The S&P/ASX 200 Index (ASX: XJO) is on course to record another solid gain on Wednesday. In early afternoon trade the benchmark index is up 0.8% to 5,883.8 points.

Four shares that have climbed more than most today are listed below. Here’s why they are charging higher:

The Afterpay Ltd (ASX: APT) share price is up 3.5% to $51.22. At one stage today the payments company’s shares were up as much as 5.5% to a new record high of $52.29. Investors have been buying Afterpay’s shares after rival Zip Co Ltd (ASX: Z1P) announced its expansion into the lucrative U.S. market via the acquisition of QuadPay. While this will mean added competition, it may also help raise awareness of the payment method and accelerate its adoption with consumers and merchants.

The Infigen Energy Ltd (ASX: IFN) share price has surged 35% higher to 79.5 cents. Investors have been buying the renewable energy company’s shares after it received a takeover approach. UAC Energy, an investment holding company owned by the AC Energy Group and UPC Renewables Australia, intends to make an off-market takeover bid of 80 cents per share.

The Qantas Airways Limited (ASX: QAN) share price is up 5% to $4.19. This appears to have been driven by a broker note out of UBS this morning. According to the note, UBS has retained its buy rating and $4.65 price target on the airline operator’s shares. It appears optimistic that leisure and corporate travel markets will be given a big boost when state borders reopen.

The Zip Co share price has surged 25% higher to $6.48. Investors have been scrambling to buy the payments company’s shares after it announced that it is expanding into the U.S. market with the acquisition of QuadPay. The all-scrip deal, which values QuadPay at approximately $400 million, will give Zip Co access to a retail market estimated to be worth US$5 trillion per year.

More reading

• ASX 200 up 1%: Big four banks jump, Afterpay hits record high
• The Zip Co share price just zoomed to a record high: Is it too late to invest?
• Infigen Energy share price rockets 36% higher following takeover bid
• Afterpay and these top ASX tech shares are on fire in 2020
• ASX 200 rises 0.3%, Zip rockets higher

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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At lunch on Wednesday the S&P/ASX 200 Index (ASX: XJO) is on course to record a very strong gain. The benchmark index is up 1% to 5,894.9 points at the time of writing.

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

Afterpay hits a record high.

The Afterpay Ltd (ASX: APT) share price has been a positive performer on Wednesday. Its shares jumped 5.5% to a record high of $52.29 this morning. Investors have been buying its shares after rival Zip Co Ltd (ASX: Z1P) announced its expansion into the lucrative U.S. market via the acquisition of QuadPay. Investors may believe the increased competition will accelerate the adoption of buy now pay later platforms in the multi-trillion dollar market.

Big four banks jump.

It has been a very positive day for Westpac Banking Corp (ASX: WBC) and the rest of the big four banks. All four banks are trading notably higher at lunch and are playing a key role in driving the ASX 200 higher. The best performer in the group at lunch is the Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price. Its shares are up 4% at the time of writing. This morning the Australian Bureau of Statistics revealed that GDP fell 0.3% during the first quarter. This was in line with expectations.

Gold miners sink lower.

One area of the market acting as a drag on the ASX 200 index today is the gold sector. The likes of Evolution Mining Ltd (ASX: EVN) and Newcrest Mining Limited (ASX: NCM) are all trading notably lower at lunch. This follows a reasonable pullback in the gold price overnight. The price of the precious metal tumbled after Wall Street began betting on a successful economic restart. At lunch the S&P/ASX All Ordinaries Gold index is down 4.4%.

Best and worst ASX 200 performers.

The best performer on the ASX 200 on Wednesday has been the SKYCITY Entertainment Group Limited (ASX: SKC) share price with a 9.5% gain. This morning the casino and resorts operator revealed that its New Zealand operations have performed well since reopening. The worst performer on the ASX 200 is the Silver Lake Resources Limited (ASX: SLR) share price. Silver Lake’s shares are down 7% after the gold price decline.

More reading

• The smartest ASX 200 shares to buy with $2,500 today
• Why Afterpay, Infigen, Qantas, & Zip Co shares are charging higher
• Are our ASX big miners on an earnings upgrade cycle?
• Can ASX 200 retail shares outperform this year?
• 1 ASX 200 tech share to buy and hold for a decade

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sky City Entertainment Group 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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Our largest miners may be in a cum-upgrade cycle that could see their share prices keep outperforming for a little longer yet!

We have Brazil to thank for this as the country’s poor management of the COVID-19 pandemic will curtail its iron ore exports.

Australia’s ability to flatten the coronavirus curve is giving the BHP Group Ltd (ASX: BHP) share price, Rio Tinto Limited (ASX: RIO) share price and Fortescue Metals Group Limited (ASX: FMG) share price an advantage.

I reckon these ASX miners are on an earnings upgrade cycle.

The Brazilian advantage

Brazil’s biggest iron ore miner Vale SA told the Australian Financial Review that its mines are running on a skeleton crew and that it’s license to operate is under “extreme pressure” from authorities.

Vale is not only sending home workers who tested positive for the virus, but anyone who had contact with the infected employee.

Meanwhile, the miner was forced to turn to the courts on Friday to keep its Itabira mining hub open after government officials tried to close it on the belief that the hub is a source of infections.

Broker upgrade

The escalating COVID-19 crisis in the Latin American country prompted Goldman Sachs to upgrade its iron ore forecast for 2020.

The broker thinks Vale will only be able to hit the low end of its production guidance in 2020, which will leave the iron ore market short of supply.

“We now expect Vale to sell 311Mt [million tonnes] of iron ore vs. guidance of 310-330Mt and for China steel production to grow by 0.4% to 998Mt but for steel production to peak mid-year and then moderate in 2H,” said the broker.

Iron ore forecasts for 2020 and 2021

Goldman Sachs is now forecasting the price of the steel making ingredient to average US$86 a tonne this year and US$80 a tonne in 2021. That’s about 7% to 8% higher than its original estimate.

What this translates to is a 12% upgrade to Fortescue’s earnings per share (EPS) forecast for both FY21 and FY22. Rio’s FY20 EPS gets boosted by 10% while BHP’s FY21 EPS enjoys an 8% lift.

“We forecast an average FCF [free cash flow] yield of 7-9% for the BHP and RIO over the next 3 years,” said Goldman.

“We think that copper production could disappoint over the next 12-18 months for both stocks, however, capex guidance could positively surprise and FCF should remain very attractive.”

Which ASX miner should you buy?

The broker is recommending BHP and Rio as “buy” but is keeping its “hold” rating on Fortescue after the stock’s big recent surge to a record high.

Goldman’s price target on BHP is $37.80, Rio Tinto $101.10 and Fortescue $12.10 a share.

I am expecting other brokers to be lifting their earnings forecasts on the sector too. Let the ASX miner earnings upgrade cycle begin!

More reading

• The smartest ASX 200 shares to buy with $2,500 today
• ASX 200 up 1%: Big four banks jump, Afterpay hits record high
• Can ASX 200 retail shares outperform this year?
• 1 ASX 200 tech share to buy and hold for a decade
• JobMaker is coming. These 3 ASX 200 shares could benefit

Motley Fool contributor Brendon Lau owns shares of BHP Billiton Limited and Rio Tinto Ltd. 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 Musgrave Minerals Ltd (ASX: MGV) share price has charged out of a trading halt this morning on the back of drilling results at its flagship Cue Project.

Musgrave Minerals is an active Australian gold and base metals explorer. Its cornerstone project is the Cue Gold Project in the Murchison Province of Western Australia. The company also has a big footprint in the Musgrave Province, one of the least explored exploration frontiers in the country.

At the end of FY19, Westgold Resources Ltd (ASX: WGX) was Musgrave Minerals’ largest shareholder, owning 16.78% of shares. Musgrave’s shareholder base also comprises other big ASX names like Evolution Mining Ltd (ASX: EVN) and IGO Ltd (ASX: IGO).

Why the Musgrave Minerals share price is spiking

This morning, Musgrave reported assay results for the first 12 reverse circulation (RC) drill holes from the current program at the new Starlight gold discovery. The Starlight link-lode is located at the Break of Day deposit within the Cue Gold Project.

For a bit of background, the Cue Gold Project hosts total resources of 6.45 million tonnes at 3.0 grams per tonne (g/t) gold for 613,000 ounces. This includes the Break of Day deposit (868,000 tonnes at 7.2 g/t gold for 199,000 ounces of contained gold) and the Lena deposit (4.3 million tonnes at 2.3 g/t gold for 325,000 ounces of contained gold).

Significant intercepts announced this morning from the initial RC drill holes at Starlight include:

• 12 metres at 112.9 g/t gold from 36 metres;
• 48 metres at 4.4 g/t gold from 30 metres;
• 7 metres at 13.7 g/t gold 114 metres;
• 6 metres at 5.7 g/t gold from 81 metres; and
• 6 metres at 5.2 g/t gold from 176 metres.

The drilling is focused on infilling and extending the new high-grade lode where mineralisation has been intersected over a strike of more than 115 metres.

Commenting on the results, managing director Rob Waugh said:

“This is a great start to the program and confirms the current model extending the mineralisation both up dip where it approaches the surface and down dip where it remains open. The bonanza high-grade, near surface mineralisation will enhance the open cut development potential of the deposit while the deeper mineralisation will enhance the underground potential.”

The current RC drilling program at Break of Day is approximately 60% complete and consists of more than 36 holes for around 7,000 metres.

After flying as much as 93.33% higher in early trade, the Musgrave Minerals share price is currently sitting 53.33% higher for the day at 23 cents per share. This takes its market capitalisation at the time of writing to around $106 million.

More reading

• 3 emerging trends in ASX resources 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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ASX 200 retail shares have had a pretty tough start to the year. Even before the coronavirus pandemic, things were looking pretty bleak.

We’ve seen a continuing trend of insolvency action, with brands like Jeanswest and Kikki.K falling into voluntary administration.

Then the pandemic hit and the situation deteriorated further. ASX 200 retail share prices were hammered as lockdown restrictions were introduced. This crushed bricks and mortar sales as businesses were forced to temporarily close.

But now restrictions are continuing to ease and the economy is emerging from hibernation. Could this mean Aussie retail shares are set to outperform in 2020?

Will ASX 200 retail shares outperform in 2020?

I think the JB Hi-Fi Limited (ASX: JBH) share price could outperform this year. The Aussie electronics retailer has already seen some strong sales as workers moved to a ‘work from home’ model and rushed to stock up on computers, monitors and accessories. This was good news for the ASX 200 retail share but there could be more on the way.

If businesses continue to operate at a reduced capacity, I think this could result in more sales for JB Hi-Fi. Aussie workers may move from temporary work-at-home setups to more permanent home offices. This could mean more spending on equipment and be very good news for retailers like JB.

I also think Harvey Norman Holdings Limited (ASX: HVN) is worth a look. Harvey Norman is a more diversified retailer which means there are more potential earnings streams.

The real question here is whether or not Aussies continue to spend. While many are keen to get back to shopping as soon as possible, the tough economic conditions could definitely impact discretionary spending.

However, if supply chains are maintained and we see government stimulus measures continue, I think the Aussie retail share could outperform this year.

Foolish takeaway

The S&P/ASX 200 Index (ASX: XJO) is down 12.70% this year. Meanwhile JB Hi-Fi shares are up 3% while Harvey Norman shares have fallen 15.72%.

If the economy continues to pick up then I think both of these ASX 200 retail shares could outperform by the end of the year.

More reading

• 1 ASX 200 tech share to buy and hold for a decade
• JobMaker is coming. These 3 ASX 200 shares could benefit
• Why the Vocus share price can race ahead later this month
• Is the BHP share price cheap right now?
• 5 things to watch on the ASX 200 on Wednesday

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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If I were starting my investment journey again with my first $500 to invest into ASX shares, I’d pick Future Generation Investment Company Ltd (ASX: FGX).

The problem with investing just $500 is that brokerage can take up a material amount of your starting money. So I’d want to go for an ASX share that I could stay invested in for the long-term.

If you were to begin with a single ASX share like Commonwealth Bank of Australia (ASX: CBA) then your entire investment portfolio would be allocated to just one business. That’s not very good diversification. I’d also want to pick something that can do well if there’s another coronavirus market sell off. 

What if you could pick an investment that could give you good diversification right from the start? I think Future Generation is a good answer.

Why is Future Generation a good ASX share?

It’s a special listed investment company (LIC). The job of a LIC is to invest in other shares on your behalf. Most LICs will charge a management fee (and perhaps a performance fee).

But Future Generation doesn’t charge a management fee. It donates 1% of its net assets each year to youth charities.

What does Future Generation actually invest in? Well, it doesn’t invest in normal ASX shares. It invests in the funds of around 20 fund managers who also work for free. They don’t charge management fees or performance fees.

Each fund is a separate portfolio. So Future Generation’s underlying diversification is very strong. The investments that Future Generation’s managers usually go for are those smaller growth shares, so in normal times it may be able to offer better growth than the ASX index.

One of the fun things with LICs is that sometimes you can buy them for cheaper than their asset value. You can buy the ASX share’s $1 of assets for less than $1. That seems like good value to me. Future Generation has been trading at an attractive discount to its net tangible assets (NTA) in recent times. 

As a bonus, Future Generation currently has a grossed-up dividend yield of 7.3%. I think Future Generation is a good ASX share to start with $500.

More reading

• Got $50,000 to invest for income? Pick these 5 ASX dividend shares
• How to make $1,000 a month in dividends
• How to build good wealth with small investments
• Why high yield dividend shares can be detrimental to your wealth
• 2 ASX shares to build a diversified dividend portfolio

Motley Fool contributor Tristan Harrison owns shares of FUTURE GEN 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 NextDC Ltd (ASX: NXT) share price has soared nearly 39% higher during 2020. This far exceeds the performance of the S&P/ASX 200 Index (ASX: XJO) which has fallen by 12% year to date.

Is this ASX 200 tech share overvalued right now? Or, is it a good long-term buy?

Fast growing cloud ecosystem

NextDC is Australia’s largest, locally-based data centre provider by quite a margin.

The ASX 200 company’s portfolio of data centres is home to one of Australia’s largest cloud centre partner ecosystems. This is highly advantageous because, in the data centre service market, ‘scale’ really matters. NextDC’s cloud centre community comprises more than 590 carriers, cloud providers and IT service providers.

Furthermore, the company is continuing to rapidly expand its portfolio of data centres, with a number currently under construction. NextDC recently completed a $672 million equity raising which will further assist with its expansion strategy.

The company is also looking at further data centre site acquisitions to expand its nationwide presence.

Continued strong growth during the pandemic

NextDC has benefitted from increased demand for cloud services during the coronavirus pandemic.

Under the government enforced lockdown measures, vast numbers of businesses have switched to a working-from-home model for their employees. Because of this, many consumers have increased their usage of bandwidth-hungry applications such as streaming video. This has been good news for the ASX 200 tech share.

Well positioned for long-term growth

NextDC has continued to grow strongly with the ongoing rise of cloud computing.  Over the last 4 years, the company’s customer base has grown at a compound annual growth rate (CAGR) of 21%.

This is very strong result for a data centre provider which typically grows at much slower rates than other IT companies such as Software-as-a-Service (SaaS) providers.

Interconnections have grown even more quickly for NextDC with a CAGR of 31% over the same period.

Customers are continuing to expand their ecosystems which is driving higher use of cloud services and connectivity with other data centres.

NextDC is also continuing to build newer and more energy-efficient Tier IV data centres. This is driving higher margins and higher recurring revenues for the business.

Is NextDC a solid, ASX 200 long-term buy?

The data centre game is highly capital intensive. There are high upfront costs to build new data centres. However, once in place, operators are well positioned to reap the benefits further down the track.

I believe that NextDC is well placed for strong revenue and profitability growth over the next 5 to 10 years. This will be driven by increased economies of scale and the rollout of more efficient tier IV data centres.

Despite the company’s recent share price rise, in my view, this still makes it a tech share worth buying and holding for the long term.

More reading

• Can ASX 200 retail shares outperform this year?
• JobMaker is coming. These 3 ASX 200 shares could benefit
• Why the Vocus share price can race ahead later this month
• Is the BHP share price cheap right now?
• Afterpay and these top ASX tech shares are on fire in 2020

Motley Fool contributor Phil Harpur owns shares of NEXTDC 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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I think that the Vanguard Australian Shares Index ETF (ASX: VAS) share price is a buy.

At the moment the Vanguard Australian Shares Index ETF share price is down around 17.5% from the pre-coronavirus selloff high. That’s still a pretty large decline if you ignore where it was in March 2020. We don’t have a time machine to go back to that price.

All we can decide is whether today is a good time to buy or not to buy the exchange-traded fund (ETF).

Things are certainly looking up compared to a couple of months ago. The infection numbers are very low across the country and not as many people are on jobkeeper as feared.

Perhaps that means that the Australian economy won’t be as bad as expected? Let’s hope so.

In that context, I think it’s good to consider if the Australian share market is worth buying.

Is it time to buy Vanguard Australian Shares Index ETF?

At the moment the ASX banks like Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group (ASX: ANZ) are at low share prices. It’s a large reason why the Vanguard Australian Shares Index ETF share price is down as much as it is.

I’ve always said that I’m not a big fan of investing in banks. So being able to buy the ETF when the banks are a smaller allocation than before is attractive to me. I’d rather get more exposure to shares like CSL Limited (ASX: CSL), Macquarie Group Ltd (ASX: MQG) and Wesfarmers Ltd (ASX: WES).

As time goes on it’s growing shares like A2 Milk Company Ltd (ASX: A2M), Altium Limited (ASX: ALU), Aristocrat Leisure Limited (ASX: ALL), Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) and Amcor Plc (ASX: AMC) that become a bigger part of the ETF.

We can’t decide how much each share makes up of the Vanguard Australian Shares Index ETF, we can just buy the whole ETF at today’s price. In the future the ETF may have shares like CSL, Wesfarmers and Xero Limited (ASX: XRO) at the very top of the holdings.

So, I think it could be a good idea to buy the ETF at a lower price, particularly as the Australian dollar is so strong right now. It means we can buy the earnings of shares that make earnings in US dollars, such as CSL, at a lower price in Australian dollars. I’d happily buy the Vanguard Australian Shares Index ETF today for the long-term.

More reading

• How to become a millionaire by investing in ASX shares
• 3 investing secrets for success with ASX shares
• I don’t normally buy ETFs, but I would buy these 2
• How teenagers can beat the share pros at investing
• How I would build a $100,000 ASX portfolio with ETFs

Tristan Harrison owns shares of Altium. 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 Amcor Limited and Macquarie Group Limited. The Motley Fool Australia owns shares of A2 Milk, Altium, Wesfarmers Limited, and Xero. 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 Zip Co Ltd (ASX: Z1P) share price has been a very strong performer again on Wednesday.

In morning trade the payments company jumped a further 30% to a record high of $6.74.

This means the Zip Co share price is now up a massive 81% over the last two trading days.

Why is the Zip Co share price up 81% in two days?

The catalyst for this strong gain was a major announcement by the buy now pay later (BNPL) provider on Tuesday.

That announcement reveals that Zip Co has entered into an agreement to acquire New York-based buy now pay later provider QuadPay. This deal will see the company go head to head with Afterpay Ltd (ASX: APT) in the United States market.

What is QuadPay?

QuadPay is a leading, high growth, instalment provider disrupting the credit card industry. It has a strong focus on innovation and customer centricity.

It has 1.5 million customers and 3,500 merchants on its platform. From these it is currently generating annualised total transaction value of over $900 million and annualised revenue of $70 million.

As with Afterpay, QuadPay splits purchases into four interest free repayments over a period of six weeks.

How is Zip Co funding the deal?

Zip Co intends to fund the deal through the issue of shares. If shareholders vote in favour of the acquisition at an upcoming extraordinary general meeting, the company will issue approximately 119 million Zip Co shares to QuadPay stockholders. This will represent the equivalent of 23.3% of the issued share capital of Zip at completion.

This implies an enterprise value of approximately US$269 million or A$403 million.

That won’t be the only thing shareholders are voting on. To support its expansion into a U.S. retail market estimated to be worth $5 trillion per year, the company intends to raise funds via the issue of convertible notes.

Zip Co has entered into an agreement with CVI Investments, Inc., an affiliate of Susquehanna International, to raise up to $200 million by way of the issue of convertible notes and the exercise of warrants. These convertible notes have an initial conversion price of $5.5328, which was a 47.7% premium to Friday’s close price.

Is it too late to invest?

I think this acquisition is a big positive for Zip Co and the U.S. market could be a key driver of growth for the company in the future.

However, although I’m a big fan of the company, I feel its shares are looking fully valued now after this strong gain. As such, I would class Zip Co as a hold until it starts to demonstrate that it can crack the U.S. market like Afterpay has.

More reading

• Afterpay and these top ASX tech shares are on fire in 2020
• ASX 200 rises 0.3%, Zip rockets higher
• These ASX shares were among the best performers in May, surpassing the ASX 200
• Zip Co share price rockets 44% higher on U.S. expansion news
• The 3 ASX tech stocks that helped this fund manager outperform in May

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

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