Stock Pick

  • What Negative Interest Rates Would Mean For Banks, Stocks And The Average American

    What Negative Interest Rates Would Mean For Banks, Stocks And The Average AmericanOn Wednesday, Federal Reserve Chair Jerome Powell said the Fed is still not considering cutting interest rates into negative territory.Goldman Sachs co-head of global foreign exchange, rates and emerging markets strategy Zach Pandl said Thursday that the Fed is just one more COVID-19 outbreak wave away from cutting rates below zero. What Are Negative Rates? The primary interest rate the Federal Reserve manages is the fed funds rate. The fed funds rate is the interest rate banks and other institutions charge to lend money to each other, typically on an overnight basis. Banks also indirectly base savings rates, mortgage rates and credit card rates on the fed funds rate as well.When interest rates drop below zero, lenders are actually forced to pay borrowers to take their money. On the surface, the idea is counterintuitive. Yet several central banks around the world have tested the waters of negative interest rates as a way of providing artificial economic stimulus.How Are Banks Impacted? Banks are unable to drop interest rates below zero on the average consumer deposit accounts or they risk customers withdrawing and hoarding their cash. Banks in other parts of the world have successfully been able to lower interest rates on large corporate accounts below zero because it's nearly impossible for tax-compliant large businesses to operate without deposit accounts.How Will Banks Profit? Retail banks make profit on the difference between the interest rates they charge on loans and the rates they pay on deposits. This spread is known as a bank's net interest margin, or NIM. In general, the lower interest rates go, the more NIM is compressed and the less wiggle room banks have in maximizing profits.When Japan dropped interest rates below zero, bank NIMs predictably dropped, applying pressure on bank earnings. In a negative rate environment, banks will be forced to try to offset these pressures by increasing profits in areas outside of deposits, such as ramping up fee revenue or increasing investment banking activities.Negative Rate Winners, Losers The most obvious winners from negative interest rates are people and companies with large debt loads. Falling interest rates decrease the cost of borrowing money. In the theoretical extreme, some companies could even be paid to borrow money if interest rates are below zero.The biggest losers from negative interest rates are people with savings and companies with large cash balances. If interest rates drop below zero, companies will essentially be penalized for holding cash. Instead, many companies will be forced to invest that cash, which is the theoretical justification for negative rates in the first place. By forcing companies to invest and spend money, negative rates in theory will help drive economic growth.That same stimulus also benefits stock investors. In addition to forcing companies to invest cash, negative interest rates also make low-risk sources of investment income, such as savings accounts, CDs and Treasury bonds, unappealing. The lower interest rates fall, the fewer viable options investors have and the more money flows into stocks, driving share prices higher.What Else Can The Fed Do To Stimulate? The Federal Reserve essentially cut the fed fund rate to zero back in March, but that doesn't mean that it has no other options for stimulating the economy. The Fed has a history of quantitative easing, buying large quantities of government and mortgage bonds to provide liquidity to the economy. In March, the Fed announced a new unlimited QE program to help combat the economic slowdown.The Fed also initiated a program for buying corporate bonds for the first time and even set aside up to $500 billion to buy bonds from state and large local governments as well.There are other more extreme measures that the Fed could potentially take in the future in addition to dropping interest rates below zero. The Federal Reserve could actually print money and distribute it directly to Americans. This policy is known as "helicopter dropping."The Fed could also choose to go beyond supporting corporations by buying bonds and also begin buying shares of stock. That idea may seem extreme, but Japan's central bank has already been buying stocks.Benzinga's Take With even President Donald Trump talking up the potential economic benefits of negative interest rates, American investors should be financially prepared for the possibility. If cash becomes the enemy and the the Fed forces companies to spend it all, one of the best places to invest may simply be a low-cost S&P 500 index fund, such as the VANGUARD IX FUN/S&P 500 ETF SHS NEW (NYSE: VOO) or the SPDR S&P 500 ETF Trust (NYSE: SPY).Related Links:Powell Says US Economic Recovery 'May Take Some Time To Gather Momentum'2 Technical Levels That Will Determine If S&P 500 Strength Is Just A Bear Market RallySee more from Benzinga * ETF Short Sellers Are Targeting Retail, Biotech * Why Whitney Tilson Is Selling Stocks: 'We're In An Enormous Hole'(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

    from Yahoo Finance https://ift.tt/2T7tj64

  • ASX construction shares feel impacts of COVID-19 shutdowns

    Building material shares

    The Australian building industry is feeling the combined effects of the summer bushfires and coronavirus. While construction has continued to operate as an essential business throughout COVID-19, disruptions have been inevitable. ASX building suppliers such as Boral Limited (ASX: BLD) and CSR Limited (ASX: CSR) are feeling the effects. 

    Boral experiences disruptions 

    Boral has continued to operate and supply customers in most jurisdictions, albeit with additional health and safety measures in place. In some jurisdictions, however, stricter mandates have resulted in temporary closures and substantial disruption. 

    This morning, Boral reported that for the 4 months ended April 2020, Australian concrete volumes were down 16% and revenue down 6% compared to the prior corresponding period (pcp).

    In the North American division, around 25% of the workforce has been placed on furlough. 4 operations are in full or partial shutdown as a result of government mandates and around 70% of building product plants have been impacted. 

    For the 4 months from January to April 2020, revenue for Boral North America decreased by around 5% on the pcp. Production volumes across the roofing, stone, and fly ash businesses were also down. CEO Mike Kane said, “the impacts of COVID-19 measures on our people and our markets have been significant and will be for some time.”

    Debt financing extended to maintain liquidity

    Boral has extended its debt facilities with a new US Private Placement note of US$200 million. It has also secured new loan facilities of A$365 million and approved an extension of US$665 million in existing facilities. This has increased Boral’s liquidity and extended its debt maturity. 

    The company is taking action to preserve cash through shift reductions and temporary plant closures to align production with current and expected lower levels of activity. Capital expenditure has been reduced by 15% to 20% to ~$330 million in FY20. 

    CSR sees declining revenues 

    Earlier this week, CSR reported a 5% reduction in revenue for the full year ended March 2020. Net profit after tax (NPAT) from continuing operations fell 10% to $125 million, although total NPAT rose 61%. This was because total NPAT in the previous year was impacted by impairment charges relating to the Viridian Glass business. 

    CSR reports it hasn’t experienced a significant drop in activity since the end of March, although building product revenue was down 3% compared to the pcp. CSR nonetheless anticipates there will be an impact on activity in key markets this year. The company has declined to provide earnings guidance due to the uncertainty from COVID-19. 

    Foolish takeaway

    The construction sector may see a pullback this year as economic contraction takes hold. This will put pressure on sales for ASX construction shares like CSR and Boral until building markets recover.  

    While ASX construction shares may face some near-term headwinds, be sure to check out the report below for an ASX share we Fools like the look of right now.

    One “All In” ASX Buy Alert, that could be one of our greatest discoveries

    Investing expert Scott Phillips has just named what he believes is the #1 Top “Buy Alert” after stumbling upon a little-owned opportunity he believes could be one of the greatest discoveries of his 25 years as a professional investor.

    This under-the-radar ASX recommendation is virtually unknown among individual investors, and no wonder.

    What it offers is an utterly unique strategy to position yourself to potentially profit alongside some of the world’s biggest and most powerful tech companies.

    Potential returns of 1X, 2X and even 3X are all in play. Best of all, you could hold onto this little-known equity for DECADES to come

    Simply click here to see how you can find out the name of this ‘all in’ buy alert… before the next stock market rally.

    Find out the name of Scott’s ‘All in’ Buy Alert

    Returns as of 6/5/2020

    More reading

    Motley Fool contributor Kate O’Brien 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 ASX construction shares feel impacts of COVID-19 shutdowns appeared first on Motley Fool Australia.

    from Motley Fool Australia https://ift.tt/3cx3xQo

  • Where growth, income, and value investors can invest $5,000 today

    where to invest

    If you’re looking to invest $5,000 into the Australian share market, then one of the shares listed below could be worth considering whether you’re looking for growth, income, or value.

    Here’s why I think investors should buy these ASX shares:

    Accent Group Ltd (ASX: AX1)

    I think Accent could be a great option for value investors. Although the retail sector is having a very tough time and trading conditions are unlikely to improve quickly, I still think this footwear retailer could prove to be a bargain buy. While its earnings will almost certainly decline this year, I expect a rebound of sorts in FY 2021 before a full recovery a year later. Based on a recent note out of Morgan Stanley, it expects earnings per share of 7 cents in FY 2020 and then 8 cents in FY 2021. Based on the latter, its shares are currently changing hands at just 13x FY 2021 earnings.

    Dicker Data Ltd (ASX: DDR)

    If you’re an income investor you might want to consider investing $5,000 into Dicker Data’s shares. The wholesale distributor of computer hardware and software has been growing its earnings and dividends at a consistently strong rate for many years. The good news is that this trend has continued during the pandemic. Last month the company released its first quarter update and revealed a 36.3% increase in profit before tax to $18.4 million. Management also advised that it intends to increase its dividend by 31% in FY 2020 to 35.5 cents per share. This represents a 5.1% fully franked dividend yield.

    Xero Limited (ASX: XRO)

    Xero could be a good long term option for growth investors. Earlier this week the cloud-based business and accounting software provider released its full year results and revealed a 30% increase in operating revenue to NZ$718.2 million. Things were even better further down the income statement, with its margin expansion leading to a 52% increase in EBITDA to NZ$139.17 million. While FY 2021 is likely to be impacted by the pandemic and could stifle its growth somewhat, I believe its long term outlook is as positive as ever. Xero has a significant global market opportunity and, thanks to the quality and stickiness of its product, I expect it to capture a big slice of it.  

    And here are five dirt cheap shares which combined offer a mix of growth, income, and value as well. They all look like great options to buy after the market crash.

    5 cheap stocks that could be the biggest winners of the stock market crash

    Investing expert Scott Phillips has just named what he believes are the 5 cheapest and best stocks to buy right now.

    Courtesy of the crashing stock market, these 5 companies are suddenly trading at significant discounts to their recent highs… creating what could be incredible opportunities for bargain-hungry investors.

    Simply click here to scoop up your FREE copy and discover the names of all 5 cheap shares to buy now… before the next stock market rally.

    See the 5 stocks

    Returns as of 7/4/2020

    More reading

    Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited. The Motley Fool Australia owns shares of Xero. The Motley Fool Australia has recommended Accent Group. 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 Where growth, income, and value investors can invest $5,000 today appeared first on Motley Fool Australia.

    from Motley Fool Australia https://ift.tt/2X0NKTx

  • PPP Loans Under $2 Million Get A Significant Waiver From SBA

    PPP Loans Under $2 Million Get A Significant Waiver From SBAIf your company received a loan of less than $2 million under the Paycheck Protection Program, the new message from the Small Business Administration is that you're OK.In an addition to its lengthy list of FAQs, the SBA said Wednesday that all loans granted under that dollar threshold will be viewed as having met the "good faith" standard necessary under the PPP.The clarification comes after Treasury Secretary Steve Mnuchin said in April that the SBA would be reviewing PPP recipients who received more than $2 million to be sure that they needed those funds given their large size. In particular, public companies that received the funds have been ordered to give them back. The sole known public transportation company that received one, Evo Transportation & Energy Services, had not indicated by Thursday whether it was returning its $10 million. (It had disclosed the receipt of the loan in an 8-K filing with the Securities & Exchange Commision in late April. No subsequent 8-K filing announcing the return of the funds has been filed)."Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith," the SBA said in its updated FAQs.Statistics released by the SBA for round 2 of the PPP, which began April 27, showed that just over 19% of the loans were over the $2 million cutoff, which means more than 80% don't need to worry about the certification.The law firm of Scopelitis Garvin Light Hanson Feary sent out a notice on the change, laying out the concern that some smaller borrowers under the PPP faced. "Many PPP borrowers have been struggling with the new SBA mandate that borrowers revisit their loan application certification that ‘[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant,'" Scopelitis said in its Law Alert. The law firm noted that the mandate was not part of the original CARES Act that set up PPP, but was handed down later "in response to much negative publicity surrounding high profile borrowers."The $2 million threshold and the need to certify the need for those funds if a company got more than that is leading some loan recipients to give back the money. The deadline for doing that without triggering a "good faith" investigation was Thursday but has been pushed back to Monday."SBA has determined that this safe harbor is appropriate because borrowers with loans below [the $2 million] threshold are generally less likely to have had access to adequate sources of liquidity in the current economic environment than borrowers that obtained larger loans," the SBA said in its FAQs. "This safe harbor will also promote economic certainty as PPP borrowers with more limited resources endeavor to retain and rehire employees."The SBA also said the sheer number of loans under $2 million would be difficult to investigate for their good faith certification given the stretched resources at the agency. "This approach will enable SBA to conserve its finite audit resources and focus its reviews on larger loans, where the compliance effort may yield higher returns," the agency said.(There already has been discovery of potential PPP fraud involving a trucking company).   Through last Friday, the SBA had approved 2,571,167 loans under phase 2 of the PPP, disbursing approximately $188.9 billion. Companies with less than $10 billion in assets got 32% of the disbursed loans, while companies with more than $50 billion got 53%. The tranche between those two got 15%.See more from Benzinga * US Airlines Aim To Keep It Clean During COVID-19 * Today's Pickup: COVID-19 Gives Smaller e-Commerce Firms A Chance Against Amazon * Largest East Coast Retail Grocery Group Taps Americold For New Frozen Facilities(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

    from Yahoo Finance https://ift.tt/2TakJ6O

  • Want to invest like Warren Buffett? Buy and hold these ASX 200 shares

    warren buffett

    One of the simplest and arguably most effective investment strategies is buy and hold investing.

    This strategy sees investors buy the shares of quality companies with positive long term outlooks and hold onto them for as long as the investment thesis remains intact.

    This is a strategy that has been used by legendary investor Warren Buffett. And you can’t argue with his track record, can you?

    With that in mind, here are two top S&P/ASX 200 Index (ASX: XJO) shares that I think would be quality buy and hold options:

    Nanosonics Ltd (ASX: NAN)

    The first buy and hold option to consider is Nanosonics. It is best-known for its trophon EPR disinfection system for ultrasound probes. It has been growing its installed base at a rapid rate over the last few years and has continued this trend in FY 2020. During the first half it increased 17% on the prior corresponding period to 22,500 units. This is still well short of its addressable market of 120,000 units.

    Which is positive for two reasons. As well as benefiting from unit sales, Nanosonics earnings lucrative recurring revenues from the consumable products the system requires. Consumable and service sales were up 40% to $34.1 million in the first half. This represents 70% of its total sales during the period. As its market share grows, so too will these sales. Combined with the impending launch of several new products, I believe the future is bright for Nanosonics.

    REA Group Limited (ASX: REA)

    I think REA Group would be a great buy and hold option. I’ve been very impressed with the way the realestate.com.au operator can still deliver earnings growth in the toughest of trading conditions. This was evident in its third quarter update which revealed a 1% increase in revenue to $199.8 million and an 8% lift in EBITDA to $119.6 million. This was despite a 7% decline in listings during the quarter.

    While listings volumes are likely to remain subdued for the immediate term, when conditions do improve I expect REA Group’s earnings growth to accelerate. So with its shares down 23% from their 52-week high, now could be an opportune time to snap them up.

    And don’t miss out on these top stocks which have been sold off and could be great buy and hold options now.

    5 cheap stocks that could be the biggest winners of the stock market crash

    Investing expert Scott Phillips has just named what he believes are the 5 cheapest and best stocks to buy right now.

    Courtesy of the crashing stock market, these 5 companies are suddenly trading at significant discounts to their recent highs… creating what could be incredible opportunities for bargain-hungry investors.

    Simply click here to scoop up your FREE copy and discover the names of all 5 cheap shares to buy now… before the next stock market rally.

    See the 5 stocks

    Returns as of 7/4/2020

    More reading

    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 Nanosonics Limited. The Motley Fool Australia has recommended Nanosonics Limited and 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.

    The post Want to invest like Warren Buffett? Buy and hold these ASX 200 shares appeared first on Motley Fool Australia.

    from Motley Fool Australia https://ift.tt/2y4360Z

  • Take advantage of ASX share market volatility

    stock market chart volatility

    I think it’s important to take advantage of ASX share market volatility when we can.

    Volatility is a key feature of shares. Each day there are different buyers and sellers. Obviously there will be different views about what price people are willing to buy and sell at.

    This coronavirus period of time has seen some of the strongest volatility in decades. I think it’s important to take advantage of the lower share prices. Collectively, investors are only willing to sell their shares at lower prices when there’s something to actually worry about. And there’s always something to worry about. Eventually that particular worry will pass, just like the GFC. 

    The price we pay for our investments is the biggest factor for deciding our future returns. If you can buy during periods like this when prices are a lot lower then you’ll boost your future returns significantly.

    These low share prices don’t last forever. Just look at how the ASX share market volatility has lowered and prices have recovered strongly since 23 March 2020 even though the actual economic numbers like unemployment just get worse and worse.

    What ASX shares on the share market are opportunistic buys due to volatility?

    A number of exciting shares like Pushpay Holdings Ltd (ASX: PPH) were a lot cheaper a few weeks ago, but I wouldn’t describe those shares as opportunistic any more. They’re still solid buys though.

    I think ASX share market volatility have made these shares buys: diversified property business Brickworks Limited (ASX: BKW), water entitlement business Duxton Water Ltd (ASX: D2O) and investment business Magellan Global Trust (ASX: MGG).

    Plenty more investment opportunities

    Those few named ideas aren’t the only shares that could be great buys today. These top ASX shares could be wonderful cheap buys right now.

    Our experts at The Motley Fool have just released a FREE report detailing 5 shares you can buy now to take advantage of the much cheaper share prices on offer.

    One is a diversified conglomerate trading 40% off it’s all time high, all while offering a fully franked dividend yield of over 3%…

    Another is a former stock market darling that is one of Australia’s most popular and iconic businesses. Trading at a significant discount to its 52-week high, not only does this stock offer massive upside potential, but it also trades on an attractive fully franked dividend yield of almost 4%.

    Plus, this free report highlights 3 more cheap bets that could position you to profit in 2020 and beyond.

    Simply click here to scoop up your FREE copy and discover the names of all 5 cheap shares.

    But you will have to hurry because the cheap share prices on offer today might not last for long.

    YES! SEND ME THE FREE REPORT!

    Returns as of 7/4/2020

    More reading

    The post Take advantage of ASX share market volatility appeared first on Motley Fool Australia.

    from Motley Fool Australia https://ift.tt/2WXaCDl

  • Big bounce in these ASX stocks may be over before it began

    ASX energy shares are poised to finish the trading week on a stronger footing after the oil price rallied overnight.

    But the dramatic recovery for these stocks from their bear market low may have run out of fuel!

    Morgans is sounding the warning bell even as the WTI oil price surged by US$65 to US$27.66 a barrel in less than four weeks since crashing into negative territory. I suspect that’s a record bounce over the timeframe for the WTI benchmark.

    The more relevant (to Australia) Brent crude price didn’t slip into negative, but it’s staged a pretty stellar 62% climb over the same period to trade at US$31.13 a barrel.

    Running ahead of the market

    “We remain long-term oil bulls, but it is hard to maintain this positivity towards the sector when key energy stocks so strongly outperform oil prices,” said the broker.

    By its reckoning, the jump in Woodside Petroleum Limited (ASX: WPL) share price and Oil Search Limited (ASX: OSH) share price imply an oil price of around US$47 a barrel.

    Meanwhile, the Santos Ltd (ASX: STO) share price will need an oil price of US$42 a barrel to justify its recovery.

    The long road to recovery

    “We view this level of market optimism as dangerous given not only the massive demand impact from Covid-19 restrictions, but also because of new macro risks emerging,” said Morgans.

    “Key amongst these is the growing risk of a new Trade War breaking out between the US and China, with tensions escalating from the ongoing health and economic crisis.

    “Even barring a new trade war, we expect oil demand loss (currently at an unprecedented c.30mb/d) will take multiple years to recover, with the market not yet in a position to accurately analyse all of the fallout.”

    Going nowhere fast

    The chance of oil prices jumping back to over US$40 a barrel looks pretty slim even as Goldman Sachs sounded a positive note on the commodity.

    The broker believes that the oversupplied market is heading back towards a deficit next month, according to a report on Reuters.

    Oil production cuts by OPEC and Russia will limit supply as demand picks up pace from the restarting of major economies like China and the US.

    Oil price forecasts

    While that means we may have seen the lows for oil, Goldman Sachs thinks oil prices may be stuck at current levels for a while. It’s forecasting US$30 a barrel for Brent and US$28 per barrel for WTI during the Northern Hemisphere summer months.

    “We believe that the next stage of the oil market rebalancing will be one of range-bound spot prices with the most notable shifts being a decline in implied volatility as well as a continued flattening of the forward curve without long-dated prices rising yet,” said Goldman Sachs.

    Here come the downgrades

    Investors may have to wait a few years to see the oil price catch up to the share prices of our major energy stocks.

    On that sombre note, Morgans lowered its medium- to long-term forecasts on the Brent oil price. This meant that the broker also had to downgrade its recommendation on Oil Search, Woodside and Santos to “hold” from “add”.

    One “All In” ASX Buy Alert, that could be one of our greatest discoveries

    Investing expert Scott Phillips has just named what he believes is the #1 Top “Buy Alert” after stumbling upon a little-owned opportunity he believes could be one of the greatest discoveries of his 25 years as a professional investor.

    This under-the-radar ASX recommendation is virtually unknown among individual investors, and no wonder.

    What it offers is an utterly unique strategy to position yourself to potentially profit alongside some of the world’s biggest and most powerful tech companies.

    Potential returns of 1X, 2X and even 3X are all in play. Best of all, you could hold onto this little-known equity for DECADES to come

    Simply click here to see how you can find out the name of this ‘all in’ buy alert… before the next stock market rally.

    Find out the name of Scott’s ‘All in’ Buy Alert

    Returns as of 6/5/2020

    More reading

    Motley Fool contributor Brendon Lau 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 Big bounce in these ASX stocks may be over before it began appeared first on Motley Fool Australia.

    from Motley Fool Australia https://ift.tt/2Z5cBIg

  • Got $2,000? Here are 2 ASX 200 energy shares to buy today

    energy share price, ASX energy shares, wind turbine and energy production with graph line

    ASX 200 energy shares have been hit hard in 2020. First, there were concerns surrounding coronavirus which sent the S&P/ASX 200 Index (ASX: XJO) tumbling lower in late February. Then came an oil price war between Saudi Arabia and Russia which spooked investors even more and eventually sent the oil price into negative territory last month.

    You might be looking at the markets and thinking now is not a good time to buy ASX 200 energy shares. However, I think it could be quite the opposite. Here are a couple of my top picks for energy companies that could be in the buy zone in 2020.

    2 ASX 200 energy shares to buy today

    I like the prospects for AGL Energy Limited (ASX: AGL) shares. AGL is one of the largest energy producers in Australia and I believe it’s in a strong competitive position.

    The Aussie electricity market is largely dominated by AGL, EnergyAustralia and Origin Energy Ltd (ASX: ORG). The AGL share price has plummeted 21.28% lower this year but I feel it may have been oversold.

    Sure, the oil price war has hurt most ASX 200 energy shares. However, east coast electricity prices remain high, despite the ACCC recommending further intervention. These ongoing high prices could help stabilise FY20 earnings despite potentially lower volumes.

    Another issue affecting the sector is less commercial energy use. COVID-19 restrictions have forced many employers towards a remote working model which means less energy consumption by businesses in our cities. However, this also means higher residential energy use which could help to balance things out for AGL.

    Aside from AGL, I also like the look of Origin Energy. Given what’s happening to oil prices and the supply-demand dynamics, I think investing in the ASX 200 oil producers is a risky bet. There’s a lot of uncertainty surrounding oil and, as such, I feel Aussie utility companies could be a better option right now. As a long-term investor, I’m happy to trade some potential upside for the defensive qualities I see in energy ‘gentailers’ like AGL and Origin.

    I think Origin is in a similar position to AGL right now. Given we’re investing for the long-term, I also think both AGL and Origin could benefit from an increase in renewable energy investment. That means, moving forward, AGL and Origin could tick all the boxes as strong dividend shares with solid medium and long-term outlooks.

    Foolish takeaway

    Investing in ASX 200 energy shares is certainly not for everyone. Diversification is key, which means that AGL and/or Origin shares could form part of your broader portfolio construction. I would say it’s still a relatively speculative play right now which means I wouldn’t be going all in. However, I do feel there are long-term rewards on offer for investors willing to roll the dice with ASX 200 energy shares in 2020.

    If you’re after more long-term buys, check out this ASX share with an all-in buy alert today!

    One “All In” ASX Buy Alert, that could be one of our greatest discoveries

    Investing expert Scott Phillips has just named what he believes is the #1 Top “Buy Alert” after stumbling upon a little-owned opportunity he believes could be one of the greatest discoveries of his 25 years as a professional investor.

    This under-the-radar ASX recommendation is virtually unknown among individual investors, and no wonder.

    What it offers is an utterly unique strategy to position yourself to potentially profit alongside some of the world’s biggest and most powerful tech companies.

    Potential returns of 1X, 2X and even 3X are all in play. Best of all, you could hold onto this little-known equity for DECADES to come

    Simply click here to see how you can find out the name of this ‘all in’ buy alert… before the next stock market rally.

    Find out the name of Scott’s ‘All in’ Buy Alert

    Returns as of 6/5/2020

    More reading

    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.

    The post Got $2,000? Here are 2 ASX 200 energy shares to buy today appeared first on Motley Fool Australia.

    from Motley Fool Australia https://ift.tt/2LrgDCU

  • Broker tips 10 ASX 200 shares for a post-coronavirus recovery

    The head of research services at broker Bell Potter recently released 10 ASX 200 shares that analysts tip for a post-coronavirus recovery. All the stocks mentioned have a market capitalisation of more than $1 billion and boast strong balance sheets that could see them recover from the pandemic.  

    Aristocrat Leisure Limited (ASX: ALL)

    Aristocrat is a gambling machine manufacturer that has a strong recurring revenue stream from leasing machines to its customers. The company also makes revenue through outright sales of gaming machines and monetisation of online casinos and gaming.

    Analysts are optimistic on the medium-term growth of Aristocrat’s land-based operations, with the company having a strong presence in the US gaming industry. In addition, the company’s online operations are a growing market that provides Aristocrat with flexibility during the pandemic.

    ANZ Banking Group (ASX: ANZ)

    Analysts expect that economic growth post-pandemic should provide ANZ with a solid lift in profitability. The bank is currently providing financial assistance packages for its small business and retail customers.

    BHP Group Ltd (ASX: BHP)

    BHP boasts a strong balance sheet and low-cost operations with earnings coming from iron ore, copper and coal. Analysts are optimistic that BHP is well positioned during the pandemic, with improving commodity prices expected to benefit the company in the future.

    Flight Centre Travel Group Ltd (ASX: FLT)

    The pandemic has created an unprecedented challenge for travel and leisure companies like Flight Centre. The company has completed a $700 million equity raising and reduced its annualised operating expenses by $1.9 billion. As a result, analysts estimate that the company can survive for 15 months without revenue and post a recovery following the pandemic.  

    Macquarie Group Ltd (ASX: MQG)

    Analysts are also optimistic on Macquarie Group to recover strongly post-pandemic. The investment bank has the ability to switch between market-facing and annuity-style operations, which makes it an attractive investment during and after the coronavirus pandemic.

    Mirvac Group (ASX: MGR)

    Mirvac owns and operates a commercial property portfolio that is exposed to office, retail and industrial properties, which account for 59% of group earnings. The coronavirus pandemic is expected to impact retail and other commercial rental incomes for the next 2 years. Despite this, analysts believe that Mirvac will recover post-pandemic with a secure income stream.

    Origin Energy Limited (ASX: ORG)

    Origin’s 2 main areas of operation are the energy markets and integrated gas, which contribute 44% and 56%, respectively, to group earnings. The energy market is expected to recover post-pandemic and analysts are optimistic that Origin energy will see a strong resurgence in energy and fuel demand.

    Premier Investments Limited (ASX: PMV)

    Premier Investments is the owner of prominent retail brands such as Smiggle, Peter Alexander and Just Jeans. Despite the pandemic causing havoc among retailers, Premier Investments is tipped to recover strongly. Analysts cited the company’s stance to pay adjusted rent and strong retail presence as factors that will help Premier Investments emerge stronger, post-pandemic.

    Qantas Airways Limited (ASX: QAN)

    With the pandemic bringing domestic and international travel to a grinding halt, airlines like Qantas have been some of the most adversely impacted companies. Despite the toll the pandemic has had on the company, analysts think that Qantas could see a protracted recovery. Analysts believe that Qantas can survive for up to 12 months with cost reductions and available liquidity of $4 billion.

    Worley Ltd (ASX: WOR)

    Worley is a global provider of engineering and project management services for the energy, chemicals and resource sectors. The pandemic has presented the company with a challenging operating environment, especially given the collapse in oil price. Analysts believe that the company will recover post-pandemic as activity levels improve.

    Foolish takeaway

    In my opinion, Bell Potter provides high quality research and analysis, However, just because analysts think these shares could recover doesn’t mean that investors should jump the gun and start buying. As we have seen, the coronavirus pandemic is an evolving situation and nothing is certain.

    I think a prudent strategy would be to compile your own watchlist of champion stocks and wait for positive price action before making an investment decision.

    Take a look at this report for 5 more stocks that could have a strong post-pandemic recovery.

    5 “Bounce Back” Stocks To Tame The Bear Market (FREE REPORT)

    Master investor Scott Phillips has sifted through the wreckage and identified the 5 stocks he thinks could bounce back the hardest once the coronavirus is contained.

    Given how far some of them have fallen, the upside potential could be enormous.

    The report is called 5 Stocks For Building Wealth after 50, and you can grab a copy for FREE for a limited time only.

    But you will have to hurry — history has shown the market could bounce significantly higher before the virus is contained, meaning the cheap prices on offer today might not last for long.

    See the 5 stocks

    More reading

    Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited and Premier Investments Limited. 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 Broker tips 10 ASX 200 shares for a post-coronavirus recovery appeared first on Motley Fool Australia.

    from Motley Fool Australia https://ift.tt/3cwPydm

  • 3 ASX shares to buy for growth and income

    Some ASX shares can provide a good mixture of growth and income for your portfolio.

    In this era of ultra-low interest rates it’s hard to find good sources of income. And with the coronavirus there are few shares that cab provide good growth right now.

    Here are three ideas to consider:

    Ansell Limited (ASX: ANN)

    Ansell is one of the businesses involved in fighting the spread of the coronavirus. It makes a number of products like gloves, masks and protective suits.

    However, despite the coronavirus impacts, the company recently reaffirmed its FY20 guidance for earnings per share (EPS) to be in a range of US$1.12 to US$1.22.

    Even before the coronavirus Ansell was predicting solid mid-single digit growth so I think that Ansell is well placed to grow whatever happens next. I think it’s a good, defensive ASX share to provide growth and income.

    In terms of dividend income it has a trailing dividend yield of 2.3%.

    Magellan Global Trust (ASX: MGG)

    Magellan Global Trust is a listed investment trust (LIT) which invests in some of the best shares in the world. You get indirect exposure to shares you just don’t find on the ASX. Some examples are Microsoft, Alphabet, Visa, Mastercard, Tencent, Alibaba and Facebook.

    Many of its holdings are quality growth shares with great balance sheets. If you owned them yourself you wouldn’t get much income. But Magellan Global Trust can target a 4% distribution yield by paying out a portion of the long-term capital growth each year.

    As the net asset value (NAV) of Magellan Global Trust grows, the distribution will rise over time with it. This is an attractive combination of growth and income from an ASX share.

    Kogan.com Ltd (ASX: KGN)

    Kogan.com is an online retailer that also has a third party marketplace. It also distributes cheap services like telecommunications, superannuation, insurance and so on.

    With everyone limiting their exposure to the outside world it’s eCommerce businesses like Kogan.com that are getting a lot of the pent up demand. In April 2020 Kogan.com saw revenue growth of over 100%. ‘Adjusted’ earnings before interest, tax, depreciation and amortisation (EBITDA) grew over 200%.

    It also announced this morning that it has acquired Matt Blatt, a furniture and homewares retailer which generated around 20% to 25% of its $46.5 million revenue online in FY19. It will be an online only retailer under Kogan.com’s leadership.

    Kogan.com has grown its dividend each year over the past few years and currently has a grossed-up dividend yield of 2.6%.

    Are all of these ASX shares buys for income and growth?

    Kogan.com and Ansell have both performed strongly after the initial market selloff as investors realised the strength of those businesses. I don’t think they’re not cheap any more. But my ASX share pick for income and growth is Magellan Global Trust – it’s diversified, has the biggest yield and gives exposure to many of the best businesses in the world.

    Want more ASX share ideas for income and growth?

    These top ASX shares could be some of the best ideas available right now.

    Our experts at The Motley Fool have just released a FREE report detailing 5 shares you can buy now to take advantage of the much cheaper share prices on offer.

    One is a diversified conglomerate trading 40% off it’s all time high, all while offering a fully franked dividend yield of over 3%…

    Another is a former stock market darling that is one of Australia’s most popular and iconic businesses. Trading at a significant discount to its 52-week high, not only does this stock offer massive upside potential, but it also trades on an attractive fully franked dividend yield of almost 4%.

    Plus, this free report highlights 3 more cheap bets that could position you to profit in 2020 and beyond.

    Simply click here to scoop up your FREE copy and discover the names of all 5 cheap shares.

    But you will have to hurry because the cheap share prices on offer today might not last for long.

    YES! SEND ME THE FREE REPORT!

    Returns as of 7/4/2020

    More reading

    Motley Fool contributor Tristan Harrison owns shares of MAGLOBTRST UNITS. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia has recommended Ansell 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 ASX shares to buy for growth and income appeared first on Motley Fool Australia.

    from Motley Fool Australia https://ift.tt/3dEesbg