The BHP Group Ltd (ASX: BHP) share price will be on watch on Tuesday after the release of its fourth quarter and full year production update.

How did BHP perform?

BHP has just completed a solid 12 months with production guidance met for iron ore, metallurgical coal, and operated copper and energy coal assets.

Petroleum production fell a touch short of guidance due to lower than expected demand due to the impact of COVID-19. Whereas production at Antamina and Cerrejon was lower than guidance due to the temporary suspension of operations due to the pandemic. Both operations are now ramping back up.

Here’s a summary of its production for FY 2020 and expectations for next year:

Petroleum production was 109 MMboe, down 10% on the prior corresponding period. This was despite a strong finish to the year thanks to increased production at Bass Strait due to higher seasonal demand. In FY 2021, BHP is forecasting production of 95 to 102 MMboe. This represents a 6% to 13% decline.

Copper production was up 2% in FY 2020 to 1,724 kt. This was despite lower production in the fourth quarter due to the aforementioned temporary operating suspensions. Copper production is expected to decline by 13% to 21% in FY 2021 to 1,480 kt to 1,645 kt. This is due largely to a sharp reduction at the key Escondida operation.

Iron ore production was the highlight of FY 2020 with 248 Mt. This was up 4% on the prior corresponding period thanks to a strong fourth quarter performance at Mining Area C and Yandi. Pleasingly, production costs are expected to be in line with guidance at WAIO and BHP has benefited greatly from a 16% increase in average price realised to US$77.36 a tonne. In FY 2021 production is forecast to be 244 Mt to 253 Mt. This will be a 2% decline to a 2% increase.

Metallurgical Coal production came in a 41 Mt in FY 2020, down 3% year on year. A very strong performance in the fourth quarter prevented a much worse result. Looking ahead, in FY 2021 production is expected to be in the region of 40 Mt to 44 Mt. The low end represents a 3% decline and the high end represents a 7% gain.

Elsewhere, Energy Coal production was down 16% to 23 Mt and Nickel production fell 8% to 80 kt. The latter is expected to rebound with production growth of 6% to 19% in FY 2021. Whereas Energy Coal production guidance for the new financial year ranges from a 5% decline to 4% growth.

What else did BHP announce?

The Big Australian also gave investors an idea of what its finances will look like when it reports its full year results next month.

Management advised that its unit costs are expected to be in line with guidance for its WAIO, Queensland Coal, and NSWEC operations. Whereas Petroleum and Escondida costs are expected to slightly better than guidance.

There will be an increase in closure and rehabilitation provisions for closed mines of US$600 million to US$700 million and impairments of US$450 million to US$500 million to property, plant and equipment at Cerro Colorado.

It also has forecast costs directly attributable to COVID-19 of US$100 million to US$150 million after tax.

Nevertheless, BHP’s net debt is expected to be at the lower end of its target range of US$12 billion to US$17 billion.

BHP Chief Executive Officer, Mike Henry, commented: “Our diversified portfolio and high quality assets, together with our strong balance sheet, make us resilient to the ongoing uncertainty in the markets for our commodities. We expect to continue to generate solid cash flow through the cycle and we remain confident in the outlook for demand for our products over the medium to long-term.”

“We continue to focus on becoming even safer, delivering exceptional operational performance, maintaining disciplined capital allocation, creating and securing more options in future facing commodities and building social value. We have learned new ways of working, both internally and with others, through the COVID-19 pandemic. We will seek to embed these in a way that helps to reinforce these priorities,” he concluded.

More reading

• Why you should buy ANZ and these ASX dividend shares for income
• Why the South32 share price is falling today
• 3 ASX shares to leverage the booming iron ore price
• ASX 200 Weekly Wrap: Blue chip shares pull ASX 200 back over 6,000 points
• Why I would buy a2 Milk and these fantastic ASX 50 shares

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.

The post BHP share price on watch after robust FY 2020 update appeared first on Motley Fool Australia.

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If you’re a fan of a particular brand or retail outlet, it can pay to look into the company behind it. Many of the products and services we consume are produced by companies trading on the ASX. As our consumption habits shift, so do the fortunes of the companies catering to them. By monitoring your own consumption you can gain insights into long term trends that can influence the way ASX shares perform.

Here we take a look at 7 ASX shares you probably already buy from. 

Wesfarmers Ltd (ASX: WES) 

Wesfarmers is behind a stable of retail brands including Bunnings, Officeworks, Kmart, and Target. The Wesfarmers share price has recovered strongly from the March downturn and it is now trading on par with February levels, i.e. near record highs.

Bunnings and Officeworks both saw a surge in sales as a result of lockdowns and the move to remote working. Consumers spent time and money setting up home offices and getting stuck into DIY. As a result, Officeworks’ sales grew 27.8% in the second half and Bunnings’ grew 19.2%. 

Coles Group Ltd (ASX: COL)

Spun off from Wesfamers in 2018, Coles is behind 2,500 retail outlets nationally. This includes 800 supermarkets, 900 liquor stores, and more than 700 fuel and convenience retailers. The Coles share price remained relatively robust in the March correction, losing around 17% from peak to trough. Coles shares have now surpassed pre-Covid-19 levels and are trading near all-time highs.

Coles saw significant sales growth in the third quarter as the result of stockpiling and panic buying. Supermarkets sales grew 13.8%, with overall sales revenue up 12.9% to $9.2 billion. 

Woolworths Group Ltd (ASX: WOW) 

If you don’t shop at Coles, there’s a strong chance you shop at Woolworths, Australia’s other major supermarket chain. Woolworths operates some 995 supermarkets across Australia. Including its liquor and Big W brands, Woolworths is behind some 3,000 stores across the country. The Woolworths share price fell 20% in the March dip, but has since recovered somewhat. It is still, however, trading down 10% from its February high.

Woolworths experienced a similar rush in sales to Coles in the third quarter. The Australian food business saw growth of 11.3%, Big W grew sales by 9.5%, and liquor also grew 9.5%. The Hotels business saw a 12.9% drop in sales with the closure of venues. 

JB Hi-Fi Limited (ASX: JBH)

JB Hi-Fi is Australia’s largest home entertainment retailer with almost 200 stores throughout Australia and New Zealand. JB Hi-Fi acquired The Good Guys in 2016, a home appliances retailer with a network of over 100 stores. The JB Hi-Fi share price has recovered strongly from the March downturn and is now just 3% down from its February peak.

JB Hi-Fi also saw a surge in sales in the third quarter as consumers set up home offices and searched for in-home entertainment. Australian JB Hi-Fi sales were up 20% in the half year to June. The Good Guys sales were up 23.5%. JB Hi-Fi New Zealand sales fell 19.3% as a result of closures during lockdowns. 

Kogan.com Ltd (ASX: KGN)

Kogan is an online retailer selling a wide range of products from consumer electronics, to appliances, homewares, hardware, and toys. The company sells its own stock and provides for third party sellers via Kogan Marketplace. The company also owns and operates a suite of private label brands. The Kogan share price has surged since its March low of $4.16 with shares currently trading at $17.34.

The company grew gross sales by more than 100% in April and May with gross profit growing by more than 103% over the same period. Kogan is benefitting from the ongoing shift to ecommerce, which has been hastened by the onset of coronavirus. 

Premier Investments Limited (ASX: PMV)

Premier Investments is the company behind popular brands Peter Alexander, Smiggle, Portmans, Just Jeans, Jay Jays, Jacque E, and Dotti. The company also holds a 28% stake in Breville Group Limited (ASX: BRG). The Premier Investments share price is up 82% from its March low but remains 23% below its February high.

Premier Investments closed stores during the first lockdown and took the hard line with landlords on rental payments. Pleasingly, during temporary store closures the retailer’s online sales surged. Online sales for Peter Alexander during the store closure period were up 295%. Incredibly, during the week ended 2 May, the brand’s online sales alone were up 18% on the previous years total sales across online and the 122 store network. 

Adairs Ltd (ASX: ADH)

Adairs is an omni-channel home furnishings retailer operating in Australia and New Zealand. Its product range includes bed linen, towels, homewares, soft and children’s furnishings, and some furniture. The Adairs share price has recovered strongly from the March downturn and is now close to reaching its pre-Covid-19 peak.

The retailer was forced to close stores during the first lockdown, but its online sales surged. Customers spending more time at home took the opportunity to upgrade home furnishings. Adairs reported a 92.6% increase in online sales in the 24 weeks to 14 June 2020. This led to a 27.4% increase in total sales for the period. Online furniture subsidiary Mocka saw sales growth of 52.1% over the same period. 

Foolish takeaway

Observing your own spending patterns can help you identify trends that will impact ASX shares in both the short and long term. If you’re a believer in the products or services produced by a certain company, you may want to consider investing. That way, you could stand to earn a portion of the money you spend on its products in the form of dividends.  

More reading

• Why you should buy ANZ and these ASX dividend shares for income
• One thing you should be doing ahead of the ASX reporting season
• The Coles share price is flying under the radar
• Why these 9 ASX shares have doubled in value in the past year
• Coles and 2 more ASX 200 shares to watch this 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 Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET, Wesfarmers Limited, and Woolworths Limited. The Motley Fool Australia has recommended 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.

The post You probably shop at these 7 ASX retailers. Should you buy shares in them too? appeared first on Motley Fool Australia.

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The Super Retail Group Ltd (ASX: SUL) share price could be a bargain right now, in my view.

Shares in the Aussie retailer fell 4.8% lower yesterday to $7.80 per share. It was far from the only ASX 200 share falling lower as the S&P/ASX 200 Index (ASX: XJO) closed down 0.5% at 6,001.60 points.

So, after a big share price fall, is Super Retail worth a look right now?

Why the Super Retail share price fell lower

I think the main cause for concern is the rising coronavirus cases across Australia. The pandemic continues to spread in Victoria and somewhat in New South Wales as well.

That could spell trouble for the Aussie economy and lead to tightening restrictions. In turn, a reduction in foot traffic and potentially discretionary income could hit the retail sector hard.

These fears saw investors head for safety on Monday, which pushed the Super Retail share price lower.

Why the Aussie retailer could be a strong buy

There’s no denying there could be some impact on retailers from tightening restrictions a second time round. However, that was also the case in March when the ASX 200 entered a bear market.

But Super Retail has been relatively resilient in the face of these challenges. In fact, after bottoming out at $2.99 per share in March, the Super Retail share price has rocketed 160% higher since then to $7.80 per share. That’s on the back of strong earnings from Super Retail’s online channels, in particular a surge in sales from its Supercheap Auto and Rebel Sport brands.

I don’t see any reason why that trend can’t continue if we see another lockdown. Yes, there will be some customers who have already bought what they needed. But a targeted strategy towards boosting online sales could pay dividends for the Super Retail share price and the group’s investors.

On top of that, shares in the Aussie retailer are now down 25.3% from their 52-week high. That could mean that now is the chance to snap up a bargain.

Leading fundie Paul Xiradis from fund manager Ausbil holds a similar view. According to a recent client memo from Mr Xiradis, Ausbil’s base case for Super Retail is for a quick recovery.

That represents a bullish scenario that could see the Super Retail share price and others like JB Hi-Fi Limited (ASX: JBH) outperform in 2020.

More reading

• Down 5% in 1 day: Are Bendigo and Adelaide Bank shares a buy?
• 3 investing strategies to profit from a second ASX share market crash in 2020
• 5 things to watch on the ASX 200 on Tuesday
• Where to invest $5,000 into ASX shares right now
• Market close: ASX 200 falls 0.5%

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Super Retail Group 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.

The post Is the Super Retail share price cheap today? appeared first on Motley Fool Australia.

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It wasn’t a good start to the week for Bendigo and Adelaide Bank Ltd (ASX: BEN) shares.

The company’s share price slumped 5.17% as ASX bank shares were hammered in Monday’s trade. The Aussie banks led the S&P/ASX 200 Index (ASX: XJO) 0.5% lower to close at 6,001.60 points.

But is the Aussie bank cheap after yesterday’s slump or does it have further to fall in 2020?

Why Bendigo and Adelaide Bank shares fell yesterday

The big factor in Monday’s trading sessions was, you guessed it, coronavirus concerns.

An increase in cases across Victoria and New South Wales once again spooked investors. There are increasing talks of tighter restrictions that could hurt Australia’s economic rebound.

The banks are exposed to a deteriorating economy. This could be through more home, personal and business loan defaults and lower earnings.

That sent investors heading for the exits with Bendigo and Adelaide Bank shares closing down 5.17% on Monday.

Is the ASX bank a cheap buy?

I think the best way to evaluate Bendigo and Adelaide Bank shares is by benchmarking them against their peers.

Bendigo is the largest Australian retail bank outside of the big four. That means banks like Commonwealth Bank of Australia (ASX: CBA) or National Australia Bank Ltd (ASX: NAB) might be a reasonable benchmark.

Commonwealth Bank shares trade at a price to earnings (P/E) ratio of 13.1 while NAB shares trade at 16.0. However, Bendigo and Adelaide Bank shares have them both beaten with a P/E of just 11.5.

That could mean that the Aussie bank is a good relative buy versus its peers. Unfortunately for us keen-eyed Fools, it’s not that simple.

For one, P/E ratios and dividend yields are a bit unreliable right now. No one knows just how different the next period’s earnings will be from the last period due to the pandemic.

It’s also arguable that Bendigo is in a worse position compared to the big four. Bendigo is a smaller bank and has heavy regional exposure. That could mean more defaults in hard-hit regions and difficulty to compete on pricing with the majors.

On the other hand, Bendigo is looking towards the long-term. The Aussie bank owns neobank Up which leaves it well-placed for any potential shift in the banking sector.

Foolish takeaway

ASX bank shares like Bendigo and Adelaide Bank are hard to value right now. I think it’s too uncertain to be buying in for a marginally lower P/E ratio under the current conditions.

Personally, I would be waiting until the bank’s August earnings result for a better idea of whether to buy or not.

More reading

• Is the Super Retail share price cheap today?
• 3 investing strategies to profit from a second ASX share market crash in 2020
• 5 things to watch on the ASX 200 on Tuesday
• Where to invest $5,000 into ASX shares right now
• Market close: ASX 200 falls 0.5%

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Down 5% in 1 day: Are Bendigo and Adelaide Bank shares a buy? appeared first on Motley Fool Australia.

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The 2020 ASX share market crash has caused a lot of pain for many S&P/ASX 200 Index (ASX: XJO) investors. In the short run, further declines could happen from a second wave of coronavirus and its potential impact on the world economy.

Here are 3 investing strategies to profit from a potential second ASX share market crash in 2020:

Hold alternative assets

ASX 200 shares are by no means the only asset class you should hold in a diversified portfolio during a share market crash. Two “safer” options are gold and cash. 

Investors looking for exposure to gold could consider miners like Northern Star Resources Ltd (ASX: NST), physical gold, or an ETF like Perth Mint Gold (ASX: PMGOLD).

Perth Mint Gold has a very low management fee of just 0.15%. Another great feature is that unlike many gold exchange traded products, PMGOLD can be physically redeemed for any of The Perth Mint’s bullion coins and bars.

If you’re particularly bullish on the safe-haven metal during a 2020 share market crash, investing in a gold miner should provide you with additional leverage to the gold price, meaning that you could have greater upside potential. However, with greater potential comes greater risk.

Cash is a great asset to hold for both optionality and peace of mind. More risk averse investors should hold some cash to give them the confidence to hold their growth stocks through any stock market turbulence. More aggressive investors can use cash to “buy the dip”, which I explain in more detail below.

Buy a bear fund before the crash

Shorting stocks or the share market is my least favourite option to profit from a pull back. Why? Because it requires you to successfully time the market. Maybe you can, but I know that I certainly can’t do that.

With that being said, if you have a sound understanding of economics or investor sentiment, this strategy can make you money. The easiest way to take a position like this is through an ETF like BetaShares Australian Equities Bear Hedge Fund (ASX: BEAR).

Buy quality ASX 200 shares during the crash

You’ve heard my least favourite way to invest during a share market crash, now here is my favourite. Buy ASX 200 shares! If you remain fully invested, I would recommend dollar cost averaging a portion of each paycheck into the market. If you have cash waiting to be deployed, I still think that you should stage it into shares to avoid missing out on depressed prices.

In my view, you should look for high quality, profitable companies with strong balance sheets, and growth companies that have seen their lofty valuations cut more than their fundamental business. Perfect examples of these are CSL Limited (ASX: CSL) and ETFS FANG+ ETF (ASX: FANG).

Foolish bottom line

Over the long-term, high quality ASX 200 shares should continue to be a life changing asset to own. Potential share market crash or not, continuing to invest in the right businesses will stand you and your family in good stead.

More reading

• Is the Super Retail share price cheap today?
• Down 5% in 1 day: Are Bendigo and Adelaide Bank shares a buy?
• 5 things to watch on the ASX 200 on Tuesday
• Where to invest $5,000 into ASX shares right now
• Market close: ASX 200 falls 0.5%

Lloyd Prout has no position in any of the stocks mentioned and expresses his own opinions. 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.

The post 3 investing strategies to profit from a second ASX share market crash in 2020 appeared first on Motley Fool Australia.

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I believe that ASX dividend shares are great options for income.

The official RBA interest rate is now just 0.25%. You won’t get much interest from a bank account. I’d want to make my money work harder than that, so I’d go for ASX shares that will be good dividend picks.

However, I don’t think that most ASX blue chips are the answer. We have seen dividend cuts from shares like National Australia Bank Ltd (ASX: NAB) and Sydney Airport Holdings Pty Ltd (ASX: SYD) during this COVID-19 era.

I think these ASX dividend shares could be much better ideas for long-term income:

Future Generation Investment Company Ltd (ASX: FGX)

Future Generation is a listed investment company (LIC). The job of a LIC is to invest in other assets on your behalf. LICs are good options to be ASX dividend shares because they can turn investment returns (including capital growth) into a consistent dividend for their shareholders.

This LIC is quite different to most other LICs on the ASX. It doesn’t charge any management fees or performance fees. Instead, it donates 1% of its net assets each year to youth charities. Future Generation invests in the funds of fund managers who invest in ASX shares. These fund managers don’t charge any fees so that Future Generation can make those donations to youth charities.

Its investment returns are compelling. At the end of June 2020 it reported that over FY20 its gross portfolio performance showed a decline of just 1.2%, outperforming the S&P/ASX All Ordinaries Accumulation Index by 6% (which fell 7.2%).

At the current Future Generation share price it offers a grossed-up dividend yield of 7%. The share price is trading at an 11.5% discount to the June 2020 net tangible assets (NTA) per share. That means you’re buying $1 of assets for less than $0.90.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Patts has one of the best ASX share dividend records around. It has grown its dividend every year since 2000. It has actually been listed since 1903 and it has paid a dividend every single year including through world wars, recessions, the Spanish Flu and any other disaster you can name over the past century.

It’s an investment house that’s invested in a variety of listed and unlisted businesses. Some of its main ASX share investments are: TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), Milton Corporation Limited (ASX: MLT), Bki Investment Co Ltd (ASX: BKI), Palla Pharma Ltd (ASX: PAL) and Clover Corporation Limited (ASX: CLV).

Some of its unlisted assets include swimming schools, agriculture, luxury retirement living and soon it will be involved in regional data centres.

Soul Patts has defensive assets which are well diversified. The investment conglomerate continues to diversify its portfolio and it has a strong focus on cashflow. Each year it tells investors what its regular operating cashflows are – this is the investment income minus operating expenses (and a few other small items). Soul Patts funds its dividend from its annual net cashflow. In FY19 it only paid out 80% of its net cashflow.

At the current Soul Patts share price it offers a grossed-up dividend yield of 4.2%.

APA Group (ASX: APA)

I think APA is a high-quality ASX dividend share. It has increased its distribution every year for the past decade and a half.

The business owns a vast network of 15,000km of natural gas pipelines around Australia with a presence in every mainland state and the Northern Territory. It also owns or has interests in gas storage facilities, gas-fired power stations and renewable energy generation (wind and solar farms). APA owns, or manages and operates, a portfolio of assets worth more than $21 billion and delivers half the nation’s natural gas usage.

It generates a reliable source of cashflow from its national customer base. This allows APA to pay a dependable distribution to shareholders each year. That’s why it was able to stick to its annual FY20 guidance of 50 cents per unit.

Using the FY20 annual distribution, at the current APA share price, it’s trading with a 4.5% distribution yield. I think it’s very likely that FY21 will see another increase for investors.

Foolish takeaway

I really like all three of these ASX dividend shares. At the current prices I think Future Generation looks like the best value, but Soul Patts has a great dividend history and it’s the one that I’d rely on for my investment income in retirement because of its reliability.

More reading

• 2 quality ASX 200 shares to buy and hold beyond 2027
• How to create a yearly income of $65,000 in dividends
• Fund managers have been buying these ASX shares
• Top ASX dividend shares to buy in July 2020
• What I’m looking for in dividend shares during COVID-19

Tristan Harrison owns shares of FUTURE GEN FPO and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Clover Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of APA Group. 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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