The Woolworths Group Ltd (ASX: WOW) share price has increased by 11% in the past year. The Woolworths share price gain has significantly outperformed the S&P/ASX 200 Index (ASX: XJO), which has seen a 11% fall over the same period.

Woolworths Group owns the largest supermarket in Australia by market share, along with a number of other businesses including Big W, ALH Group and Endeavour Group Limited, which consists of Dan Murphy’s, BWS, Cellarmasters and Langton’s. 

Here’s a closer look at the current supermarket landscape, and whether the Woolworths share price is a buy.

The rise of Aldi

According to Roy Morgan’s Fresh Food and Grocery Report, Woolworths has a 32.9% market share compared to Coles Group Ltd (ASX: COL)‘s 26.6% share. However, Aldi’s market share is rapidly rising.

Commenting on the breakdown, Roy Morgan CEO Michele Levine stated:

Aldi has increased its market share from 6.7% in 2011, to 12.4% today. While it is still a fair way behind Australia’s two supermarket giants, to put this growth in perspective, Aldi is now approaching half of the market share held by Coles Group.

Aldi’s 12.4% market share puts it at a approximately a third of Woolworths’ market share – growth that must be concerning for Woolworths and Coles.

Financial performance

In its recent trading update released 23 June 2020, Woolworths announced Q4 sales growth to date in its supermarkets in Australia and NZ was up 8.6% and 15.1%, respectively. At that time, Big W and Endeavour drinks sales growth in Q4 had also risen by 27.8% and 21.4%, respectively. In addition, Woolworths highlighted it expects to report earnings before interest and tax of between $3,200 million and $3,250 million, however, this is subject to finalisation and before significant items are taken into account.

The strong sales growth has helped give the share price a boost. However, the sales growth experienced this year could be from the panic buying that is taking place and only be over the short term.   

Furthermore, the group is looking to decrease supply chain costs in the business by developing automated distribution centres in Moorebank Logistics Park, Sydney. This is expected to cost $700–$780 million in technology and fitout over the next 4 years. While this addresses costs in the business, my concern is around whether the sales growth Woolworths has experienced is sustainable over the long term, in what is a very competitive landscape.

Foolish takeaway 

In my view, Woolworths’ market-leading position in the supermarket space could be eroded by the likes of retail giant Aldi over the long term. While groceries are essential items, consumers are offered many choices.

At the current Woolworths share price of $38.21, I personally believe that an investment in the tech space could offer more income and growth over the long term.

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Motley Fool contributor Matthew Donald 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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On Thursday the S&P/ASX 200 Index (ASX: XJO) returned to form and charged higher. The benchmark index climbed 0.6% to 5,955.5 points.

Will the market be able to build on this on Thursday? Here are five things to watch:

ASX 200 expected to slide.

Weakness on Wall Street overnight looks likely to weigh on the ASX 200 index on Friday. According to the latest SPI futures, the ASX 200 is expected to open the day 0.5% or 28 points lower this morning. Overnight the Dow Jones sank 1.4%, the S&P 500 dropped 0.55%, and the Nasdaq defied the rest with a 0.5% gain.

Tech shares on watch.

It could be a good day of trade for Afterpay Ltd (ASX: APT) and other tech shares after their U.S. counterparts charged higher overnight. Investors were piling into tech shares again, leading to the Nasdaq index racing to a new record high. Tech behemoth Amazon was the star of the show, rising 3.3% to an all-time high. It now has a market capitalisation comfortably above US$1.5 trillion.

Oil prices sink.

Energy producers such as Oil Search Limited (ASX: OSH) and Santos Ltd (ASX: STO) are likely to come under pressure on Friday after a pullback in oil prices. According to Bloomberg, the WTI crude oil price has fallen 3.3% to US$39.54 a barrel and the Brent crude oil price dropped 2.2% to US$42.33 a barrel. Traders appear concerned that a spike in coronavirus cases could impact oil demand.

Gold price rally runs out of steam.

Gold miners Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could end the week in a subdued fashion after the gold price softened. According to CNBC, the spot gold price fell 0.75% to US$1,807.30 an ounce. Investors appear to have been taking profit after some strong gains by the precious metal.

Evolution and Regis downgraded.

Also on watch today will be gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL). This morning analysts at Goldman Sachs downgraded their shares to sell ratings on valuation grounds. The broker has a $4.60 price target on Evolution shares and a $4.10 price target on Regis shares. This is notably lower than where their shares trade today.

More reading

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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 AFTERPAY T 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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I’m a big fan of buy and hold investing and feel very fortunate to have such a large number of quality companies with positive long term outlooks at my disposal on the Australian share market.

Two top ASX shares that I think would be fantastic buy and hold investments are listed below. Here’s why I would snap them up today:

Domino’s Pizza Enterprises Ltd (ASX: DMP)

I think this pizza chain operator would be a great buy and hold investment option. Although the company has thousands of stores across Europe, the ANZ region, and Japan, it has no plans to stop its expansion any time soon.

Management intends to grow its global store network by 7% to 9% per annum for the next 3 to 5 years. It is also targeting same store sales growth of 3% to 6% per annum over the same period. If it delivers on both these targets, it should lead to solid profit growth over the medium term.

Nanosonics Ltd (ASX: NAN)

Another quality buy and hold option for investors to consider is Nanosonics. At present the infection prevention specialist generates all its revenue from its trophon EPR disinfection system for ultrasound probes. While this product still has a long runway for growth, the company is intending to diversify its offering in the near future with several new product launches.

Not a lot is known about these secretive new products, other than they are targeting unmet needs and the first product has a similar market opportunity to the trophon EPR product. If these products are a success, then the company’s earnings growth could be explosive over the 2020s. In light of this, I think there’s a very strong chance that the Nanosonics share price will smash the market over the next decade.

More reading

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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 Nanosonics Limited. The Motley Fool Australia has recommended Domino’s Pizza Enterprises Limited and Nanosonics 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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Luckily in this low interest rate environment, there are a good number of dividend shares offering attractive yields.

Three top dividend shares that I would buy right now are listed below. Here’s why I like them:

Dicker Data Ltd (ASX: DDR)

The first dividend share to consider buying is Dicker Data. It is a wholesale distributor of computer hardware and software which has continued its positive form in FY 2020 despite the pandemic. At the start of the month it released a half year update and revealed unaudited first half revenue of $1 billion and net profit before tax of $40 million. This was an increase of 18.3% and 25%, respectively, on the prior corresponding period. Management appears confident this strong form will continue. So much so, it has guided to a 31% increase in its dividend this year. This will bring it to 35.5 cents per share, which equates to a fully franked 4.8% yield based on the current Dicker Data share price.

Fortescue Metals Group Limited (ASX: FMG)

Another dividend share to consider buying is Fortescue Metals. I think it could be a top option right now thanks to sky high iron ore prices. The combination of its low costs, higher grades, and strong prices appear to have left the miner well-placed to generate bumper free cash flows from its Pilbara operations in FY 2020 and FY 2021. I expect the majority of these funds to be returned to investors through dividends. Based on the current Fortescue share price, I estimate that it offers a forward fully franked dividend of ~6%.

Wesfarmers Ltd (ASX: WES)

A final dividend share to consider buying is Wesfarmers. I think it would be a good option for income investors due to its portfolio of strong businesses. This is particularly the case for the Bunnings business, which looks well-placed for growth thanks to its high quality business model and government stimulus. And given how it is Wesfarmers’ biggest contributor to earnings, this bodes well for the company’s overall performance. In addition, Wesfarmers’ hefty cash balance should be supportive of potential earnings accretive M&A activity in the near future. All in all, based on the current Wesfarmers share price, I estimate that it offers a fully franked 3.4% FY 2021 dividend yield.

More reading

• Broker tips on how to invest for the August ASX reporting season
• 3 dependable, blue chip ASX shares for uncertain times
• Why it’s time to rotate out of JB Hi-Fi share price and these popular ASX stocks: Macquarie
• Goldman Sachs names the ASX retail shares to buy and the ones to avoid
• My bull and bear case for the ASX share market

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. The Motley Fool Australia owns shares of Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post 3 quality ASX dividend shares to buy today appeared first on Motley Fool Australia.

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