The Openpay Group Ltd (ASX: OPY) share price has been an incredible performer over the last two and a half months.

Since crashing as low as 32 cents on 23 March, the Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) rival’s shares have jumped a whopping 840% to $3.02.

Why is the Openpay share price rocketing higher?

Investors have been buying Openpay and other buy now pay later providers in recent weeks for a number of factors.

One is the belief that the pandemic has accelerated the rapid adoption of the payment method due to retail spending shifting online during the lockdowns.

Both Afterpay and Zip Co have reported stellar sales and customer growth throughout the pandemic. And this has come without any notable deterioration in bad debts. This appears to have convinced the market that their business models are more robust than first believed.

Openpay has also reported strong growth of its own. During the third quarter the company reported a 203% increase in active plans, a 113% lift in active customers, and a 63% jump in active merchants on its platform. This strong form continued in May.

Its active merchants now include the likes of Bunnings Warehouse, Bupa, JD Sports UK, Repco, Smiggle, and Spotlight.

But Openpay’s shares won’t be building on its strong gains today. This morning the payments company requested a trading halt.

Why are its shares in a trading halt?

It appears as though management has decided to take advantage of its incredible share price gain to raise capital.

No details have been released officially by the company, but the AFR is reporting that Openpay is seeking to raise $30 million to accelerate its expansion in the UK market and strengthen its balance sheet.

According to the report, the company is aiming to raise the funds at $2.40 per share, which represents a 20.5% discount to its last close price.

These certainly are exciting times for Openpay and the buy now pay later space in general.

More reading

• Where to invest $2,000 in cheap shares
• Why Zip Co and these ASX shares just zoomed to new highs
• ASX 200 jumps 1.8%, Australian headed for recession
• Sezzle Inc shares and 2 other small cap ASX techs surge higher today
• Afterpay share price hits a new record high: Is it too late to invest?

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 AFTERPAY T FPO and ZIPCOLTD 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 Dimerix Ltd (ASX: DXB) share price has raced out of the gates this morning following news that one of its treatments has been included in a global COVID-19 clinical study.

Dimerix is a clinical-stage biopharmaceutical company that develops new therapies in areas with unmet medical needs. In doing so, the company leverages its scalable proprietary platform technology, Receptor-HIT, to rapidly screen and identify new drug opportunities.

Why the Dimerix share price is flying higher

This morning, Dimerix announced that its novel treatment DMX-200 has been selected for inclusion in the REMAP-CAP global study protocol for acute respiratory distress syndrome (ARDS) caused by COVID-19.

The REMAP-CAP clinical study is endorsed by the World Health Organisation and has been named by the chief medical officers of the UK as a key clinical trial for COVID-19.

REMAP-CAP is an international platform trial run by a number of leading experts, institutions, and research groups. The trial already has several existing treatment domains including anti-viral, immune-modulation and immunoglobulin treatment arms. DMX-200 will now be part of a new treatment group to compare the effect of a number of treatment options on the clinical outcomes of COVID-19 patients requiring hospital care.

Upon regulatory approval, Dimerix believes DMX-200 could be the only investigational new drug in the study since all of the other candidates are a repurposing of existing approved drugs.

The overall REMAP-CAP study plans to include more than 7,000 patients at study sites across Asia-Pacific, Europe and North America. Dimerix stated it will work closely with REMAP-CAP to obtain the necessary regulatory and ethics approvals before providing DMX-200 to sites from its existing pharmaceutical-grade manufactured supply.

In addition to potentially benefitting ARDS patients with COVID-19, Dimerix is currently developing DMX-200 for both diabetic kidney disease and focal segmental glomerulosclerosis (a kidney-related disease).

Commenting on today’s update, Dimerix CEO and managing director Dr Nina Webster said:

“We are extremely pleased to be in a position to support this global initiative investigating the potential of multiple therapies to treat COVID-19 patients dying of ARDS”.

“Dimerix is uniquely positioned to support the global effort in identifying COVID-19 treatments, as well as having two Phase 2 renal clinical studies completing mid- 2020,” she added.

The Dimerix share price rocketed as much as 120% this morning to an intra-day high of 59.5 cents in early trade. It has since pulled back to 44 cents at the time of writing, representing a 63% jump. This takes Dimerix’s current market capitalisation to around $80 million.

More reading

• Got $5,000 for a dividend yield over 10%?
• Have $10,000? This is where I’d invest it into ASX shares
• Why Corporate Travel Management, SKYCITY, Vocus, & Westpac are pushing higher
• Why Austal, Ecofibre, Northern Star, & Nufarm are dropping lower
• Where to invest $2,000 in cheap shares

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

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The Vocus Group Ltd (ASX: VOC) share price is storming higher on Thursday after the release of an announcement.

In morning trade the specialist fibre and network solutions provider’s shares are up 5.5% to $3.30.

What did Vocus announce?

Investors have been buying Vocus shares after it announced that it has both refinanced and extended the duration of its existing debt facilities and provided an update on its FY 2020 guidance.

Vocus’ new syndicated debt facility (comprising A$1,255 million and NZ$135 million) increases the duration of its debt to provide ongoing financial stability and flexibility.

And while the interest cover and gearing ratios are unchanged, management notes that the Net Leverage Ratio (Net Debt/EBITDA) covenant has been amended to a maximum of 3.25x. It will then reduce to 3x from 30 June 2021.

This mean Vocus is currently operating well within its covenant. At the end of December its Net Leverage Ratio stood at 2.8x and is expected to reduce at the end of FY 2020.

Vocus’ CEO and Managing Director, Kevin Russell, believes this refinancing and the reaffirming of its guidance is a testament to the strength of the company.

Mr Russell said: “Refinancing our debt and reaffirming guidance in the current market environment shows the underlying strength of Vocus’ business. The new loan facility is a strong platform that gives Vocus financial stability and flexibility as we enter the next phase of the company’s growth and business transformation.”

Guidance.

In FY 2020 Vocus expects its earnings before interest, tax, depreciation, and amortisation (EBITDA) to be in the range of $359 million to $369 million. This compares to FY 2019’s EBITDA of $360.1 million.

While today’s guidance is within its previous range, it has been narrowed to the low end. In February the company provided full year EBITDA guidance of $359 million to $379 million.

Management revealed that its core Vocus network services business has been doing the heavy lifting. It is expecting this key segment to deliver EBITDA growth of 10% this year.

More reading

• Why the Vocus share price can race ahead later this month
• Telstra share price down 21% since February. Is it now in the buy zone?

Motley Fool contributor James Mickleboro 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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There’s a school of thought that once stimulus measures are wound down and JobKeeper is finished, we’ll witness another share market sell-down in response to any revelations that the economy has gone to ‘hell in a hand basket’.

Of course, this may never eventuate. All the early signals suggest that the recovery we’re on looks much better than anyone expected. However, it’s never a bad idea to add some good defensive shares to your portfolio. These shares are more likely to hold up when others are falling. Given that investors are currently looking at the market through rose coloured glasses, bringing some contrarian thinking to the basket of shares you hold could have a lot merit.

When looking for defensive shares, it’s important to look for companies that have low debt on balance sheet, sustainable and high quality underlying core earnings, quality management, and sufficient cash to seize growth opportunities. It’s also preferable that they aren’t in a sector at the apex of rapid technology and/or regulatory upheaval.

While these shares are often slow-burners in terms of strong growth, they typically have the capacity to retain their core earnings when the markets are in flux – like now.

Here are 3 ASX shares to consider.

Hansen Technologies Limited (ASX: HSN)

While this technology mid-cap doesn’t have the strong organic growth of local peers, like TechnologyOne Ltd (ASX: TNE), Whispir Ltd (ASX: WSP), and Appen Ltd (ASX: APX), the quality of its underlying earnings can’t be understated.

Two thirds of the company’s revenue is from recurring software fees. While not dynamic, this revenue is at the very least relatively bankable, regardless of what the economy is doing. The stock also earns kudos for doing what few companies are prepared to do right now – provide earnings guidance. Given the state of the economy, its full year guidance of operating of revenue between $298 million and $300 million – slightly lower than the original $300 million to $305 million – is encouraging.

What I also like about the company is its management’s track-record in growth by acquisition. With a net debt to equity ratio of around 59%, the business looks well positioned to afford future acquisitions. At $3.08, Hansen shares are trading at a 23% discount to Bloomberg’s 12-month price target of $4.02.

Spark Infrastructure Group (ASX: SKI)

As a leading electric utilities business with $18 billion of total electricity network assets, Spark’s core earnings have a high degree of resilience about them. Much of that resilience was reflected in the company’s Macquarie Investor Conference Presentation in early May. Spark reconfirmed its FY2020 distribution guidance of at least 13.5 cents per share.

Despite cost increases linked with summer bushfires and tree management, the latest financial result saw earnings before interest, tax, depreciation and amortisation up at each of its largest business units – CitiPower and Powercor in Victoria and SA Power Networks in South Australia. The result was buoyed by rising regulated tariffs and higher services revenue. Then there are the returns at electricity transmission network TransGrid, of which Spark owns 15%.

Government tariff adjustments on electricity prices tend to move in tandem with economic activity – and hence key indicators like the 10-year bond yield. A return to more normal bond yields beyond fiscal 2021, which hit record lows mid-2019, should improve Spark’s returns and distributions over the longer haul.

While the Spark share price has bounced from a low of $1.72 mid-March to $2.15, it still trades at 6% discount to Goldman Sachs’ target price of $2.30.

ASX Ltd (ASX: ASX)

ASX’s standout defensive features come from its near-monopoly status as operator of Australia’s primary market for the listing and trading of securities. Equally compelling is the quality of its balance sheet, and notably its debt-free position, and strong cash balance.

To its credit, the company was quick to warn the market of a significant decline in cost growth for FY20 (below guidance of 6–8%) due to COVID-19. While projections within the current market are problematic, the company expects net interest earned on collateral balances – which accounts for around 90% of total net interest income – to remain elevated in the near term.

Given the company’s dominant market position, history of cost containment, and ability to deliver consistently good EBIT margin, it looks better positioned than the market at large to weather near-term market volatility. This bodes well for a sustainable dividend payout ratio of around 90%.

In my opinion it’s worth watching the ASX Ltd share price for dips following future market corrections, with sub-$70 making for a more comfortable buying position than its current price of $88.57.

More reading

• Why Zip Co and these ASX shares just zoomed to new highs
• Revealed: 5 dividend shares for reliable income
• Leading brokers name 3 ASX shares to sell today
• Morgans warns investors to sell these ASX 200 shares in the rally
• ASX 200 slips 0.4% lower

Motley Fool contributor Mark Story has no position in any of the shares mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Hansen Technologies. The Motley Fool Australia has recommended Hansen Technologies. 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 Vista Group International Ltd (ASX: VGL) share price will be on watch today after the company provided a COVID-19 update and revealed an organisational shake-up. 

Vista Group is a New Zealand company that provides software and technology solutions across the global film industry sectors of distribution, exhibition, and consumer.

The company’s founding business is Vista Cinema which provides cinema management software in the exhibition sector. The group also has a number of other businesses, such as Movio, Veezi and Maacs, each providing technology solutions to clients in the global film industry. This includes cinema management solutions, film distribution software, intelligence solutions, box office reporting platforms, and campaign management software. 

COVID-19 trading update

This morning, Vista provided an update on the impacts of COVID-19 on its business, along with the steps it is taking to address these impacts.

To begin with, Vista acknowledged that the pandemic continues to have a significant impact on the global film industry, including its customers.

Cinemas in most countries remain closed, while those that are open generally don’t have new content to show moviegoers due to studios having delayed the release of new films.

Nonetheless, Vista has continued to support customers during the lockdown and in preparation for potential reopening, it has undertaken a number of initiatives. This includes releasing a ‘cinema re-opening kit’ to really strong demand and working with cinemas in the US to re-configure mobile apps to enable the purchasing of snacks through kerb-site pick up.

The company noted that both Vista Cinema and Movio have been successful in winning new businesses during the pandemic period – mostly in Europe.

Balance sheet initiatives and further measures

As announced back in March, Vista Group has responded to the challenging environment by implementing a series of measures to strengthen its balance sheet. This includes cancelling its FY19 final dividend, company-wide pay cuts and reduced hours, and ending engagement with all non-essential contracting measures.

On top of this, the company also completed a NZ$65 million capital raise at an issue price of $1 per share.

In addition to these initiatives, the company announced this morning that it has undertaken a review of its business to determine the extent to which additional cost reduction measures are required.

As a result of this review, the company has begun consultation with its staff regarding a proposed new structure for the core Vista Group companies – Vista Group, Vista Cinema, and Movio. This would mean a new organisation structure worldwide – one with fewer employees.

If the restructure proceeds in its current form, the company expects to achieve annualised cost savings of between NZ$12 million and NZ$15 million.

Commenting on trading conditions, CEO Kimbal Riley said:

“We are operating in a situation where we do not know when our customers (80%+ of Vista Group customers are cinemas) will be able to reopen in a meaningful way. This has had, and continues to have, a significant impact on their businesses – and therefore ours.”

And as for the restructure, Mr Riley commented:

“We have therefore taken the decision to implement a restructure of all our core businesses (Vista Group, Vista Cinema, and Movio) in all our offices. Whilst this will have a significant impact on a number of people, we will ensure everyone is treated with the utmost respect and given appropriate support”.

The Vista Group share price rallied 23.36% yesterday despite no news out of the company, closing at $1.88. This takes Vista’s year-to-date loss to around 40%.

More reading

• Why this ASX 200 telco share is storming higher today
• 3 defensive ASX shares for a potential September sell-off
• Is the CBA share price cheap today?
• Why it’s a good week to buy international shares
• 3 high yield ASX dividend shares to buy right now

Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Vista Group Intl. 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 Commonwealth Bank of Australia (ASX: CBA) share price rocketed 2.32% higher yesterday, but is the ASX bank share in the buy zone?

Why the CBA share price climbed higher

Commonwealth Bank was a big part of the S&P/ASX 200 Index (ASX: XJO) gains on Monday. And the Big Four bank shares all climbed higher yesterday despite Treasurer Josh Frydenberg confirming Australia is headed for a technical recession in 2020.

The Aussie dollar had reached a new, 5-month high of 69.83 US cents on Wednesday before slipping back to 69.3 US cents by the end of the day. Whilst we learned the Aussie economy shrank by 0.3% for the March quarter, it marginally outperformed expectations of a 0.4% decline.

Hopes of a swifter than expected rebound from the coronavirus economic fallout could have been behind the CBA share price move. There’s plenty of money being poured into ASX shares right now, but should you be buying CBA?

Is now the time to buy CBA?

The CBA share price is certainly rebounding strongly. Having hit a 52-week low of $53.44 on 23 March, CBA is now valued at $66.11 per share.

This means the Aussie bank is worth $117 billion right now. With a price to earnings (P/E) ratio of 11.99, CBA could be worth buying.

However, I still think there’s plenty of uncertainty ahead. This means the ASX bank share could be volatile so waiting and watching might not be a bad strategy.

Of course, timing the market is basically impossible. If you’re a believer in the Big Four banks and their role in the Aussie economy, CBA could be good value.

After all, it’s still down 27.39% from its 52-week high of $91.05 per share. There are certainly some headwinds but I think CBA may have been oversold in recent months.

Foolish takeaway

The CBA share price could be in for more volatility in 2020 but I don’t think it’s overpriced right now.

Personally, I won’t be buying until I see more corporate earnings in August, but bullish investors could get CBA shares for a steal at today’s price of $66.11 per share.

More reading

• Meet the ASX stocks to benefit from the new $688m home stimulus
• Should the Xero share price have a P/E ratio of 4,000?
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 jumps 1.8%, Australian headed for recession
• These ASX 200 shares could be perfect for a retirement portfolio

Motley Fool contributor Ken Hall 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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This week is turning out to be a great week to buy international shares. Or any ASX shares that hold international shares or assets for that matter.

Why?

Well, because our Australian dollar has been on a tear this week, that’s why.

On Monday, the Aussie dollar was buying around 67 US cents. Yesterday, our dollar hit 69.83 US cents before dropping back to 69.3 US cents – an extraordinary rally over just 2 days. We’re now back at a pre-coronavirus level against the greenback.

Why a higher Aussie dollar is significant for international shares

A higher Aussie dollar has many effects across the economy. Imports are cheaper, whilst exports become more expensive.

By extension, any assets that are defined in US dollars are now less valuable in Australian dollar terms. That’s why we’ve been seeing US-dominated investments like some exchange-traded funds (ETFs), listed investment companies (LICs) and listed investment trusts lose some steam over the past 2 days, despite a rising share market in both countries.

Take the iShares S&P 500 ETF (ASX: IVV). This ETF tracks the largest 500 companies over in the United States. Over the past week, IVV has lost 3.33% whilst the actual S&P 500 Index has risen 1.47%.

We can see the effects of this currency swing by looking at the iShares S&P 500 (AUD) Hedged) ETF (ASX: IHVV), which takes the impact of currency fluctuations away from its returns. This ETF is up 1.4% over the past week.

Whilst these movements are painful for anyone already holding US-based or international shares, by the same logic, it’s a good time to buy.

Buying a US-listed investment when our currency is at 69 US cents will make for a profitable investment on currency alone if the Aussie dollar heads back down towards the lows of ~55 US cents that we saw back in March.

Thus, I think this week is a great time to think about adding some international shares or ASX-listed ETFs, LITs and LICs that hold US investments.

Magellan Global Trust (ASX: MGG) is one such option. It’s an LIT that primarily invests in top US companies like Microsoft, Alphabet and Facebook.

MFF Capital Investments Ltd (ASX: MFF) is another option to consider. It’s a LIC that also invests in US companies with a long-term outlook. Some of its top holdings include the US payment giants Mastercard and Visa. MFF shares are still more than 25% below the highs we saw in February, despite the US markets’ strong rebound.

If those investments still don’t appeal to you, ETFs like IVV or perhaps the Vanguard U.S. Total Market Shares Index ETF (ASX: VTS) are always a solid choice.

Foolish takeaway

For those ASX investors who might desire more diversification in their ASX-dominated portfolios, I think this week is a great time to consider adding some US-based investments. With the Aussie dollar now closer to historically ‘normal’ levels, it’s a chance that may not come back for a while.

More reading

• Should your share portfolio actually be 50% cash right now?
• Why I’m not afraid to invest in shares during this recession
• How teenagers can beat the share pros at investing
• 10 top ASX growth shares to buy in June for strong returns
• How to make $1,000 a month in dividends

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, Magellan Flagship Fund Ltd, Mastercard, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Facebook, Mastercard, and Visa. The Motley Fool Australia has recommended Alphabet (A shares), Facebook, and Mastercard. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you are looking to invest in dividend shares, then you’re in luck. I believe there are a large number of quality options for investors to choose from right now.

Three ASX dividend shares that I would buy are listed below. Here’s why I like them:

BHP Group Ltd (ASX: BHP)

I believe that BHP would be a great dividend share for income investors that are looking for exposure to the resources sector. I think the Big Australian is well-positioned to deliver strong free cash flows this year thanks to high iron ore prices. This has been driven by supply disruptions in Brazil and robust demand from Chinese steel makers. I estimate that the mining giant’s shares currently provide investors with a forward fully franked 5% dividend yield.

BWP Trust (ASX: BWP)

Another ASX dividend share to consider buying is this real estate investment trust. BWP has a focus on warehouses, with most of them leased to hardware giant Bunnings. I believe Bunnings is a high quality tenant and unlikely to be leaving its properties any time soon. Especially given how the retailer is owned by Wesfarmers Ltd (ASX: WES), which is also a major BWP shareholder with a ~23.6% stake. At present I estimate that it offers investors a forward 5.1% yield.

Rural Funds Group (ASX: RFF)

Another ASX dividend share to consider is Rural Funds. It is a property company which owns a portfolio of agricultural assets across Australia. It generates its revenue from long-term leases across five sectors: almond and macadamia orchards, cattle assets, vineyards, and cotton assets. Pleasingly, the company has not been impacted by the pandemic and remains on course to increase its distribution to 11.28 cents per share next year. This equates to a very generous forward 5.5% distribution yield.

More reading

• Are our ASX big miners on an earnings upgrade cycle?
• JobMaker is coming. These 3 ASX 200 shares could benefit
• Is the BHP share price cheap right now?
• 5 things to watch on the ASX 200 on Wednesday
• Smash low interest rates with these ASX dividend shares

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 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 new $688 million grant to stimulate the construction sector is a fillip to a handful of ASX stocks and will add to the euphoria on the market.

The S&P/ASX 200 Index (Index:^AXJO) is set to break above 6,000 points this morning thanks to a strong lead from Wall Street and the federal government’s housing boost that was unveiled last night.

But how much of a boost the new grant can provide remains to be seen as there are a number of disappointing features in the new scheme.

Low end of scale

For one, the $25,000 cash handout is at the low end of estimates. There was speculation that the grant would range between $20,000 and $40,000, with some commentators even tipping it could go higher.

The not as bad as expected GDP figure for the March quarter and early signs of an economic recovery from the COVID-19 shutdown may have persuaded the Morrison government from being so generous.

There are also questions about whether the policy is well targeted or will make as much of a difference to the economy as it could.

Who qualifies for the housing grants?

The grant, which is aimed at protecting construction jobs, can be used by eligible households to renovate or build new homes.

To qualify, singles cannot earn more than $125,000 and couples not more than $200,000 in FY19, according to The Guardian.

The new home that is being built must be used as the principal place of residence and the property value (including land) cannot exceed $750,000.

For renovations, the project must be between $150,000 and $750,000 with the existing property worth not more than $1.5 million.

ASX stocks in the spotlight

Before the details were released, I thought the grant would provide a big support to sagging house prices. Now I am not so sure even though new home developers like Stockland Corporation Ltd (ASX: SGP) and Mirvac Group (ASX: MGR) are likely to benefit.

Hardware retailers like those owned by Wesfarmers Ltd (ASX: WES) and Metcash Limited (ASX: MTS) will also see a sales boost as these are where tradies go to get supplies.

By extension, home fitting suppliers are another group that will benefit from the new stimulus. These include GWA Group Ltd (ASX: GWA) and Reece Ltd (ASX: REH).

Further, construction materials companies like CSR Limited (ASX: CSR) and James Hardie Industries plc (ASX: JHX) should also be excited if the stimulus leads to the construction of 30,000 new homes by Christmas, as intended.

It’s a wasted opportunity that the scheme didn’t target social housing. I think that is a better way to support the construction industry and wider community without distorting the housing market.

More reading

• Is the CBA share price cheap today?
• Should the Xero share price have a P/E ratio of 4,000?
• 5 things to watch on the ASX 200 on Thursday
• These ASX 200 shares could be perfect for a retirement portfolio
• The latest ASX 200 stocks to be upgraded to “buy” amid the recession

Motley Fool contributor Brendon Lau owns shares of James Hardie Industries plc and Reece Australia Limited. Connect with me on Twitter @brenlau.

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

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