The S&P/ASX 200 Index (ASX: XJO) looks set to continue its positive run on Thursday. In late morning trade the benchmark index is up 0.2% to 5,583.1 points.

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

The Aristocrat Leisure Limited (ASX: ALL) share price is down 4.5% to $26.13 following the release of its half year update. For the six months ended March 31, Aristocrat posted a 7% increase in operating revenue to $2,251.8 million. However, due to margin weakness, the company posted a 12.8% decline in normalised NPATA to $368.1 million. As a comparison, Goldman Sachs was expecting a 6% increase in revenue to $2.2 billion and a 2% decline in NPATA to $416 million.

The Bigtincan Holdings Ltd (ASX: BTH) share price has fallen 5% to 72 cents. This follows the successful completion of its institutional placement. The sales enablement software platform provider raised $35 million at a discount 67 cents per share. It will now aim to raise up to $5 million via a share purchase plan. These funds will be used to accelerate key strategic priorities.

The Clover Corporation Limited (ASX: CLV) share price is down 2.5% to $2.47. This appears to have been driven by a broker note out of UBS. Although its analysts note that Clover is expecting a strong fourth quarter, they suspect this is partly due to inventory restocking pulling forward demand. In light of this and its strong share price performance, it has downgraded its shares to a neutral rating with a $2.50 price target.

The Megaport Ltd (ASX: MP1) share price has fallen 4% to $13.24. Investors have been selling Megaport’s shares after it revealed that its founder and chairman, Bevan Slattery, has sold 5 million shares. This represents 3.27% of the company’s issued capital. The sale was underwritten by UBS at a price of $13.00 per share and distributed to institutional investors. Mr Slattery still owns just over 13 million shares.

More reading

• ASX 200 down 0.2%: Afterpay hits a record high, Aristocrat Leisure update disappoints
• Top ASX 200 gaming share on watch after half year update
• 5 things to watch on the ASX 200 on Thursday
• Why this ASX 200 stock could surge higher tomorrow
• Why ALS, Clover, Computershare, & EML Payments shares are storming 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 Clover Limited and MEGAPORT FPO. The Motley Fool Australia owns shares of and has recommended BIGTINCAN FPO. The Motley Fool Australia has recommended MEGAPORT 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.

The post Why Aristocrat Leisure, Bigtincan, Clover, & Megaport shares are dropping lower appeared first on Motley Fool Australia.

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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to maintain its winning streak. The benchmark index is currently up 0.3% to 5,588.4 points.

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

The Afterpay Ltd (ASX: APT) share price is up 3.5% to $44.41. Investors have been buying the payments company’s shares after the release of a U.S. update this morning. According to the release, the Afterpay platform has continued its meteoric growth in the market even during the pandemic. This has seen the number of active U.S. customer hit 5 million. Management revealed that 1 million of these have joined during the last 10 weeks.

The AMA Group Ltd (ASX: AMA) share price has jumped 5.5% to 68 cents. This gain has been driven by a market update from the crash repairer this morning. That update revealed that AMA is well-funded to support the business during an extended period of disruption. It also believes the headwinds it is facing now will soon turn to tailwinds and notes that vehicle travel levels are beginning to return to normal levels as restrictions continue to ease.

The NRW Holdings Limited (ASX: NWH) share price has rocketed 24% higher to $2.05. The catalyst for this strong gain has been a trading update by the infrastructure contractor. According to the update, NRW delivered unaudited revenue of $1.6 billion for the 10 months to April 30. This represents record revenue for the company compared to any previous full financial year. The company’s EBITDA came in at $177 million for the 10 months, pre-adoption of AASB16.

The Santos Ltd (ASX: STO) share price has stormed 3.5% to $5.30. This follows a jump in oil prices overnight after data revealed a surprise drop in U.S. stockpiles. It isn’t just Santos which is storming higher. The S&P/ASX 200 Energy index is up a solid 2% at the time of writing.

More reading

• ASX 200 down 0.2%: Afterpay hits a record high, Aristocrat Leisure update disappoints
• ASX 200 mining services share storms 27% higher on record revenue result
• Why I’d invest $1,000 in this ASX tech share today
• Afterpay share price on watch after hitting 5 million active US customers
• 5 things to watch on the ASX 200 on Thursday

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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The biggest single risk factor facing the big four ASX banks may not be as worrisome as another growing threat.

While all eyes are on the large provisioning set aside by our largest mortgage lenders due to fears of consumer and SME loan defaults, its $63 billion of commercial property loans that’s keeping bankers awake at night.

This is according to a report in the Australian Financial Review quoting unnamed senior banking executives.

Dividend and earnings threat

This could be a surprise to many as the attention is placed on over indebted households and small businesses most exposed to the devastating COVID-19 shutdown.

This is why the National Australia Bank Ltd. (ASX: NAB) share price was under the most pressure during the coronavirus fallout as it is most exposed to small business lending.

But Westpac Banking Group (ASX: WBC), Commonwealth Bank of Australia (ASX: CBA) and Australia and New Zealand Banking Group (ASX: ANZ) are also under pressure with the big four collectively setting aside more than $5 billion to due with problem loans.

Loan provisions under threat

Provisioning may have to increase if commercial property loans become as big a risk factor as the AFR is suggesting.

That means the big dividend cuts we’ve seen over the past three months may be a more permanent feature than what many are forecasting.

Bankers are worried because large companies and multinationals may decide they do not need large expensive offices in the CBD anymore.

Structural risks to ASX banks

The COVID-19 lockdown that forced record numbers of Australians to work from home is driving this rethinking. Aussies are equally if not more productive working from home. Law practices, accounting firms and investment banks may be tempted to economise by saving on rent.

If this happens, landlords will be forced to write-down the value of their prime properties. This will be a problem for the big banks who are using these high-end addresses as loan collateral.

While the $63 billion worth of such loans sound tiny relative to the mortgage books of the big four (CBA’s alone is worth around $500 billion), it’s still potentially big enough to trigger an earnings collapse in bank profits.

Another overlooked risk factor

Meanwhile, there’s a second possible structural change looming. As highlighted in my article this week, mega mall operators could also be forced to change their business model as the coronavirus shut-in accelerated the shift to online shopping.

I suspect these shopping destinations have reached their peak in terms of their strategic value and we could also see write-downs in these assets.

Structural change takes years to manifest. The fact that bankers are already starting to worry about some of these trends is a warning to investors not to take their eye off these emerging challenges.

More reading

• ASX 200 down 0.2%: Afterpay hits a record high, Aristocrat Leisure update disappoints
• Are CBA shares a 2020 dividend trap?
• Are NAB shares a bargain buy?
• Why the Commonwealth Bank share price is the best buy among the Big 4 banks
• ASX 200 down 0.2%: Big four banks lower and TPG announces demerger plans

Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, National Australia Bank Limited, and Westpac Banking. Connect with me on Twitter @brenlau.

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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Many S&P/ASX 200 Index (ASX: XJO) and All Ordinaries (ASX: XAO) dividend-paying shares have significantly cut or deferred its dividend payments. This is not the case for the likes of BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG). With the current iron ore spot price sitting at US$91.13 per tonne and the benefit of a weak Australian dollar, iron ore miners can be expected to continue generating strong cash flows to pay a leading dividend yield.  

Iron ore tailwinds 

The iron ore spot price has remained resilient throughout the coronavirus pandemic. China iron ore futures hit record peaks this week as industry data showed that port inventory levels had fallen to the lowest in more than 3 years. 

Following China’s targeted tariffs on Australian sectors such as grain and beef, investors might be concerned that iron ore could be next. However, China and Australia are incredibly co-dependent on iron ore trade. There is no replacement for Australia’s iron ore. 

This is strengthened by the fact that one of the world’s biggest iron ore producing countries, Brazil, is struggling to contain the coronavirus. Brazil’s confirmed cases have grown to more than 250,000, with almost 17,000 confirmed deaths. The world’s largest iron ore miner, Vale, is also recovering from the fatal dam disaster last year that significantly disrupted its production. This could drastically threaten Brazil’s iron ore production and seaborne exports.  

China’s post-coronavirus stimulus 

Infrastructure construction and industrial output has been pivotal to China’s economic growth. The market is expecting further infrastructure stimulus measures to be decided in May or June. 

In response to the global financial crisis in 2008, the Chinese government unleashed a RMB$4 trillion stimulus package, equivalent to approximately 13% of the country’s GDP. This stimulus went towards various government-led projects, with a particular focus on infrastructure such as high speed rail lines, train stations, metro systems and airports. An infrastructure and commodity-reliant stimulus should further support the iron ore spot price and Aussie miners. 

Market-leading dividends 

Australian miners are positioned front and centre to generate strong cash flows and provide investors with a market-leading dividend.

At the time of writing, Fortescue pays a 7.70% dividend yield, BHP pays a 5.10% dividend yield and Rio Tinto pays a 4.90% dividend yield. Given Fortescue’s pure iron ore operations, it has greater exposure to the stable/rising iron ore spot price. 

I see a lot of potential in iron ore moving forward and these shares no doubt deserve a place on your watchlist. 

More reading

• How to invest $1,000 in ASX 200 shares like Warren Buffett today
• Why I’d invest $1,000 in this ASX tech share today
• Is the Wesfarmers share price in the buy zone?
• 3 five-star ASX 200 shares to buy right now
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor Lina Lim 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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If you’re looking at investing at the small side of the market, I think the three small caps listed below could be worth considering.

While there is certainly still a lot of work to be done, they all appear to be carving out bright futures for themselves.

Here’s why I think they should be on your watchlist:

Alcidion Group Ltd (ASX: ALC)

Alcidion is a fast-growing health informatics company which is aiming to transform healthcare with smart, intuitive technology solutions. It has a growing portfolio of software products and services such as Miya Precision, Smartpage and Patientrack. Combined, they support interoperability, allow communication and task management, and deliver clinical decision support at the point of care to improve patient outcomes.

Serko Ltd (ASX: SKO)

Serko is an online travel booking and expense management provider behind the Zeno Travel and Zeno Expense platforms. Zeno Travel provides AI-powered end-to-end travel itineraries, cost control and travel policy compliance to corporate customers. Whereas the latter platform allows its users to automate and streamline the expense administration function, identify out-of-policy expense claims, and prevent fraud. While Serko’s growth will be hit hard by the pandemic, I believe it will bounce back strongly when travel markets return to normal. Until then, it looks well-funded to ride out the storm.

Volpara Health Technologies Ltd (ASX: VHT)

Volpara is a Software-As-A-Service (SaaS) company that leverages artificial intelligence to improve the early detection of breast cancer by analysing mammograms and associated patient data. After which, the software is able to provide clinical decision support and practice management tools and a cost-effective way. But most importantly, it can be used to reduce breast cancer deaths. The company is currently generating NZ$18 million in annual recurring revenues (ARR), but estimates that it has a US$750 million ARR opportunity in breast cancer screening.

More reading

• These small cap ASX shares could be stars of the future
• Could these small cap ASX shares be the next Afterpay?
• 3 exciting ASX healthcare shares to watch in the 2020s
• 3 exciting small cap ASX shares to invest $3,000 into right now
• Why these 4 exciting ASX tech shares are soaring higher today

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 Alcidion Group Ltd and Serko Ltd. The Motley Fool Australia owns shares of and has recommended VOLPARA FPO NZ. The Motley Fool Australia has recommended Alcidion Group Ltd and Serko 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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I often ask myself, “how would Warren Buffett invest in ASX 200 shares right now?”

The Oracle of Omaha is arguably the most successful investor ever. He has built his fortune by combining long-term thinking with short-term tactical buying. His investment strategy has clearly paid dividends (even if Berkshire Hathaway doesn’t!) and I think the current market is ripe with opportunities for value investing.

Many ASX 200 shares have been smashed in the recent downturn. But a large proportion of these will emerge from the coronavirus pandemic with their businesses intact. They, therefore, could represent super cheap buying right now. Furthermore, with markets remaining volatile amid COVID-19 related updates, large daily swings are offering up plenty of chances to snap up some bargain buys. 

So, amongst all the noise, how can you invest $1,000 in ASX shares like Warren Buffett himself?

How to invest $1,000 in ASX 200 shares like Warren Buffett

The key to value investing is looking for undervalued companies. This means those that have experienced heavy share price falls are prime buying candidates.

However, share prices don’t often fall for no reason. Investors are usually pricing in actual or expected decreases in earnings and/or future growth. The trick to investing like Warren Buffett is finding those that have been unfairly oversold.

I’ve got my eye on a couple of such ASX 200 shares. I think some of the real estate investment trusts (REITs) could be oversold right now. Take, for instance, National Storage REIT (ASX: NSR).

National Storage specialises in self-storage units and its share price has fallen 5.98% lower in 2020. However, if the economy and residential housing market nosedive this year, I think National Storage REIT earnings could benefit. Increasing numbers of people would be looking to store their possessions while they search for housing and/or temporarily downsize to save costs. The ASX 200 REIT was also a potential takeover target amongst several contenders prior to the pandemic. As such, it could be back on the acquisition radar when the market settles.

I also like the look of Macquarie Group Ltd (ASX: MQG). The ASX 200 financial group’s shares are down 23.21% in 2020 and could represent a great vehicle for investing $1,000 today. All of the ASX bank shares have been smashed this year, but I think Macquarie’s diversified investments and earnings streams could see it pull through the market downturn in good shape.

More reading

• Why ASX 200 iron ore miners are your best bet for dividends right now
• Why I’d invest $1,000 in this ASX tech share today
• Is the Wesfarmers share price in the buy zone?
• 3 five-star ASX 200 shares to buy right now
• 5 things to watch on the ASX 200 on Thursday

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