Stock Pick

  • Why weakness in the CSL share price could be a buying opportunity

    woman testing substance in laboratory dish, csl share price

    The CSL Limited (ASX: CSL) share price has been a disappointing performer on the ASX 200 in recent months.

    Recent weakness means the CSL share price is currently trading at $282.42, which is approximately 18% lower than its 52-week high of $342.75.

    Why is the CSL share price out of form?

    Investors have been selling CSL’s shares this year amid concerns that the pandemic will have a negative impact on its plasma collections.

    The biotherapeutics giant sources the majority of its plasma from the US and European markets, which have been hit hard by the pandemic. This is particularly the case with the US market, which is believed to account for around three-quarters of its plasma supply.

    Why does this matter? This is a potential headwind for the CSL Behring business as this plasma is used for immunoglobulin and albumin production. Supply issues could lead to increasing production costs and weigh on margins.

    Should you be concerned?

    I don’t think investors should be concerned and continue to believe that the pullback in the CSL share price is a buying opportunity.

    I don’t believe things are as bad as some fear. Furthermore, I’m confident that any headwinds from plasma collections can be offset by increasing demand for flu vaccines.

    One broker that isn’t concerned is Goldman Sachs. This morning the broker retained its buy rating and trimmed its price target slightly to $326.00. This price target implies potential upside of 15% for its shares.

    What did Goldman Sachs say?

    Goldman notes that the CSL share price has underperformed since April. It feels this is due largely to the aforementioned plasma collection concerns.

    However, it has been looking into its collections and believes there is nothing to worry about.

    Goldman commented: “Whilst plasma collections are inevitably lower this year, there are several factors which will soften the impact, notably inventory draw-down, regulatory support and, potentially, price.”

    “The 8/9-month plasma production cycle means a material disruption is unlikely in either 2H20 or 1H21. Our new monthly plasma supply/demand model suggests that CSL is only likely to incur material supply challenges from 2H21 if collection volumes decline -30% during CY20. At this stage, we forecast -12% yoy in our base case (1Q: -1% yoy; 2Q: -40% yoy; 3Q: -15% yoy; 4Q: -1% yoy),” it explained.

    Though, the broker did warn that this is a fluid situation which will need to be monitored closely.

    Nevertheless, its “analysis implies a reasonable margin of safety, particularly because some modest softening of demand was likely in 4Q20” and “other operators may choose to manage/ration volume themselves through an abundance of caution.”

    In light of this, it continues to believe the CSL share price is in the buy zone right now and I completely agree.

    5 stocks under $5

    We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.

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    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 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 Why weakness in the CSL share price could be a buying opportunity appeared first on Motley Fool Australia.

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  • Intel Just Gave Investors Even More Reason to Worry

    Intel Just Gave Investors Even More Reason to Worry(Bloomberg Opinion) — Intel Corp. investors could use some upbeat news about now. They didn’t get it.A month after Apple Inc. announced a plan to switch to its own chips over Intel’s for its Mac PCs and laptops, and just weeks removed from the stunning departure of its top chip architect, Intel has now revealed even more disappointing news: another chip delay.On Thursday, Intel posted better-than-expected second-quarter results, reporting adjusted earnings per share of $1.23 while generating $19.7 billion of revenue in the quarter versus the $18.5 billion estimate. Sales guidance for the current quarter and the full year were also both higher than the average analyst forecasts.While the near-term financial numbers were strong, the big story was Intel saying its future lineup of 7-nanometer chips — a new version of the central processing units it makes that serve as the general-purpose operating brains for desktop and server computers  — will be delayed. The company said its CPU chips based on this manufacturing node will be released about six months later than its previous expectations, primarily due to problems with chip yields. On the call, Intel management said the first 7-nanometer desktop CPU is now expected to ship in late 2022. The stock tanked in after-market trading.Intel investors have seen this movie before. The company suffered years of delays in bringing its current 10-nanometer chips to market, which allowed Taiwan Semiconductor Manufacturing Co. to surpass Intel in its semiconductor-making abilities. This in turn enabled Intel’s main competitor, Advanced Micro Devices Inc. — which designs its own semiconductors and pays TSMC to make them — to take market share by offering better-performing and lower-energy consuming chips. Intel’s latest chip will likely prolong that shift in market share. Last month, I wrote about how Apple’s decision to use its own chips may pose a long-term threat to Intel’s server processor lineup. But more importantly, I said the departure of leading chip architect Jim Keller was even more worrisome for Intel’s future because the company needed an experienced hand to guide the final stages of development for its future designs. While we don’t know what exactly led to the 7-nanometer delay, it looks like the worst fears over Intel’s pipeline is now realized. What now? There is one dramatic move Intel can make to right this ship. For all its troubles, the main problem hasn’t been Intel’s ability to design good processors, but in manufacturing them. It ought to follow what the hottest chip companies like AMD and Nvidia Corp. have done, and outsource its manufacturing to the best chip foundry in the world: TSMC. It’s a simple solution that would help get Intel back on track.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tae Kim is a Bloomberg Opinion columnist covering technology. He previously covered technology for Barron's, following an earlier career as an equity analyst.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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  • Intel Process Delay Sparks $44 Billion Swing in Chipmaker Values

    Intel Process Delay Sparks $44 Billion Swing in Chipmaker Values(Bloomberg) — Intel Corp.’s revelation that a new chip production process suffered another delay sent its stock tumbling, erasing billions of dollars in market valuation and inflating the shares of rivals.Intel fell 10% in postmarket trading, erasing about $25 billion in market cap. The news sent shares of rival Advanced Micro Devices Inc. up 8%, creating more than $5 billion in market value. Taiwan Semiconductor Manufacturing Co.’s American depositary receipts also gained 4%, adding almost $14 billion in market value.Intel had been neck-and-neck in recent weeks with Nvidia Corp. for the title of biggest market capitalization for a U.S. chipmaker. If Thursday’s move holds, the decline would put Nvidia firmly in the lead with a market value of almost $250 billion. Intel had a market cap of about $256 billion before news of the 7-nanometer chip delay.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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  • U.S. clears way for drugmakers to share COVID antibody capacity

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  • 3 exciting small cap ASX shares to watch in FY 2021

    watch, watch list, observe, keep an eye on

    I believe there are a good number of shares at the small end of the Australian share market that have the potential to grow into much larger entities in the future.

    Three small cap shares which I think ought to be on your watchlist are listed below. Here’s why I think they have very promising futures:

    Bigtincan Holdings Ltd (ASX: BTH)

    Bigtincan is a fast-growing provider of enterprise mobility software. Its software allows businesses to increase their sales win rates, reduce costs, and improve customer satisfaction. This is achieved through improvements in mobile worker productivity. Demand for Bigtincan’s software has been growing strongly in recent years and this has continued to be the case during the pandemic. As a result, the company advised remains well-placed to deliver on its 30% to 40% organic revenue growth target in FY 2020. I expect more of the same in FY 2021.

    Mach7 Technologies Ltd (ASX: M7T)

    Mach7 is a medical imaging data management solutions provider which offers software that helps inform diagnosis, reduce care delivery delays and costs, and improve patient outcomes. Its software is being used by healthcare institutions across the world, including in markets such as Hong Kong and Qatar. Demand for its software has been very strong in FY 2020, leading to Mach7 reporting a 158% increase in first half revenue to $9.1 million. Since then the company has announced the acquisition of Client Outlook. The acquisition of this leading provider of enterprise image viewing technology increases Mach7’s total addressable market from US$0.75 billion to US$2.75 billion.

    MNF Group Ltd (ASX: MNF)

    A final small cap to watch is MNF Group. It specialises in Voice over Internet Protocol (VoIP) technology, which is used to convert analogue audio signals into digital data that can be sent over the internet. Demand for its services has been very strong during the pandemic. This is because as more people work or study from home, the demand for information and connectivity through technology has increased. In fact, demand has been so strong, in April MNF Group was able to reaffirm its full-year guidance for earnings before interest, tax, depreciation and amortisation (EBITDA). It expects EBITDA of between $36 million and $39 million in FY 2020, which represents 32% to 43.4% year on year growth.

    5 stocks under $5

    We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.

    And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

    See the 5 stocks

    *Extreme Opportunities returns as of June 5th 2020

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    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 and recommends BIGTINCAN FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of MACH7 FPO. The Motley Fool Australia owns shares of and has recommended MNF Group Limited. The Motley Fool Australia has recommended BIGTINCAN FPO and MACH7 FPO. 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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  • What the budget deficit means for ASX shares like Webjet

    Australian flag with stethoscope on it

    Yesterday, the Australian Government announced an $86 billion budget deficit. Just 12 months ago the government was forecasting a $5 billion budget surplus in FY20.

    Well, the coronavirus pandemic has hammered ASX shares lower and thrown those plans out of whack.

    Let’s unpack Treasurer Josh Frydenberg’s budget update and what it means for your favourite ASX shares in 2020.

    What were the key budget takeaways?

    To be honest, it makes for some grim reading. The government’s deficit for FY20 is forecast to be $85.8 billion. That’s a big turnaround from a forecast $5 billion surplus in the pre-pandemic world.

    Not only that but the FY21 deficit is forecast to grow to $184.5 billion the following year. These are some big numbers that reflect both a slowdown in government revenue (i.e. taxes) and increase in government expenditure.

    The unemployment rate is expected to hit 9.25% by Christmas, despite an extension of the JobKeeper program, and Australia’s net debt is forecast to reach $677.1 billion by the end of June 2021, or 35.7% of GDP.

    It’s important to note that budget deficits are not necessarily a bad thing. In fact, more government spending and strong fiscal policy can help drive economic growth. There’s been an obsession with surpluses over the last decade or so but budget deficits can actually be good for ASX shares and the economy.

    What does all of this mean for ASX shares?

    I don’t think there’s much good news for hard-hit industries like travel or hospitality in the budget update. Treasury is forecasting an easing of border restrictions by January but that seems very optimistic. That would be good for travel shares like Webjet Limited (ASX: WEB), but also residential REITs like Stockland Corporation Ltd (ASX: SGP), both of which benefit from immigration. However, that forecast appears at odds with what we’re seeing in the market, so I’d take it with a grain of salt.

    I think infrastructure could be one sector that benefits from the current conditions. The pandemic has forced a re-think of working and living arrangements. It’s also given cities a chance to see how impact well-planned infrastructure is for everyday life.

    More government infrastructure spending seems like a real possibility to boost economic growth. Multi-billion-dollar government contracts provide: a) big dollars, and b) reliable work for chosen companies.

    That could boost economic activity and future-proof our cities, which could in turn help boost ASX infrastructure shares higher. If that’s the case, I’d be watching Transurban Group (ASX: TCL) and Atlas Arteria Group (ASX: ALX) shares in 2020.

    In the end, much of the impact of the budget deficit on ASX shares will really come down to how the ballooning government debt will be deployed. 

    3 “Double Down” Stocks To Ride The Bull Market

    Motley Fool resident tech stock expert Dr. Anirban Mahanti has stumbled upon three under-the-radar stock picks he believes could be some of the greatest discoveries of his investing career.

    He’s so confident in their future prospects that he has issued “double down” buy alerts on each of these three stocks to members of his Motley Fool Extreme Opportunities stock picking service.

    See the Double Down Stocks

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    Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia owns shares of Transurban 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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  • Buy NAB and this ASX dividend share for income

    NAB bank share price

    If you are looking to add some dividend shares into your portfolio, then you might want to consider the two listed below.

    Both of these ASX dividend shares offer generous yields which smash the interest rates currently being offered on savings accounts and term deposits. Here’s why I like them:

    Dicker Data Ltd (ASX: DDR)

    The first dividend share I would buy is this wholesale distributor of computer hardware and software. Dicker Data has consistently grown its dividend at a solid rate over the last few years and this trend will continue in FY 2020. During the first half, Dicker Data continued to experience strong demand for its offering. So much so, its half year revenue broke through the $1 billion level for the first time. As a result of this, the company advised that it plans to increase its dividend by 31% to 35.5 cents per share this year. Based on the current Dicker Data share price, this represents an attractive fully franked 4.7% dividend yield.

    National Australia Bank Ltd (ASX: NAB)

    If you don’t have exposure to the banking sector, then I think NAB could be worth considering. The banking sector has come under significant pressure this year due to the impact of the pandemic and the spike in bad debts that this is likely to cause. While a decline in the NAB share price was appropriate, I think the selling has been overdone and has left the banking giant’s shares trading at a very attractive level. Especially for income investors on the lookout for a source of income. Based on the latest NAB share price, I estimate that the bank’s shares currently offer investors a generous fully franked ~5% FY 2021 dividend yield. This is significantly better than the interest rates you’ll get on its savings accounts and term deposits.

    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.

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    Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data 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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  • Up 38% in July! Is the Orocobre share price a buy?

    Cut outs of cogs and machinery with chemical symbol for lithium

    ASX lithium shares. It’s been some time since the Orocobre Limited (ASX: ORE) share price was all the hype, even as far back as 2018.

    What’s been happening to ASX lithium shares?

    The March bear market hit ASX lithium shares like Orocobre particularly hard. However, their share price recovery has lagged that of the S&P/ASX 200 Index (ASX: XJO).

    The Orocobre share price hit a new, 52-week low of $1.82 per share on 14 May. Meanwhile, the Galaxy Resources Limited (ASX: GXY) share price hit a 52-week low back in mid-March.

    For starters, global lithium prices have been volatile and trending lower for years.

    That price decline has been both supply and demand-driven. A Fastmarkets report back in February laid out some of the challenges and opportunities on both sides.

    On the one hand, there is a significant oversupply in the market right now. Demand has lagged supply for some time now with an expected uptick in electric vehicle production failing to materialise.

    That has seen the Orocobre share price slide 55.9% lower since January 2018.

    Falling demand for imported battery raw materials into China has also challenged commodity and share prices.

    Over time, the hype around ASX lithium shares has died down. While some investors are still bullish, I think many are starting to lose faith in the long-term growth story.

    Is the Orocobre share price worth buying at $3.19?

    According to Geoscience Australia, Australia controls 18% of the world’s known lithium supply. That means Orocobre and Galaxy are well-placed to capitalise if the market booms.

    I really think buying ASX lithium shares right now is pretty speculative.

    Pilbara Minerals Ltd (ASX: PLS) expects the lithium market to triple in the next five years. Once again, it’s electric vehicles that are expected to be the main catalyst.

    That would be good news for the Orocobre share price given the company’s status as a major lithium producer. However, it could also be a case of the Boy Who Cried Wolf as investors turn their backs on the potential upside.

    I think I’d personally like to see Orocobre’s August full-year result before buying. I have no doubt that there will be potential winners among ASX lithium shares in the future.

    The real trouble is picking a long-term winner and I wouldn’t bet on the Orocobre share price at $3.19.

    Foolish takeaway

    As you can see, picking winning ASX lithium shares is a challenging business. The Orocobre share price surged 3.2% higher yesterday but I think it’ll remain volatile rather than climbing higher in 2020.

    5 stocks under $5

    We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.

    And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

    See the 5 stocks

    *Extreme Opportunities returns as of June 5th 2020

    More reading

    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.

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  • Market Recap: Thursday, July 23

    Market Recap: Thursday, July 23Stocks fell Thursday with a selloff accelerating as investors focused on the U.S.’s unchecked coronavirus crisis and a new rise in unemployment claims. Tech shares led declines, with each of Facebook, Amazon, Apple, Netflix, Alphabet and Microsoft falling during intraday trading.

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  • Tabcorp share price up 5% as CEO and chair succession plan announced

    sports fan betting on mobile phone, pointsbet share price

    The Tabcorp Holdings Limited (ASX: TAH) share price shot up by 4.93% on Thursday to $3.62 as the company announced a succession plan for replacement of its CEO and managing director, in addition to its chair.

    What was in the announcement?

    Tabcorp announced that it had selected existing non executive director Steven Gregg to succeed its current chair, Paula Dwyer. The transition will take place on 31 December 2020.

    The company also announced that its CEO and managing director David Attenborough would retire in the first half of the 2021 calendar year. Tabcorp stated that a global search was underway to find a replacement. 

    In the announcement, Tabcorp’s current chair Paula Dwyer said:

    With the integration of Tatts nearing completion, the time is now right for a new Chairman to lead the Tabcorp Board into the future. The appointment of Steven Gregg will provide continuity of leadership and an orderly transition as the company identifies and transitions to a new Managing Director and CEO.

    Steven’s contribution to the Tabcorp board has been significant, and his track record in stewarding complex companies navigating change, including CEO transitions, positions him well for success as the next Chairman of Tabcorp.

    The company’s current CEO and managing director David Attenborough also commented on the succession plan, stating: 

    The combination with Tatts is now largely complete and, as such, now is the right time to start the process to appoint the new CEO who can work with the board and management team to take the company forward. Until then, I am totally committed to steering Tabcorp through the COVID-19 pandemic and ensuring that our businesses are best positioned for the future.

    About the Tabcorp share price

    Tabcorp is a gambling entertainment company providing lottery products, wagering, Keno and gaming products. The company operates a number of household name services including Keno, TAB, The Lott, George, Max, TGS, eBet and Sky Racing. Tabcorp is Australia’s leading gambling provider with more than 5,000 employees.

    In June, Tabcorp announced that its bank lenders had agreed to waive covenants on leverage and interest cover as the company works through the impact of the coronavirus pandemic. The company had liquidity $820 million available in cash and undrawn facilities in May. It resolved not to pay a final dividend for the 2020 financial year as part of the agreement with its lenders.

    In the second half of 2019, Tabcorp earnings before interest, tax, depreciation and amortisation of $596.5 million, and revenue was up by 4.4% to $2,913.9 million.

    The Tabcorp share price is up 73.2% from its 52-week low of $2.09, but is still down 20.61% since the beginning of the year. The Tabcorp share price has fallen 26.80% since this time last year.

    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.

    See The 5 Stocks

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    Motley Fool contributor Chris Chitty 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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