If you’re looking for a way to diversify your portfolio to offer some protection from market shocks and optimise your returns, then I think the two exchange traded funds (ETFs) listed below could be worth considering.

As well as giving investors exposure to a wide range of shares in different markets and industries, I believe these ETFs also have the potential to provide strong returns for investors in the future. They are as follows:

BetaShares NASDAQ 100 ETF (ASX: NDQ)

If you were to buy only one ETF, I would make it the BetaShares NASDAQ 100 ETF. This is because this ETF gives investors access to the 100 shares that are trading on the famous NASDAQ 100 index. These include countless household names such as Amazon, Facebook, Microsoft, and Netflix.

One area of the market which is not represented on the index is the financial sector. This could make it a good option for investors that have a high weighting towards shares such as Australia and New Zealand Banking GrpLtd (ASX: ANZ) and the big four banks.

iShares Global Healthcare ETF (ASX: IXJ)

Another ETF to consider buying is the iShares Global Healthcare ETF. If your portfolio is lacking exposure to the healthcare sector, then I think this ETF would be a good way to do it. As well as giving investors access to Australian healthcare shares such as CSL Ltd (ASX: CSL), Ramsay Health Care Limited (ASX: RHC), and Sonic Healthcare Limited (ASX: SHL), it provides exposure to many global healthcare giants.

This includes the likes of Johnson & Johnson, Novartis, Pfizer, Roche, and Sanofi. And given the positive outlook for the healthcare sector over the next couple of decades due to ageing populations and increased chronic disease, I believe it could provide strong returns for investors over the long term.

More reading

• 2 ASX ETFs I would buy for diversification and strong long term returns
• Tech shares! Should we even invest in anything else?
• 3 of the best ETFs to give ASX investors international exposure
• Are Macquarie Group shares worth investing part of $3,000 into this June?
• 3 top ETFs you can easily diversify your portfolio with immediately

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 CSL Ltd. The Motley Fool Australia owns shares of and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended Ramsay Health Care Limited and Sonic Healthcare 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 Spheria Emerging Companies Ltd (ASX: SEC) share price is edging higher on Wednesday after the release of its May investment update.

What happened in May?

During the month of May, Spheria Emerging Companies recorded a solid return but continued to underperform its benchmark.

The fund manager reported a 7.2% gain in May, compared to a 10.6% gain by the S&P/ASX Small Ordinaries Accumulation Index. This means its return over the last 12 months is now a negative 12.7%, whereas the index is down 2.9%.

What is Spheria invested in?

A number of companies contributed to its 7.2% gain last month. Positive performers in the fund included retailer Beacon Lighting Group Ltd (ASX: BLX), appliance manufacturer Breville Group Ltd (ASX: BRG), fashion retailer City Chic Collective Ltd (ASX: CCX), and telco Superloop Ltd (ASX: SLC).

Management commented: “These stocks continued their recovery over May post the selloff in March. Superloop is benefitting from increased data demand and a much greater focus on cash flow generation with a moderating capex profile.”

The fund manager also notes that Breville “appears to have continued to trade well through the shutdown period as consumers purchase small home appliances.” It took part in its $101 million capital raising during the month.

That wasn’t the only capital raising it took part in. It also added to its position in Blackmores Limited (ASX: BKL) by participating in its $117 million capital raising. This could be an indication that it remains optimistic on its prospects.

The detractors.

The biggest factor in its underperformance in May was not necessarily what it owned, but what it didn’t own.

Spheria notes that there were a few names in the gold space which it doesn’t own, including Saracen Mineral Holdings Limited (ASX: SAR) and Regis Resources Limited (ASX: RRL), which contributed strongly to the S&P/ASX Small Ordinaries Accumulation Index’s gain.

Though, one share in the portfolio that did weigh on its performance was Village Roadshow Ltd (ASX: VRL). It declined 10% during May on the back of a revised takeover offer from BGH Capital.

Where will the future gains come from?

Spheria appears optimistic on the future and notes that “the prospects for a reasonable economic recovery are real.”

In suspects that this could ultimately lead to a rotation into cyclical sectors which offer value for money.

“Whilst high growth concept stocks particularly in the fintech space have led the recovery so far, there remains the prospect of a strong rotation into cyclical sectors which offer far greater relative valuation appeal. Sectors which include building materials, consumer discretionary and media,” the fund manager explained.

It concluded: “The re-emergence of private equity and corporates on the acquisition path is also likely. With our focus on strongly cash generative businesses with modest gearing we should be the beneficiary of some of this activity looking forward.”

More reading

• Why the Beacon Lighting share price is soaring 22% today
• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 jumps almost 4%, Webjet share price soars
• Why AusCann, Phoslock, Kogan, & Village Roadshow are dropping lower
• The ASX winners and losers from the latest S&P index shake-up

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 SUPERLOOP FPO. The Motley Fool Australia owns shares of and has recommended Blackmores 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 Here’s where this ASX fund manager sees value for investors appeared first on Motley Fool Australia.

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The Beacon Lighting Group Ltd (ASX: BLX) share price is beaming today after the retailer announced bumper second-half sales growth.

At the time of writing, Beacon Lighting shares have surged 22.61% to $1.22, taking the company’s year-to-date share price movement back into positive territory (albeit marginally).

What did Beacon Lighting announce?

This morning, Beacon Lighting delivered a business update. This is the first time investors have heard from the company since the release of its first-half FY20 results back in February.

In today’s release, Beacon revealed that its stores have been able to trade throughout the COVID-19 pandemic. This has helped the company to achieve strong sales growth in the second half of FY20.

Accordingly, for the period 30 December 2019 to 14 June 2020, Beacon delivered total sales growth of 15.5% and comparable sales growth of 16.9% over the corresponding period in 2H19. Meanwhile, the company’s online channel reported bumper growth of 77.7%.

As for year-to-date results (1 July 2019 to 14 June 2020), Beacon has achieved total sales growth of 7.1%, comparable sales growth of 6.4%, and online sales growth of 47.8% over the corresponding period in FY19.

The company attributed this uplift in sales to changes in consumer behaviour in the wake of COVID-19.

Further developments and profit guidance

On 9 December 2019, Beacon disclosed it had sold its Brisbane distribution centre to Charter Hall for $28 million under a sale and leaseback arrangement.

This morning, Beacon revealed that the sale realised a cash flow profit before tax of $13.5 million. Given the sale and leaseback accounting rules, the company realised a profit before tax of $7.8 million which will contribute to its FY20 statutory results.

At the end of last year, the company also announced the closure of Beacon Energy Solutions. The retailer disclosed today that the cost to close the business will be approximately $5 million, exceeding original forecasts of between $3.4 million and $3.9 million.

Excluding the impact of the distribution centre sale, the Beacon Energy Solutions closure and lease accounting changes, the company’s FY20 underlying net profit after tax (NPAT) is expected to exceed the $16.5 million result achieved in FY19.

More reading

• Here’s where this ASX fund manager sees value for investors
• Is this ASX small cap the best placed to benefit from the $700m HomeBuilder grant?

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.

The post Why the Beacon Lighting share price is soaring 22% today appeared first on Motley Fool Australia.

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The ASX energy sector may represent one of the last value buys on the S&P/ASX 200 Index (Index:^AXJO) if oil demand stages a record bounce in 2021.

The bullish prediction was contained in the International Energy Agency’s monthly report released yesterday, according to Market Watch.

While the IEA is forecasting global demand for crude to plunge by 8.1 million barrels a day in 2020, demand next year will rebound by a record 5.7 million barrels a day.

One of the few value sectors left standing?

The economic shutdown forced upon us by the COVID-19 pandemic pushed demand for crude off a cliff – along with ASX oil-exposed stocks.

These stocks, such as the Woodside Petroleum Limited (ASX: WPL) share price and Oil Search Limited (ASX: OSH) share price, may have recovered some of their big losses since the March bear market low, but they are still underperforming the ASX 200.

In fact, they are also lagging behind ASX big bank stocks like Westpac Banking Corp (ASX: WBC) since the start of this fateful year.

The banking sector enjoyed a re-rating as bargain hunters rushed to buy the big banks. Oil stocks may represent a value play too if oil demand comes roaring back, like the IEA expects.

Oil demand recovering – somewhat

Early recovery in oil demand in parts of the world is giving hope to the bulls. China’s demand for the commodity in April is nearly back to what it was for the same month last year.

India also recorded an increase in May despite its big lock-down of its economy to stem the spread of the virus.

Meanwhile, OPEC and Russia’s agreement to extend production cuts through to July is also helping the recovery. The Brent oil price jumped to over US$40 a barrel from under US$20 a barrel in April.

Consolidating befor a recovery

If the tailwinds persist, the IEA believes the market will stabilise in the second half of 2020 before rebounding next year.

But it also warned that the recovery will be patchy with the pace and success of different countries in restarting their economies still looking highly uncertain.

I held a more downbeat outlook on the recovery prospects for the sector given the large stockpiles of crude and the fact that international air travel looks to be off the cards till 2021, at the earliest.

Foolish takeaway

The effective grounding of planes means a 3 million-barrel drop for the sector in 2020 before the IEA estimates a modest 1 million-barrel recovery in 2021.

I won’t be changing my underweight position in the sector despite the better than expected forecast from the IEA. But I think having a small exposure to the potential oil recovery (assuming the IEA is spot on – and that’s quite a big assumption) isn’t a bad idea.

But the stock I would be more drawn towards for the exposure to this thematic is oil and gas engineering group Worley Ltd (ASX: WOR).

It follows the saying that you are better off investing in the guys supplying the shovels during a mining boom than the miners themselves.

More reading

• Top brokers name 3 ASX 200 shares to buy today
• ASX 200 down 0.1%: Carsales update impresses, a2 Milk surges higher
• Is $1,000 invested in AGL Energy shares a smart investment?
• 3 reasons to buy ASX 200 shares right now
• 5 things to watch on the ASX 200 on Wednesday

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

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

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

A2 Milk Company Ltd (ASX: A2M)

According to a note out of UBS, its analysts have retained their buy rating and NZ$22.00 (A$20.64) price target on this infant formula company’s shares. UBS believes there is some upside risk to its earnings guidance for FY 2020. In addition to this, it suspects there could be a new product launch in the medium term. It feels this could be the catalyst to taking its shares higher again. I agree with UBS on a2 Milk Company and think it would be a great buy and hold investment.

Cochlear Limited (ASX: COH)

A note out of the Macquarie equities desk reveals that its analysts have retained their outperform rating and lifted the price target on this hearing solutions company’s shares to $208.50. According to the note, the broker has been busy surveying audiologists. Its survey found that Cochlear has the strongest portfolio of implantable products. And while it notes that the pandemic has reduced patient volumes materially, it believes volumes will rebound when the crisis passes. And with Advanced Bionics recalling competing devices, it expects Cochlear to grow its sales quicker than the industry average. I think Macquarie is spot on and Cochlear would be a top option.

Crown Resorts Ltd (ASX: CWN)

Analysts at Morgan Stanley have upgraded this casino and resorts operator’s shares to an overweight rating with an improved price target of $12.00. According to the note, due to international travel uncertainty, it believes the gaming market will be reliant heavily on domestic tourism. Morgan Stanley thinks that the opening of Crown Sydney later this year will give it the edge over the competition and allow it to win market share from rivals. I think Morgan Stanley makes some very good points, but I’d rather wait and see how the company fares in the coming months before jumping in.  

More reading

• ASX 200 down 0.1%: Carsales update impresses, a2 Milk surges higher
• Why a2 Milk, Carsales, Fisher & Paykel Healthcare, & Starpharma are surging higher
• Is $1,000 invested in AGL Energy shares a smart investment?
• How to become wealthy by investing $1,000 into ASX shares
• 3 reasons to buy ASX 200 shares right now

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 Cochlear Ltd. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended Cochlear Ltd. and Crown Resorts 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  CSL Limited (ASX: CSL) share price has risen strongly over the past 12 months. It rose from $211.42 last June to $341.00 in mid-February this year. It then declined sharply in the first month of the coronavirus crisis to mid-March. However, after a strong rally to mid-April, where it regained most of its losses, its share price has been on a downward trajectory again.

CSL is also playing an important role during the pandemic.  It has recently entered into a new agreement to accelerate the development of a COVID-19 vaccine candidate.

With all this in mind, is the CSL share price a buy right now?

An amazing Australian success story

Although the CSL share price has lost some recent ground, its long-term returns to shareholders have been amazing.

It has risen from a split-adjusted price of 76.6 cents back in 1994 to now be trading at $284.10. So if you had invested $10,000 back in 1994, that investment would now be worth a staggering $3.71 million!

CSL has evolved from a modest federal government department back in 1994, to become the largest company on the S&P/ASX 200 Index (ASX: XJO). It now has a market capitalisation of $129 billion.

The company has become a global market leader in blood plasma research and disease treatment, now reaching more than 60 countries.

High investment in research and development to create new products is a key factor underpinning its success.

CSL’s P/E ratio is high. Is this a reason not to invest?

CSL’s P/E ratio is 44.09. That significantly higher than the ASX market average which is around 18. However, due to CSL’s strong market differentiation and strong growth potential, I don’t think this is an issue. In addition, over the past 10 years, CSL’s P/E ratio has always been above the market average, yet its share price has continued to climb!

A similar trend has been evident over the past decade with other top Australian growth shares. These include: REA Group Limited (ASX: REA), Carsales.Com Ltd (ASX: CAR) and Seek Limited (ASX: SEK).

So, is the CSL share price a buy?

The CSL share price has been trending downwards since April. However, there doesn’t appear to be any obvious reason for this trend. In fact, despite no recent announcements, CSL’s latest business performance continues to appear quite strong. And, with its share price well below its 12-month peak in February, I think now offers a reasonable buying opportunity for long-term investors.

I believe that CSL remains well-positioned to continue delivering strong earnings growth over the next 5–10 years. It continues to have a strong new product development pipeline. There is also likely to be a steadily increasing global demand for immunoglobulin products over the years to come.

More reading

• ASX 200 down 0.1%: Carsales update impresses, a2 Milk surges higher
• Why a2 Milk, Carsales, Fisher & Paykel Healthcare, & Starpharma are surging higher
• Carsales share price up 5% following solid trade update
• Why I would buy CSL and these ASX blue chip shares
• Here are 2 top ASX tech shares for your portfolio

Phil Harpur owns shares of carsales.com Limited, CSL Ltd., REA Group Limited, and SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has recommended carsales.com Limited, 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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The Infigen Energy Ltd (ASX: IFN) share price is climbing today after the company disclosed a takeover offer from a global energy leader. At the time of writing, Infigen shares have jumped 9.15% to 89.5 cents.

Today’s announcement follows a takeover bid from UAC Energy at the beginning of June, which sent Infigen shares flying. UAC made an offer of 80 cents per Infigen stapled security, which represented a 35.59% premium to the previous day’s closing price at the time of the announcement.

When news first broke of UAC’s offer in early June, the Infigen board advised investors to take no action. The board reiterated this recommendation in a further ASX release last week.

Why is the Infigen share price spiking?

This morning, Infigen announced it has entered into a bid implementation agreement with Iberdrola Renewables Australia. Under the agreement, Iberdrola will make an off-market takeover bid for Infigen at a cash offer price of 86 cents per stapled security. This represents a 7.5% premium to UAC’s offer of 80 cents.

In conjunction with the bid, Iberdrola has entered into a pre-bid agreement with Infigen’s largest security holder, TCI Funds, to purchase 20% of Infigen stapled securities.

Iberdrola is a major player in the global energy space. It is the number one producer of wind power and one of the world’s biggest electricity utilities in terms of market capitalisation.

Unlike the takeover play from UAC, Infigen’s board unanimously recommends that security holders accept the offer from Iberdrola. 

According to today’s release, Iberdrola’s offer is less conditional than UAC’s offer. This includes not being subject to the due diligence and disclosure conditions contained in the UAC offer.

As for the next steps, Infigen expects Iberdrola to lodge its bidder’s statement with the ASX and ASIC shortly. Following this, Infigen will dispatch its target’s statement for the Iberdrola offer to security holders “as soon as practical”.

2H20 distribution scrapped

In addition to the takeover announcement, Infigen revealed this morning it will not pay a second-half FY20 distribution. The company noted that both takeover offers are on the basis of no distribution being paid with respect to this period.

In this way, Infigen stated the decision to not pay a distribution lowers the conditionality of the bids and provides more certainty for security holders.

More reading

• ASX 200 jumps 1.8%, Australian headed for recession
• Why Afterpay, Infigen, Qantas, & Zip Co shares are charging higher
• Infigen Energy share price rockets 36% higher following takeover bid

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.

The post Infigen Energy share price jumps 9% on rival takeover bid appeared first on Motley Fool Australia.

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