The S&P/ASX 200 (ASX: XJO) fell by 1.9% today. Overnight the Dow Jones Industrial Average (DJI) fell by 6.9% on fears of a second wave of COVID-19.

This week the Federal Reserve boss Jerome Powell said: “This is going to take a whole lot of time. There are just a lot of people that are unemployed and it seems quite likely there will be a significant group, even after a lot of strong jobs growth, that will still be struggling to find jobs.” 

But there was some good news for Australians today. The federal government has announced it’s working on rules with the states to allow stadiums with 40,000 seats to hold crowds of up to 10,000 people. Bigger stadiums could be allowed to fill a quarter of the seats. These changes could come in July.

Major ASX banks retreat

The share prices of each of the big four ASX banks went backwards today.

The Commonwealth Bank of Australia (ASX: CBA) share price dropped 1.2%, the Westpac Banking Corp (ASX: WBC) share price fell 3.1%, the Australia and New Zealand Banking Group (ASX: ANZ) share price declined 2.8% and the National Australia Bank Ltd (ASX: NAB) share price dropped 2.2%.

However, they remain higher than where they were a month ago. 

Big falls in the ASX 200

Thankfully the ASX 200 actually recovered some lost ground – it was down over 3% this morning. However, whilst some shares like Afterpay Ltd (ASX: APT) managed to reverse the decline, others ended the day down heavily.

The Platinum Asset Management Ltd (ASX: PTM) share price went down 12%.

The oOh!Media Ltd (ASX: OML) share price dropped 9.8%.

Southern Cross Media Group Ltd (ASX: SXL) saw its share price decline 9.1%.

ASX 200 engineering business Monadelphous Group Limited (ASX: MND) suffered a share price decline of 8.9%.

The Unibail-Rodamco-Westfield (ASX: URW) share price went down 8.8%.

Zip Co Ltd (ASX: Z1P) announces May 2020 trading update

The buy now, pay later (BNPL) ASX 200 business said that it grew its monthly revenue to $15.6 million, an increase of 78% year on year. Zip’s monthly transaction volume increased by 63% to $189.3 million.

Zip said its receivables figure was up 85% compared to a year ago to $1.2 billion.

Customer and merchant numbers were also up by a significant amount. Customers increased by 63% to 2.1 million. It added 65,000 new customers over the course of the month. Merchant numbers increased by 46% year on year to 23,600.

In terms of net bad debts and monthly arrears, the ASX 200 said it was doing very well. Net bad debts of 2.16% were in-line with management expectations, Zip said this significantly outperformed the market. Monthly arrears reduced from 1.57% in April to 1.47% in May. Monthly arrears are seen as a forward indicator of future losses.

The ASX 200 business said that customer repayment success rates are higher or on par with pre COVID-19 rates. Monthly repayments as a percentage of opening receivables increased to 16%, up from 15% in April.

Pleasingly, there has been no material change to the number of requests for hardship assistance, which peaked at the end of March 2020 at less than 0.08% of receivables.

Zip reminded investors of the acquisition of QuadPay. Management are looking to accelerate Zip’s global expansion strategy. Zip also re-iterated to investors it has reached an agreement to raise up to $200 million from US-based Susquehanna International Group to further drive growth.

The Zip managing director and CEO Larry Diamond said that the BNPL business remains on track to hit its FY20 target of $2.2 billion in annualised transaction volume set at the beginning of the year.

More reading

• 3 ASX shares I’d buy if the market hits 23 March levels again
• Leading fund manager names 4 ASX stocks set to benefit from a faster re-opening of the Australian economy
• Down 20% in 7 trading hours… Worse to come?
• The latest ASX shares to be hit by broker downgrades to “sell” today
• What would I rather buy today: TPG or Telstra shares?

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia has recommended oOh!Media 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.

The post ASX 200 falls 1.9%, big 4 ASX banks retreat appeared first on Motley Fool Australia.

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If you’re looking to add a bit of international exposure to your portfolio, then it is remarkably easier than you might think.

This is thanks to the emergence of exchange traded funds (ETFs). Through just a single investment, ETFs can provide investors with exposure to a wide range of international indices and themes.

Two ETFs that I think would be great additions to a balance portfolio are listed below:

BetaShares NASDAQ 100 ETF (ASX: NDQ)

If you’re a fan of tech shares then you might want to look at the BetaShares NASDAQ 100 ETF. This ETF gives investors exposure to the 100 largest non-financial shares on the famous NASDAQ index. Among its biggest holdings you’ll find tech giants Apple, Microsoft, Amazon, Facebook, and Google. Whereas some of its smaller holdings include online conferencing company Zoom, Chinese search engine giant Baidu, and eBay. On the whole, I believe the majority of companies on the NASDAQ 100 are well-placed to grow at a quicker than average rate. This could drive strong returns for investors in this ETF.

Vanguard US Total Market Shares Index ETF (ASX: VTS)

Another option to consider buying is the Vanguard US Total Market Shares Index ETF. If you want a more balanced ETF with less of a focus on tech shares, then this ETF could be the one for you. It provides investors access to approximately 3,500 shares listed on the U.S. stock market. While this means it gives investors exposure to many of the tech giants listed above, it also gives investors access to blue chips such as Berkshire Hathaway, Johnson & Johnson, Proctor & Gamble, and Visa and Mastercard. And as many of these companies pay dividends, it also provides investors with a source of income. At present the ETF offers a trailing 2% dividend yield.

More reading

• Tech shares! Should we even invest in anything else?
• 3 of the best ETFs to give ASX investors international exposure
• Are Macquarie Group shares worth investing part of $3,000 into this June?
• 3 top ETFs you can easily diversify your portfolio with immediately
• Where to invest $10,000 into ASX shares immediately

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BETANASDAQ ETF UNITS. 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 2 ASX ETFs I would buy for diversification and strong long term returns appeared first on Motley Fool Australia.

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“If we as a society stopped and thought about it for a minute, we’d blow the whole finance industry up.”

That was me, talking to a good mate this morning.

(And because we live in reactionary, call-out times, let me be clear I’m talking metaphorically and holistically — I’m clearly not suggesting actual explosions or harm!)

With that out of the way, back to my point.

My mate called me to laugh about the recent bout of market volatility, with the US market down some 6% overnight.

Laugh, not because we were both making losses, but because the whole thing is just silly.

Here, some travel stocks have lost 20% in little more than 7 trading hours over the past two days.

Twenty per cent.

Because?

Well, you can make up your own mind. 

In theory, it seems to be because of a more sober outlook from the US Fed and an uptick in coronavirus cases in the US.

Okay, fine.

But let me put that another way.

If you think Flight Centre Travel Group Ltd (ASX: FLT)’s total future earnings — from here to eternity — are  worth 20% less because of those two inputs, I don’t think you have any business investing.

Here’s why:

First, eternity is a long time. Coronavirus is either transitory or endemic, but in either case, discounting the entire future earnings of Flight Centre by 20% on the basis of two transitory data points is, as they say in Yes, Minister, ‘courageous’.

Second, if that’s your view, you implicitly thought Flight Centre was worth 20% more on Wednesday just because you expected the Fed to be more bullish, and COVID cases to fall in a 24hr period.

Which means you were betting 20% of the value of that position on what a Fed Chief might say, and the ultra-short-term trajectory of an inherently unknowable and volatile data series: COVID case counts.

And when I say ‘you’, I don’t just mean you, dear reader.

I mean the sum total of all investors buying and selling (and, implicitly, choosing to neither buy nor sell) over the past couple of days.

In short, the finance industry.

These are people who extract billions of dollars in fees from people like you and me every year.

Because, apparently, they’re the experts.

They know what’s going on.

They’re not silly enough to take part in a market that drops 38% in a matter of weeks, then climbs the best part of 20%, before falling 6% in a couple of days.

I mean, that’d be crazy, right?

Who’d seriously invest that way.

And who, in their right minds, would pay fees to people who invested that way?

Oh.

I see.

Us?

Yep. Us.

Billions and billions of dollars every year, across the globe.

Can you imagine if your accountant worked that way?

Your mechanic?

Your doctor?

Now, I have to say, I shouldn’t hate on it too much.

After all, as long as we can separate ourselves from the seemingly manic activity, it can be an opportunity.

I’ve been telling you that I think it’s been a good idea to keep buying, if you want to make money.

(If you don’t like money, I have a PayPal account you can donate to!) 

Not because I knew what the skittish market would do next, but because my (and I hope your!) time horizon is different.

From a wealth-building perspective, I genuinely don’t care what the market does next.

Because I’m not cashing out tomorrow. Or next week. Or next month. Or next year.

Nor are you.

Even if you’re retired or about to retire, you almost certainly don’t need to ‘go to cash’ this week.

Maybe you can live on dividends. Maybe you need to slowly liquidate your portfolio over many years.

Either way, today’s movements are noise.

All of this volatility reminds me of an old joke:

A bloke is worried about whether his blinkers are working, and asks his mate to stand behind the car and check.

His mate calls out ‘They’re working… they’re not working… they’re working… they’re not working… they’re working…’.

It’s not a bad metaphor for investing.

Investing doesn’t stop working just because some knuckleheads get temporarily overexcited or temporarily disappointed.

Investing wasn’t a great idea on Wednesday, but a terrible idea yesterday.

(Sounds kinda obvious when you put it that way, doesn’t it?)

Was the market seriously ever worth 38% less in March, compared to February, because of a pandemic?

Nope.

Just as it wasn’t worth less because of wars, recessions or anything else in the past.

Because the value of each company’s shares are the full sum total of profits over the long term — not just this week or this month, or even this year.

To be blunt, Flight Centre cannot have been worth $16.85 per share on Wednesday at 4pm and $13.32 at 11am today. The company’s future just hasn’t swung that wildly in 7 trading hours.

Maybe — maybe — one of them was right.

But probably not.

Still, if we’re generous, and say one of them was right, then the market has been right half the time.

Half.

(And both are still probably wrong.)

Now you know that, are you still going to put value in the daily recitations of the value of the S&P/ASX 200 Index (ASX: XJO)?

Do you still reckon the billions doled out in fees to financial types are value for money?

Are you really going to let the daily movements of share prices tell you how to think and how to feel?

I hope not.

Short term movements are noise.

Distraction. Misdirection. Rubbish.

—-

A small aside: As I write this on Friday morning, an alert just popped up on my phone. Apparently US futures are up 100 points.

Up. Down. Up.

It’s laughable.

—–

Fair dinkum. If you’re still letting the market dictate your moods, or your actions, I hope this piece helps you sleep a little better.

I hope it helps you realise that the charade of ‘control’ that lets the finance industry rake in exorbitant fees is, well, just that — a charade.

I hope it makes you ask that eternal question, first voiced by someone when a stockbroker showed him his brand new boat: “… But where are all the customers’ yachts?”.

Yes, there are some good eggs. They’re trying their best. You’ll know them, because they’re the ones who are happy to say ‘I don’t know’, and to prick the pompous bubble of the industry.

The others? Well, decide for yourself.

Just take their prognostications with a huge dose of salt. And their fees the same.

In the meantime?

I’m never particularly happy when my portfolio is worth less than it was yesterday. I’m only human, too.

But it’s the response that counts far more.

Mine? 

I’m not selling. I’m not panicking. And I’m sure as hell not asking the market what I should think.

I’ll probably buy shares next week, I think. (I have a decent Achilles’ heel: our internal trading rules mean I’m not allowed to buy or sell shares within 2 full business days of mentioning them in public or to our members. So my ‘restricted’ list is usually longish and ever-changing!).

And my prediction? I’m sticking with the words of John Pierpont Morgan who famously said, when asked to give a prediction on what would happen to the index: “It will fluctuate”.

Everything else is vanity, pretence or willing obfuscation.

Over the long term, though? History has delivered meaningful long-term compound gains for the patient.

Invest accordingly. Please.

Fool on!

More reading

• 3 ASX shares I’d buy if the market hits 23 March levels again
• Leading fund manager names 4 ASX stocks set to benefit from a faster re-opening of the Australian economy
• ASX 200 falls 1.9%, big 4 ASX banks retreat
• The latest ASX shares to be hit by broker downgrades to “sell” today
• What would I rather buy today: TPG or Telstra shares?

Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel 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.

The post Down 20% in 7 trading hours… Worse to come? appeared first on Motley Fool Australia.

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The Mineral Commodities Limited (ASX: MRC) share price ended the week on a sour note, closing 15.38% lower on Friday at 22 cents.

While the ASX was a sea of red as investors responded to a potential second COVID-19 wave in the US, Mineral Commodities also released a trading update today which likely weighed on its shares.

Mineral Commodities is a global mining and development company. Its primary focus is on the development of high-grade deposits within the mineral sands and battery minerals sectors.

The company’s major projects include the Tormin mineral sands operation in South Africa and the Skaland graphite operation in Norway.

Operations update

In the release today, Mineral Commodities shed some light on trading conditions and recent developments at its major operations.

At Skaland, the company’s mining operations and downstream program haven’t experienced any major interruptions from COVID-19.

Meanwhile, at Tormin, Mineral Commodities revealed that the pandemic has caused delays for its section 102 expanded mining rights application. Nonetheless, the application has progressed to the Department of Mines Resources and Energy for granting.

Mining and processing operations at Tormin were impacted by South Africa’s nationwide lockdown in March and April. However, operations resumed on 13 April and have since returned to normal. Accordingly, the company reported that mining and processing tonnes in May were the highest recorded performance for the year.

Sales

Mineral Commodities revealed it has seen “unabated” demand and continues to sell all the production of its non-magnetic zircon rutile concentrates to China.

However, as flagged back in March, there has been reduced demand for bulk ilmenite concentrate. As a result, no sales for ilmenite concentrate had been secured up until mid-June. However, the company noted it has now secured firm sales for the second half of FY20.

With this, Mineral Commodities stated it has observed improving market conditions as most Chinese tertiary mineral sands processing facilities have returned to production. It expects to start shipping ilmenite concentrates by as early as July 2020.

Mineral Commodities also flagged a technical dispute that has arisen regarding its Life of Mine Garnet Offtake Agreement with GMA Group. The dispute relates to stockpiled inventory quantities and both parties have reverted to a formal dispute resolution process.

On a more positive note, graphite sales at Skaland have continued without interruption. The company achieved record sales in the first quarter as product inventory accumulated in 2019 was sold down.

Financial position

Turning to the balance sheet, Mineral Commodities has US$18.6 million in current account receivables. This includes US$11.7 million owing from GMA Group, with US$8.6 million past due for payment.

Mineral Commodities noted that budgeted revenue and operating cash inflows have been adversely affected by the disruption to normal ilmenite and garnet sales.

“The Company’s business remains sound and on track to deliver the growth profile at Tormin and Skaland, however unforeseen circumstances have ensued, compounded by the COVID-19 pandemic, which require Management and the Board to undertake contingency planning to ensure that the business successfully navigates these challenges,” said executive chair Mark Caruso.

More reading

• Top fundie names small-cap ASX shares to buy
• ASX shares I’d buy if this decline is a second COVID-19 crash
• Insiders have been buying these ASX shares this week
• 3 fantastic ASX shares to buy and hold to make you wealthy
• The latest ASX shares to be hit by broker downgrades to “sell” today

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.

The post Mineral Commodities share price tumbles 15% on COVID-19 trading update appeared first on Motley Fool Australia.

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Investing is one of those rare games where cheating isn’t against the rules. Well, not all cheating. Insider trading is still a crime.

But by ‘cheating’, here I mean looking over other investors’ shoulders and seeing what they’re buying. Of course, not all investors are worth a look. You never want to copy the test of the worst student in the class.

But the fund managers at Bennelong Australian Equity Partners are amongst those investors that are well worth a peek, in my view. Bennelong’s managed funds are often at the top of the pile in terms of performance history. The Bennelong Emerging Companies Fund, for example, has managed a return of 22.47% per annum since its inception in 2017.

And it’s this fund we’re going to have a peek at today.

Bennelong has just released its monthly update for May, and it merits some interesting reading if you’re looking for some small-cap ASX shares to buy.

Bennelong’s top ASX share picks

In its letter to investors, Bennelong remained coy about its exact portfolio holdings (and fair enough). But it did give us some tidbits.

The fund manager named Viva Leisure Ltd (ASX: VVA), Mader Group Ltd (ASX: MAD) and BWX Ltd (ASX: BWX) as amongst its top holdings for the month.

Viva Leisure owns a chain of gyms, including Club Lime and HIIT Republic. Here, Bennelong obviously bet on the lifting of coronavirus restrictions surrounding gyms benefitting this company going forward. Fair enough too – this stock is already up more than 260% from the lows we saw in March.

Mader (which an enviable ticker symbol, I must say) is a manufacturer of mining equipment and machinery. According to the company it works with ‘all the major names Australian and international mining’, which presumably includes BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG). Again, Mader has done well in recent months, up more than 30% from the March lows. Even so, this company remains significantly underwater from its highs in February, and so might still offer some growth opportunities.

BWX is a boutique beauty products manufacturer which includes brands such as Sukin, Andalau, USPA and Nourished Life. Its shares have also been doing well lately, up more than 36% from its March lows. Like Mader though, BWX is still underwater in 2020 so far, and so perhaps Bennelong is playing a long game with this one.

Foolish takeaway

Just because one ASX investor is buying a share doesn’t mean we should all rush out and blindly copy their moves without doing our own research first. But we can still ‘cheat’ by getting some of our next ideas to research from well-performing fund managers. So take these shares with a grain of salt, but take note nonetheless!

More reading

• These top ASX shares have doubled in value in 12 months

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BWX 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 Top fundie names small-cap ASX shares to buy appeared first on Motley Fool Australia.

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ASX shares are falling again. The S&P/ASX 200 Index (ASX: XJO) is down by 1.6%, though it has bounced back from earlier today. The ASX 200 was down more than 3% in the morning.

Investors seem to be scared after US Federal Reserve boss made comments suggesting that the US economy isn’t likely to recover as quickly as some are hoping. It probably isn’t going to be a V-shaped recovery.

The original COVID-19 crash caused the ASX 200 to fall around 35% by 23 March 2020. Since then the share market has been recovering. Some ASX shares have made astonishing gains. For example, the Afterpay Ltd (ASX: APT) share price has gone from $8.90 to over $50.

There have been plenty of other ASX shares that have made large gains since March like Webjet Limited (ASX: WEB), Zip Co Ltd (ASX: Z1P), Qantas Airways Limited (ASX: QAN) and EML Payments Ltd (ASX: EML). It has been getting harder to find good value after such a strong recovery.

If the ASX keeps falling then I’d buy ASX shares:

Share 1: Altium Limited (ASX: ALU)

I believe that Altium is one of the highest-quality businesses on the ASX.

It is trying to become the global leader of electronic PCB software. It’s aiming to do this by achieving 100,000 Altium Designer subscribers by 2025. Reaching that goal is a large part of hitting another goal of US$500 million revenue by 2025.

The company has warned that the ongoing conditions has caused the company to respond with “attractive pricing and extended payment terms to drive volume”. Lower-than-expected short-term revenue isn’t ideal, but gaining subscribers is more important for the long-term goals I mentioned above.

Altium recently launched a cloud offering called Altium 365. I think this service will prove popular because COVID-19 has caused more engineers to work from home.

In the FY20 half-year result the ASX share reported it had US$80.7 million of cash. This means it’s well funded to keep going through these uncertain times.

I’m hoping to buy Altium at a share price under $30.

Share 2: A2 Milk Company Ltd (ASX: A2M)

I think A2 Milk is another high-quality ASX share. A2 Milk has been one of the most successful ASX businesses at growing beyond Australia and New Zealand.

In its FY20 half-year result the ASX share generated NZ$317.2 million of revenue from its China and other Asia segment. That revenue total was 76.7% higher than the prior corresponding period. This division generated earnings before interest, tax, depreciation and amortisation (EBITDA) of NZ$117.5 million, up 60.3%.

In the US the ASX share generated revenue of NZ$28 million, representing growth of 116%.

I think these Asia and US alone give A2 Milk an attractive growth runway. It’s also about to start generating earnings from Canada with an exclusive licensing agreement with Agrifoods Cooperative.

COVID-19 doesn’t seem to be slowing A2 Milk down. I think it’s one to watch. I’d like to buy it at a share price under $17.

Share 3: Brickworks Limited (ASX: BKW)

Brickworks is best known for being a building products business. It manufactures a variety of things like bricks, paving, masonry, roofing, precast and so on.

Construction is expected to suffer this year as the impact of COVID-19 flows through the economy. If that’s true, it will probably hurt Brickworks’ building product earnings in Australia (and the US too, where COVID-19 is also a problem).

However, Brickworks has two other divisions to provide stability to the ASX share. It has a 50% stake in an industrial property trust alongside Goodman Group (ASX: GMG). Ecommerce demand is expected to further strengthen the demand for industrial properties.

Brickworks also owns a large shareholding of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares. Soul Patts has been delivering steady and growing earnings and dividends for Brickworks for decades.

I think Brickworks looks like a very good long-term buy at a share price under $15.

Foolish takeaway

I really like each of these ASX shares. At the current prices I think Brickworks is the best buy for 2020. Particularly because Australia is lifting many COVID-19 restrictions. However, if they were all trading at a good price I’d go for Altium first. I really like high-quality tech businesses.

More reading

• 3 fantastic ASX shares to buy and hold to make you wealthy
• Tech shares! Should we even invest in anything else?
• S&P quarterly rebalance: A2 Milk added to ASX 50 & NEXTDC in the ASX 100
• Have $1,000? You should pick one of these 8 ASX shares
• Why is the A2 Milk share price underperforming?

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO, Emerchants Limited, and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Brickworks and Webjet Ltd. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended Emerchants 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 ASX shares I’d buy if this decline is a second COVID-19 crash appeared first on Motley Fool Australia.

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Once a week I like to take a look to see which shares have experienced meaningful insider buying.

This is because insider buying is often regarded as a bullish indicator, as few people know a company and its intrinsic value better than its own directors.

A number of shares have reported meaningful insider buying this week. Here are a couple which have caught my eye:

AMA Group Ltd (ASX: AMA)

One of this smash repair company’s non-executive directors has taken advantage of a significant pullback in the AMA Group share price to purchase shares. According to a change of director’s interest notice, Non-Executive Director Simon Moore picked up 1,125,000 shares through an on-market trade on 5 June. Mr Moore paid a total of $744,412.50 for the shares, which equates to an average of ~66.2 cents per share.

AMA Group’s shares fell heavily earlier this year after the release of a very disappointing half year result. Despite posting a 32% increase in half year revenue, the company delivered a loss after tax of $11 million. This compares to a profit of $10 million in the prior corresponding period. Judging by the sizeable purchase, it appears as though this director is confident that the worst is behind the company now.

Wesfarmers Ltd (ASX: WES)

According to another a change of director’s interest notice, one of this conglomerate’s non-executive directors has been topping up their holding. The notice reveals that Sharon Warburton bought 4,600 shares through an on-market trade on 9 June. Warburton paid an average of $41.75 per share, which equates to a total consideration of $192,050.

The director’s buy price was a discount of approximately 12% to Wesfarmers’ 52-week high of $47.42. It appears as though they see value at this level, especially given the strong performance of its Bunnings and Officeworks businesses during the pandemic.  

More reading

• ASX 200: improved consumer sentiment to near pre COVID-19 levels
• 3 quality ASX dividend shares to solve your income needs
• 2 top ASX dividend shares you can buy right now
• Is the Wesfarmers share price good value?
• Why I think Wesfarmers is the best ASX blue chip

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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 Insiders have been buying these ASX shares this week appeared first on Motley Fool Australia.

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One of the simplest and potentially most effective ways of building your wealth is to invest with a long term view.

This is because buying and holding shares lets investors benefit fully from the power of compounding.

But which shares should you buy? I believe the three ASX shares listed below could generate strong returns for investors over the long term. Here’s why I would buy them today:

Altium Limited (ASX: ALU)

The first buy and hold option to look at is Altium. It is a printed circuit board (PCB) design software provider which I believe has significant potential. This is due to the growing demand for sophisticated electronic design automation software such as Altium Designer because of the Internet of Things boom. This year management is aiming to reach 50,000 software subscriptions. It then wants to double this to 100,000 by FY 2025. Given the quality of its product and favourable industry tailwinds, I believe Altium will achieve this.

Bubs Australia Ltd (ASX: BUB)

Another buy and hold option to consider is Bubs. It is a goat’s milk-focused infant formula and baby food company which has been growing at a strong rate over the last few years. Pleasingly, I believe this strong form can continue for some time to come. Especially given increasing demand in China and its supply agreements with Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) supermarkets. Another positive is that it has recently expanded its offering into cow’s milk infant formula. Given the size of this side of the infant formula market, it could be a big contributor to its future growth.

Nearmap Ltd (ASX: NEA)

A final buy and hold option to consider is Nearmap. It is a leading aerial imagery technology and location data company that allows businesses to instantly access high resolution aerial imagery and integrated geospatial tools. Last month Nearmap revealed that it is on course to achieve annualised contract value of $103 million to $107 million in FY 2020. This is still only a fraction of the global aerial imagery market, which is estimated to be worth US$10.1 billion. I believe its quality offering, which is being boosted by the release of an AI product, puts the company in a position to capture a growing slice of this market over the next decade.

More reading

• ASX shares I’d buy if this decline is a second COVID-19 crash
• Tech shares! Should we even invest in anything else?
• Have $1,000? You should pick one of these 8 ASX shares
• How the A2 Milk and Bubs share prices have performed during the pandemic
• 2 ASX shares I’d buy if the ASX crashes again

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 Altium, BUBS AUST FPO, and Nearmap Ltd. The Motley Fool Australia has recommended BUBS AUST FPO and Nearmap 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.

The post 3 fantastic ASX shares to buy and hold to make you wealthy appeared first on Motley Fool Australia.

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The S&P/ASX 200 Index (Index:^AXJO) is clawing its way back from the abyss, but any bounce could be an opportunity to sell shares that have just been hit by broker downgrades.

The top 200 benchmark is trading 1.7% lower in after lunch trade but that’s only around half of what it lost this morning.

The sharp sell-off was triggered by fears of a second wave of COVID-19 infections in the US and I think any pullback is an opportunity to buy as I don’t see the market returning to its March bear market low.

But not all popular stocks should be on your watchlist, not according to some leading brokers who just downgraded these two ASX shares to “sell”.

Paying more than full price

One that got its recommendation cut by Credit Suisse is JB Hi-Fi Limited (ASX: JBH). The broker lowered its rating on the electrical and white goods retailer to “underperform” from “neutral” today even after management’s positive trading update.

But Credit Suisse is urging investors to take the opportunity to take profit after JB Hi-Fi sales benefited from stay and work at home restrictions to curtail the pandemic.

While the retailer is seen as a quality stock given managements propensity to under promise and overdeliver, the broker pointed out that it’s trading on a significant premium to peers like Harvey Norman Holdings Limited (ASX: HVN) and its own historical multiples.

The broker also believes that FY21 earnings are “very likely” to be lower despite the tailwinds and it sees its sell recommendation on the stock as a relatively low risk call.

Credit Suisse’s 12-month price target on the stock is $34.52 a share.

Wings clipped

Meanwhile the Webjet Limited (ASX: WEB) share price crashed 6.8% ahead of the close to $3.90 after Morgan Stanley downgraded the stock to “underweight” from “equal weight”.

The broker made the cut as it pointed out six reasons why it preferred Corporate Travel Management Ltd (ASX: CTD) over the online travel agent.

For one, Corporate Travel looks to be better priced than Webjet based on market cap and enterprise value.

The corporate travel group’s cash burn is also lower than Webjet and its exposure to the collapse Virgin Australia airline is smaller.

Further, CTD’s earnings are expected to recovery quicker than Webjet’s as more of its bookings are for domestic travel.

Morgan Stanley also prefers CTD for its direct relationship with its business customers while Webjet is used more as a price comparison service.

Lastly, the broker thinks CTD is better placed to acquire a bargain. The group has access to capital and a long list of potential takeover targets.

Morgan Stanley’s price target on Webjet is $3.30 a share.

More reading

• What would I rather buy today: TPG or Telstra shares?
• Brokers name 3 ASX shares to buy right now
• Tech shares! Should we even invest in anything else?
• Keep a watch on these 3 ASX trends next week
• ASX 200 down 2.2%: Westpac tumbles, TPG reveals special dividend plans

Motley Fool contributor Brendon Lau owns shares of Webjet Ltd. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and 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.

The post The latest ASX shares to be hit by broker downgrades to “sell” today appeared first on Motley Fool Australia.

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The TPG Telecom Ltd (ASX: TPM) share price has been an extraordinary performer in 2020 so far. TPG shares are up more than 23% year to date, compared with the S&P/ASX 200 Index (ASX: XJO) which is still down around 13% from where it started the year.

In contrast to TPG, the Telstra Corporation Ltd (ASX: TLS) share price is having a pretty average year. Telstra shares have more or less tracked the ASX 200 and are down around 11.5% year to date.

But despite the disparity in these 2 companies’ fortunes in 2020 so far (not to mention the excitement TPG has been generating of late), I would much rather buy Telstra shares today for a long-term buy.

Why TPG shares are outperforming in 2020

TPG shares have been benefiting from a perfect storm in their favour. Firstly, the long-proposed merger between TPG and Vodafone has been green-lit by the Federal Courts. This was despite the ACCC attempting to block the marriage on competition grounds.

The two companies are set to become one over the next few months, which will also involve a hefty special dividend and another spin-off of TPG’s Singapore operations.

Investors are liking what they see here, and have subsequently pushed up TPG shares over the last few months.

Why Telstra shares are a better bet

Despite all this exciting news, I’m still betting on Telstra as an investment. TPG is a well-run company with a great CEO and a great brand. However, I still don’t think it has the firepower to really compete with Telstra. Telstra already commands a significant pricing premium on its mobile data products in the current market. It is able to do so (in my view) due to the superiority of its network coverage.

Many people go with Telstra because other providers simply can’t offer the coverage that Telstra can.

Telstra has a very well-known brand which I think is superior to all of its competitors in attracting and keeping customers.

The company also offers more dividend potential that TPG. On current prices, Telstra shares come with a trailing yield of 5.05% (taking into account Telstra’s special nbn dividend payments).

In contrast, TPG shares are only offering a 0.61% trailing yield on current prices. Even if you threw in the prospect of a post-merger special dividend, Telstra is still more attractive to me.

I also expect Telstra to be the market leader in the new 5G technology. Since the Chinese giant Huawei was banned from operating 5G networks in Australia, TPG has fallen behind in the 5G race. Thus, I would still bet on Telstra’s heavy investment and brand power to carry it over the line first against TPG, Optus or any other competitor.

Foolish takeaway

TPG is a great company and one that has been especially lucrative to own in 2020. However, going forward  I think Telstra will make a better investment overall, and that’s why I would rather buy cheap Telstra shares today than TPG shares despite them being near their 52-week highs.

More reading

• The latest ASX shares to be hit by broker downgrades to “sell” today
• Tech shares! Should we even invest in anything else?
• Keep a watch on these 3 ASX trends next week
• ASX 200 down 2.2%: Westpac tumbles, TPG reveals special dividend plans
• Estia Health share price tumbles after being cut from the ASX 200

Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited. 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.

The post What would I rather buy today: TPG or Telstra shares? appeared first on Motley Fool Australia.

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