The S&P/ASX 200 (INDEXASX: XJO) fell nearly 11% in FY20, in its poorest fiscal year performance since 2012. The bulk of the losses occurred between late February and mid-March as a result of the COVID-19 pandemic. But some ASX 200 shares have fallen much more than the broader market. On that note, let’s take a look at the ASX 200 shares that delivered the worst performances of FY20. 

The worst performing ASX 200 shares of FY20

Southern Cross Media Group Ltd (ASX: SXL)

The Southern Cross Media Group share price fell 86% over the last financial year. The radio station owner struggled as advertising revenues all but dried up in the face of the pandemic. The company sought to realign its capital structure, therefore, shares were suspended from trading in late March. A $169 million capital raising was launched with the proceeds used to pay down net debt. Operating expenses were minimised with cost savings of $40 to $45 million to be realised over the 2020 calendar year. The interim dividend was also cancelled. In more positive news, the media company recently announced it was eligible for $10 million of funding under the Federal Government’s Public Interest News Gathering Program. 

Flight Centre Travel Group Ltd (ASX: FLT)

The Flight Centre share price plunged 73% over FY20. The company was an early casualty of the COVID-19 crisis, conducting a $700 million equity raising in April. At the onset of the pandemic, Flight Centre also moved to reduce costs and preserve cash. About 6,000 support and sales roles were either stood down or made redundant and 35% of shops globally were closed. In May, the company sold its St Kilda road property for $62.15 million. 

oOh!Media Ltd (ASX: OML)

Another victim of lockdowns, the oOh!Media share price shed 72% of its value over the last financial year. Demand for the company’s outdoor advertising assets plummeted as coronavirus caused people to spend more time at home. A $167 million equity raising was launched in late March with the proceeds applied to pay down debt. Material cost control measures were also implemented with savings of $20 to $30 million identified. Nonetheless, the company believes the outdoor advertising market will continue to grow as conditions normalise. 

G8 Education Ltd (ASX: GEM) 

The G8 Education share price fell 70% over 2020. The childcare centre operator flagged the impact of coronavirus on attendance at its centres in February. By late March, attendances across the sector were around half the level of the prior year, putting the sector at risk of collapse. The Federal Government announced a relief package for the sector in April, under which families received child care for free. Subsequent to this, G8 Education conducted a $301 million capital raising to provide the company with additional liquidity and financial flexibility. 

Webjet Limited (ASX: WEB)

The Webjet share price tumbled 66% in FY20 as the travel industry ground to a halt. The company conducted a $275 million equity raising in April to strengthen its balance sheet in the face of restrictions severely impacting travel globally. Webjet deferred its interim dividend and will review its decision in October. The company announced redundancies and most remaining staff moved to a 4-day week. While the travel industry will be impacted by coronavirus for some time, Webjet believes it will emerge in a strong competitive position, partially thanks to its improved capital position following its equity raise. 

Unibail-Rodamco-Westfield (ASX: URW)

The Unibail share price dropped 62% last financial year. The shopping centre operator has suffered greatly during the pandemic, particularly due to lockdowns in Europe impacting its properties in the region. Restrictions have meant conventions and exhibitions are on hold and foot traffic at shopping centres is significantly down. The fall in its share price meant Unibail was removed from the S&P/ASX 100 (INDEXASX: XTO) in the latest rebalancing. Earlier this month, Unibail reported that 65 of its 90 shopping centres have reopened. Centres have seen footfall returning progressively following re-opening. 

Whitehaven Coal Ltd (ASX: WHC)

The Whitehaven Coal share price was down 61% over FY20 on the back of declining coal sales throughout the pandemic. Sales fell 22% in the March quarter when compared to the prior corresponding period. Saleable coal production also declined by 15% to 4.1 million tonnes. The company, nonetheless, reports that although it sees economic activity rapidly contracting, demand for coal from customers in its region remains solid. 

Corporate Travel Management Ltd (ASX: CTD)

The Corporate Travel Management share price plunged 57% in FY20 as travel came to a standstill. The travel agent is one of the few that has not yet raised capital to shore up liquidity. Corporate Travel Management has benefitted from its business model under which a high proportion of costs are variable. The business has a relatively small physical footprint, therefore saving on rent but meaning roughly 70% of costs are people-related. This business model allowed for a swift resizing of the business as the coronavirus crisis took hold. When the crisis hit, Corporate Travel Management implemented an extensive cost reduction program. The company saw its cost base reduced from $27 million a month to $10–$12 million a month. The company eliminated non-essential expenditure and reduced CAPEX.  Corporate Travel Management also implemented temporary stand-downs and retrenchments but has been a beneficiary of government initiatives such as JobKeeper. 

Oil Search Limited (ASX: OSH)

The Oil Search share price fell 54.5% last financial year. The company saw revenue decline by 20% in the last quarter as sales fell by 13%. The onset of the pandemic saw a decline in demand for oil accompanied by a steep drop in oil prices. In response to the sudden fall in the oil price in March, Oil Search took action to strengthen its balance sheet and increase liquidity. In April, the company launched a $700 million equity raising and investment expenditure has also been slashed by approximately 40%. Oil Search believes it is now in a robust position to withstand a sustained period of low oil prices. 

Virgin Money UK PLC (ASX: VUK)

The Virgin Money share price dived 53% in FY20. The ASX 200 company saw a resilient first-half performance although the pandemic produced headwinds in the second half. Virgin has reported that it has a defensive loan portfolio with 82% mortgages, 11% business lending, and 7% personal lending, mainly in prime and high-quality credit cards. Nonetheless, Virgin Money booked a COVID impairment provision of £164 million at the end of 1H FY20. 

More reading

• ASX 200 finishes 0.6% higher, Aussie house prices fall
• Australian property prices fell again in June. Will the drop continue?
• These 3 ASX healthcare shares are at all-time highs!
• ASX 200 up 0.9%: Big four banks rising, NEXTDC rockets higher
• Why Polynovo and JB Hi-Fi shares outperformed in FY20

Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and oOh!Media Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Are you looking to add some blue chip shares to your portfolio in FY 2021? If you are, then I think the ones listed below could be top options.

I believe all three have the potential to not just generate solid returns over the new financial year, but also over the rest of the 2020s. Here’s why I would buy these ASX blue chip shares today:

CSL Limited (ASX: CSL)

I think CSL is one of the best blue chip ASX shares to buy right now. This is because I’m confident the biotherapeutics giant is well-placed to deliver solid earnings growth over the 2020s thanks to its leading therapies, growing plasma collection network, and its burgeoning research and development (R&D) pipeline. This pipeline contains a number of therapies (some of which have just been acquired) that have the potential to generate billions of dollars in sales over the next decade if their trials are successful.

REA Group Limited (ASX: REA)

Another blue chip share to consider buying is this property listings company. I believe it is well-positioned to deliver strong long term earnings growth thanks to its market-leading position and the strength of its business model. I was particularly impressed during the third quarter when REA Group still managed to grow its earnings despite a 7% drop in listings volumes. And while trading conditions are likely to remain challenging in the near term, I expect its earnings growth to accelerate once they ease.

SEEK Limited (ASX: SEK)

A final blue chip share to consider buying is SEEK. I believe the job listings giant can grow materially in the future thanks largely to its growing Zhaopin business in China. Given how this business has such a massive opportunity in a very lucrative market, I believe it will be the key driver of growth over the next decade and beyond. This should be supported by modest growth from its ANZ business, which continues to dominate the local market.

More reading

• ASX 200 stocks to watch for FY2021
• Up nearly 33% in 12 months. Can the CSL share price climb higher?
• Top ASX Stock Picks for July 2020
• Why I would buy and hold CSL and this quality ASX 200 share
• The top 10 performing ASX shares over the past year

James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has recommended REA Group Limited and SEEK 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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Happy new financial year!

Yes, it’s 1 July today and officially the start of the 2021 financial year. Apart from being able to lodge your tax return, a new financial year presents a great opportunity to take a decent look over your investment portfolio. It’s the perfect time to celebrate your gains, rue your losses and look towards your next purchase of ASX shares .

So, on that note, let’s consider some solid ASX dividend shares. Specifically, I’m looking at those shares that I think will prove fruitful for income investors in the year ahead and beyond.

1) Wesfarmers Ltd (ASX: WES)

Wesfarmers is one of the largest companies on the ASX. It’s also a retailing giant – owning the Bunnings Warehouse chain of hardware stores as well as Kmart, Officeworks and Target. It also retains a ~5% stake in Coles Group Ltd (ASX: COL). Wesfarmers first listed on the ASX more than 30 years ago and, in my opinion, has proven itself time and again as a savvy allocator of capital. This was highlighted by the company’s acquisition of lithium producer Kidman Resources last year. Wesfarmers is also a formidable dividend payer. On current prices, its shares offer a trailing dividend yield of 3.4%, or 4.86% grossed-up with full franking.

2) Rural Funds Group (ASX: RFF)

Rural Funds has had its fair share of controversy in recent times. Last year, this agricultural REIT (real estate investment trust) was accused of cooking its books by a prominent short-seller. Rural Funds has since been completely exonerated by the courts, however, and I think it remains a top option for income investors to consider. This REIT leases agricultural land to farms and agri-businesses. Its portfolio includes macadamia, cotton, wine and beef-producing land, which all have the potential to return relatively safe and reliable rental cash flows back to Rural Funds. On current prices, Rural Funds shares are offering a 4.2% dividend yield. The company aims to increase this yield by 4% annually.

3) AGL Energy Limited (ASX: AGL)

AGL is Australia’s largest supplier of energy like electricity and gas. This isn’t the sort of company that will make you rich overnight but, in my opinion, AGL does offer a defensive, inelastic earnings base and a strong and robust dividend. Despite this, AGL has yet to regain the highs of above $21 per share we saw back in February. At today’s price of $17.18 per share (at the time of writing), AGL is offering a trailing dividend yield of 6.46%, which grosses-up to more than 8.5% with the company’s 80% franking.

More reading

• Is the Wesfarmers share price a good buy right now?
• Can the Coles share price climb 12% again in July?
• Morgans picks the best FY21 ASX buys for the COVID-19 world
• Searching for decent dividends? These 4 ASX shares are paying 6% or more
• ASX 200 up 1.2%: Big four banks rebound, WiseTech CEO dumps shares, Collins Foods impresses

Motley Fool contributor Sebastian Bowen 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 and Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Telix Pharmaceuticals Ltd (ASX: TLX) share price has jumped by 16.02% today on the back of a market announcement released this morning. The announcement confirmed the company has received a ‘Breakthrough Therapy’ (BT) designation for its renal cancer imaging product from the US Food and Drug Administration (FDA). 

What does this mean for Telix?

The BT designation means that the FDA will work closely with Telix to provide guidance on the development of its product TLX250-CDx. The product is being developed to determine if “indeterminate renal masses” identified in MRI or CT imaging are either clear cell renal cell cancer or non-clear cell renal cell cancer. It does this using positron emission tomography imaging, which is an imaging technique that uses radioactive substances to visualise and measure metabolic processes in the body.

According to the announcement, the new BT designation offers Telix a number of significant benefits. These include eligibility for FDA’s ‘Fast Track’ designation and more frequent and intensive interactions with the FDA. It also gives the company the opportunity to submit a ‘rolling’ biological licence application for the product, which allows it to submit its application in separate modules to streamline the approval process. 

In order to achieve BT designation, Telix needed to provide preliminary clinical evidence that demonstrated its product could have substantial improvement on at least one clinically significant endpoint over available care. This means that the Telix product has shown positive results.

Commenting on the news, Telix CEO Dr Christian Behrenbruch said:

The granting of breakthrough designation by the FDA for our kidney cancer imaging product provides Telix with the opportunity to interact closely with the FDA to expedite the registration process of TLX250CDx, a particularly important consideration given the current Phase III development status of the asset. There is a significant unmet medical need to improve diagnosis and staging of clear cell renal carcinoma (ccRCC), which is the most common and aggressive form of kidney cancer. It’s encouraging that the agency recognizes this.

About the Telix Pharmaceuticals share price

Telix is a biopharmaceutical company with a focus on molecularly targeted radiation. It is developing clinical-stage oncology products that will aim to address unmet medical needs in renal, prostate and brain cancer. The company is based in Melbourne and also has operations in Belgium, Japan and the United States.

In April, Telix released its Q3 FY2020 results and the company appears to be in healthy shape. It had cash reserves as at 31 March 2020 of $34.49 million, and invested $10.61 million during the quarter in direct R&D activities. Telix also spent around $4 million on one-off costs during Q3. These costs were related to making a drug product for its prostate and kidney cancer therapies.

The company received cash from sales of $1.14 million in Q3 FY2020, which was a 15% increase on the previous quarter. 

During and subsequent to Q1 2020, Telix saw a number of achievements including:

• Gaining permission to trial TLX250-CDx in the US
• Acquisition of a licensed radiopharmaceutical production facility in Belgium
• A commercial agreement with Cardinal Health as a commercial partner in the United States.

The Telix share price is up 96% from its 52-week low of $0.755 cents. It has dropped 3% since the beginning of the year, however, the Telix share price is up 17% since this time last year. 

More reading

• Why Alterity Therapeutics, Flight Centre, NEXTDC, & Telix are surging higher

Motley Fool contributor Chris Chitty 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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The Regional Express Holdings Ltd (ASX: REX) share price has recovered more than 195% from its lows in late-March and is trading relatively flat for the year.

Australia’s largest regional airliner’s share price recovery has dwarfed that of larger airliners like Qantas Airways Limited (ASX: QAN) and Virgin Australian Holdings Ltd (ASX: VAH). Here’s why the Regional Express share price has been flying under the radar and why it could be a long-term buy.

Expanding into the ‘Golden Triangle’

Regional Express recently announced that the airliner will expand its domestic operations into the ‘Golden Triangle’. In local aviation terms, the ‘Golden Triangle’ refers to the lucrative domestic routes between Sydney, Melbourne and Brisbane.

The company will look to raise $30 million to support the initiative in order to purchase 5–10 narrow-body jets to be based in major cities on the east coast. The airliners board aims to have the new routes in operation by the start of March 2021. The company’s new domestic operations will be priced at affordable levels and incorporate its hybrid business and service model.

How has Regional Express performed?

Regional Express operates exclusive services to 60 regional destinations in Australia and currently has a fleet of 60 Saab aircraft. The company has made an operational profit every year since 2004, 2 years after it was founded.

Despite the company’s resilience and consistent profitability, Regional Express has not been spared the impact of the coronavirus pandemic. The airliner withdrew its profit guidance in mid-March and has managed to maintain services to regional Australia thanks to funding arrangements with both federal and state governments. 

Should you shares in Regional Express?

Regional Express currently dominates regional services, covering 85% of the routes on offer. However, it should be noted that expanding into servicing capital cities comes with a range of additional risks. The current environment also remains highly volatile given the evolving nature of the coronavirus pandemic. Qantas also sacked 6,000 workers and implement a 3-year recovery plan, despite being a highly-regarded airliner.

If Regional Express can build on its existing infrastructure and maintain a lower cost base, it should be competitive. I think the prospect of Regional Express expanding its services would be great for consumers and potentially shareholders, too. I think investors should keep an eye on the sector and Rex, in particular, before making an investment decision.

More reading

• The latest ASX stocks to be upgraded by brokers to “buy”
• Top brokers name 3 ASX 200 shares to buy today
• What does the future hold for the Qantas share price?
• Leading brokers name 3 ASX 200 shares to sell today
• Why the Regional Express share price is soaring 28% this week

Motley Fool contributor Nikhil Gangaram 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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While there’s no single ‘right’ way to buy ASX shares, buying when a share is trading at a discount to the sum total of its worth based on earnings, dividends, equity and debt – aka intrinsic value – means you are more likely to make money. That’s because the price at which you enter a stock has a major bearing on your future returns.

But avoiding paying too much for ASX shares is easier said than done. As an investor, you don’t have the resources to analyse companies across key criteria like growth, value, quality and timing. Even the fund managers and brokers invariably get it wrong. That explains why after 10 years, 85% of large cap funds underperformed the S&P 500, and after 15 years, nearly 92% are trailing the index.

The key to maximising future returns is to understand a handful of financial ratios, plus some other key indicators. Do this and you’ll significantly improve your ability to buy the right shares at the right price.

First, the key financial ratios

No single piece of data should ever be looked at in isolation. The smarter approach is to draw from a handful of criteria to get a much better snapshot of a share’s overall health. Firstly, let’s take a look-see at the financials.

• Price-to-earnings growth (PEG) ratio: A combination of the price-to-earnings (PE), divided by the prospective earnings-per-share (EPS) growth rate gives the PEG ratio, which measures the price of earnings growth. Ideally you should be looking for a PEG of less than one. Tip: the lower the PEG ratio, the more a stock may be undervalued relative to its future earnings expectations.
• Price-to-earnings (P/E) ratio: Contrary to the popular belief of many investors, P/E is not a measure of absolute value. As such, it can often raise more questions than it answers. However, a share’s P/E – which is its current share price divided by its earnings per share (EPS) – provides a useful starting point for comparing different shares within like or similar sectors. If you’re set on using P/E as a measure, you need to understand: A) why it might be low, relative to its peers; and B) the outlook for the next 12 months. If you don’t understand these 2 factors, you risk buying value traps, which will drag down your overall portfolio performance.
• Payout ratio: As a percentage of net profit paid out as dividends, the payout ratio is an important proxy into the sustainability of a company’s dividend. It also provides strong clues into a company’s future growth upside. A payout ratio less than 50% can also signal that the company plans to use surplus cash to grow the business.
• Return on equity (ROE): A key measure of how well management uses its equity, ROE is earnings (revenue minus expenses, taxes and depreciation) divided by equity. As long as debt remains controllable – ideally with a net-debt to equity ratio under 70% – there’s no better indicator of business performance than the ROE. Another way to look at ROE is to ask whether or not every $1 used in financial growth is able to convert into $1 of market value.
• Return on investment capital (ROIC): ROIC measures the cash rate of return on the capital that a company has invested. In some cases, it’s modified by replacing earnings with earnings plus the interest on long-term debt. In this case, a comparison with return on equity (ROE) determines whether the company benefitted from the extra debt. Assuming the return on equity (ROE) is higher than ROIC, the debt has succeeded in adding value to the business.
• Earnings per share (EPS) growth rate: Within normal markets, share prices typically increase if EPS increases. And the faster a company grows its EPS, the higher those earnings tend to be valued.

Next, the more qualitative measures

It’s important to overlay the above key financial ratios with some important measures of growth and value. Digging around in the annual report can provide valuable insights into:

• Management’s track record and industry knowledge. One key element to look for within managements’ talents is evidence they’ve carved out a sustainable competitive advantage for the business. Without it, a company can’t generate long-term, above-market returns.
• Sales activity: There’s no smoke and mirrors here, either a company’s revenue has tracked upwards over the long term or it hasn’t. If not, why not, and more importantly, when did the rot set in?
• CAPEX, staff numbers and R&D: You want to see sufficient evidence that the company is investing in future growth – this includes its staff. If there is no evidence of sufficient investment, then why not, and equally important – when did the wheels start falling off?
• Structural growth: Unlike cyclical growth, which is vulnerable to the economic cycle, you want to find out how much structural growth is being driven by what’s happening inside the business. A shift or change in the basic ways a company functions or operates can signal that it’s serious about applying new technology or adopting to regulatory or industry-changing reforms.

A little homework returns in spades

Running a ruler over of any of the stocks you have on your radar – before you buy (or sell) – is tantamount to a health check. The good news is that using the 10 criteria above isn’t rocket science; all of the data you’re looking for is publicly available.

Instead of buying purely on share price momentum – which isn’t investing, it’s speculating – this checklist will ensure that at the very least, you’re entering stocks with solid balance sheets and sustainable income streams, both of which are needed to support either consistent dividends and/or reinvestment in future growth.

More reading

• Should ASX investors be worried about insider selling?
• The latest ASX stocks to be upgraded by brokers to “buy”
• These 3 ASX healthcare shares are at all-time highs!
• Next Science share price surges higher on TGA approval
• Alcidion Group share price jumps 10% on new contract

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

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Should investors be worried about what effect insider selling might have on the value of their ASX shares?

If you own shares in a company, surely the notion of one of this company’s senior management figures selling off large stakes of their own equity would raise a red flag? If this does happen, wouldn’t it be prudent for you as an ordinary, retail investor to follow management and jump ship?

Well, I don’t think it’s that simple.

What is ‘insider selling’?

Not to be confused with ‘insider trading’, insider selling refers to when a member of a company’s management team or board of directors sells shares in the company. By law, these sales (as well as any buy orders) have to be reported to the market. This provides us with the opportunity to scrutinise whether a company’s leaders are ‘putting their money where their mouths are’, so to speak.

We saw this in action just yesterday. Former ASX tech high-flyer WiseTech Global Ltd (ASX: WTC) informed the market (before open) that its founder and CEO, Richard White, has sold 2,445,653 shares of his own company at a market value of approximately $45.9 million. These sales apparently occurred between 22 June and 29 June. WiseTech shares understandably dipped more than 2% yesterday on the news.

Is insider selling really a bad thing?

When I consider this question, I always try to place the situation in context. Every person worth their salt when it comes to prudent, wealth-building practices knows that keeping your investments diversified across different assets and asset classes is usually a good idea. If I was in Mr White’s position (the WiseTech CEO, not the Breaking Bad character!), I wouldn’t want 90% or more of my wealth tied up in a single company. This is regardless of how much faith I had in the company’s future. Looking at Mr White’s remaining holdings in WiseTech, we can see that he still holds around 151 million shares. This means that the selling announced yesterday represented a mere 1.62% of his total holdings.

Insider selling is actually very common among founder-led companies. Many famous founder/CEOs from around the world have sold off shares of ‘their’ companies over the years. They include Microsoft’s Bill Gates, Facebook’s Mark Zuckerberg, Amazon’s Jeff Bezos and Alphabet’s Sergey Brin and Larry Page. This is usually done to diversify wealth or to fund other ventures. Then again, some other founder/CEOs, like Berkshire Hathaway’s Warren Buffett or Tesla’s Elon Musk, have been reluctant to part with their shares for most of their lives.

Foolish takeaway

When it comes to insider selling, generally I don’t feel too alarmed. If it looks as though management are ‘fire-saling’ their stock, or inexplicably selling off vast chunks of shares for no reason, it might be a different story. But I do feel the media likes to beat up those people like Mr White who might just want to take some profits off the table after years of investing in their companies. Personally, the latter doesn’t bother me, we’re all human after all.

More reading

• Why Avita, Brickworks, Fisher & Paykel Healthcare, & WiseTech Global are tumbling lower
• ASX 200 up 1.2%: Big four banks rebound, WiseTech CEO dumps shares, Collins Foods impresses
• Why Pushpay, Ramelius, Saracen, & WiseTech are dropping lower
• WiseTech share price on watch after CEO dumps almost $46 million of shares
• ASX 200 drops 1.5% on elevated COVID-19 fears

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares), Facebook, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Facebook, and Tesla. The Motley Fool Australia owns shares of WiseTech Global. The Motley Fool Australia has recommended Alphabet (A shares) and Facebook. 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 market is off to a good start on the first day of the new financial year. This might be particularly so for a handful of ASX stocks that have been upgraded by top brokers to “buy”.

The S&P/ASX 200 Index (Index:^AXJO) gained 0.6% in after lunch trade led by property and technology shares.

But there’s plenty of action outside of those sectors too.

Copper turning to gold

The OZ Minerals Limited (ASX: OZL) share price is one example with the copper miner jumping 2.8% to $11.27 at the time of writing.

JP Morgan’s move to upgrade OZ Minerals to “overweight” from “neutral” probably had something to do with the stock’s outperformance.

The broker admitted that it was too conservative in ascribing value to the miner’s Carrapateena block cave project.

But as it turns out, the capital expenditure for the project isn’t as high as originally feared, while ore grades and mine life of the block cave is also better than expected.

JP Morgan’s 12-month price target on OZ Minerals is $12.80 a share.

Flying high

Another stock taking off today is the Qantas Airways Limited (ASX: QAN) share price. Shares in our largest carrier jumped 3.3% to $3.90 after Macquarie Group Ltd (ASX: MQG) lifted its recommendation on Qantas to “outperform”.

While predicting the earnings recovery for the airline is extremely difficult in this environment, the broker believes Qantas can sustainably achieve $1 billion in cost cuts a year by FY23. This should allow the company to fly through to the other side of the COVID-19 pandemic.

“A return to profitability is likely in FY22+, but in the near-term cash flow can still be positive considering the ~A$2bn non-cash depreciation and amortisation impact,” said Macquarie.

“Using FY23 as a basis for valuation, which should be at FY19 levels… Qantas is trading on 3.1x EV / EBITDA which is a 20% discount to the 3.9x three-year average.”

The broker’s price target on the stock is $4.35 a share.

Tasty bite

Meanwhile, the Collins Foods Ltd (ASX: CKF) share price is on track to record it’s fourth consecutive trading day of gains.

Shares in the KFC franchisee added another 0.3% to $9.45 at the time of writing, which takes its total four-day gain to just over 17%.

But Canaccord Genuity thinks there’s more room for the stock to climb as it upgraded Collins Foods to “buy” from “hold” following its profit announcement this week.

The broker believes its local KFC network is well placed to benefit from the economic turmoil caused by the COVID-19 outbreak and pointed out that its underperforming European operations are performing better than it expected.

“While the earnings multiples (23x FY21e EPS) are relatively full, yesterday’s result suggests that CKF remains comparatively well-placed to navigate any broader economic weakness that persists into 2021,” said the broker.

Canaccord’s price target on the stock is $9.75 a share.

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Motley Fool contributor Brendon Lau owns shares of Macquarie Group Limited and OZ Minerals Limited. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended Collins Foods 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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Shares in the healthcare sector have been a favourite amongst investors during the coronavirus pandemic. Here are 3 ASX healthcare shares that have shown resilience during the pandemic and are trading at all-time highs.

Ansell Limited (ASX: ANN)

Ansell is a global leader in developing, manufacturing and distributing health and safety protection solutions. In mid-March, I wrote an article about Ansell and the potential surge in demand for safety and protective equipment. I wish I acted on this hunch as the Ansell share price has surged 86% from its lows in March. The company is currently trading at all-time highs.

With people becoming more aware of safety and hygiene protocols due to COVID, Ansell is well poised to benefit. In late March, Ansell reaffirmed its FY20 guidance for earnings per share, citing strong demand for its hand and body protection products. Ansell also assured investors that its balance sheet remains in a strong position and the company is working to maximise its product output.

ResMed Inc (ASX: RMD)

ResMed is another healthcare share that has surged to all-time highs. The company is a global manufacturer of medical devices and treatments focused on the management of respiratory and sleep disorders. The coronavirus pandemic has seen a surge in demand for the company’s invasive and non-invasive ventilators.

In Q3, ResMed tripled its ventilator production to produce more than 52,000 units for an urgent Australian Government contract. The ResMed share price has the potential to see further upside in the short term as fears of a second wave of coronavirus infections grow.

Fisher and Paykel Healthcare Corp Ltd (ASX: FPH)

Fisher and Paykel have been one of the best performers on the S&P/ASX 200 (INDEXASX: XJO) for FY20. The company specialises in manufacturing and the distribution of products used in respiratory care. Fisher and Paykel recently published its full-year report for FY20 which saw Fisher and Paykel record an 18% increase in operating revenue of NZ$1.26 billion for the year.

The company attributed the boost in revenue to an increase in demand for its Optiflow nasal high-flow therapy. Fisher and Paykel noted strong hardware sales and demand from hospitals for products used to treat COVID-19.

This demand has also been reflected in the company’s share price which is trading near all-time highs. With fears of a second wave of coronavirus infections emerging, the Fisher and Paykel share price could see further upside as demand for ventilation treatments and respiratory humidifiers increase.

Should you buy?

ASX healthcare shares are usually a more defensive option during tough economic times as individuals still need medical care. The coronavirus pandemic will likely add to the essential services of healthcare as many individuals may pay more attention to their health.

In my opinion, investors should compile a watchlist of healthcare shares that could blossom in 2020 and beyond, in particular, I would focus on health companies that have exposure to vaccines or auxiliary treatments for COVID-19.

More reading

• Why Avita, Brickworks, Fisher & Paykel Healthcare, & WiseTech Global are tumbling lower
• ASX 200 up 0.9%: Big four banks rising, NEXTDC rockets higher
• Why Polynovo and JB Hi-Fi shares outperformed in FY20
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Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ansell Ltd. and ResMed Inc. 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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