The Zip Co Ltd (ASX: Z1P) share price has rebounded off its lows but is still trading notably lower on Friday.

At the time of writing the payments company’s shares are down over 7.5% to $6.03. This is despite the release of another positive announcement this morning.

What did Zip announce?

This morning Zip released an update which revealed that its strong performance continued during the month of May.

In May, Zip recorded monthly transaction volume of $189.3 million and revenue of $15.6 million. This was a 63% and 78% increase, respectively, over the same period last year.

And while this growth is a touch slower than in April, when transaction volume lifted 86% and revenue rose 81% growth, it is still a very impressive rate of growth in such a challenging economic environment.

Zip added 65,000 new customers during the month, lifting its total to 2.1 million. This represents a total increase of 63% since this time last year.

Also growing strongly was its merchant numbers. They are up 46% year on year to 23,600.

Net bad debts low but rising.

At the end of May, Zip’s net bad debts stood at 2.16%. This compares to 1.99% at the end of April.

Management notes that this is in-line with expectations and significantly outperforming the market average.

Positively, monthly arrears, which is a forward indicator of future losses, reduced from 1.57% in April to 1.47% in May. In addition to this, there was no material change to the number of hardship assistance requests.

Zip’s Managing Director and CEO, Larry Diamond, commented: “May was another strong month for Zip – the performance of the business, both in terms of the continued strong transaction volume, and in particular the outstanding repayment performance, demonstrates the resilience of the Zip business model.”

The chief executive notes that the company is benefiting from the shift away from cash to digital, contactless payments, and ecommerce. Pleasingly, he expects this trend to continue in the future even after the pandemic ends.

Mr Diamond explained: “We also anticipate ecommerce penetration to remain at elevated levels post COVID-19 as consumers gain familiarity shopping online, and retailers invest significantly in this space.”

The chief executive also revealed that Zip is on course to achieve its guidance in FY 2020. “We remain on track to hit our FY20 target of $2.2b in annualised transaction volume set at the beginning of the year,” he concluded.

More reading

• S&P quarterly rebalance: A2 Milk added to ASX 50 & NEXTDC in the ASX 100
• ASX growth companies including Zip Co cash in on the rise of e-commerce
• A $10,000 investment in the Zip Co IPO would be worth $350,000 today
• My share investing journey during the pandemic
• 3 ASX shares to buy now with $10,000

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 ZIPCOLTD FPO. 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 Qantas Airways Limited (ASX: QAN) share price has shot up over 100% from its trough on 23 March. The company has gradually started to recommence regional flights. Meanwhile, both national and international borders remain closed. You have to wonder if investors are taking a very large gamble, or if Qantas really is a good investment right now. 

Not the same old Qantas

It appears likely that Qantas will be a transformed company following the COVID-19 pandemic lockdowns. Reduced demand is likely to force down costs for employees and marketing, in particular. This will presumably drive the company to mould itself into a leaner outfit that is better equipped to face its new ‘normal’. Analyst Anthony Mulder from the investment bank Jeffries has forecast staff costs at Qantas to reduce to $2 billion in the 2021 financial year, down from $4.2 billion in 2019.

Qantas will, however, take a short term hit on fuel. The hedging they would have had in place to control costs will see them paying higher prices following the oil price’s sudden crash. Nonetheless, over the medium term, the company will see fuel costs fall. There is also talk of Qantas winding up or selling off its minority stake in Vietnamese offshoot Jetstar Pacific. 

What happens next?

It is hard to miss the growing crescendo calling for borders to reopen. The moment open borders are announced, I believe the Qantas share price will start to climb again. In addition, the company is well placed to return to a level of profitability.

It has been well supported by the government subsidising essential flights and its balance sheet remains very strong. Furthermore, Qantas retains a 19.9% stake in Alliance Aviation Services Ltd (ASX: AQZ). This provided the Aussie airliner with at least one air flight revenue stream throughout the lockdown period. Qantas’ stake in Alliance, however, is currently under review by the ACCC.

Is there value in today’s Qantas share price?

Notwithstanding all the factors above, I believe Qantas has the financial track record of a well managed company. Moreover, it has a strong balance sheet and high liquidity (cash) levels. As an indication of good management, Qantas has a 10-year average return on equity of 17.5%. This is also known as its return on net assets. I believe that for a capital intensive company, this is a good result.

Lastly, in his upgrade of Qantas, analyst Anthony Mulder gave it a target price of $6.20. Merrill Lynch Bank of America analyst Melinda Baxter also upgraded her recommendation, valuing the Qantas share price at $5.25. It is currently trading at $4.29, at the time of writing.

Foolish takeaway

During the pandemic, Qantas has demonstrated why it is one of Australia’s most widely held shares. It is reshaping itself for the future and has worked hard to be battle ready. With two prominent analysts recommending a higher target price, I believe the Qantas share price will start to climb once there is a hint that borders will reopen. 

More reading

• The smartest ASX shares to invest $10,000 in right now
• Flight Centre share price and other ASX 200 travel shares look set to continue rising
• ASX 200 Weekly Wrap: ASX bulls crash through 6,000 points
• Top brokers name 3 ASX 200 shares to buy next week
• Will the Qantas share price crash back to Earth?

Motley Fool contributor Daryl Mather 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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ASX 200 shares continue to bounce back strongly in June. However, we’ve seen a minor wobble this week as the S&P/ASX 200 Index (ASX: XJO) has fallen lower for 2 consecutive days, and is down almost 3% this morning.

Despite this, things are still looking relatively good in global share markets. Strong money supply and general optimism about 2021 are pushing share prices higher.

It’s easy to get distracted by short-term market movements. It’s important to keep an eye on the prize – building a long-term investment portfolio.

Here are a few ASX 200 shares that I think are worth buying and holding for decades into the future.

3 ASX 200 shares to buy for the long-term

When investing for the future, I like to think of some key themes that will be important. After all, future trends will drive the economy and that will be led by top ASX companies.

I think Commonwealth Bank of Australia (ASX: CBA) is one share to buy for the future. CBA is Australia’s largest bank and has historically been a dividend staple of many Aussie portfolios.

There’s a lot of talk around disruption and the rise of the neobanks. While neobanks may continue to capture market share, I think the big four will be hard to dislodge.

CBA isn’t the only ASX 200 share that is looking tough to dislodge in its industry. I like the look of NextDC Limited (ASX: NXT) as a leader in the data storage and security industry.

NextDC looks to be laying the platform for future growth right now. The Aussie data storage group recently raised $672 million from investors to develop more data centres around Australia.

Another ASX growth share that I think is set for more growth is Polynovo Ltd (ASX: PNV). Polynovo’s proprietary NovoSorb BTM product continues to go from strength to strength. In fact, the Polynovo share price has rocketed 3,050% in the last 5 years and more than doubled in the last 12 months.

Foolish takeaway

These are just a couple of the ASX 200 shares I think will be strong companies in the decades ahead and are well worth considering today as long-term buys.

More reading

• Is ‘sell’ really a dirty word? How to know when to let go of your ASX shares
• Why the AFIC share price could be cheap today
• Woolworths facing fresh threat from Amazon.com
• Is this the start of a second COVID-19 share market crash?
• Is this why the NAB share price could be cheap today?

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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With ASX shares now getting a grip on their earnings following the recent crash that left most of them oversold, it’s time to take stock of what the current ‘recalibration’ means for the overall market. The end of the financial year is looming large, and with the S&P/ASX 200 Index (ASX: XJO) up around 35% since falling to 4,546 points on 23 March, there’s no better time to review the ASX shares in your portfolio.

Cutting your losses on non-performing shares is never easy. What makes it doubly hard is broker aversion to the S-word, with their recommendations typically gyrating between ‘buy’, ‘hold’, and ‘accumulate’.

But sometimes it simply pays to bite the bullet and take a loss. This, incidentally, can have some favourable tax considerations: notably the ability to offset losses against future gains. On the flipside, an attempt to avoid paying tax on a capital gain is insufficient reason not to sell a stock when you should.

Take gains off the table while you can

But it’s not only the rotten apples that you should consider selling down. Sometimes it’s equally important to know when to lock in some profit. That doesn’t necessarily mean existing a quality stock completely.

For example, many shares have seen major gains recently. One strategy for shareholders could have been to reduce their stake, and potentially buy back in following a share market correction, or via corporate activity. Due to a slew of recent capital raisings, some shareholders have been able to offload shares only to top up their holding at attractive discounts to the current price.

Admittedly, there’s nothing wrong with letting your profits run, especially if future upside is yet to be factored into the price. However, savvy investors know when to take profits before prices potentially fall.

The art of selling shares is also considerably less predictable than buying, so it pays to have a solid strategy.

Do your reasons for selling stack up?

Shares that have enjoyed a strong run up may start to look decidedly overheated. This often triggers smart investors to sell out at a price they perceive to be close to the top. While calling the top (or bottom) is something even most professional investors struggle with, one tell-tale sign that the price is looking decidedly ‘toppy’ is how far it rallies above any reasonable estimate of value.

One of the investment truisms coined by Warren Buffett is that the share price cannot continue to outperform the underlying business forever. At some point, something has to give. Unless there are future upsides to current valuations, the closer a company’s share price gets to its intrinsic value, the greater the potential risk of holding onto the stock.

So when the share price runs way ahead of value and for no justifiable reason, don’t get too greedy and don’t simply rely on raw exuberance or momentum. Equally important, remember that it’s over the short-term that the gap between the share price and the underlying performance of the business will be at its widest.

If you’re unsure of where a share price is heading, ask yourself this: If a stock trades at $10 today, while the intrinsic value is $20, do you expect the price to rise to $25 next year, and maybe $35 three years later? Can you afford to wait? If the answer’s yes – consider holding. If not – consider selling.

While it’s not rocket science, the conclusion you come to should be based on research into future valuations, rather than an educated hunch.

Take the money and run

You may also think about selling-down stocks that are starting to slip into what’s known as value-trap territory. Typical candidates include former share market darlings. While their best days might be behind them, these ASX shares can still attract investors due to their sheer size, dividend history or an instantly recognisable household brand.

Remember, shares that appear to be under-priced have typically become that way for good reason. For example, bad management, declining business performance, declining competitive edge (due to regulatory or technological change), excessive debt, an over-priced acquisition, or an unaffordable dividend payout ratio.

These factors will result in declining intrinsic valuations and future growth that’s less promising. This will eventually find its way to the share price. Unless you sell these stocks, they will continue to drag down the value of your overall portfolio.

The trick is to take these suppurating time-bombs – which, I’m sorry to tell you, are destined to be liquidated, enter receivership or administration – out of your portfolio before they do greater damage. Before they do, why not deploy what value is left in these lame shares into the market’s next best opportunities.

More reading

• 3 ASX 200 shares to buy and hold for decades
• Why the AFIC share price could be cheap today
• Woolworths facing fresh threat from Amazon.com
• Is this the start of a second COVID-19 share market crash?
• Is this why the NAB share price could be cheap today?

Motley Fool contributor Mark Story 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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The TPG Telecom Ltd (ASX: TPM) share price is dropping lower on Friday despite making an announcement this morning.

At the time of writing the telecommunications company’s shares are down almost 3% to $7.83.

What did TPG Telecom announce?

Last month when the telecommunications company released an update on its proposed merger with Vodafone Australia, it revealed plans to pay shareholders a fully franked cash special dividend prior to the completion of the merger.

At that point the company wasn’t able to say how much it would be paying to investors. But that has changed today, with the company revealing the quantum of the dividend it plans to pay if the merger goes ahead as planned.

According to the release, TPG Telecom plans to pay a fully franked special dividend in the range of 49 cents per share to 52 cents per share. While this equates to a generous 6.1% to 6.45% dividend yield based on its last close price, it has fallen short of expectations.

Goldman Sachs was forecasting a 67 cents per share special dividend, while UBS had suggested a dividend no lower than 60 cents per share would be declared.

Investors that own shares on the record date of 1 July 2020 will be eligible to receive this dividend, which will be paid at a yet to be determined date prior to the implementation of the merger.

What now?

TPG Telecom will be holding a scheme meeting and extraordinary general meeting on 24 June 2020.

At this meeting, which will be held online because of the pandemic, shareholders will be voting on its proposed merger with Vodafone Australia.

Though, this vote looks to be a formality. The market appears to universally see the merger as the best way for the two telcos to take on industry giant Telstra Corporation Ltd (ASX: TLS).

More reading

• Can this ASX dividend share afford its 11% yield?
• The TPG share price is on the up. A good long-term buy today?
• ASX 200 Weekly Wrap: ASX bulls crash through 6,000 points
• These were the worst performers on the ASX 200 last week
• Top broker tips the Vocus share price to zoom higher

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 Australian Foundation Investment Co.Ltd. (ASX: AFI) or “AFIC” share price could be a cheap buy today.

AFIC is a listed investment company (LIC) that has a $7.6 billion market capitalisation right now. The Aussie company is perhaps best known for being a tried and true dividend share, even when times are tough.

But after slumping 12.8% lower in 2020, is the Aussie LIC in the buy zone?

Why the AFIC share price could be cheap today

AFIC invests in a diversified portfolio of 8 to 100 companies across a range of industries. Given the scope of its investments, I like to compare the Aussie LIC to the S&P/ASX 200 Index (ASX: XJO).

While the AFIC share price is down in 2020, the benchmark ASX 200 index has also fallen 10.9%.

That could mean the Aussie LIC is in the buy zone but it may not be enough. One of the big advantages of LICs like AFIC is their historical dividend performance.

Even during the GFC, AFIC managed to still pay a strong dividend to investors. That’s impressive and one of the many reasons AFIC is a staple in a lot of Aussie portfolios.

Let’s consider an exchange-traded fund (ETF) as an alternative to AFIC. The Vanguard Australian Shares Index ETF (ASX: VAS) tracks the ASX 300 and is down 10.5% this year.

This Vanguard ETF is yielding 4.34% right now while AFIC is paying 3.84%. That could mean the AFIC share price isn’t as cheap as it initially looks.

However, it’s not that simple. If AFIC manages to maintain its dividends even as we see more ASX shares slash distributions later this year, that could be worth more than capital stability for many investors.

Foolish takeaway

I think AFIC is a solid ASX share in most portfolios. The Aussie LIC provides diversified exposure and its management fee is a lowly 0.13% per annum.

Whether the AFIC share price is cheap or not remains to be seen in 2020 but it could be a good buy after its 12.8% fall.

More reading

• 3 ASX 200 shares to buy and hold for decades
• Is ‘sell’ really a dirty word? How to know when to let go of your ASX shares
• Woolworths facing fresh threat from Amazon.com
• Is this the start of a second COVID-19 share market crash?
• Is this why the NAB share price could be cheap today?

Motley Fool contributor Ken Hall owns shares of Vanguard Australian Shares Index. 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 ASX is facing a big indiscriminate sell-off this morning but the Woolworths Group Ltd (ASX: WOW) share price might have another headache to deal with.

On-line shopping titan Amazon.com, Inc. started selling alcohol online with free delivery for Amazon Prime subscribers, reported Nine News.

The move was to capitalise on strong demand for alcohol during the COVID-19 lockdown with Aussies flocking to online platforms for contactless delivery.

Demerger under a cloud

The launch of alcohol on Amazon poses a fresh challenge to Woolworths on a few fronts. Our supermarket giant is looking to demerge its Endeavour Drinks business, which houses Dan Murphy’s and BWS, among others.

The coronavirus pandemic is complicating the process and news that the world’s largest retailer is muscling in on the lucrative market will cast a further cloud over the demerger.

How prices compare

The drinks sold on Amazon is priced favourably to Dan Murphy’s. According to Nine News, a case of VB beer on Amazon costs $51.90 for 30 cans.

Dan Murphy’s price is a tat cheaper at $51.85 – but Dan Murphy’s charges between $6.90 and $15 for delivery while Amazon’s delivery free with its $6.99 per month Prime subscription.

A case of Jacob’s Creek Double Barrel Chardonnay at Dan Murphy’s is $119.70 plus delivery. Amazon is selling the same for $108 – again with free delivery for Prime members.

Amazon competing with our supermarkets

Woolies shareholders are hanging out for the Endeavour spin-off given that stocks which undertake such a separation tend to outperform the S&P/ASX 200 Index (Index:^AXJO).

But Woolworths is facing more than one battle front with Amazon. Experts believe it’s only a matter of time before Amazon starts selling fresh produce online and in physical stores, just as it’s doing in the US.

It isn’t only Woolworths that is facing the Amazon challenge. Archrival Coles Group Ltd (ASX: COL) is also vulnerable to losing market share to the US retailer, while grocery distributor Metcash Limited (ASX: MTS) is another that will be impacted.

Can ASX supermarket stocks keep outperforming?

These stocks have held up very well through the COVID-19 bear market thanks to their defensive income and the grocery panic buying .

The Metcash share price is up 12.5% since the start of 2020, while the Cole’s share price is ahead by nearly 7% and the Woolworth share price is 2% in the black.

This stands in contract to the 11% loss on the ASX 200.

Shareholders will be hoping they can keep outperforming during these uncertain times even with Amazon nipping at their heels.

More reading

• Is this the start of a second COVID-19 share market crash?
• Is this why the NAB share price could be cheap today?
• ASX 200 to sink lower after Wall Street crashes on second wave concerns
• 5 things to watch on the ASX 200 on Friday
• ASX 200 drops 3%, Webjet share price sinks

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. BrenLau 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 Amazon and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool Australia has recommended Amazon. 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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While the S&P/ASX200 (ASX: XJO) closed down 3.1% on Thursday, gold mining share prices rallied. Among the high-performers were Newcrest Mining Limited (ASX: NCM), Saracen Mineral Holdings Limited (ASX: SAR) and St Barbara Ltd (ASX: SBM).

These company shares have reacted positively to a rising gold price this week. The commodity was up 0.18% on Thursday. In addition, the uncertainty facing markets and the easing restrictions around the world is likely to have added a positive sentiment to gold mining share prices. Gold can be a popular investment during times when economies become volatile, and the current situation appears no different.

While share prices around the world have recovered considerably, the US Federal Reserve flagged concerns about the negative effect of the coronavirus on the US economy. This uncertainty, along with the fact the Federal Reserve will continue printing money, has likely contributed to the current rally for gold miners.

Newcrest Mining

The Newcrest Mining share price rose 5.67% on Thursday and was supported by positive exploration results. Newcrest Mining has been listed on the ASX since 1987 and trades on a fully franked dividend yield of 1.15%. Like most companies, Newcrest has experienced volatility as a result of the coronavirus crisis but its share price has since recovered to above its price at the beginning of 2020.

Saracen Minerals 

The Saracen Minerals share price is up 4.57%, showing a positive reaction to gold prices in line with its peers. Saracen Minerals has two operations in Western Australia and late last year it acquired a 50% stake in the Kalgoorlie Super Pit. Saracen produced a record 355,000 ounces of gold in 2019. The gold mining company’s share price is up 71% from its 52 week low of $2.81. It has risen 45% since the beginning of the year.

St Barbara

The St Barbara share price is up 5.33% at a price of $3.16 at the time of writing. The company provided guidance for the 2020 financial year in a presentation released yesterday. It expects production to be up 6.35% on last year to 385,000 ounces. The gold miner will also be cutting costs at its Western Australia operations. The St Barbara share price is up 22% since this time last year. 

More reading

• S&P quarterly rebalance: A2 Milk added to ASX 50 & NEXTDC in the ASX 100
• 5 things to watch on the ASX 200 on Friday
• Why the Newcrest share price is up today
• ASX 200 drops 2%: Big four banks sink lower, JB Hi-Fi to deliver strong profit growth
• Why Aventus, Kogan, Newcrest, & Northern Star are pushing higher

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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