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2021 is looking up for the economy and the markets: Morning Brief
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Sri Lankan man pays a gold shop to let him sweep the floors to fund his decades-long addiction
Mavin has been addicted to heroin for decades. To pay for his habit he’s found what he says is the easiest way to earn money, sweeping floors in gold shops. But rather than being paid to do the job, he’s the one who has to pay the shop owners. The dust he sweeps up is how he can afford his “medicine”. The Sri Lankan government runs rehabilitation centres for those who suffer from substance abuse and dependency under the Bureau of Commissioner General Rehabilitation. There are also other…
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Chinese Tesla, Nio Rival Xpeng Files To Go Public On NYSE
Chinese electric vehicle maker XPeng Inc. filed for an initial public offering with the United States Securities and Exchange Commission Friday. What Happened The Alibaba Group Holding Ltd (NYSE: BABA)-backed company said it would list its shares on the New York Stock Exchange under the ticker "XPEV."Xpeng didn't reveal how many Class A shares it would be offering or their pricing, but said it intended to sell about 429.8 million Class B ordinary shares. It put a placeholder number of $100 million as amount it expected to raise in the IPO; companies typically reveal the actual amount they expect to raise in later filings. Credit Suisse Group AG (NYSE: CS), JPMorgan Chase & Co (NYSE: JPM), and Bank of America (NYSE: BAC) are serving as the underwriters for the offering.Why It Matters The electric vehicle maker raised $400 million ahead of the filing from Alibaba, along with the Qatar Investment Authority and Abu Dhabi sovereign wealth fund Mubadala, CNBC reported last week.In July, the automaker raised 0 million from Hillhouse Capital, Coatue Management, Aspex, and Sequoia Capital's local division.In total, Xpeng has raised $2.6 billion as of its latest Series C funding round, according to Crunchbase.Xpeng started delivering its P7 sports sedan in June; the car competes with Tesla Inc's (NASDAQ: TSLA) Model 3. Local EV competitor Nio Inc (NYSE: NIO) raised $1 billion in its IPO in September 2018. Its shares have risen 234% YTD. Late last month, another Chinese EV maker Li Auto Inc (NASDAQ: LI) raised $1.1 billion in its IPO.The U.S. Senate passed a law in May that seeks to delist Chinese companies on domestic exchanges.The EV maker addressed the law in its filing noting, the legislation "may have a material and adverse impact on the stock performance of China-based issuers listed in the United States."Photo courtesy: XPeng Inc. See more from Benzinga * Credit Suisse Reports Q2 Earnings Beat * Credit Suisse Silently Invested 0M In Alibaba Subsidiary Ant Financial, Set To Benefit Immensely In Public Debut * SoftBank Withdraws 0M From Credit Suisse Fund Over Conflict Of Interest With Vision Fund(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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Space industry is moving to ‘leadership by seasoned execs’: Space Capital partner
The space “from a small community of space enthusiasts to leadership by seasoned execs”, says Chad Anderson, managing partner at Space Capital.
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It Might Not Be A Great Idea To Buy Diageo plc (LON:DGE) For Its Next Dividend
Diageo plc (LON:DGE) stock is about to trade ex-dividend in three days. If you purchase the stock on or after the 13th…
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Euro zone investor morale improves in August but recovery sluggish – Sentix
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Investors Don’t See Light At End Of Huami Corporation’s (NYSE:HMI) Tunnel
When close to half the companies in the United States have price-to-earnings ratios (or "P/E's") above 19x, you may…
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Hyundai Shares Soar 15% In Seoul As It Announces Dedicated Electric Vehicle Brand
Hyundai Motor Co (OTC: HYMTF) announced the launch of a brand dedicated to battery electric vehicles on Sunday.What Happened: The automaker plans to sell one million units of battery-electric vehicles by 2025, occupying 10% of the global market share, in an effort to emerge as a leader in the segment under its dedicated EV brand "Ioniq."Three electric vehicles under the Ioniq brand will be released beginning early 2021, according to Hyundai. Launch of a midsize crossover vehicle in early 2021, a sedan in early 2022, and a large crossover vehicle in early 2024 is planned.Nikola Wants To Coopearte: Trevor Milton, the chief executive officer of Nikola Corporation (NASDAQ: NKLA), disclosed his intention of cooperating with Hyundai in an interview with local Korean media Sunday, Reuters reported.Milton said he proposed cooperation with the Seoul-based carmaker twice, which rebuffed his efforts both times. A Threat To Tesla's Rise: EV rival Tesla Inc (NASDAQ: TSLA) has been seeing an impressive surge in business in South Korea, becoming a dominant player on the back of Model 3 sales.The Elon Musk-led company sold 2,827 vehicles in the country in June, with another 4000-5000 awaiting delivery. Its Model X vehicles are also said to be picking up momentum, according to Reuters.EV Sector Growth In South Korea: SK Securities analyst Kwon Soon-woo told Reuters that the rise in shares of Hyundai on Monday reflects "investors' hope that the auto industry will outperform compared to other industries."Korean battery makers such as LG Chem Ltd (OTC: LGCLF), Samsung Electronics Co Ltd (OTC: SSNLF) unit Samsung SDI Co, and SK Innovation Co. dominated EV battery supplies in the first half this year globally, according to SNE Research.Price Action: Hyundai shares traded 10.54% higher at $136.86 on Monday at press time in Seoul. The company's shares closed 4.67% at $31.39 in the otc market on Friday.Photo courtesy: Hyundai Motor Co.See more from Benzinga * Kodak 5M Federal Loan For Generic Drugs Paused Until Allegations Are Probed * Activist Investor ValueAct Offloads Entire Stake In Rolls-Royce: FT * Daniel Loeb's Third Point To Merge With Fellow Insurance Firm Sirius Group, Create .3B Entity(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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Forget term deposits and buy these ASX dividend shares
If you’re looking for better interest rates than those on offer with savings accounts or term deposits, then I have good news for you! Despite the pandemic, the Australian share market is still home to a good number of shares offering decent dividends.
Two ASX dividend options that I think are top picks for income investors right now are listed below. Here’s why I like them:
Commonwealth Bank of Australia (ASX: CBA)
The first ASX dividend share to consider buying is Commonwealth Bank. I think the banking giant’s shares are trading at a very attractive level following a sharp pullback this year. And although this pullback isn’t completely unjustified, I believe the extent of its decline has been overdone.
While guessing what dividend the bank will pay next year is difficult given the increased uncertainty caused by the coronavirus second wave, I would expect something in the region of $3.00 per share in FY 2021. After which, I expect a rebound to a more normal level in FY 2022. The former still equates to a generous fully franked 4% yield.
SPDR S&P/ASX 200 Fund (ASX: STW)
I think the SPDR S&P/ASX 200 Fund ETF could be another good option for income investors right now. As its name implies, this fund gives investors exposure to all of the 200 companies listed on the S&P/ASX 200 Index (ASX: XJO) through just a single investment. This means you’ll be investing in a diverse group of shares including Commonwealth Bank and the rest of the big four banks, mining giants, and countless REITs.
Although predicting what the yield will be in FY 2021 is tricky because of the pandemic, traditionally it is around 4% to 4.5%. I think this makes it a good option for income investors that don’t have enough funds to maintain a truly diverse portfolio.
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*Returns as of 6/8/2020
More reading
- Should you buy CBA shares before the dividend announcement?
- Bank savings rates fall as Buffett racks up record cash pile and analysts tip Qantas share price rebound
- It’s ASX reporting season! Here’s what to watch out for this week
- CBA and 2 more ASX 200 shares to watch this week
- ASX 200 Weekly Wrap: Surging commodity prices snap ASX 200’s losing streak
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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Why the Wesfarmers share price is too expensive
Is the Wesfarmers Ltd (ASX: WES) share price too expensive?
Wesfarmers is one of the largest and most popular companies on the ASX for Aussie investors. The company has a massive presence in the Australian retail scene, after all. It owns the stupendously successful hardware chain Bunnings, as well as the Officeworks, Kmart and Target store chains.
It also used to own Coles Group Ltd (ASX: COL) before Coles was kicked out of the Wesfarmers nest and spun off to live life on its own terms in late 2018. Before Coles was demerged, Wesfarmers was actually the largest non-public employer in the country. The company still retains a 5% stake in Coles to this day.
In addition to the retail stores listed above, Wesfarmers also owns a significant portfolio of other businesses. It owns the Kleenheat brand of gas, Covalent Lithium and the WorkWear clothing brand, amongst many others. If you’re looking for a diversified conglomerate, then this is Australia’s largest by far.
It’s a bold claim then, perhaps, to label Wesfarmers as overvalued. But I think there is sufficient cause here.
Is the Wesfarmers share price overvalued?
So on current pricing, Wesfarmers is asking a price of $47.01 a share. That gives the stock a price-to-earnings (P/E) ratio of 24.38 and a trailing dividend yield of 3.25% (which comes fully franked).
By comparison, the broader S&P/ASX 200 Index (ASX: XJO) currently has an average P/E ratio of 16.99. So the market is pricing Wesfarmers far above the market average, for a start.
But let’s look at some of Wesfarmers’ numbers.
In the 6 months to 31 December 2019, Wesfarmers reported 6% growth in revenue and 4.4% growth in after-tax profits. solid numbers to be sure, but nothing exciting in my opinion. Ditto with Wesfarmers’ dividends. A 3.25% yield is solid, but nothing to write home about.
Not only that, but last year’s interim dividend came in at $1 per share. In February this year, Wesfarmers only delivered a 75 cents per share dividend (a 25% drop). This does take into account the demerger of Coles (from which Wesfarmers shareholders received an additional special dividend), but it still doesn’t excite me.
So for a company with (pre-coronavirus) revenue growth of 6% and a dividend yield of 3.25%, we are being asked to pay 24.38x earnings. It’s a ‘no deal’ for me.
Foolish takeaway
Wesfarmers is due to report its full-year earnings on 20 August, so it will be interesting to see what the past 12 months have thrown up for the company. Even so, there is nothing in the current Wesfarmers share price that leads me to believe the shares are anything but too expensive.
Yes, it’s a relatively stable and diversified company. But it is also one that is not growing very fast, and which I think there are few growth avenues left to meaningfully pursue. As such, I think there are better options out there for growth and income investors alike than Wesfarmers shares today.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
More reading
- Why I would buy Goodman Group and these blue chip ASX shares
- The ASX stocks that could enjoy a consensus earnings upgrade this reporting season
- Are ASX retail shares buys right now?
- Why I’ve gone cold on ASX REITs
- Sigma share price jumps on $172 million deal
Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. 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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