News that China ordered the closure of the US consulate in Chengdu is adding to the gloom on markets, but it sent two ASX stocks jumping higher today.

The S&P/ASX 200 Index (Index:^AXJO) fell 1.3% ahead of the close with nearly every sector losing ground while the S&P 500 Index (INDEXSP: .INX) futures are pointing to a more than 1% drop for the US market.

China’s move is in retaliation for the US decision to shut the Chinese consulate in Houston, reported Bloomberg.

Worsening US-Sino ties to hit earnings

The US Chengdu consulate was opened in 1985 and covers Sichuan, Yunnan, Guizhou and Chongqing in the country’s southwest. It’s also a key listening post for developments in Tibet, where China is criticised by Western democracies of suppressing minority groups, added Bloomberg.

Sino-US relations have been steadily deteriorating with US President Donald Trump accusing China for spreading COVID-19 and taking a harder line against the Asian nation.

The breakdown is threatening global trade at a time when the world’s economy is careening into a deep recession due to the pandemic.

This will drag on the earnings of many ASX 200 stocks as they are exposed to US and international markets.

Strategic value shining through

But not all are worried. In fact, there are some ASX stocks that will benefit from the rising tension. One ASX stock that’s well placed to be rewarded is the Lynas Corporation Ltd (ASX: LYC) share price.

Shares in the rare earth miner jumped 1.9% to $2.17 on Friday when the market was tanking. Lynas is the only non-Chinese producer of rare earth commodities which are critical to the manufacture of a wide range of electronics and weaponry.

The US and its allies are desperate to cut its reliance on China for these critical raw materials, and that puts Lynas in a very good position, in my view.

Lynas is best hope for US supply

The Lynas share price had been under pressure recently on doubts that the US government will fund its proposed processing plant in Texas after intense lobbying by local miners.

But as I mentioned, Lynas is the only miner with any scale to replace Chinese supplies. The US government doesn’t really have a viable plan “B” – at least not one that can be put into action quickly.

All guns firing

Another winner from geo-political tensions between the world’s two largest economies is the Austal Limited (ASX: ASB) share price.

Shares in the shipbuilder also bucked the downtrend today by jumping 1.5% to $3.34.

Austal is building the Littoral combat ship for the US Navy but lost out on the tender to construct the multi-mission guided-missile frigates called FFG(X).

However, there’s speculation that Austal could get a second bite at FFG(X) as the US Navy can commission more of these warships in a shorter timeframe if it appointed a second builder.

The worsening relationship with increasingly militarised China could just provide that extra urgency for the US to tap Austal on the shoulder.

I own both ASX shares and I think they will outperform this financial year.

More reading

• ASX 200 drops more than 1%, IAG falls 7.5%
• Brokers name 3 ASX 200 shares to buy right now
• Will the iron ore price crash by the end of 2020?
• Value stocks to rise on strong A$ and broker picks the cheapest ASX stocks to buy today
• Up 38% in July! Is the Orocobre share price a buy?

Brendon Lau owns shares of Austal Limited and Lynas Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Austal 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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If you’re looking to add some ASX blue chip shares to your portfolio, then I would suggest you consider the two listed below.

Here’s why I think they are among the highest quality options for blue chip investors to choose from right now:

CSL Limited (ASX: CSL)

I continue to believe that this biotherapeutics giant is the highest quality company on the Australian share market. This is due to the quality of its operations, talented management team, and its high level of investment in research and development activities. In respect to the latter, the company is pouring in almost US$1 billion into its research and development this year.

Historically, these investments have generated very high returns and helped cement its position as a leader in its field. I expect this to remain the case over the 2020s and for its in-demand therapies and vaccines to underpin strong earnings growth over the decade.

Ramsay Health Care Limited (ASX: RHC)

Another blue chip share to consider buying is Ramsay Health Care. Although near term trading conditions are likely to be challenging because of the pandemic, I believe it is worth looking beyond this and focusing on the long term. This is because Ramsay’s world class network of private hospitals appear perfectly positioned to benefit from the expected increase in demand for healthcare services in the future due to ageing populations and increased chronic disease burden.

In addition to this, Ramsay has a long history of making earnings accretive acquisitions. The most recent being the acquisition of Capio AB in Scandinavia in 2018. I believe there’s a strong chance it will follow this up with further acquisitions in the coming years that open it up to new markets and support its growth. Overall, I feel this could mean the Ramsay share price provides investors with strong total returns over the 2020s and beyond.

More reading

• How CSL could save Australia from COVID-19
• Value stocks to rise on strong A$ and broker picks the cheapest ASX stocks to buy today
• Why weakness in the CSL share price could be a buying opportunity
• 5 things to watch on the ASX 200 on Friday
• What to do if your ASX shares hit a record high

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has recommended 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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Every so often, I like to take a look to see which shares have experienced meaningful insider buying.

This is because insider buying is often regarded as a bullish indicator, as few people know a company and its intrinsic value better than its own directors.

A number of shares have reported meaningful insider buying this week. Here are a couple which have caught my eye:

Citadel Group Ltd (ASX: CGL)

A change of director’s interest notice reveals that non-executive director Jayne Shaw has been buying this information management company’s shares. The notice shows that Ms Shaw picked up a total of 50,500 shares through two on market trades on 24 June and 25 June. The director paid a total of $167,193.18, which equates to an average of $3.31 per share. This purchase almost doubled Ms Shaw’s holding to a total of 100,000 shares.

With the Citadel share price down 40% from its 52-week high, it appears as though this director sees value in its shares at the current level. Interestingly, Citadel has been very quiet during the pandemic and hasn’t provided any trading updates. This could be an indication that it is on track to achieve its guidance. Citadel is expected to deliver revenue and EBITDA growth in FY 2020, supported by low double-digit organic revenue growth.

Collins Foods Ltd (ASX: CKF)

According to a change of director’s interest notice, one of this quick service restaurant operator’s directors has been buying shares on market. The notice reveals that Collins Foods chairman and independent non-executive director, Robert Kaye SC, has topped up his position. The chair picked up 3,125 shares for a total consideration of $29,861.90. This equates to an average of $9.55 per share and brought his holding to a total of 18,444 shares.

It appears as though this director is confident that Collins Foods will deliver another solid result in FY 2021. Last month the company released its full year results and revealed an 8.9% increase in revenue to $981.7 million and a 5.1% lift in underlying net profit after tax to $47.3 million. This was despite some of its stores being closed because of the pandemic.

More reading

• 3 of the best mid cap ASX shares you can buy right now
• Insiders have been buying TechnologyOne and this ASX 200 share
• 5 things to watch on the ASX 200 on Wednesday
• These were the 5 best performing ASX shares last week
• The latest ASX stocks to be upgraded by brokers to “buy”

Motley Fool contributor James Mickleboro owns shares of Collins Foods Limited. The Motley Fool Australia has recommended Citadel Group Ltd and Collins Foods 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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Well, 2020 has been a disastrous year for ASX dividend shares, to say the least. Former income stalwarts like the ASX banks have slashed or even ‘deferred’ dividends entirely. And other dividend payers that investors used to regard as ‘safe’ – such as Transurban Group (ASX: TCL) and Sydney Airport Holdings Pty Ltd (ASX: SYD) – have turned out to be not so safe.

So where should investors turn? Consumer staples giants like Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL) dividends appear to be safe. But with current trailing yields of 2.67% and 2.37%, respectively, these shares will only go so far for a dividend investor.

ASX resources giants like BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG) have been spots of light this year on a dark dividend horizon. But ASX resources shares are notoriously cyclical, and many dividend investors don’t like to dedicate too much of their portfolios to this sector as a result.

So where to turn for dividends in 2020?

Well, I think this ASX dividend share is a great place to start.

Enter WAM Global Ltd (ASX: WGB)

WAM Global is a listed investment company (LIC), which means it acts like an investor in its own right and buys and sells shares on behalf of its owners. This LIC is run by the reputable Wilson Asset Management and focuses on internationally listed shares beyond the ASX. Some of its current holdings include names you might know, such as EA Games, Microsoft, Tencent and Hasbro.

Wilson Asset Management has said it has modelled WAM Global on its highly successful flagship LIC WAM Capital Ltd (ASX: WAM). WAM Capital is an ASX-focused LIC that has been around since 1999. Since then, it has delivered an average return of 15.6% per annum. Today, it offers a trailing yield of around 8%.

WAM Global only started life in 2018. But since then, this LIC has been growing its shareholder payouts at an impressive rate. Just this week, WAM Global announced a final FY20 dividend of 4 cents per share, which was a 100% increase from the prior final dividend. It brings the LIC’s total dividends for the year to 7 cents per share, up 250% from the prior year. On current pricing, this would give WAM Global a trailing, grossed-up yield of 4.93%, or 5.63% if we annualise the 2020 final dividend.

Given WAM Global has already proved it can be a top ASX dividend growth share, I think it’s a great investment for 2020 and beyond.

More reading

• Fed up of dividend cancellations? Buy these safe ASX dividend shares
• Will the iron ore price crash by the end of 2020?
• What the budget deficit means for ASX shares like Webjet
• Which ASX 200 shares are the safest?
• Are Marley Spoon shares future ASX blue-chips?

Motley Fool contributor Sebastian Bowen owns shares of WAMGLOBAL FPO. The Motley Fool Australia owns shares of COLESGROUP DEF SET, Transurban Group, and Woolworths 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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Despite the economic uncertainty, CNBC reported this week that Warren Buffett has hiked his stake in a United States bank by US$800 million. Does this mean it’s time to purchase ASX bank shares?

What did Buffet buy?

According to a Securities and Exchange Commission filing, Berkshire Hathaway bought 33.9 million shares in Bank of America worth US$813.3 million. As a result, this lifted his stake to more than US$24 billion. The transaction was flagged as it resulted in an ownership interest amounting to over 10%.

This triggered a rally in Bank of America shares of 1% despite the fall in the US markets overnight. However, the Bank of America share price has slumped this year.

In a Berkshire Hathaway virtual AGM held in May, Warren Buffett was optimistic about the future and it appears he is confident in the future of his investment in Bank of America as well. 

Additionally, through Berkshire Hathaway, Warren Buffett has stakes in multiple other banks including Goldman Sachs and JPMorgan Chase & Co.

Should you buy ASX banks?

Similar to banks in the US, Aussie bank shares have been hit hard by recent events. National Australia Bank Ltd (ASX: NAB), Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group Ltd (ASX: ANZ) share prices are down 36.5%, 11.5%, 37.4% and 34.0% respectively in the past year.

On Wednesday this week, APRA chair, Wayne Byres, gave a speech stating that “our banks and insurers remain soundly capitalised and highly liquid. APRA’s stress testing of the banking sector indicates the industry is well-placed to withstand economic headwinds ahead: even when faced with severe adverse scenarios, our analysis indicates the banking industry would remain well above minimum capital requirements”.

Recent data from Roy Morgan also pointed to an increased satisfaction in Australian banks in May at 79.5%. This is up 1.1% compared to a year ago. However, this still trails mutual and foreign banks with satisfaction ratings of 89.2% and 85.5% respectively. 

An S&P report, as reported by Business Insider Australia, comments that Australian Banks are unlikely to see a return to their pre-COVID-era earnings.

S&P’s Sharad Jain said “For most banks, a steep rise in credit losses, and a sizeable drop in interest margins and fee income, will likely suppress earnings at least for the next year”. He also went on to say that “We forecast significant property price drops in Australia…”

Australian banks are particularly vulnerable to property price drops and have significantly increased provisions for losses.

My take

Australian economic conditions characterised by recession, low interest rates and high unemployment could point to a continued decline in ASX bank share prices. This is due to their being highly leveraged to the performance of the economy.

However, an investment in bank share prices presently could be rewarding over the long run as the economy recovers over a number of years. Additionally, Warren Buffett is known for investing in companies when other investors are fearful. Food for thought…

More reading

• Will the iron ore price crash by the end of 2020?
• ASX 200 sinks 1%: IAG cancels final dividend, tech shares tumble, IGO jumps
• Value stocks to rise on strong A$ and broker picks the cheapest ASX stocks to buy today
• Buy NAB and this ASX dividend share for income
• Which ASX 200 shares are the safest?

Motley Fool contributor Matthew Donald owns shares of National Australia Bank 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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The Tabcorp Holdings Limited (ASX: TAH) share price is bucking the downtrend after UBS urged investors to buy the underperformer.

Shares in the wagering and lottery business held flat at $3.62 in after lunch trade when the  S&P/ASX 200 Index (Index:^AXJO) tumbled 1.2%.

The Tabcorp share price also outperformed yesterday when it shot up around 5% after announcing the replacement of its chairman Paula Dwyer and upcoming departure of chief executive David Attenborough.

Tabcorp and friends lagging the ASX 200

However, this doesn’t change the fact that the stock is a woeful performer. Tabcorp shed more than 20% of its market value over the past year when the ASX 200 is down by 9%.

It’s been a tough time for most gambling related large cap stocks. The Crown Resorts Ltd (ASX: CWN) share price and Star Entertainment Group Ltd (ASX: SGR) share price lost around 30% each, while Jumbo Interactive Ltd (ASX: JIN) slumped 40%.

Punter survey provides ray of hope

But the tide could be turning for Tabcorp, so says UBS which reiterated its “buy” recommendation on the stock after it undertook a survey with 1,000 Australia punters.

“COVID-19 has had a positive impact for digital operators with almost 40% of respondents increasing their wagering spend,” reported the broker.

“While Sportsbet remains the clear market leader in brand awareness and customer experience, the use of Sportsbet as the primary betting app fell slightly to 28% (still #1 followed by Tabcorp at 19%, up 1% y/y).”

Better odds but poor payoff

Tabcorp’s aggressive promotions are helping it win market share with survey respondents citing this as the main reason for placing bets with Tabcorp for the first time.

But in some sense, this is a pyrrhic victory. Intense online competition is squeezing margins while the coronavirus restrictions is having a big negative impact on its gaming venues.

The silver lining is that retail cash betting only contributed 5%, or $40 million, to the group’s earnings before interest and tax (EBIT) in FY19. Surely the very modest income generating business can’t be seen as being a core asset to Tabcorp.

Divestment could trigger re-rating

UBS thinks now is the time for the group to consider divesting its retail division, particularly in light of management changes.

“This scenario would result in a variable contribution margin in line with the corporates; an initial decline in EBIT of over $100m but an outlook which is highly likely to see steady growth of 5-10% pa,” said UBS.

Earnings upgrade

The broker lifted its earnings per share forecast by 14% in FY21 and an additional 4% for each of the following two years.

This is to reflect a faster than expected recovery of retail closures and a stronger outlook for wagering.

“While the upcoming result will be negatively impacted by the closures of pubs and clubs and a difficult comp in lotteries, the next two to three years should see higher profit than what was experienced in FY19,” added UBS.

“Ultimately, we don’t believe that the pandemic will have a material impact on medium-term cash flow and underperformance represents an attractive entry point into the shares in our view.”

The broker’s 12-month price target on Tabcorp increased to $5 from $4.60 a share.

More reading

• Tabcorp share price up 5% as CEO and chair succession plan announced
• ASX 200 rises 0.3%, investors bet on Tabcorp
• Why Coca-Cola Amatil, Newcrest, QBE, & Tabcorp shares are pushing higher
• Why this leading fundie thinks ASX bank shares are undervalued
• Nanosonics and these ASX shares could be fantastic long term options

Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive Limited. The Motley Fool Australia has recommended Crown Resorts Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Investing in shares on the ASX could be great way to build your wealth for the long-term. You don’t need $10,000 to start investing. You can start with $1,000 (or even just $500).

There are lots of potential ideas, whether you go for individual ASX shares or a portfolio investment like an exchange-traded fund (ETF).

Here are three potential ideas to invest $1,000 into:

Share 1: BetaShares Global Quality Leaders ETF (ASX: QLTY)

ETFs are an easy way to invest into the share market. But you don’t want diversification just the sake of it, that may lower your potential returns for no real benefit. There are some ETFs that just invest in high quality businesses like the BetaShares Global Quality Leaders ETF.

It doesn’t invest in ASX shares, it invests in global leaders which rank highly on four quality metrics. Those metrics are: return on equity, debt to capital, cash flow generation ability and earnings stability. It’s these qualities that can combine to make good shareholder returns.

The quality theory has certainly been proven with the returns of the ETF. Since inception in November 2018, the ETF has returned an average of 19.75% per annum.

There are around 150 businesses within this ETF. Some of the biggest holdings are: Nvidia, Accenture, Intuitive Surgical, L’Oreal, Adobe, Apple, Cisco and Alphabet.

I think it would be possible for this ASX share to be your only investment, if you wanted it to be. It’s quality and diversified.

Share 2: Pushpay Holdings Ltd (ASX: PPH)

Pushpay is one of the most exciting ASX shares in my opinion. It’s a digital giving business that enables people to electronically donate. Its biggest customer base is the large and medium church sector. This provides Pushpay a somewhat consistent level of donations on an annual basis – indeed, the average donation is actually growing.

The ASX share has done a good job of offering all of the tools that its clients may need.

COVID-19 conditions are causing more people to donate electronically due to shutdowns and social distancing. The option of livestreaming church services is very useful.

The company steadily increased its guidance during its FY20. It’s now expecting FY21 earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) to at least double. That’s very strong guidance, in my opinion.

The company is aiming for US$1 billion of annual revenue from the US church sector. But American Christians are not the only people that Pushpay can aim to service in the future. There are plenty of other countries and indeed other philanthropic causes that Pushpay can become a market leader of. 

It’s trading at 33x FY21’s estimated earnings.

Share 3: Magellan Global Trust (ASX: MGG)

This is a listed investment trust (LIT) which only invests in high quality global shares.

I like investing in closed-end investment vehicles because you can sometimes buy them for a cheaper price than their assets. In other words, you can buy $1 of assets for $0.90, or whatever the discount is. Magellan Global Trust is trading at a 5% discount to its net assets value (NAV). That’s a solid discount, though occasionally it does trade at larger discounts.

Some of its current top positions include: Alibaba, Alphabet, Atmos Energy, Eversource Energy, Microsoft, Tencent, Facebook, Visa, Mastercard and Reckitt Benckiser.

I think that the Magellan Global Trust strategy of investing in both defensive and growth shares is a good mix. It should mean that it can outperform in most share market conditions.

Since inception in October 2017 it has returned 11.4% per annum after fees, outperforming the MSCI World Net Total Return Index by 1.2% per annum.

As a bonus, the ASX share aims for a 4% distribution yield. This is a solid starting yield that should grow as the NAV grows over time.

Foolish takeaway

I like all three of these ASX shares. It’s hard to pick a winner, I think all three can deliver strong returns over the long-term. If I had $3,000 I’d want to invest $1,000 in all three. At the current prices if I had to pick one I’d go for Pushpay for the potential growth of the next few years.

More reading

• 3 ASX growth shares that could be long term market beaters
• Got $1,000? You should buy 1 of these 6 ASX shares
• The smartest ASX shares to buy if you have $2,000
• My top 5 ASX growth shares to buy in FY 2021
• 3 five-star ASX shares to buy

Tristan Harrison owns shares of MAGLOBTRST UNITS. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia has recommended PUSHPAY FPO NZX. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The CSL Limited (ASX: CSL) share price could be in the spotlight as the Australian Government backs the biotech giant to produce COVID-19 vaccines. With new cases of the virus still growing in Australia, the need to access a vaccine has never been higher.

Here’s how CSL could save Australia from the COVID-19 pandemic as well as a look at whether you should invest.

Producing vaccines for the whole country

According to an article in yesterday’s Sydney Morning Herald, the federal government has backed biotech giant CSL to make enough vaccines for the entire Australian population. If a locally produced vaccine is not first to market, the government will have to broker licencing deals with international developers. CSL would then manufacture the vaccine at its Broadmeadows facility.  

Last month, CSL noted that the company had established a partnership with the Coalition for Epidemic Preparedness Innovations (CEPI) and the University of Queensland to fast-track the development of a COVID-19 vaccine.

In addition to manufacturing a potential vaccine, CSL has also been working on additional potential therapies by collecting plasma from recovered patients. In conjunction with other global biotech companies, CSL has launched a campaign in the United States encouraging recovered COVID-19 patients to donate plasma. In partnership with the Australian Red Cross Lifeblood Service, CSL is also collecting plasma in Australia from recovered COVID patients.

How has CSL performed?

In a trading update released in early April, CSL acknowledged that plasma collection volumes are expected to be impacted by the COVID-19 pandemic. In order to mitigate these challenges, the company’s plasma collection centres have been designated as ‘essential and critical’ services.

As a result of reduced volumes, there are fears that supply issues could result in increased production costs. Despite these fears, the company recently acquired global licence rights from uniQure to commercialise a gene therapy program for the treatment of haemophilia B.

Should you invest?

In my opinion, CSL is one of the highest quality companies listed on the ASX. The company has assured shareholders that it’s in a strong capital position with more than $1 billion in available liquidity. CSL has also reaffirmed its profit guidance for FY20.

Despite the optimism of possibly manufacturing a vaccine, the CSL share price has remained relatively flat for 2020. This muted price action could reflect portfolio rotation and concerns about a decline in plasma collection volumes.

Personally, I think that the CSL share price won’t be suppressed for much longer, particularly if there continues to be positive news about a potential vaccine. I think a prudent strategy would be to wait until August when CSL reports its full-year results to get a better picture of where the company stands.

More reading

• Value stocks to rise on strong A$ and broker picks the cheapest ASX stocks to buy today
• Why weakness in the CSL share price could be a buying opportunity
• 5 things to watch on the ASX 200 on Friday
• What to do if your ASX shares hit a record high
• How you can take advantage of the surging Australian dollar

Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia 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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