The S&P/ASX 50 index is a large cap index which has been designed to represent 50 of the largest and most liquid shares listed on the ASX by float-adjusted market capitalisation.

While I wouldn’t necessarily be a buyer of all the shares on the ASX 50, I think there are some top options for investors to consider at present.

Two that I would buy today are listed below:

CSL Limited (ASX: CSL)

The first ASX 50 share to consider buying is biotherapeutics giant CSL. I think it is one of the highest quality companies on the Australian share market and a great long term investment option. The company is made up of two businesses – CSL Behring and Seqirus. CSL Behring is behind immunoglobulins products such as Privgen and Hizentra, as well as haemophilia products Idelvion and Afstyla, amongst others. Whereas the Seqirus business is the second-largest player in the influenza vaccines industry.

The company’s current product portfolio has significant growth potential as it is, but management isn’t resting on its laurels. It continues to invest heavily in its research and development pipeline. As a result, CSL has a large number of potentially lucrative therapies and vaccines at various stages of development. I expect these to bolster its growth over the next decade and lead to more market-beating returns for investors.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

Another ASX 50 share to consider buying is Sydney Airport. I think it is fair to say that the pandemic has hit the airport operator harder than most companies. The good news is that its balance sheet strength has helped it navigate the crisis far better than others. And with travel markets expected to start their recovery in the coming months, its outlook is becoming increasingly positive. As such, now could be an opportune time to make a patient investment in this ASX 50 share.

Furthermore, while I wouldn’t expect to receive a dividend in the second half of 2020, if Australia avoids a second coronavirus wave, I believe it will be well-placed to pay a decent dividend next year. And the following year I expect international tourism to be in full swing and its terminals to be heaving again. This should mean a dividend similar to previous levels, which implies a very generous yield well in excess of 6%.

More reading

• Why Afterpay, CSL, Fortescue, & Newcrest shares are dropping lower
• Where to invest $5,000 in ASX 200 shares today
• 3 ASX dividend shares to diversify your income
• ASX 200 rallies hard, no longer in bear territory
• Latest spending data could drive the ASX retail sector higher

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.

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The Pro-Pac Packaging Ltd (ASX: PPG) share price is charging higher today on the back of a trading update and manufacturing site consolidation plans. At the time of writing, Pro-Pac Packaging shares are sitting 8.57% higher for the day at 19 cents per share after being up by as much as 14.29% in early trade.

About Pro-Pac Packaging

Pro-Pac is an international packaging company that operates a distribution and manufacturing network throughout Australia, New Zealand, and Canada.

The company supplies a combination of product and service solutions for primary, secondary, and tertiary packaging for most industry segments. Its vast product range includes flexible films, plastic bottles, gloves, cleaning supplies, and signs.

Pro-Pac was established in 1987 and has been listed on the ASX since 2005.

Why is the Pro-Pac Packaging share price spiking?

This morning, Pro-Pac provided an update on its expected results for the year ending 30 June 2020.

According to the ASX release, trading has been better than expected in the COVID-19 environment. Accordingly, the company expects full-year earnings before interest, tax, depreciation and amortisation (EBITDA) of around $30 million, before significant items. For context, Pro-Pac achieved a $28.1 million EBITDA result in FY19, and a $16.3 million result in the financial year before that.

Additionally, Pro-Pac has continued to target working capital improvements. As a result, it expects its net debt position at 30 June 2020 to be around $60 million. This is down from $82.9 million at 30 June 2019.

Optimisation of manufacturing footprint

In addition to the trading update, Pro-Pac also announced that it will relocate production from its Chester Hill facility in Sydney.

The transition, which is expected to be completed by March 2021, includes the transfer of manufacturing volume from the Chester Hill factory to the company’s other facilities in Sydney, Melbourne, Adelaide and Perth. This is to optimise Pro-Pac’s manufacturing footprint and expand its service offering in an effort to reduce its cost base and grow profitability.

According to the company, central to this initiative is the investment in a new 7-layer extruder and laminator. This piece of equipment will provide new capacity and capability for growth with existing customers, and also support expansion into new markets.

The closure of the Chester Hill facility will involve capital investment of around $7 million and one-off costs of approximately $12.6 million – incurred over the next 2 years. The project will be funded from cash reserves and existing committed banking facilities, and is expected to result in annualised benefits of around $7 million from FY22.

Commenting on today’s update, CEO Tim Welsh said:

Leveraging our existing resources and obtaining the best possible returns on our investments, is an important priority. The consolidation [of facilities] will ensure our Flexibles division remains a leader in the delivery of flexible packaging products and services, for all of the critical markets we serve. The move will also optimise our other sites and enable the business to focus on innovation and growth.

More reading

• Should you ever buy into an ASX IPO?
• Soaring share price: Is CBA a buy?
• The Aussie dollar just hit an 8-week high. Here’s how it affects your ASX shares
• Top brokers name 3 ASX shares to buy right now
• The ASX 200 stock hit by the Brazilian COVID-19 wave

Motley Fool contributor Cathryn Goh 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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An IPO (or Initial Public Offering) can be an exciting event on the ASX, or any other share market for that matter. That’s because it involves the process of a private company becoming public, with its shares trading on the stock exchange for the first time.

Normally, most investors are locked out of investing in private companies because the shares aren’t publicly traded on a market.

But an IPO ‘democratises’ a company by allowing it to be accessible for the first time to any investor with money to spare. Thus, it’s always an exciting event with a lot of ‘buzz’ when a company goes public for the first time.

All listed companies underwent some kind of IPO in their history. This is the case whether relating to recent listings like Splitit Ltd (ASX: SPT) or those that occurred over a century ago, like Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

Some big names that have IPOed on the ASX in the last 5 years include Splitit, as well as Viva Energy Group Ltd (ASX: VEA), Marley Spoon AG (ASX: MMM) and Elixinol Global Ltd (ASX: EXL).

Over in the United States, there are some bigger names you might have heard of that recently had IPOs. These include Uber Technologies Inc (NASDAQ: UBER), which floated just last year, along with Beyond Meat Inc (NASDAQ: BYND). These were very exciting events that generated a lot of investor interest.

Should you invest in IPOs?

Just because you can invest in something, it doesn’t necessarily mean you should. Investors often get swept up in the hype of an IPO. But here’s why I think investing in one usually isn’t a good idea for the average investor.

When a company is private, it is subject to far less scrutiny than a public company. Even after a private company becomes public, it can sometimes take years for all of the company’s skeletons to come out of the closet.

What’s more, you don’t get a chance to see how a company is actually weighed up by the market until after the IPO occurs. This can result in the shares being quickly re-valued.

Thus, a company can believe its own shares are worth $10 each and, as such, offers them at its IPO for $10. But if the market has a different opinion, you might find the shares trading at $7 or $5 each very quickly.

Boom, you’ve just lost 30% or more of your money on day one.

Foolish takeaway

In my experience, losing money on an IPO happens more often than not. Therefore, I generally think it’s preferable to wait until after a company has floated to buy in. That way, you can ensure you are buying its shares at the market price, rather than at a price the company has concocted. Too often, IPOs are done to let old investors out, not to let new investors in. Thus, I think all investors should be very careful with IPOs and be sure to have a cold shower before jumping in.

More reading

• 3 ASX dividend shares to diversify your income
• 2 ASX shares that are absurdly cheap right now
• Why this small-cap ASX pharmaceutical share rocketed 27% higher today
• 2 ASX shares perfect for dollar-cost averaging
• 2 quality ASX shares to buy for long-term growth

Sebastian Bowen owns shares of Uber Technologies and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Uber Technologies. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company 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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The Commonwealth Bank of Australia (ASX: CBA) share price is rapidly rising. It’s currently up around 5% right now. It’s now up around 9% from the start of the week.

It’s not just the CBA share price which is rising rapidly. Today alone the Westpac Banking Corp (ASX: WBC) share price is up 9%, the Australia and New Zealand Banking Group (ASX: ANZ) share price is up 9% and the National Australia Bank Ltd (ASX: NAB) share price is up 8.8%.

This is one of the best days ever for the major ASX banks if they hold onto these gains.

The error with the jobkeeper total cost is good news in the sense that far less people are requiring support than previously expected. So perhaps that means the economy won’t be hit as hard as previously expected?

With a share price fall from around $90, investors were obviously expecting a really painful downturn for CBA. But clearly the news is getting better with restrictions lifting and people getting out and about again.

Is it time to buy the CBA share price?

So far CBA has provisioned $1.5 billion for COVID-19 impacts. Not much in the grand scheme of CBA’s overall loan book. If that’s all the damage is going to be then the CBA share price could seem pretty cheap.

But I don’t think it’s all rosy just yet. In Australia there are question marks for at least the tourism and construction sectors.

The US and China could each individually cause major problems for the entire world if there’s a new trade war. The coronavirus continues to spread at an alarming rate in the US. And who knows what the US election will throw up?

If you’ve been waiting to buy CBA shares then I think now could be the time to do it – everything is looking like it’s on an upward trend. But I’m not sure the dividend will remain as high. Profits could fall if the net interest margin (NIM) declines.

More reading

• ASX 200 up 0.1%: Big four banks rocket, Afterpay sinks lower
• Why the NAB share price is surging higher today
• Why ALS, Metcash, NAB, & Pointsbet shares are racing higher
• How much money should you have in your emergency fund going forwards?
• Where to invest $5,000 in ASX 200 shares today

Motley Fool contributor Tristan Harrison 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 Soaring share price: Is CBA a buy? appeared first on Motley Fool Australia.

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The Aussie dollar hit a new 8-week high overnight against the United States dollar, climbing as high as 66.75 US cents. The last time the Australian currency traded at these levels was back in early March.

It follows the massive dollar sell-off in late March when the ‘flight to safety’ amid the stock market crash pushed our dollar under 57 US cents – a multi-decade low. The Aussie is seen as a ‘risky’ currency partly due to our economic ties to China and, hence, is often sold-off with ructions in the global economy. Thus, the recent rise reflects a growing appetite for risk against safety in global markets.

So, apart from restoring some national pride, what does this move mean for ASX shares?

What a high Aussie dollar means for ASX shares

A higher exchange rate typically means imports become cheaper while exports become more expensive. That’s because it takes less Aussie dollars to buy a good or service denominated in foreign currencies with a higher exchange rate. Vice-versa for selling goods or services.

Therefore, a higher currency benefits companies importing products into Australia to sell, disadvantaging companies selling goods or services beyond our shores.

Thus, I’m looking at retailers as the biggest beneficiaries of a higher Aussie dollar. Not so much companies like Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL), which sell mostly Australian products as their benefit is far more muted.

No, it’s companies like JB Hi-Fi Limited (ASX: JBH) and Harvey Norman Holdings Limited (ASX: HVN) who stand to benefit the most, in my view. These companies sell electronics, TVs, white goods and computers, most coming from markets like the US, Japan, and China. For JB and Harvey Norman, importing these goods will now be cheaper. This price saving could then be banked for extra profits or passed onto consumers at no cost to the company. Cheap TVs all round!

Conversely, the biggest losers from a higher Aussie dollar are exporters like mining companies. Most commodities (like iron ore or gold) are priced in US dollars, so miners like BHP Group Ltd (ASX: BHP) or Newcrest Mining Limited (ASX: NCM) receive US dollars. These are then domiciled back into Aussie dollars and with a higher exchange rate, they’ll get less Aussie dollars back for each US dollar received.

Foolish takeaway

Currencies change all the time and have cycles of their own. Therefore, the Aussie dollar isn’t something you should lose too much sleep over, in my view. Nonetheless, its always good to know exactly what’s happening in the economy and your ASX share portfolio, of which exchange rates play a meaningful part.

More reading

• Why Afterpay, CSL, Fortescue, & Newcrest shares are dropping lower
• 3 easy rules for building a massive ASX share portfolio
• Where to invest $5,000 in ASX 200 shares today
• Where will the Coles share price be in 1 year?
• 3 exciting ASX growth shares to buy in June

Motley Fool contributor Sebastian Bowen owns shares of Newcrest Mining Limited. 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.

The post The Aussie dollar just hit an 8-week high. Here’s how it affects your ASX shares appeared first on Motley Fool Australia.

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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 shares are in the buy zone:

City Chic Collective Ltd (ASX: CCX)

According to a note out of Goldman Sachs, its analysts have retained the buy rating and $3.25 price target on this fashion clothing retailer’s shares. The broker has lifted its forecasts for City Chic in response to the earlier than anticipated reopening of its retail stores. The broker believes the company will keep its dividend suspended until FY 2022 and focus on reinvesting in medium-term growth options both at home at overseas. It expects this to lead to a 20.1% compound annual growth rate for earnings per share between FY 2019 and FY 2022. While not my favourite option in the retail sector, I think it could be worth a closer look.

Metcash Limited (ASX: MTS)

Analysts at UBS have upgraded this wholesale distributor’s shares to a buy rating with a $2.85 price target. According to the note, the broker believes the underperformance of its share price since its capital raising has created a buying opportunity. UBS likes Metcash due to the strength of its grocery business and the improving outlook for its hardware business. I think UBS makes some good points and Metcash could be a decent option for investors.

Telstra Corporation Ltd (ASX: TLS)

A note out of Credit Suisse reveals that its analysts have retained their outperform rating but trimmed the price target on this telco giant’s shares slightly to $4.10. Although it suspects the company’s earnings will take a bit of a hit from lower roaming and enterprise revenues, it believes the market is being too harsh. As a result, it sees Telstra’s share price weakness as a buying opportunity for investors. I agree with this view and would be a buyer of Telstra’s shares today.

More reading

• Why ALS, Metcash, NAB, & Pointsbet shares are racing higher
• 3 easy rules for building a massive ASX share portfolio
• Tax planning for ASX 200 investors
• Latest spending data could drive the ASX retail sector higher
• 3 quality ASX 200 blue chip shares to buy right now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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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The fallout from Brazil’s COVID-19 catastrophe is reaching the shores of the ASX!

Laboratory testing services group ALS Ltd (ASX: ALQ) took a $50 million hit to its bottom line due to the growing crisis in the region when it unveiled its full year profit.

Brazil’s economy is taking a big beating and the worst is yet to come. The number of coronavirus deaths in Brazil is projected to surge to nearly 126,000 by August, according to the Institute for Health Metrics and Evaluation at the University of Washington in Seattle.

Grim forecast reported in the Australian Financial Review is 42% higher than the IHME’s first projection released on May 12.

New COVID-19 epicentre

Brazil is fast becoming the epicentre for the COVID-19 pandemic as its defiant president Jair Bolsonaro refuses to implement any strict measures used in other countries to curb the outbreak.

This, combined with the country’s poor health care system, spells bad news for not only Brazil but its neighbours.

The impact is felt at ALS where its full year statutory profit slumped by $24.8 million to $127.8 million. Management also sliced its final dividend by nearly half to 6.1 cents from 11.5 cents a share.

ALS jumps on profit result

But the news didn’t bother investors. The ALS share price jumped 2.8% during lunch time trade to $7.25 when the S&P/ASX 200 Index (Index:^AXJO) is struggling at breakeven.

This is because underlying net profit (which ignores one-off issues) increased 4.3% to $188.8 million as revenue improved 10% to $1.83 billion in FY20.

That’s in-line with its guidance range of $185 million to $195 million. In this climate, hitting guidance is an achievement in itself!

Growth across divisions

Despite the disruption to its Latin American operations and the drop in demand from oil and gas customers, its Life Sciences, Industrial and Commodities divisions posted growth, even on an organic basis.

Management also boasted about its strong balance sheet with around $650 million of liquidity available. This includes an extra $200 million of debt it recently secured with its banks.

ALS said it’s shown resilience during the COVID-19 pandemic so far due to a diverse portfolio of businesses and geographies, with many of its services deemed as “essential businesses”.

ALS isn’t the only ASX company exposed to Brazil and Latin America. Some of our miners like Rio Tinto Limited (ASX: RIO) and South32 Ltd (ASX: S32) also have operations in the region.

More reading

• ASX 200 up 0.1%: Big four banks rocket, Afterpay sinks lower
• Why the NAB share price is surging higher today
• Why ALS, Metcash, NAB, & Pointsbet shares are racing higher
• Where I would put $10,000 into ASX 200 shares today
• 3 easy rules for building a massive ASX share portfolio

Motley Fool contributor Brendon Lau owns shares of Rio Tinto Ltd and South32 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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