Tag: Motley Fool Australia

If you’re interested in investing in mid cap shares, then you’re in luck.

At present I believe there are a good number of mid cap shares that have the potential to grow strongly over the next 10 years.

Two mid cap ASX shares that I think are worth considering are listed below. Here’s why I like them:

BINGO Industries Ltd (ASX: BIN)

While waste management may not be the most exciting industry to invest in, I believe the potential returns on offer with BINGO shares over the next decade could be exciting. While the pandemic is likely to weigh on its near term performance, I believe its long term outlook remains very positive.

This is thanks largely to its expansion plans and the game-changing acquisition of rival Dial a Dump Industries. This acquisition has allowed BINGO to be fully vertically integrated from collections to landfill. It also makes it the largest player in building and demolition waste in Sydney and provides it with some much-needed diversification. 

Megaport Ltd (ASX: MP1)

Another mid cap ASX share that I would buy with a long term view is Megaport. It is an elasticity connectivity and network services company which has been growing at an astonishing rate. Its service allows users to increase and decrease their available bandwidth in response to their own demand requirements.

This is instead of being tied to fixed service levels on long-term and expensive contracts. Due to the popularity of its service, its growing footprint in data centres globally, its first-mover advantage, and the accelerating shift to the cloud, I’m confident that Megaport’s strong growth can continue for a long time to come. Overall, I feel this could make it one of the best buy and hold options on the ASX right now.

More reading

• 5 of the worst performing ASX shares from last week
• ASX 200 Weekly Wrap: Blue chip shares pull ASX 200 back over 6,000 points
• These were the worst performing ASX 200 shares last week
• Why these are the top performing ASX 200 shares over the past year
• Pointerra share price soars 77% on $2.5 million placement to tech entrepreneur

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 MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Buy and hold these mid cap ASX shares for strong potential returns appeared first on Motley Fool Australia.

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The SEEK Limited (ASX: SEK) share price has been a very strong performer over the last few months.

The job listings company’s shares are up over 93% from their March low and are now trading within sight of their 52-week high.

Is it too late to buy SEEK shares?

While I still think SEEK shares would be a great long term option for investors, they certainly aren’t the bargain buy they were a few months ago.

One leading broker that thinks its shares have now peaked is Goldman Sachs. This morning the broker retained its neutral rating and lifted its price target on the company’s shares by 14% to $20.20.

This price target implies potential downside of 7% based on the current SEEK share price.

What did Goldman Sachs say?

Overall, the broker is actually very positive on SEEK’s outlook and is forecasting a swift rebound in earnings before interest, tax, depreciation, and amortisation (EBITDA) in FY 2021.

It expects the pandemic to lead to a 10% decline in EBITDA in FY 2020 to $409.9 million. However, in FY 2021 it is forecasting a 16% jump in EBITDA to $475.7 million.

After which, it expects its strong growth to continue in FY 2022, with EBITDA lifting another 23% to $585.2 million. This is despite a potential reduction in listing volumes in the ANZ market due to budget constraints.

Goldman commented: “Based on a number of discussions, we believe most recruiters will attempt to maintain, or only marginally increase total budgets (at least initially) despite the c.50%/c.25% price rises in FY21/22 from SEK. We estimate that should total recruitment budgets increase 10% each year, these contracts would result in a decline of total ANZ volumes of -12%/-5% in FY21/22, but result in yields improving +16%/+7% (all else equal).”

Another driver of earnings growth is expected to be the Asia Pacific & Americas (AP&A) business.

Goldman notes recent commentary which indicates that management has an increased focus on operational efficiencies for the AP&A business and is aiming to hold the total cost base flat into FY 2021.

“This is pleasing, given years of significant investment has limited EBITDA growth, despite the strong revenue performances,” it explained.

So why is Goldman Sachs not buy-rated?

SEEK’s valuation appears to be an issue for the broker and the reason it doesn’t have a buy rating on its shares right now. At 18.4x FY 2021’s EV/EBITDA, its valuation appears a bit too rich for this broker.

One broker that would disagree is Credit Suisse. Late last month its retained its outperform rating and $24.00 price target on SEEK’s shares.

At this point, I would have to side with Credit Suisse and be a buyer of its shares. I think its very positive long term outlook justifies the premium its shares trade at today.

More reading

• 5 things to watch on the ASX 200 on Monday
• How I’d build a $100,000 ASX portfolio of growth shares
• Why I would buy these blue chip ASX 200 shares this week
• Macquarie picks ASX stocks that can deliver positive earnings surprises next month
• 3 high quality blue chip ASX shares Warren Buffett might buy

Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia has recommended SEEK 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 Is the SEEK share price in the buy zone? appeared first on Motley Fool Australia.

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The Ecofibre Ltd (ASX: EOF) share price is up 3.56% today after the company announced its FY20 profits are expected to double. FY20 net profit after tax is expected to be around $12.5 million, an increase of more than 100% on the FY19 result. 

What does Ecofibre do? 

Ecofibre is a provider of hemp products in Australia and the United States (US). In the US, Ecofibre’s Ananda Hemp and Ananda Professional brands produce nutraceutical products for human and pet consumption as well as topical creams and salves.

In Australia, the Ananda Food brand produces Australian grown and processed hemp food products including protein powders and hemp oil. Ecofibre’s Hemp Black business is focused on developing hemp-based textiles and composite materials in partnership with TexInnovate in the US. 

What did Ecofibre announce? 

Ecofibre released its quarterly report and provided an update on trading performance, including FY20 guidance. CEO Eric Wang said, “we expect our FY20 NPAT to be around $12.5 million, up more than 100% in our FY19 result. The result is underpinned by full year revenue in excess of $50 million and a business model that focuses on profitable growth in sales and EPS.” 

Ecofibre delivered a strong annual result, despite a challenging final quarter that included significant upheaval across the supply chain and customer base. The business has adjusted focus as required, with its Hemp Black business tapping into demand for PPE while the Ananda Food business continues to experience steady sales growth.

The Ananda Health business remains the number one supplier to retail pharmacies in the US by a wide margin, with the company reporting it has over 50% market share nationally. 

What’s next for Ecofibre? 

Ecofibre believes pharmacies are the preferred channel for long-term patients utilising CBD for health and beauty. It plans to gain access to more pharmacies and practitioners over time to expand market reach for the Ananda Health brand.

Hemp Black continues to invest in addressing market demand for PPE, launching a face mask late in FY20. Around 135,000 masks were sold in May and June resulting in $2.4 million in revenue. Manufacturing capacity will double this quarter to 130,000 masks per month with distribution of masks to Australia beginning this week. 

Ananda Food’s newly formulated protein powder is to be used by plant-based food producer The Alternative Meat Co in an upgraded range of products. The launch is planned for August with products to be available in Coles. Woolworths will begin stocking Ananda’s hemp seed oil in August under its Macro brand alongside its existing hemp seed and protein powder products. 

More reading

• Why the BlueScope share price is outperforming today
• Are you a ‘risky’ investor in ASX 200 shares?
• The Redbubble share price is up almost 500% from its low: Is it too late to invest?
• Immuron share price shoots 6% higher after receiving FDA guidance for new drug
• Is the Zip share price a buy after falling 20% last week?

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.

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Many ASX investors are feeling lost on what to do with the market walking into the reporting season on a tightrope.

There’s a lot at stake as we will find out if the big rebound in the S&P/ASX 200 Index (Index:^AXJO) from the COVID-19 sell-off in March is sustainable.

While no one can predict with any certainty how the August reporting season will play out, there’s one thing I’ve done to prepare.

Shoring up your cash

I’ve sold some of my ASX stocks recently to shore-up my cash position before companies hand in their profit report cards for review.

I was holding very little cash as I had been aggressively buying the market when it crashing earlier this year from the pandemic.

If you don’t have much in the cash tank currently, it won’t be a bad idea to take some profit with the market trading around a four-month high.

ASX buying opportunities

I say this not because I am a market bear. If anything, I think ASX shares are more likely to soldier on than capitulate.

But I suspect the August reporting season will present some interesting buying opportunities that you won’t be able to capitalise on unless you are packing a bit of firepower.

There are also some sectors that I think you could be using as a funding source too. The fact is, some of these ASX stocks have rebounded nicely as we emerged from the nationwide lockdown on faith of a V-shape recovery.

Funding sources

But the resurgence of COVID-19 cases in Victoria and New South Wales highlights the risk that some ASX shares could face downward pressure in the near-term.

It isn’t only the two Australian states that serve as a poignant reminder. Several countries, including Japan, are battling a second wave of infections, while the worst affected like the US and Brazil show little signs of getting on top of their rampant outbreaks.

This means stocks leveraged to global trade, such as the Brambles Limited (ASX: BXB) share price, could issue a sombre outlook with its results.

More write-down pressure

Another group that could disappoint are property stocks. A number of these landlords have recently written down the value of their assets due to the COVID-19 impact, but I think some are at risk to having to devalue assets again.

One possible disappointer is the Mirvac Group (ASX: MGR) share price. While management cut the carrying value of its retail properties by nearly 10% last month, it upgraded the value of its office properties.

The move runs contrary to growing signs of an office glut in our two biggest cities and reports of weaker demand in the COVID new normal.

It’s also worth noting that 9% of Mirvac’s office leases expire in FY21 with a further 8% in the following year.

Questionable ethics

Meanwhile, one stock that might be worth taking some profit on is the surging Kogan.com Ltd (ASX: KGN) share price.

The online retailer, which is a star performer during the coronavirus lockdown, was found guilty by the Federal Court of using dodgy sales tactics.

History has shown that if a company doesn’t care much for its customers, it will treat shareholders much the same.

Further, sales growth could be hurt if customers stop trusting Kogan to offer them a fair deal.

More reading

• 3 top Warren Buffett quotes for ASX investors this week
• 5 top performing ASX 200 shares from last week
• Why these 9 ASX shares have doubled in value in the past year
• ASX 200 down 0.5%: Sydney Airport and South32 updates, HUB24 delivers record Q4
• Why the South32 share price is falling today

Brendon Lau does not own any shares mentioned in the article. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com 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 One thing you should be doing ahead of the ASX reporting season appeared first on Motley Fool Australia.

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Warren Buffett is one of the greatest investors of all time and an idol for many here at the Motley Fool. The company he is chair and CEO of, Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B), is one of the best and most consistent performers on the American stock market since Buffett took it over back in the mid-1960s.

Despite being nearly 90 years old, Warren Buffett is still looked up to around the world for his sagely investing advice and no-nonsense approach to the share market. So, as I’ve been wont to do in recent weeks, I thought we’d canvas some of Buffett’s wisdom this Monday so we can all start our week on the share market on the front foot. So, fresh from our Fool colleagues over in the great man’s homeland, here are 3 of Buffett’s best quotes to mull over:

“For the investor, a too-high purchase price for the stock of an excellent company can undo the effects of a subsequent decade of favourable business developments.”

This is a problem that keeps cropping up in today’s rather inexplicably strong share market. Investors get so caught up in a company’s perceived strength or positive narrative and are so excited that they might buy the shares at any cost, regardless of the share’s fundamentals or intrinsic value. As Warren Buffett so eloquently warns, this is not a path that will typically lead to long-term wealth creation. So if a company you absolutely love is trading at a price that assumes 10 years of sky-high growth in its share price today, it might instead be worth considering how much you should pay if the next decade doesn’t go as well as investors are hoping.

“If you like spending six to eight hours per week working on investments, do it. If you don’t, then dollar-cost average into index funds.”

Here at the Fool, we think all investors have the potential to outperform the S&P/ASX 200 Index (ASX: XJO) over time. But this is no easy feat and (as Buffett reminds us) requires a lot of research, work and dedication. So if you simply don’t find investing exciting enough to dedicate at least a few hours a week to, it might be worth following Buffett’s advice and sticking primarily to investing in index funds like the Vanguard Australian Shares Index ETF (ASX: VAS). Even though using index funds won’t deliver the gains that a market-beating investor might, it’s still a lot better than not investing at all.

“Read 500 pages like this every day. That’s how knowledge works. It builds up, like compound interest. All of you can do it, but I guarantee not many of you will do it.”

What a great quote to end on. Buffett is known as a voracious reader and he credits this habit with much of his success. So if you think all it takes to become a great investor is mastering spreadsheets and maths, think again. Buffett reads because it helps him understand the companies he invests in, the economy in which those companies reside and the world in which they interact and trade. I think all investors would profit from this advice and should aim to improve their knowledge about all things investing as much as possible.

More reading

• One thing you should be doing ahead of the ASX reporting season
• 5 top performing ASX 200 shares from last week
• How to invest $10,000 in ASX 200 shares for growth and dividends
• ASX 200 down 0.5%: Sydney Airport and South32 updates, HUB24 delivers record Q4
• Why the South32 share price is falling today

Sebastian Bowen 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 Berkshire Hathaway (B shares) and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares). 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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Investment platform provider CommSec has just released data on the five most traded ASX shares on its platform from last week.

This week all five ASX shares came from just a single area – the buy now pay later sector.

Approximately 21% of trades on the CommSec platform involved buy now pay later companies, which I feel demonstrates just how high investor interest in this particular part of the market is right now.

But which buy now pay later companies are investors buying the most? Here’s the data:

Zip Co Ltd (ASX: Z1P)

Zip shares were the most traded on the ASX by CommSec customers last week. The buy now pay later company’s shares accounted for 8.1% of total trades made on the CommSec platform following the release of its fourth quarter and full year update. According to the data, 70% of these trades were executed by buyers. Despite this buying, it couldn’t stop the Zip share price from tumbling 18.5% lower during the period.

Openpay Group Ltd (ASX: OPY)

The next most traded share on the CommSec platform was Openpay. It was responsible for 5.3% of total trades on the platform last week. Investors were buying its shares after it announced record growth for FY 2020. During the 12 months, Openpay delivered a 141% increase in active customers and a 52% lift in active merchants. This underpinned a 98.2% increase in total transaction value to $192.8 million. The Openpay share price recorded a 28% gain for the week.

Afterpay Ltd (ASX: APT)

The Afterpay share price was popular with investors last week, accounting for 3.4% of total CommSec trades. This follows the announcement of deals with Apple Pay and Google Pay for in-store payments in the United States. However, the buying wasn’t strong enough to prevent the buy now pay later giant from slumping 7% over the period.

Sezzle Inc (ASX: SZL)

Investors were also heavily trading Sezzle’s shares last week. The U.S. based buy now pay later provider’s shares accounted for 2.4% of total trades on the Commsec platform. The Sezzle share price rocketed to a record high on Monday of last week after they returned from a trading halt following the completion of its placement. Sezzle is raising a total of $86.3 million to accelerate its growth strategy and strengthen its balance sheet. These gains didn’t stick, though. By the close of play on Friday, Sezzle’s shares had lost 3.2% for the week.

Splitit Ltd (ASX: SPT)

Finally, Splitit was the fifth most traded share on the CommSec platform last week. It accounted for 1.5% of total trades over the period. This was despite there being no news out of the company. And despite buyers accounting for 63% of trades in the stock, the Splitit share price lost 10.5% of its value last week.

More reading

• 5 of the worst performing ASX shares from last week
• Respiri share price pops 17% after revealing merchant agreement with Zip
• Why these 9 ASX shares have doubled in value in the past year
• ASX 200 Weekly Wrap: Blue chip shares pull ASX 200 back over 6,000 points
• Buy these strong ASX shares for your retirement portfolio

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 owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. 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 Mesoblast limited (ASX: MSB) share price performed exceptionally well during the first half of 2020. This is not entirely surprising given Mesoblast is engaging in the development of biologic products for regenerative medicine during a global pandemic.

Across the first half of the year, the Mesoblast share price rose from $2.05 to $3.25 on 30 June. That represents a rise of 58.5% which is pretty impressive considering the time frame. The Mesoblast share price spiked as high as $4.45 and fell as low as $1.02 in what was an incredibly volatile 6 months for the biotech stock.

What does Mesoblast do?

Mesoblast uses its proprietary technology platform to develop and commercialise innovative allogeneic cellular medicines to treat complex diseases. The company targets diseases that are resistant to a conventional standard of care and where inflammation plays a central role.

Mesoblast has four phase 3 products nearing registration:

• Revascor for advanced chronic heart failure
• MPC-06-ID for chronic low back pain due to degenerative disc disease
• Remestemcel-L for moderate to severe acute respiratory distress syndrome (ARDS) due to COVID-19 infection
• Ryoncil for use in steroid-refractory acute host disease

What’s been moving the Mesoblast share price this year?

With COVID-19 still rampant across the globe, it is likely that the rise of the Mesoblast share price is largely due to the promising news regarding Remestemcel’s ability to treat patients suffereing with the disease. In early May, the Mesoblast share price jumped 13% as it commenced trials of its COVID-19 treatment. The trial achieved an 83% survival rate and reported that 75% of patients managed to come off ventilator support within a ten day period.

Furthermore, Mesoblast’s recent financial performance has also been strong. The company recorded a 113% increase in overall revenues to US$31.5 million for the first 9 months of FY 2020, compared to the prior corresponding period. Mesoblast also completed a $138million fund raising in May, adding to the strength of its balance sheet.

In a highlight for the company, it is currently awaiting a priority review of Ryoncil by the United States FDA for the treatment of children with steroid-refractory acute host disease.  The action date is 30 September 2020 and, if approved, Mesoblast will make Ryoncil immediately available in the US market.

Foolish takeaway

The Mesoblast share price has soared a huge 124% in the last year alone, pushing it into the S&P/ASX 200 Index (ASX: XJO). The company has been well placed to benefit from the onset of the pandemic which has been instrumental in fuelling its share price growth this year. Furthermore, since Ryoncil is awaiting registration later this year, and the decision is expected to have huge ramifications for the company’s share price, I believe Mesoblast definitely deserves a place on your watchlist. 

More reading

• 5 of the worst performing ASX shares from last week
• Why these 9 ASX shares have doubled in value in the past year
• ASX 200 Weekly Wrap: Blue chip shares pull ASX 200 back over 6,000 points
• These were the worst performing ASX 200 shares last week
• Why these are the top performing ASX 200 shares over the past year

Motley Fool contributor Daniel Ewing 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 Why the Mesoblast share price gained 58% in the first half of 2020 appeared first on Motley Fool Australia.

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Is the share price of NIB Holdings Limited (ASX: NHF), AMP Limited (ASX: AMP) or BWP Trust (ASX: BWP) a strong buy?

In the current investing conditions it’s hard to find shares that are good value. Some of the ASX tech growth shares are trading with very high forward price/earnings ratio multiples like Appen Ltd (ASX: APX) and Afterpay Ltd (ASX: APT).

I’m inclined to consider some non-tech ASX shares for my portfolio. Could one of these three ASX shares be considered a strong buy?

NIB

NIB is one of the biggest private health insurance businesses in Australia.

The company is in an interesting position with the ongoing global COVID-19 pandemic. Elective surgeries were delayed earlier in the year, though they have gradually returned as well as allied healthcare treatment like dentistry.

NIB recently acknowledged that there were likely to be some savings in claims expenses and there could be a possible cash refund for members in part compensation for the lack of access of private health treatments.

The ASX share has postponed its premium increase by six months to October 2020, it has offered financial hardship support, extended product coverage for no extra cost, extended cover to include telehealth consultations and offered frontline healthcare workers a $250 ‘wellness rebate’.

There was uncertainty for the private health insurance industry before COVID-19 with a national discussion about premium affordability. The picture looks even more clouded now. If people ditch their private health insurance due to household budget difficulties then that could be tough for NIB. There’s also the current loss of incoming international students and workers who would have taken up private health insurance.

NIB is trading at 17x FY21’s estimated earnings at the current NIB share price. It can be smart to invest when there’s a lot of fear and uncertainty. I just don’t see a big turning point for Australian policyholder growth unless the federal government does something. Though a vaccine could boost the NIB share price. 

AMP

AMP shareholders have been through a very tough time since the start of 2018. The Hayne royal commission really hurt the financial services business.

Of course, every business has a price as long as it’s not going to go broke. AMP is still worth several billion dollars. It has the financial firepower to potentially change things around.

The company recently sold AMP Life for $3 billion, including $2.5 billion cash. A sizeable part of the $2.5 billion cash pile will be used to deliver the new AMP strategy. Only time will tell if AMP can truly turn things around. Low-cost exchange-traded funds (ETFs) are now in high demand by younger investors, it’s businesses like Vanguard, Blackrock and BetaShares that are attracting a lot of fund flows.

It’s trading at 14x FY21’s estimated earnings at the current AMP share price. The key question will be about what direction earnings will go in FY22 and beyond. I’m not convinced there’s good future growth potential with AMP.

BWP

BWP Trust is a real estate investment trust (REIT) which owns warehouses that are leased to Wesfarmers Ltd’s (ASX: WES) Bunnings.

Most REITs have seen their share prices decline due to COVID-19 like the office building REITs and shopping centre REITs.

Arguably, BWP is one of the best placed REITs in the sector because Bunnings performed so strongly because of the number of people who decided to undertake a home DIY project during lockdowns. BWP doesn’t directly profit from that, but it would help Bunnings continue to pay the rent to BWP.

Indeed, the REIT has guided that the full year FY20 distribution will be 18.29 cents per unit, a 1% increase from FY19. I think that’s a solid result considering all the uncertainty that occurred throughout FY20.

At the current BWP Trust share price it offers a 4.7% distribution yield.

Foolish takeaway

I don’t think I’d call any of these ASX shares a buy at the current price. BWP would be the one I’d buy out of the three. Generally, when I buy dividend shares for yield I like them to have a yield of more than 6% – BWP Trust’s isn’t that large. 

More reading

• Why you should buy Telstra and these ASX dividend shares for income
• These ASX dividend shares are better than term deposits
• Forget property! I’d buy these ASX dividend shares instead
• Broker warns Afterpay and these ASX stocks are caught in an overcrowded trade
• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen Ltd. The Motley Fool Australia has recommended NIB Holdings 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 Is the NIB, AMP or BWP share price a strong buy? appeared first on Motley Fool Australia.

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With so many shares to choose from on the ASX, it can be hard to decide which ones to buy.

The good news is that brokers across the country are doing a lot of the hard work for you.

Three top shares that leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

Helloworld Travel Ltd (ASX: HLO)

According to a note out of Morgans, its analysts have upgraded this travel agent’s shares to an add rating with an improved price target of $2.46. This follows its equity raising, which has been undertaken to strengthen its balance sheet during these difficult trading conditions. Although the broker doesn’t believe its earnings will return to previous levels until FY 2023, unless a vaccine is developed, it believes Helloworld’s shares are cheap at the current level and has upgraded them. While I agree that its shares look cheap, I would wait for travel markets to recover before considering an investment.

OceanaGold Corp (ASX: OGC)

A note out of the Macquarie desk reveals that its analysts have upgraded this gold miner’s shares to an outperform rating with an improved price target of $3.70. The broker made the move in response to the release of its economic assessment of the Waihi District in New Zealand. It notes that the company’s estimate of 2.2 million ounces and an all-in sustaining cost of US$627 per ounce was far better than it was expecting. I think OceanaGold could be a good option for investors looking for exposure to gold.

Westpac Banking Corp (ASX: WBC)

Analysts at Citi have retained their buy rating but lowered their price target on this banking giant’s shares to $23.50. The broker has been busy looking through the banking sector and working out what the future holds for the banks following the pandemic. While it sees further loan deferrals, slower dividend recoveries, and higher capital buffers, it also sees value in some bank shares. Westpac is the broker’s preferred pick, followed by Australia and New Zealand Banking GrpLtd (ASX: ANZ). I agree with Citi that the Westpac share price is in the buy zone right now.

More reading

• ASX 200 Weekly Wrap: Blue chip shares pull ASX 200 back over 6,000 points
• Cash rate on hold until 2022? Buy these ASX dividend shares
• Are our ASX bank shares expensive by global standards?
• BKI Investment share price rises despite 35% drop in FY20 profit
• ASX 200 flat: Westpac class action, Rio Tinto Q2 update, travel shares sink

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of and has recommended Helloworld 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 S&P/ASX 200 Index (ASX: XJO) rose 1.9% last week to finish the week at 6033.6, having received a mid-week boost on hopes of a coronavirus vaccine. The continued buoyancy of the market indicates an accelerated recovery from COVID-19 is being priced in, but experts have warned of ongoing impacts with a vaccine unlikely to be widely available for at least a year. 

Investors looked to lock in gains from recent meteoric share price rises last week, rotating out of high flying technology shares such as Afterpay Ltd (ASX: APT). The technology sector weighed on the share market last week with big names dipping sharply. EML Payments Ltd (ASX: EML) fell 6.3%, Megaport Ltd (ASX: MP1) fell 6.9% and Altium Limited (ASX ALU) fell 4.2%.

We take a look at 5 of the worst performing ASX shares last week. 

Avita Therapeutics Inc. (ASX: AVH) 

The Avita Therapeutics share price fell 19% to finish last week at $6.38. The Avita Therapeutics share price has been dropping since the company provided an update on 10 July that revealed sales below analyst expectations.

Sales of Avita’s RECELL System were US$3.79 million in the 4th quarter, a negligible increase over third quarter sales of $3.78 million. At the end of the quarter the company had cash of approximately US$73.4 million, a decrease of US$5.92 million from the end of the previous quarter. 

COVID-19 led to challenging commercial conditions for Avita. Nationwide protective orders led to a decrease in the incidence of burns, which its RECELL System is used to treat. Nonetheless, in the quarterly update CEO Mike Perry said the clear benefits of the system, which include shortened hospital stays along with less invasive and fewer surgeries, were continuing to resonate with hospitals and physicians.

In positive news, the company announced last week that the US Department of Health and Human Services would procure the RECELL System to build preparedness for public health emergencies. 

Mesoblast Limited (ASX: MSB)

The Mesoblast share price fell 9.5% last week to close the week at $3.32. There was no news out of the regenerative medicine company to prompt the fall in the share price, however the Mesoblast share price remains up 200% from its March low. It may be that investors are taking profits after the surge in the share price. Mesoblast is behind Remestemcel-L, a product that is being trialed in the treatment of seriously ill coronavirus patients. 

Remestemcel-L has been used to treat graft versus host disease and is believed to counteract the inflammatory process involved in several diseases. The product has been shown to improve respiratory and functional outcomes in patients with inflammatory lung disease. In the third quarter Mesoblast recorded a 113% increase in revenues which reached US$31.5 million. Loss after tax was reduced by 34% to US$45.3 million, driven by the increase in revenues, and a 15% decrease in research and development spend. 

Polynovo Ltd (ASX: PNV) 

The Polynovo share price declined 7% last week to finish the week at $2.26. Polynovo is a medical device company producing dermal regeneration solutions using its patented NovoSorb biodegradable polymer technology. Despite announcing a record US sales month in June, the Polynovo share price declined over the week as investors rotated out of the stock. Sales in the June quarter were 33% greater than the March quarter, with the company forecasting FY20 sales will be at least double those of FY19. 

In its recent trading update, Polynovo chair David Williams said:

[S]ales are still lumpy but there is a strong upward trajectory as surgeons embrace our product and the patient result it gives. While FY20 sales will show impressive growth over FY19, the sales run-rate is more impressive and should be a better indicator of the near-term future.

Megaport Ltd (ASX: MP1)

The Megaport share price fell 6.9% last week finishing the week at $13.64. There was no news out of the technology company to prompt the drop in the share price, but investors may have been cashing out after the company rebounded strongly from its March low. Megaport shares fell to $6.74 in March but have since gained 102% (at the time of writing). 

Megaport operates in the network-as-a-service space, providing bandwidth which allows users to connect with cloud services and data centres. Having launched services in Japan last year, Megaport now operates in 21 countries and is partnered with Microsoft Azure, Google Cloud, IBM, Alibaba, and Oracle. Megaport reported revenue of $25.9 million in 1H FY20, a 70% increase on the prior corresponding period. Profit after direct network costs increased $8.3 million or 173% to $13.2 million. 

Afterpay Ltd (ASX: APT)

The Afterpay share price fell 6.8% last week to finish the week at $67.37. This appears to be the result of profit taking with shares in the buy now, pay later (BNPL) provider hitting a high of $73.50 the week before.

Afterpay in fact announced 2 new partnerships last week, which should help expand its market share. A deal with Apple Pay means customers can now use Apple Pay to make purchases through Afterpay in physical retail stores and online. A partnership with Google Pay means customers using this payment method will also be able to utilise Afterpay. 

The largest of the ASX BNPL providers by market capitalisation, Afterpay has been a standout in the post-March market recovery. Growing customer numbers and transaction values have driven the share price higher, although Afterpay is yet to achieve profitability. In 1H FY20, the company reported $4.8 billion in underlying sales. Total income increased 105% to $212.2 million, however a statutory loss after tax of $31.6 million was recorded. 

More reading

• How to invest $10,000 in ASX 200 shares for growth and dividends
• Why these 9 ASX shares have doubled in value in the past year
• ASX 200 Weekly Wrap: Blue chip shares pull ASX 200 back over 6,000 points
• Top brokers name 3 ASX shares to buy next week
• 3 five-star ASX shares to buy

Kate O’Brien owns shares of Avita Medical Limited and POLYNOVO FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Avita Medical Limited, MEGAPORT FPO, and POLYNOVO FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Avita Medical Limited and MEGAPORT FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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