Unless you’ve just emerged from hibernation — in which case, good morning! — you’ll know that most retailers are struggling, to say the least…

Here’s an excerpt from an article in The New Daily, titled ‘Retail apocalypse: Bricks-and-mortar stores are disappearing’:

Retailers across Australia are shutting up shop, as rents skyrocket and time-poor, dollar-conscious consumers opt for the internet over their local high street.

Over the next year, 1.3 per cent of consumer goods retailers are expected to close as physical stores struggle to compete with the low prices, vast range and ease of online shopping.

Meanwhile, once-mighty department stores are in the midst of a mass extinction, with only one of the two major players, Myer and David Jones, expected to survive.

Skyrocketing rents aside, you’d be forgiven for thinking this was penned after the onset of the COVID-19 lockdowns and social distancing.

Not so.

Pandemic hits ASX retail shares when they’re down

In fact, the article was published on 21 August 2019. That’s almost 7 months before the coronavirus saw many physical stores in Australia forced to shut their doors or sharply limit the number of customers allowed inside at any given time.

All the negative ramifications associated with controlling the pandemic hit these retailers when they were already wobbly.

Over in the United States, big name brands including JCPenney and Neiman Marcus are just some of the brick-and-mortar focused retailers that have already filed for bankruptcy since the onset of the global shutdowns.

Here in Australia, swimwear brand Seafolly, with 44 stores across the country, entered voluntary administration at the end of June, citing COVID-19 as the final straw. And with the renewed lockdowns in Victoria and possible return to more stringent distancing measures in New South Wales and other states, even some of the most successful traditional retailers are struggling.

Harvey Norman Holdings Limited (ASX: HVN), for example, has seen its share price drop 13% year-to-date.

Myer Holdings Ltd (ASX: MYR) has fared far worse, with Myer shares falling 58.33% so far in 2020.

But not every retailer is feeling the pain.

No social distancing required

According to data from the Bank of America, US Department of Commerce and ShawSpring Research, e-commerce in the US grew from 16% to reach 27% of total retail sales in March and April of 2020.

That’s almost a doubling of its market share in only 2 months. And it’s seen stocks like the US$1.5 trillion (AU$2.1 trillion) Amazon.com, Inc. (NASDAQ: AMZN) gain an astounding 58.1% since 2 January.

In Australia, the surge in online shopping has been a similar boon for a select group of retailers with strong e-commerce platforms. Here are 2 I think you should consider adding to your own portfolio.

First, there’s Carsales.Com Ltd (ASX: CAR). The online car retailer‘s share price plunged 45.2% from 12 February to 23 March before making a sharp recovery. It’s gained 78.6% since that low. Year-to-date, the Carsales share price is up 11.4%. And this comes during Australia’s first recession in 29 years!

The fact of the matter is most Australians need cars. Even if you live in one of the major cities, you need a car to get outside the sprawl. And the impact of COVID-19 on people’s comfort using public transportation is likely to last long beyond the virus itself.

Those predicting the death of the car (be it electric, petrol, or what have you) will almost certainly be proven wrong. Even the trendy concept of ‘shared cars’ is unlikely to bounce back quickly. In a world rocked by the novel coronavirus and gripped by fears of future pandemics, it’s likely many drivers will stick to the comfort of their own vehicle.

Second, we have Kogan.com Ltd (ASX: KGN). The Kogan share price is up a whopping 119.4% in 2020.

Yes, that means it would have been great to get into the stock at the beginning of the year. But if you’re playing the long game, which I recommend, then I think the Kogan share price could have a lot more growth ahead. Even under some of the rosier scenarios, it’s likely Australians will be dealing with some form of social distancing or another for at least another 12 to 18 months. (Don’t shoot the messenger!)

And people are creatures of habit. When all the virus-related restrictions are finally lifted, and they will be eventually, many consumers will keep buying most of their stuff online.

The e-commerce trend is already well established. And it’s only likely to grow from here.

More reading

• 3 of the best ASX tech shares to buy and hold until 2030
• Latest ASX entrant mixes BNPL with eCommerce
• All Technology Index celebrates 6 months with stunning outperformance
• Is now the time to sell your ASX shares?
• Where to invest $100,000 into ASX shares

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia has recommended Amazon, carsales.com Limited, and Kogan.com 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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The S&P/ASX 50 index may not be as well-known as the S&P/ASX 200 Index (ASX: XJO), but it is arguably just as important.

This illustrious index is home to 50 of the largest companies on the Australian share market. These include household names and companies that are true blue chip shares.

While not all shares on the index are necessarily in the buy zone, I think there are a few that could be.

Here’s why I would buy these two outstanding ASX 50 shares:

CSL Limited (ASX: CSL)

My favourite ASX 50 share is biotherapeutics giant CSL. I think it is one of the best options on the index due to its high quality CSL Behring and Seqirus businesses. I believe these businesses are well-placed to deliver strong sales and earnings growth over the next decade.

This is thanks to their leading products and lucrative research and development (R&D) pipelines. In respect to the latter, in FY 2019 CSL invested US$832 million in its R&D activities and a similar level of investment is expected this year. I believe these investments will allow the company to maintain its market-leading position and underpin solid profit growth for the foreseeable future.

Telstra Corporation Ltd (ASX: TLS)

Another ASX 50 share to consider buying is this telco giant. I’ve been very impressed with the progress of Telstra’s T22 strategy. This game-changing strategy is stripping out costs and simplifying its business, making Telstra a leaner and more nimble business.

In addition to this, the NBN headwind is starting to ease and peak pain from the rollout is just around the corner. When this is reached, the drag on its earnings will subside and earnings growth will become a lot more achievable. Other positives that look set to be supportive of growth in the coming years are the arrival of 5G internet and rational industry competition. In light of this, its lucrative infrastructure assets, and its attractive valuation, I think now would be an opportune time to invest.

More reading

• Nanosonics and 2 other ASX healthcare shares to buy
• Are ASX tech shares the only way to protect your portfolio against the coronavirus?
• The TPG share price has fallen 9% in a month. Time to buy?
• Afterpay and Immuron were among the most traded shares on the ASX last week
• Pushpay and 1 other 5-star ASX share to buy right now

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 owns shares of and has recommended Telstra 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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Many of Australia’s top brokers have been busy adjusting their financial models again, leading to the release of a large number of broker notes this week.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

Corporate Travel Management Ltd (ASX: CTD)

According to a note out of Ord Minnett, its analysts have upgraded this travel company’s shares to a buy rating with an improved price target of $12.97. The broker believes the company has ample liquidity to ride out the pandemic. Which is something many of its competitors do not have. As a result, it appears to believe it could come out of the crisis in a stronger position. While I do think that Ord Minnett makes some great points, I’d prefer to wait for the crisis to pass before considering an investment in travel shares.

Elders Ltd (ASX: ELD)

Analysts at Goldman Sachs have initiated coverage on this agribusiness company’s shares with a conviction buy rating and $13.65 price target. According to the note, the broker is a fan of Elder’s 8-point plan for FY 2021 to FY 2023. This plan aims to win market share, expand its margins, and strengthen its core operations. Goldman expects this to result in a 16% compound annual growth rate for its earnings per share from FY 2019 through to FY 2022. I agree with the broker and think Elders could be worth a closer look.

Temple & Webster Group Ltd (ASX: TPW)

A note out of the Macquarie equities desk reveals that its analysts have retained their outperform rating and lifted the price target on this online homewares retailer’s shares to $8.80. This follows the release of a full year result which was in line with its expectations earlier this week. Macquarie appears confident on the year ahead and notes that its strong balance sheet gives it opportunities to accelerate its growth with acquisitions. I think Macquarie is spot on and Temple & Webster would be worth considering.

More reading

• ASX 200 down 0.4%, Credit Corp and Temple & Webster impress
• Why Credit Corp, Nufarm, Regis, & Temple & Webster shares are jumping higher
• Can the Marley Spoon share price climb even higher?
• Temple & Webster share price hits record high on stellar FY 2020 growth
• Which ASX furniture share has the edge?

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 Temple & Webster Group Ltd. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. The Motley Fool Australia has recommended Elders Limited and Temple & Webster 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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Both Coles Group Ltd (ASX: COL) shares and Woolworths Group Ltd (ASX: WOW) shares have been something of a beacon of stability in 2020 so far. With the coronavirus pandemic upending the world this year, it has been a strange and often scary period in which to invest in ASX shares.

Both Coles and Woolworths are consumer staples giants, with customers flocking to the supermarkets like never before in the first few months of the pandemic. This has lead to ASX investors treating both supermarket chains like islands of capital stability in an ocean of uncertainty.

And fair enough too. Both Coles and Woolworths are among the ever-shrinking pool of ASX 50 companies that are unlikely to cut their dividend payments to shareholders in 2020 and beyond for one. Their defensive, consumer staples nature for another is almost certain to keep the companies healthy and profitable under any future circumstances, whatever they may be. We all need to eat and buy household essentials after all. 

But which of these 2 Australian icons is the better buy today? Well, that’s what we’ll be trying to answer.

An age-old question: Coles or Woolies?

Unlike Coles or Woolies shoppers, who might tend to choose whichever supermarket is closest, we as investors can take a holistic view of these companies. So, let’s start with some statistics (always fun).

On market capitalisation, Woolworths is the biggest player in the game – $49.27 billion on current prices, compared to Coles’ $24.24 billion. This does reflect Woolworths’ ownership of the Big W discount chain, as well as the ALH Hotels Group and the Endeavour Drinks business (which includes the bottle shop chains Dan Murphy’s and BWS). In contrast, Coles is more of a one-trick pony, owning just the Coles network of stores, as well as some bottle shop chains of its own (including First Choice Liquor and Liquorland).

But Woolworths still has a larger presence in the overall grocery market. According to a recent Roy Morgan report, Woolworths maintained a 32.9% share of the market over the course of last year, which compares favourably with the 26.6% share of the grocery market Coles commanded. According to the report, this was a 0.7% drop for Woolworths over the previous year and a 1.4% drop for Coles.

What about the Coles and Woolworths share prices?

At the time of writing, Woolworths is trading for $39.01 and Coles for $18.17. Incidentally, the latter is just a touch off Coles’ all-time high of $18.32 that the company recently reset.

These share prices give Woolworths a price-to-earnings (P/E) ratio of 19.42 and a trailing dividend yield of 2.64%. In contrast, Coles is currently trading on a P/E ratio of 20.46 and offers a trailing dividend yield of 2.31%.

So here we can see the market is pricing Coles at a slight premium to Woolies today.

Foolish takeaway

I would say neither Coles nor Woolies is a screaming bargain today. Investors have clearly kept up both companies’ share prices, probably to reflect a ‘stability’ premium they now offer in this uncertain world.

If I had to choose one company, I think I would go with Woolworths. It’s currently offering a greater market share than Coles, has a cheaper price (relative to earnings) and a higher starting dividend yield. It’s also a more diversified company. As such, I think Woolies wins the supermarket wars, for today at least.

More reading

• CBA and 2 more ASX shares to buy and hold forever
• Are ASX tech shares the only way to protect your portfolio against the coronavirus?
• What would deflation mean for your ASX shares?
• Can the Marley Spoon share price climb even higher?
• Why I would buy Coles and these ASX dividend shares today

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET 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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Jumbo Interactive Ltd (ASX: JIN) is an Australian-based company that resells OzLotto and Powerball lottery tickets online. In 2019, Jumbo Interactive was a market darling, with the company’s share price rallying more than 114% for the year.

However, the same buying enthusiasm has not been seen in recent times. Since hitting a low of $6.99 in mid-March, the Jumbo Interactive share price has only managed to bounce 54% to $10.76 at the time of writing. Although this is not a small move, it dulls in comparison to the share price recovery of other tech shares on the ASX.

So why has the Jumbo share price failed to bounce to pre-pandemic highs and is now the time to buy shares in the company?

How has Jumbo Interactive handled the pandemic?

In early April, Jumbo Interactive provided the market with an update on the company’s performance during the COVID-19 pandemic. The company assured investors that operating conditions have remained consistent and noted that Jumbo Interactive is well positioned for an increase in online lottery demand. In addition, the company noted its healthy financial position, citing no debt and boasting $65.5 million cash on hand.

Why are ASX investors showing little interest?

The COVID-19 pandemic has seen the share price of many online retailers surge as consumers move from shopping in physical stores to online channels. Given the migration online, Jumbo Interactive is well positioned to capitalise on these structural trends with approximately 25% of Australian lottery sales coming from online.

Despite the optimism and potential, investors have remained reserved as indicated by the performance of the Jumbo Interactive share price of late. Firstly, from a fundamentals point of view, many investors may be turned off by the company’s valuation, with Jumbo Interactive currently trading on a forward price-to-earnings (P/E) ratio of 27 times.

Tabcorp Holdings Limited (ASX: TAH) also has an 11% ownership of Jumbo Interactive, with the two companies recently completing a new reseller agreement for the next 10 years, until July 2030. Under the agreement, Jumbo Interactive will pay an upfront extension fee of $15 million to Tabcorp, in recognition of the fundamental value of its lottery licenses to Jumbo. The agreement has not attracted much interest from investors, who may perceive that the deal favours Tabcorp more than Jumbo Interactive.

Should you buy at today’s Jumbo Interactive share price?

Jumbo Interactive was actually removed from the S&P/ASX 200 Index (INDEXASX: XJO) in the June rebalance, indicating that many institutions are finding the company less attractive at the moment. However, despite these factors I actually think that Jumbo Interactive has great potential.

With the pandemic changing consumer behaviour and pushing many people online, I think that Jumbo Interactive is well poised to benefit from these structural changes. However, with a weaker economy it is not known how lotteries will perform, therefore I’m happy to wait on the side lines until the economic tide starts to turn.

More reading

• 2 hidden ASX shares to benefit from coronavirus
• Top brokers name 3 ASX shares to buy next week
• Why UBS thinks now is the time to be buying this underperforming ASX 200 stock
• Tabcorp share price up 5% as CEO and chair succession plan announced
• ASX 200 rises 0.3%, investors bet on Tabcorp

Nikhil Gangaram 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. 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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In early afternoon trade the S&P/ASX 200 Index (ASX: XJO) has given back its morning gains and is dropping lower. At the time of writing the benchmark index is down 0.2% to 6,006.8 points.

Four shares falling more than most today are listed below. Here’s why they are dropping lower:

The GUD Holdings Limited (ASX: GUD) share price is down 3.5% to $11.33. This decline appears to have been caused by a broker note out of Citi this morning. According to the note, the broker has downgraded the products company’s shares to a neutral rating with a slightly reduced price target of $12.75. The broker made the move on valuation grounds after not seeing enough in its FY 2020 result to warrant the premium its shares trade at.

The IGO Ltd (ASX: IGO) share price has crashed 13% lower to $4.81 after its guidance for FY 2020 fell short of expectations. Management expects its revenue to be $892.4 million and its underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to come in at $459.6 million. The latter is well short of Macquarie’s estimate of $530 million.

The Nitro Software Ltd (ASX: NTO) share price is down 8% to $1.89. This follows the release of the software company’s second quarter result. For the six months to 30 June 2020, Nitro’s cash receipts from customers were $19.1 million. This represents a 7% increase compared to the prior corresponding period. Although this has met its pre-COVID forecasts, it appears to have fallen short of the market’s expectations.

The St Barbara Ltd (ASX: SBM) share price has fallen 6.5% to $3.55. As well as being weighed down by general weakness in the gold mining industry, the release of its fourth quarter update appears to have underwhelmed. Although St Barbara achieved its production and cost guidance for FY 2020, its outlook for the year ahead may have been softer than hoped. The gold miner is expecting production and costs to remain largely the same in FY 2021.

More reading

• ASX 200 flat: Big four banks higher, St Barbara and IGO sinks on Q4 updates
• Why the IGO share price is the worst performer on the ASX 200 today
• St Barbara share price tumbles lower on Q4 update and FY 2021 guidance
• GUD Holdings share price storms higher on FY 2020 result
• ASX 200 rises 0.3%, Perpetual reveals large US acquisition

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Nitro Software 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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