The S&P/ASX 200 Index (ASX: XJO) is on course to record another strong gain on Tuesday. In late morning trade the benchmark index is up 1.4% to 5,695.1 points.

Four shares that are climbing more than most today are listed below. Here’s why they are storming higher:

The Cann Group Ltd (ASX: CAN) share price has jumped 8.5% higher to $1.13. This morning the cannabis company announced that it has executed two new export supply agreements with European and UK partners. This is for the supply of a range of medicinal cannabis formulated oil and dried flower products for sale in Germany, the United Kingdom, and other European Union markets.

The Insurance Australia Group Ltd (ASX: IAG) share price is up over 2% to $5.74. Investors have been buying the insurance giant’s shares after analysts at Credit Suisse upgraded them to an outperform rating with a $6.40 price target. The broker believes its premiums will more than cover claims inflation and that its shares are trading an attractive level.

The Monadelphous Group Limited (ASX: MND) share price has jumped 11.5% higher to $11.79. The catalyst for this strong gain appears to be a broker note out of Citi this morning. Its analysts have upgraded the engineering company’s shares to a buy rating with a $14.35 price target. Citi likes Monadelphous due to its strong balance sheet and decent medium term prospects.

The Webjet Limited (ASX: WEB) share price has rocketed a further 8.5% higher to $4.51. Investors have been buying Webjet and other travel shares on the belieft that tourism markets could recover quicker than anticipated. This follows the easing of restrictions and speculation that a trans-Tasman travel bubble could soon be created. This would be great news for travel bookers like Webjet which are burning through cash right now.

More reading

• Is it too early to buy Webjet shares?
• ASX 200 jumped higher, rises more than 2%
• These ASX 200 share prices were cut in half. Where are they now?
• Why Flight Centre and Webjet shares are zooming higher today
• ASX 200 up 1.7%: Flight Centre and Webjet rocket, Afterpay hits record high

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet 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 National Australia Bank Ltd. (ASX: NAB) share price has been smashed in 2020, but if you’re a Foolish investor, you’re probably thinking longer term.

While the S&P/ASX 200 Index (ASX: XJO) is down around 15% this year, the Aussie bank’s shares have slumped 35%. It’s far from the only ASX bank to feel the heat from investors amid the recent bear market.

But rather than focus on the NAB share price right now, where will it be in 1 year?

Where the NAB share price will be in 1 year

I think there are a lot of factors weighing on the bank’s shares right now. Let’s look at the current situation.

NAB recently announced a soft half-year earnings result headlined by a 51.4% drop in cash profit. The popular measure of profitability fell to $1,436 million or $1,035 million on an adjusted basis.

On top of that, the bank announced $807 million worth of impairments in relation to COVID-19. That’s not good news for the NAB share price which has slumped in 2020.

But let’s look ahead to May 2021. Where will the NAB share price be after  next year’s half-year result?

The economy is already starting to come back to life after the brief coronavirus lockdown period. If Australia continues to flatten the curve, the business impact could be mitigated and the bank’s balance sheets may remain intact.

There is still the issue of real estate valuations. While stimulus measures have helped the economy, Aussies could be under pressure with their home loan repayments.

Add to that the commercial real estate side of things. Shopping centres and CBD office buildings may not be at full capacity by May 2021. This could mean more writedowns and impairments for the Aussie bank which could weigh on the NAB share price.

On the plus side, Australia’s tourism and education sectors may pickup. A weaker Aussie dollar could drive exports in 2020 and mitigate the economic impact of COVID-19.

Foolish takeaway

There’s a lot of weighing up to do for investors right now. I think the Aussie banks will remain in good shape and I believe the NAB share price will recover.

The bank’s shares are trading at $16.03 this morning but that could look like a bargain when we look back in 1 year’s time.

More reading

• The one sector that could experience a V-shape COVID-19 recovery
• Is $1,000 in Scentre shares a good investment?
• Where to invest $5,000 in ASX growth shares today
• 5 things to watch on the ASX 200 on Tuesday
• CSL shares have underperformed the ASX 200 over the past month. What’s going on?

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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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to extend its positive run with another solid gain. At the time of writing the benchmark index is up 1.3% to 5,686.7 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

The Fortescue Metals Group Limited (ASX: FMG) share price is down 1.5% to $13.63. Investors have been selling the iron ore producer’s shares on Tuesday after Chinese iron ore prices dropped lower overnight. Traders may have been taking profit after some stellar gains by the steel-making ingredient over the last few weeks.

The Freedom Foods Group Ltd (ASX: FNP) share price has continued its slide and is down 1.5% to $4.22. The diversified food company’s shares have fallen hard over the last few months. This could be due to concerns over the premium its shares trade at. One broker that believes it deserves the premium is Goldman Sachs. It is forecasting exceptionally strong earnings growth over the coming years and has a buy rating and $6.55 price target on its shares.

The Pushpay Holdings Ltd (ASX: PPH) share price is down 1.5% to $6.55. This decline appears to have been driven by profit taking after the donation platform provider’s shares rocketed higher over the last few months. Pushpay’s shares are up almost 70% year to date thanks to its strong FY 2020 result and positive guidance for the next 12 months.

The QBE Insurance Group Ltd (ASX: QBE) share price has fallen 1.5% to $8.06. The insurance giant’s shares have dropped lower today despite being the subject of a positive broker note this morning. Analysts at Morgan Stanley have retained their overweight rating and sizeable $12.00 price target on QBE’s shares.

More reading

• Where to invest $10,000 into ASX shares immediately
• Got $2,500? I’d buy these 2 ASX shares in a heartbeat
• 5 things to watch on the ASX 200 on Tuesday
• The smartest shares to buy if you have $2,000
• ASX 200 Weekly Wrap: ASX rallies on mining highs

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended PUSHPAY FPO NZX. The Motley Fool Australia has recommended Freedom Foods 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.

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The Air New Zealand Limited (ASX: AIZ) share price is edging lower this morning after the airline provided a trading update. At the time of writing, Air New Zealand shares are trading 2.06% lower in early trade at $1.19.

What did Air New Zealand announce?

The airline shed light on recent trading conditions this morning, with CFO Jeff McDowall stating that network capacity across March and April was reduced by more than 95% as demand declined to almost zero.

But in more positive news, New Zealand’s recent move to Alert Level 2 has been a welcome reprieve, allowing the airline to, as Mr McDowall puts it, “get the domestic engine turning again”.

Despite this, the airline understands it will take some time for demand to return to pre-COVID-19 levels. As a result, Air New Zealand is preparing for a scenario in which it is still 30% smaller than pre-COVID-19 levels in 2 years’ time.

Looking to the back end of this financial year, Air New Zealand’s network capacity for the second half of FY20 is expected to be around 50% lower than the prior comparative period. This will be driven by a reduction of approximately 90% in the fourth quarter.

This outlook, combined with the fact that there was “very little” revenue coming in during Alert Levels 3 and 4, means that the airline is now expecting to report an underlying loss for FY20. 

For context, Air New Zealand posted a statutory profit of NZ$270 million in FY19 and more recently, a NZ$101 million statutory profit for the half year ending 31 December 2019.

Significant items impacting FY20 results

In today’s update, Air New Zealand also provided details of other significant items for FY20. According to the airline, these items represent events that are not reflective of its underlying financial performance. Therefore, the items will not be included in the airline’s calculation of underlying earnings for FY20.

The estimates, which reflect current expectations and are still subject to further review by both the airline and its auditors, are as follows:

• De-designation of hedges: NZ$85 million to NZ$105 million
• Aircraft impairment charge: NZ$350 million to NZ$450 million non-cash charge
• Reorganisation costs: NZ$140 million to NZ$160 million
• Gain on sale from airport slots: approximately NZ$21 million gain

The top end of these estimates represents a hit of up to NZ$694 million from significant items.

Liquidity position

As at close of business 25 May 2020, Air New Zealand’s short-term liquidity was approximately NZ$640 million. This doesn’t include any funds from the NZ$900 million loan facility with the New Zealand Government.

Commenting on the airline’s liquidity position, CFO Jeff McDowall said:

We have not yet needed to draw down on the government loan facility, as we continue to utilise all available levers to reduce our cash burn and right-size the business to reflect the expectation that, for some time, our airline will be smaller than it was pre Covid-19

The airline has undertaken a number of cost-saving measures across its cost base and capital expenditure portfolio. This includes a 30% reduction in its workforce (around 4,000 employees), deferral or cancellation of almost NZ$700 million in expected capital expenditure to December 2022, salary reduction of the executive team by 30%, and suspension of all short-term incentive schemes for FY20.

More reading

• Is it too early to buy Webjet shares?
• 5 things to watch on the ASX 200 on Tuesday
• Why Flight Centre and Webjet shares are zooming higher today
• Leading brokers name 3 ASX shares to sell today
• 3 industries that may never recover from COVID-19

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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One of the most successful investors in modern history is Warren Buffett.

Through his multinational conglomerate, Berkshire Hathaway, the American billionaire has consistently generated market-beating returns over several decades.

The amazing thing about Mr Buffett’s success is that he doesn’t use complex formulas or technical analysis. He uses a relatively simple investment strategy that anyone can use – buy and hold investing.

This simple strategy sees investors buy the shares of companies with strong business models, talented management teams, and positive long-term outlooks.

They will then hold onto the shares over a long period of time (unless the investment thesis breaks) and let the power of compound interest work its magic.

How can you invest like Warren Buffett on the Australian share market? I think the two shares listed below are the type of shares that he would buy and hold. Here’s why:

Goodman Group (ASX: GMG)

One top option to consider for a buy and hold investment is Goodman Group. It owns, develops, and manages industrial real estate across 17 countries. I like the company due to its diverse portfolio and exposure to markets with strong growth potential. The latter includes its exposure to ecommerce through its relationships with Amazon, DHL, and Walmart. Combined, I believe it is well-placed to deliver strong returns for investors over the long term.

REA Group Limited (ASX: REA)

I think REA Group would be a great buy and hold option for investors. I’m a big fan of the property listings company due to the resilience of its business model. I’ve been very impressed with the way the company can still grow its earnings even in the most difficult trading conditions. Furthermore, the tough trading conditions it is experiencing right now will soon ease. This should lead to an acceleration in its growth in the coming years.

More reading

• Which is the best ASX entertainment media share?
• 3 strong ASX 200 shares to buy for a retirement portfolio
• 2 quality ASX shares to buy for long-term growth
• Is the REA Group share price a buy?
• 3 super strong 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 has recommended REA 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.

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In morning trade the Coca-Cola Amatil Ltd (ASX: CCL) share price is trading lower on the day of its annual general meeting.

In early trade the beverage company’s shares fell 4% to $8.61.

What did Coca-Cola Amatil announce at its annual general meeting?

As well as releasing its traditional presentation with speeches and a breakdown of its performance over the last 12 months, it also released a trading update.

According to the update, Coca-Cola Amatil has been battling some particularly tough trading conditions during the pandemic.

Last month the company warned investors that conditions were difficult, this morning management revealed the full extent of the “unprecedented disruption” it has faced.

In Australia the company experienced a ~30% decline in volume of its non-alcoholic ready to drink category during April compared to the prior corresponding period. This decline reflects lockdown restrictions impacting on the go (OTG) volumes and also changes in buying patterns in the grocery channel.

During April, Australian OTG volume was down 55% on the prior corresponding period and grocery channel volume fell 10%. The latter was driven by retailers reducing their inventory levels and cancelling promotional activities during the traditionally peak Easter and ANZAC Day trading periods.

The Australian alcohol business was also out of form. It posted a 35% decline in volume due to on-premise closures and softer Easter trading.

Things weren’t any better for its New Zealand or Indonesia businesses. Both posted sharp declines in volume during April due to the negative impacts of the pandemic.

Combined, total volume across the company during April declined by approximately 33% compared to the same period last year.

Another disappointment is that the shift in channel mix for its sales means that its margins have narrowed during the pandemic, putting extra pressure on its profits.

What now?

With lockdown restrictions starting to ease, the company notes that its volumes have started to recover slightly.

During the first three weeks of May, Coca-Cola Amatil’s overall volumes were down 26% on the prior corresponding period.

However, Managing Director Alison Watkins warned that conditions could remain tough for a little while to come.

She commented: “Looking ahead, whilst it is encouraging to see lockdown restrictions gradually being eased and some green shoots of improvement in trading conditions emerge, the reality is that economic recovery will take time and uncertainty remains. We anticipate we will have a clearer view that we can share with the market at our 2020 half year results in August.”

Nevertheless, Ms Watkins remains optimistic on the longer term.

“We have a clear path forward to weather the current conditions, noting that the fourth quarter trading conditions will be imperative to our FY2020 financial performance. We are confident that our strong balance sheet, ample liquidity, robust cashflows and solid credit ratings place us in a strong position financially and operationally to trade through this period and emerge a stronger and better business,” she concluded.

More reading

• Buffett? Lynch? Here are the investing experts you should take advice from when buying ASX shares
• UBS picks the real ASX winners from the COVID-19 grocery boom

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.

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Is the Australia and New Zealand Banking Group (ASX: ANZ) share price a buy? The ANZ share price is drifting lower when most other ASX shares are rising.

At the pre-open price, ANZ is actually 8% lower than it was at the start of May 2020.

The major ASX bank recently reported its result on 30 April 2020. Within that result statutory profit declined by 51% to $1.54 billion and cash profit fell 60% to $1.4 billion.

Obviously the ongoing coronavirus impacts are a big reason why the bank profit fell so hard. The result included impairment charges of $1.674 billion that included increased credit reserves for COVID-19 impacts of $1.031 billion.

And what about the all-important dividend? It was deferred to a later date. Who knows if that means it will be paid or cancelled altogether? It depends how tough things are going to get. ANZ certainly followed APRA’s dividend guidance. 

How tough will things get for the ANZ share price?

It’s hard to say right now. The ANZ share price is already down 43%, how much worse could it get?

With the jobkeeper package being overestimated, perhaps the economy won’t be as hit as hard as first thought. Maybe the share price sell-off is overdone if Australia’s economy is only modestly affected by what’s going on.

But what’s certain is that the official Australian interest rate is now extremely low. This definitely makes it harder for ANZ to make solid profit. It will hurt the net interest margin (NIM). It’s not like ANZ can start charging interest for transaction accounts.  

There’s going to be pain this year, it’s why the ANZ share price is down so much. The question is how quick the economy will recover. We just don’t know. There’s a chance ANZ’s share price could be this low for some time.

I’d rather buy shares where the potential outcomes aren’t as negative, long lasting and wide ranging as ANZ.

More reading

• NAB’s CEO is buying shares at decade low prices. Should you take the hint?
• ASX 200 Weekly Wrap: ASX rallies on mining highs
• How $1,000 can be enough to change your money mindset
• The hidden threat to big banks that may be worse than a housing collapse
• Are CBA shares a 2020 dividend trap?

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.

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