414.6% to $147 million. Total funds under management, administration and advice (FUMA) grew 46% to $202.3 billion.

The diversified ASX 200 financial business declared a final dividend of 11.5 cents per share.

IOOF also announced that it’s going to acquire MLC from National Australia Bank Ltd (ASX: NAB) for $1.44 billion. The acquisition is expected to deliver more than 20% of earnings per share (EPS) accretion on an FY21 pro forma basis including $150 million of targeted pre-tax synergies, excluding transaction and integration costs.

The acquisition price of $1.44 billion represents 7.4 times pro forma UNPAT including the targeted synergies, though it’s 16.2 times pro forma UNPAT excluding synergies.

If the acquisition goes ahead IOOF will be the number one retail wealth manager by FUMA with $510 billion and the number one advice business by the number of advisers with 1,884 advisers.

IOOF CEO Renato Mota said: “The opportunity to acquire a highly complementary business of the quality and size of MLC is compelling. MLC is a natural fit with IOOF and presents a unique opportunity to create value from synergies for the benefit of clients, members and shareholders. This is a once in a generation opportunity to create the leading wealth manager of the future.”

AGL Energy Ltd (ASX: AGL)

ASX 200 business AGL has announced it has entered into a binding agreement to acquire Click Energy from Amaysim Australia Ltd (ASX: AYS). The acquisition price is $115 million.

The acquisition includes 215,000 energy service customers and increases AGL’s total services provided to 4.2 million services. It’s aiming for 4.5 million customer services by 2024.

AGL said that its cost to serve is below that of Click Energy’s and that means AGL believes it can help Click Energy’s lower its cost base. Around 97% of Click Energy customers already use online billing, so AGL believes it can improve their service after its investments in its digital customer service.

AGL expects the acquisition to be “modestly accretive” to AGL’s underlying earnings. The acquisition will be financed from AGL’s existing debt facilities.

There will be approximately $40 million of transaction and integration costs. The ASX 200 company will recognise this as a significant item in FY21.

More reading

• The Mosaic Brands share price surges 21% on lease deal
• Amaysim share price down following FY20 results and divestment announcement
• Top fund manager says ASX share mania is at a turning point
• This ASX-listed company makes $5.7 million per employee
• ASX 200 edges higher: Fortescue sinks, NAB sells MLC Wealth, Costa jumps

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Scentre Group. 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 Tuesday the Reserve Bank is widely expected to keep the cash rate on hold at 0.25% once again. This is then predicted to be the same outcome for many meetings to come.

In light of this, it looks likely that low interest rates will be here for a few more years.

How can you beat them? The two ASX dividend shares listed below could be great ways to generate superior yields. Here’s why:

Coles Group Ltd (ASX: COL)

The first ASX dividend share to consider buying to beat low interest rates is Coles. I think the supermarket giant is perfectly positioned for long term growth thanks to its strong market position, defensive business, and expansion opportunities.

Another positive is the company’s focus on cost cutting and automation with its Refreshed Strategy. This should support its margins and ultimately its earnings and dividend growth over the coming years. For now, based on the current Coles share price, I estimate that it offers investors a fully franked ~3.2% FY 2021 dividend.

Rural Funds Group (ASX: RFF)

Another ASX dividend share I would buy is this agriculture-focused property group. It owns 61 properties across five agricultural sectors including almonds, cattle, cropping, vineyards, and macadamias. I’m a big fan of the company due to its defensive qualities and its long leases. At the end of FY 2020, the company’s weighted average lease expiry (WALE) was 10.9 years. It also has a high weighting towards blue chip tenancies, with 78% of revenue coming from corporate or listed tenants such as Treasury Wine Estates Ltd (ASX: TWE).

This allowed Rural Funds to continue its growth during the pandemic, with the company reporting an 8% increase in property revenue to $72 million. Looking ahead, management reaffirmed its plan to grow its distribution by 4% in FY 2021 and intends to pay shareholders 11.28 cents per share. Based on the current Rural Funds share price, this works out to be a 5% yield.

More reading

• Are ASX banks or miners buys for dividends?
• ASX 200 Weekly Wrap: Earnings drag ASX back to reality
• Will the RBA keep the cash rate on hold for 3 more years?
• ASX reporting season heroes to buy for FY21
• 3 quality ASX shares to add to your retirement portfolio

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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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