Much has been made of gold’s recent record price rise. And fair enough, too. It’s not every day that the price of an asset reaches a new all-time high. And when that asset has thousands of years of history as an investment (predating every share market on the planet), it’s an even more remarkable event.

Piles of gold

Yes, late last month, gold finally broke its 2011 high of US$1,921 an ounce. Today, it is well over US$2,000 an ounce. That means in 2020 so far, gold is up around 33%.

This has (predictably) caused a lot of excitement. When an asset experiences a climb like that, it gets the ‘investor on the street’ very interested.

And when buying into the gold market is as simple as buying units in an exchange-traded fund (ETF), it can result in a positive feedback loop that can cause a ‘temporarily exponential’ rise in prices. I do think we have seen this to some extent in gold prices this year so far.

Normally, I would caution against anyone jumping on a bandwagon like this. It does have some hallmarks of being an asset bubble in the making. After all, anyone who tried to buy into gold when the last record high was hit in 2011 has had 9 long years of waiting before seeing gold back at those prices.

But, after considering what an expert on the matter has to say, I am prepared to make that fatalist statement: ‘perhaps this time is different’.

Views of a gold expert

The expert of whom I speak is Ray Dalio. Dalio is one of the most successful investors in history, having built his firm Bridgewater Associates into the largest hedge fund manager in the world, with more than US$130 billion in funds under management.

Dalio has long been something of a gold bug, but he has doubled down on his bullish views on gold since the coronavirus pandemic began. Why? Well, according to reporting in the Australian Financial Review (AFR) last month, Dalio believes that we are witnessing markets that are “no longer free” due to the unprecedented intervention of central banks around the world, particularly the US Federal Reserve.

“Today the economy and the markets are driven by the central banks and the co-ordination with the central government,” the AFR quotes Dalio as stating. “As a result, capital markets are not free markets allocating resources in traditional ways.”

Governments around the world are now running massive deficits as a result. And this is what has Dalio worried: “You’re going to see central bank balance sheets explode, they have to because the choice is the sinking ship”.

As a result of this, governments are likely to be issuing more and more bonds to fund these deficits. And with interest rates already at record lows around the world, Dalio reckons there are only so many bonds paying effectively nothing that investors will buy. And if they stop buying, that’s not good news for those who already hold bonds.

The solution?

Gold, of course. Dalio thinks the choice between gold (an unprintable, physical asset) and a government bond paying no real interest is a non-starter.

As such, Dalio sees gold as an asset well-placed to navigate this Brave New World. So if you think it’s too late to buy gold, I would take Dalio’s advice and reconsider your objections. I still think ASX shares are the best vehicle for long-term wealth creation. But a bit of insurance in your portfolio never hurts either, in my view. Especially in these unprecedented times.

More reading

• Why this reporting season is different, and now’s a great time for ‘buy to hold’ investors in ASX shares
• The Silver Mines share price is up, so is now a good time to buy?
• Why I would buy and hold Afterpay and Xero shares
• Mesoblast share price crashes 29% lower on FDA doubts
• ASX stock of the day: Moneyme share price surges 36% as lender enters buy now, pay later space

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The Moneyme Ltd (ASX: MME) share price leapt more than 36% this morning after the lender announced the launch of a buy now, pay later (BNPL) solution. The company has launched MoneyMe+, a point of sale payment solution that allows merchants to offer customers a shop now, pay later option up to $50,000. During intraday trade, the Moneyme share price reached as high as $1.47 before being sold down to its current price of $1.27.

What does Moneyme do? 

Moneyme is an online lender offering personal loans of up to $50,000. Founded in 2013, it recently surpassed the $500 million in loans milestone. Loans are originated through a risk-based lending platform to tech savvy customers seeking fast and convenient access to credit from mobile devices. Moneyme has made more than 240,000 originations to customers since inception. Loan volumes have accelerated recently, with FY20 accounting for 35% of all lending since inception. 

How has the Moneyme share price been performing? 

Moneyme outperformed prospectus revenue and loan origination forecasts in FY20. Revenue was up 50% year on year to $48 million, beating prospectus forecast revenue of $45.8 million. Loan originations were up by 52% to $178 million, beating the prospectus forecast of $168.2 million. The Moneyme share price has reflected this success, and is currently up 140% from its March low. Nonetheless, the Moneyme share price remains 33.2% down from its high for the year. 

About the Moneyme BNPL venture

Moneyme has positioned its MoneyMe+ product to compete alongside the thriving BNPL distribution channels. The online lender is pivoting its offering to take advantage of consumer demand for instalment-based, merchant funded, interest-free payment solutions. The product roll out is being led by an experienced team of ex-Zip Co Ltd (ASX: Z1P) sales professionals, with 55 merchant partnerships in place. 

MoneyMe+ is launching in the solar, healthcare, cosmetics, home improvements, education, automotive, trades services and other sectors. It provides finance of $1000 to $50,000 and interest-free repayment terms from 6 to 48 months with fast online approval at checkout. As at 30 June 2020, MoneyMe+ had a gross loan book of $6 million. 

What’s next for the Moneyme share price? 

Moneyme is expanding its offering beyond the online lending space with the launch of new products. In May, the lender launched its Rent Ready product aimed at landlords. The product is designed to support landlords with capital and operational spend requirements, providing a line of credit up to $15,000 with repayment over 24 months. The company is also planning to establish a new funding facility to support asset growth and lower funding costs. The new facility is expected to be executed in 1Q FY21. The initiatives will see Moneyme expand its potential customer base and improve margins, assisting profitability. 

More reading

• 4 ASX shares I’m expecting big things from this reporting season
• These are the 10 most shorted shares on the ASX
• Are you a growth investor? Then take a look at these exciting ASX shares
• Why these ASX tech shares are skyrocketing
• Afterpay and Qantas were among the most traded shares on the ASX last week

Kate O’Brien 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 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 Sheffield Resources Ltd (ASX: SFX) share price jumped to a seven-month high on the back of what management described as a “transformational” deal.

The SFX share price surged 51% to $0.32 in late morning trade after it signed a non-binding term sheet with a subsidiary of YGH Australia Investment Pty Ltd (“Yansteel”).

The agreement will see Yansteel pay $130.1 million to Sheffield for a 50% stake in the ASX miner’s Thunderbird mineral sands project.

Sheffield share price boosted by capital raising premium

If this agreement is finalised, it will represent a triple win for the Western Australian explorer. Not only will it have a large joint-venture partner to de-risk the project, Yansteel will also buy a 9.9% stake in Sheffield via a placement.

While most capital raisings are priced at a discount to the stocks’ current share price, this isn’t the case for Sheffield.

Yansteel is paying $0.376 a new share, which is a 131% premium to Sheffield’s 10-day volume weighted average price (VWAP). The placement will inject an extra $12.9 million into Sheffield.

Offtake agreement to underpin Thunderbird

Further, the Chinese steel group will sign a “take of pay” offtake agreement to buy all of the ilmenite produced in stage one of the project.

Yansteel will pay market prices for the mineral and will have first right of refusal to buy the commodity produced in subsequent stages of the project development.

There are a few more hoops that both parties will have to jump through to consummate the deal. They need to work out the final details for the JV partnership and the Foreign Investment Review Board (FIRB) will have to give its blessing too.

Thunderbird finally taking flight

“The Joint Venture with Yansteel, if completed, will provide the project equity presently estimated to fund Stage 1 of the Thunderbird Project,” said Sheffield’s chief executive Bruce McFadzean.

“To attract such a strong partner is testimony to the quality of the Thunderbird Mineral Sands Project.   

“This outcome achieves all of the objectives of the strategic partner process undertaken by Sheffield over the past 18 months and, if completed, will provide the means by which Sheffield shareholders can realise the underlying value of the Project.”

Who is Yansteel

Yansteel is a wholly-owned subsidiary of Tangshan Yanshan Iron & Steel Co., Ltd (“Tangshan”). Tangshan is a privately-owned steel manufacturer, which produces around 10 million tonnes a year of steel products and has annual revenues of circa $6 billion.

The JV agreement will underpin the Chinese partner’s entry into titanium dioxide production. Tangshan commenced construction on a 500,000 tonnes per year processing facility that will consume the ilmenite offtake from stage one of the Thunderbird project.

More reading

• Why this reporting season is different, and now’s a great time for ‘buy to hold’ investors in ASX shares
• The Silver Mines share price is up, so is now a good time to buy?
• Why I would buy and hold Afterpay and Xero shares
• Mesoblast share price crashes 29% lower on FDA doubts
• This expert says you should have gold in your portfolio. Here’s why.

Motley Fool contributor Brendon Lau 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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On Monday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three that have just been given sell ratings are listed below.

Here’s why these brokers are bearish on these ASX shares:

GPT Group (ASX: GPT)

According to a note out of Morgan Stanley, its analysts have retained their underweight rating and cut the price target on this property company’s shares to $4.00. This follows the release of a softer than expected first half result on Monday. In addition to this, the broker notes that GPT doesn’t expect to recover the majority of its uncollected rent. The GPT share price is currently trading below this price target at $3.92.

Medibank Private Ltd (ASX: MPL)

A note out of Goldman Sachs reveals that its analysts have retained their sell rating and $2.83 price target on this private health insurer’s shares. This follows the release of an update from rival BUPA. It notes that BUPA’s ANZ business delivered a 4% increase in first half revenue but a 35% decline in underlying profit. BUPA also advised that it faces challenges in its Australian Health Insurance business. This is particularly the case with affordability issues. Goldman appears to see this as a sign that Medibank will continue to underperform. The Medibank share price is changing hands for $2.85.

Sonic Healthcare Limited (ASX: SHL)

Analysts at UBS have retained their sell rating and $28.00 price target on this global medical diagnostics company’s shares. According to the note, the broker expects Sonic to deliver a 10% increase in revenue but a 7% decline in earnings in FY 2020. In light of this, it believes its shares are overvalued at the current level and retains its sell rating. The Sonic share price is trading at $33.96 this afternoon.

More reading

• Has the CSL share price lost its ASX 200 market darling status?
• 3 dirt cheap ASX real estate shares
• The ASX stocks that could enjoy a consensus earnings upgrade this reporting season
• ASX 200 jumps 1.2%: Big four banks rise, Qantas update, Mesoblast surges
• Results: GPT share price on watch as net profit falls 247%

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended 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 Telstra Corporation Ltd (ASX: TLS) share price is going to be on watch this reporting season.

The telco is an interesting one. Its report is highly anticipated with everything that’s going on with COVID-19 at the moment.

There are some ASX blue chips that are likely to reveal a substantial profit hit because of COVID-19 like Commonwealth Bank of Australia (ASX: CBA). Whereas others like Wesfarmers Ltd (ASX: WES) seem to have had a strong year. Where will Telstra fall on this scale?

Telstra’s FY20 guidance

Before COVID-19, the company was expecting underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to be in the range of $7.4 billion to $7.9 billion.

In Telstra’s guidance update during the early part of COVID-19, it said it’s expecting both free cash flow and underlying EBITDA to be at the bottom end of its guidance. It’s also expecting its underlying EBITDA (excluding the in year NBN headwind) to be at the bottom end of its growth range of $0 to $500 million.

Whilst a reduction of profit expectations is not good news, I think that underlying profit being flat would be a good result considering all of the difficulties that Telstra has suffered this year.

Despite the profit difficulties, Telstra is expecting its capital expenditure to be at the top end of its guidance. The company is investing heavily in its new 5G network which will support the next generation of devices which will have very fast operating capabilities.

Where is the profit growth going to come from?

I think the only way for a business to deliver a sustainable increase in valuation is to increase the profit. The Telstra share price hasn’t done much over the past three years. 

In the FY20 half-year result it reported good growth in customer numbers, particularly with the mobile division. During the half year it added 137,000 retail postpaid mobile services (including 91,000 customers from Belong) 135,000 retail prepaid mobile services and 173,000 pre and postpaid and IoT wholesale services.

Adding new customers is essential for Telstra to maintain (let alone grow) its profit. The NBN is hurting Telstra’s profit due to the lower profit margin for each customer. Telstra used to own the cable infrastructure and earn a higher return.

5G services will hopefully add a lot more devices for Telstra’s network. Services like automated cars, wearables and so on will need a data connection to operate efficiently.

5G will need to be successful at attracting new customers if Telstra’s share price and earnings are going to rise from here. More 5G-capable devices are regularly being released by suppliers like Samsung and Apple, which will add to Telstra’s revenue base.  

I think 5G could be a turning point for Telstra’s home internet customers too. 5G may be so fast that customers made decide to switch from the NBN to 5G-enabled wireless internet. That wouldn’t be so good for the NBN’s earnings, but Telstra could benefit if its speeds and capacity are up to the challenge.

What about the Telstra dividend?

There has been a clear decline of the Telstra annual dividend over the past few years. It’s now paying an annual dividend of 16 cents per share, which includes the special dividends relating to the NBN payouts.

At the current Telstra share price it offers a grossed-up dividend yield of 6.75%. That’s not bad in this era of low interest rates. But I think income investors can do better than Telstra shares – either with better income growth or a higher starting yield. I don’t think the Telstra dividend is going to change over the next couple of years. For that reason I’d rather buy something like Future Generation Investment Company Ltd (ASX: FGX) or Vitalharvest Freehold Trust (ASX: VTH).

More reading

• These were last week’s best performing ASX shares
• ASX 200 Weekly Wrap: Surging commodity prices snap ASX 200’s losing streak
• 2 ASX dividend shares with generous yields to buy today
• Cash rate on hold until after 2022? Buy these ASX dividend shares
• 5 things to watch on the ASX 200 next week

Motley Fool contributor Tristan Harrison owns shares of FUTURE GEN FPO. The Motley Fool Australia owns shares of and has recommended Telstra Limited. 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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If you are looking to expand your ASX share portfolio, here are 3 good options for you to take a look at.

Here’s why Ramsay Health Care Limited (ASX: RHC), Nanosonics Ltd. (ASX: NAN) and Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) are all in my buy zone right now.

3 five-star ASX shares to buy this month

Ramsay

Ramsay has grown over the past few decades to become Australia largest private healthcare provider. The healthcare operator also now has a presence in 11 countries around the globe, including the United Kingdom, France and Italy.

The Ramsay share price took a significant hit during the early phase of the coronavirus pandemic. A ban on non-essential surgery, especially during February and March, was a significant reason for this. Since then its share price has only made a partial recovery.

While there could be further restrictions in some operating markets in the months ahead, eventually the pandemic will pass. I believe that Ramsay will be well positioned for long-term growth, driven by the growing global demand for quality hospital services over the next decade.

Nanosonics

Nanosonics is a niche healthcare product supplier. It manufactures and distributes a market-leading disinfection system for ultrasound probes. Over the past few years it has witnessed strong growth across Asia, Europe and the Middle East. Despite a dip in the early phase of the pandemic, Nanosonics has been a very strong ASX share price performer since beginning of 2019.

The company’s recent financial performance has been strong. Total revenue for the first half of FY20 was 19% up on the prior period to $48.5 million.

There is now an even stronger growing global trend towards stricter disinfection control in light of the coronavirus pandemic. I think this could help to push the Nanosonics share price even higher in the years ahead.

Soul Patts

Soul Patts has been a consistent performer on the ASX for over a decade now. Due to a strong level of market diversification, it is more resilient to economic downturns than many other ASX 200 shares.

The Soul Patts share price has lost a bit of ground since the beginning of the coronavirus pandemic. However, looking back over the past 10 years, the Soul Patts share price has risen strongly by 59%. I believe that Soul Patts is well placed to tap into its investments across a broad range of industries in the coming decade. These include pharmacies, telecommunications and mining.

Foolish takeaway

Ramsay, Nanosonics and Soul Patts are all high quality ASX shares that I believe have above-average growth prospects over the next 5 years.

More reading

• Has the CSL share price lost its ASX 200 market darling status?
• The ASX stocks that could enjoy a consensus earnings upgrade this reporting season
• These ASX healthcare shares could be fantastic long term options
• Beat low interest rates with these ASX dividend shares
• Sigma share price jumps on $172 million deal

Phil Harpur owns shares of Nanosonics Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nanosonics Limited. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Nanosonics Limited and Ramsay Health Care 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 Archtis Ltd (ASX: AR9) share price has more than doubled in the past week.

Shares in Archtis are trading more than 15% higher for the day, capping an extraordinary week for the company. The Archtis share price closed at 28.5 cents last Tuesday and hit an all-time high of 60 cents earlier today.

Here’s why the Archtis share price is soaring.

What is fuelling the Archtis share price?

Archtis is an Australian-based cyber security technology company that specialises in the safe and secure sharing of classified information. In a bid to commercialise its services, Archtis launched its software-as-a-service (SaaS) Kojensi platform last year to service government, defence and commercial clients.

The company’s quarterly report released in late July has fuelled momentum in the Archtis share price.

In the report, Archtis noted important contract wins for the quarter. The company was able to secure its first defence industry contract for its Kojensi platform with global military system integrator Northrop Grumman. Archtis also secured its first contract in the education and space sector after closing a deal with Curtin University in May.

Archtis management said the new contracts highlighted the demand for the company’s Kojensi platform and demonstrated the commercialisation potential for its products.

The company has also renewed its $400,000 contract with the Australian Government.

Bullish outlook for Archtis

Analysts painted a bullish outlook on the Archtis share price in a recent research report from Lodge Partners. The report said the company was well-positioned to benefit from a range of domestic and international tailwinds such as the growing focus on cyber security.

One potential tailwind is the growth in defence and cybersecurity spending. Analysts noted the Federal Government’s $1.35 billion Cyber Enhanced Situational Awareness and Response package.

In addition, Archtis has also endeavoured to streamline the company’s board to push revenue growth in the future.

Foolish Takeaway

There’s plenty of momentum behind the Archtis share price, which is trading at 54 cents at the time of writing after hitting a record and intraday high if 60 cents earlier today.

More reading

• Analysts back archTIS share price to outperform

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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At lunch on Tuesday the S&P/ASX 200 Index (ASX: XJO) is on course to record another strong gain. The benchmark index is currently up 1% to 6,168.8 points.

Here’s what is happening on the market today:

Challenger result and guidance disappoints.

The Challenger Ltd (ASX: CGF) share price has come under pressure on Tuesday after the release of its full year results. For the 12 months, the annuities company posted an 8% decline in normalised net profit before tax to $507 million. This excludes a significant negative investment experience relating to the COVID-19 pandemic market sell-off. Including this, Challenger recorded a statutory loss after tax of $416 million. Looking ahead, in FY 2021 Challenger expects to record a normalised net profit before tax in the range of $390 million to $440 million. This represents a 13.2% to 23% decline year on year.

A2 Milk Company shares lower on after announcing new CEO.

The A2 Milk Company Ltd (ASX: A2M) share price is trading lower on Tuesday after naming its new chief executive officer. The infant formula and fresh milk company has appointed David Bortolussi. He will replace interim CEO Geoffrey Babidge early in the 2021 calendar year. Mr Bortolussi was previously the Group President – International Innerwear, at HanesBrands. He has experience in the China market and also with M&A activities during his time with Fosters.

Sydney Airport to raise $2 billion.

The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price is in a trading halt today after launching a fully underwritten pro rata accelerated renounceable entitlement offer to raise $2 billion. Eligible securityholders will be able to acquire one new Sydney Airport share for every 5.15 shares held at a price of $4.56 per new share. The airport operator is raising funds to strengthen its balance sheet while it navigates an uncertain aviation market. Sydney Airport also revealed a loss after tax of $53.6 million for the first half.

Best and worst ASX 200 shares.

The James Hardie Industries plc (ASX: JHX) share price is the best performer on the ASX 200 on Tuesday with a 5.5% gain. This morning the building materials company posted an adjusted net operating profit (NOPAT) of US$89.3 million for the first quarter. This was in line with the prior corresponding period. The worst performer by some distance has been the Mesoblast limited (ASX: MSB) share price with a massive 20% decline. Investors may be nervous ahead of its meeting with the FDA on Thursday evening.

More reading

• ASX iron ore miners jump on broker upgrades
• Why Bendigo and Adelaide Bank, CIMIC, James Hardie, & Webjet are storming higher
• James Hardie share price jumps 5% after quarterly result
• Why Afterpay, Challenger, IVE Group, & Mesoblast shares are dropping lower
• Sydney Airport to raise $2 billion after COVID-19 profit collapse

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger Limited. The Motley Fool Australia owns shares of A2 Milk. 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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