Tag: Motley Fool Australia

Woodside Petroleum Limited (ASX: WPL) has announced a multi-billion dollar hit to its asset base after trading on Tuesday. In summary, the company is expected to recognise non-cash, post-tax impairment losses of US$4.37 billion (~$6.2 billion AUD) across most of the company’s assets. Specifically, US$2.76 billion for oil and gas properties and an additional US$1.16 billion for exploration and evaluation assets. Lastly, it includes a post-tax onerous contract provision for the Corpus Christi LNG sale and purchase agreement of US$447 million.

This follows the A$570 million write down announced yesterday by Oil Search Limited (ASX: OSH). In addition, there have been revisions by numerous international oil and gas companies. BP in particular commented that it believed the coronavirus crisis would accelerate the shift away from fossil fuels. However, Woodside has stated that its balance sheet is “not materially impacted” by the impairment. 

Causes of the impairment

The company revealed low oil and natural gas prices caused 80% of the impairment losses. Oil prices have been conservatively assumed up to 2025. Additional contributors are long term demand uncertainty from Covid-19 and increased risk of higher carbon pricing.

Woodside insists that the fundamentals of its business remain strong. In particular, that LNG is part of a decarbonising world and a continuing strong outlook for its core product, natural gas to Asia. The company also spoke of its planned move into hydrogen and ammonia. 

Management commentary

Woodside CEO Peter Coleman said the company is in a strong position to take advantage of opportunities, which will inevitably arise.

“We’ve taken some tough decisions over recent months in response to the COVID-19 pandemic and oversupply in our key markets, but Woodside’s focus remains on cash preservation, capital discipline, and maintaining the strength of our balance sheet. This will ensure we can deliver appropriate returns to shareholders and maintain our investment grade credit rating over the long term.”

“…The unique confluence of events that has unfolded through 2020 will challenge all participants in the global energy sector and we expect to see adjustment of capital allocation priorities by other asset owners as the cycle plays out…”

The company’s forward oil price estimates are for US$44 in FY21 and US$55 in 2022. 

Woodside share price

The Woodside share price is currently trading at a price to earnings ratio of 40.69. This gives the company a valuation of $20.44 billion and a current trailing 12 month dividend yield of 6.37%.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 drops 0.6% today, Afterpay share price down 7%
• Macquarie picks ASX stocks that can deliver positive earnings surprises next month
• 5 things to watch on the ASX 200 on Tuesday
• 3 ASX shares with incredible cost moats

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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As the wealthiest fund manager in Australia, Magellan Financial Group Ltd‘s (ASX: MFG) Hamish Douglass is someone that a lot of investors have time for. And for good reasons too. Magellan has grown to be the largest fund manager in Australia with $95.5 billion in funds under management as of 30 June.

Magellan’s flagship Global Fund (unlisted) has delivered its investors an average of 15.77% per annum over the past 10 years (after fees), which is an exceptional result that most ASX fundies would find out of reach. The Magellan Global Fund has an ASX-listed quasi-equivalent in the Magellan Global Equities Fund (ASX: MGE).

What shares has Magellan been buying?

Magellan has recently disclosed the total holdings of its funds for the end of the financial year. It makes some interesting reading.

For its Global Fund and Global Equities fund, the top 10 shares held are as follows:

1. Microsoft Corporation
2. Tencent Holdings
3. Alibaba Group
4. Alphabet
5. Facebook
6. Reckitt Benckiser Group
7. Starbucks Corporation
8. Novartis AG
9. Crown Castle International Corporation
10. SAP SE

The portfolio’s cash position is sitting at 15% as of 30 June.

For Magellan’s High Conviction Trust, which is an unlisted fund that offers a high conviction, high concentration strategy with ‘8-12 of Magellan’s best ideas’, the holdings are as follows:

1. Microsoft Corporation
2. Alibaba Group
3. Tencent Holdings
4. Alphabet
5. Facebook
6. Starbucks Corporation
7. SAP SE
8. Visa
9. Estee Lauder

The portfolio’s cash position is sitting at 22% as of 30 June.

Magellan also offers an ASX-listed version of this fund as well – the Magellan High Conviction Trust (ASX: MHH).

How is Magellan investing in this uncertain world?

In an interview with the Australian Financial Review (AFR), Hamish Douglass also discusses his conflicting ‘visions for the future’. Douglass told the AFR that he can see 2 possible scenarios for the future of global markets. One is where the world “gets on top of the pandemic”, fiscal and monetary support continue and economies reopen.

The other (you might have guessed already) is a little direr. It involves an uncontained coronavirus with waves of infection and rolling shutdowns and lockdowns, which would, of course, be a terrible development for global markets. Douglass isn’t willing to bet one way or the other but sees both as definite possibilities.

It’s through this prism that we should analyse Magellan’s current portfolio holdings. Douglass tells the AFR that his management team has already removed companies that would be heavily affected by the second scenario. Even though he loves the business models of LVMH (owner of luxury brands like Luis Vitton), brewers Heineken and Anheuser-Busch InBev, and US-based private hospital operator HCA, Douglass sees too mich risk facing these companies to justify an investment in the current environment.

But longtime cornerstone shares like Tencent, Alphabet, and Microsoft remain as they look set to thrive in either scenario.

Foolish takeaway

Even though Douglass and Magellan don’t really invest in ASX-listed shares, I think all Aussie investors would benefit from taking a look at this reputable fund manager’s moves and market outlook. Douglass has got to the position he is in today by getting enough calls right, after all.

More reading

• My ASX share for the week
• 2 easy ASX shares for beginners
• The Afterpay share price among ASX stocks hit by a broker downgrade today
• Why Afterpay, Alumina, Magellan, & Webjet shares are dropping lower
• ASX 200 drops on return of lockdown in Melbourne

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares), Facebook, and Magellan High Conviction Trust. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares) and Facebook. The Motley Fool Australia has recommended Alphabet (A shares) and Facebook. 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 second wave of coronavirus through Victoria is understandably weighing heavily on shares such as Flight Centre Travel Group Ltd (ASX: FLT) and Webjet Limited (ASX: WEB).

After all, a second wave has the potential to derail Australia’s economic recovery and particularly the recovery of the travel market.

However, not all shares are under pressure because of second wave concerns. In fact, some ASX shares have been propelled to new highs by these concerns.

Here’s why these ASX shares are on a high right now:

Ansell Limited (ASX: ANN)

The Ansell share price hit a record high of $38.32 on Tuesday. Investors have been buying the health and safety products company’s shares this year due to the increasing demand it is experiencing it is during the pandemic. Judging by the rampant buying, investors appear to believe the pandemic will cause a sustained increase in demand for Ansell’s hand and body protection solutions.

Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)

The Fisher & Paykel Healthcare share price has continued its incredible rise and hit a record high of $34.50 yesterday. This stretched the medical device company’s year to date gain to a sizeable 64%. Investors have been fighting to get hold of the company’s shares amid the increasing number of COVID-19 infections globally. Investors appear confident this will lead to growing demand for its ventilators over the coming months and drive further strong growth in FY 2021.

Marley Spoon AG (ASX: MMM)

The Marley Spoon share price hit a new record high of $2.25 on Tuesday. The meal kit delivery company’s shares have been exceptionally strong performers during the last few months after the pandemic led to a surge in demand. In fact, demand has been so strong that Marley Spoon’s first quarter revenue grew 46% on the prior corresponding period to 42.8 million euros. Given that this covered the three months to 31 March 2020, I suspect its second quarter result could be even stronger. Positively, this stronger than planned growth is expected to accelerate its path to profitability.

More reading

• Which ASX shares will benefit from the second lockdown?
• Is the Webjet share price a buy after falling 40% from its June high?
• Why I think the Polynovo share price is a buy right now
• A great ASX dividend share to buy this week
• ASX 200 Weekly Wrap: Rocketing BNPL shares fail to stop ASX 200 slide

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended Ansell Ltd. and 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.

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If you’re looking to add a few new dividend shares to your portfolio, then the two listed below could be top options this month.

Both these ASX shares offer generous yields and look well-placed to continue paying dividends in 2020 despite the crisis. Here’s why I think they are in the buy zone right now:

Aventus Group (ASX: AVN)

Aventus is a retail property company which owns a total of 20 large format retail parks across Australia. While retail property is going through a difficult time right now because of the pandemic, Aventus looks better positioned that most. This is because its rental income has a high weighting towards everyday needs, which have been largely unaffected by the crisis.

Goldman Sachs is very positive on the company and has forecast a ~17.3 cents per unit distribution in FY 2021. Based on the current Aventus share price, this equates to a very generous forward ~8.1% distribution yield. Overall, I think this could make Aventus a dividend share to buy right now.

Telstra Corporation Ltd (ASX: TLS)

Another dividend share to consider buying is Telstra. After years of declining earnings and dividend cuts, I’m confident the tide is now turning for this telco giant. This is due to a combination of the NBN headwind easing, rational competition returning, and the material cost cutting from its T22 strategy.

All in all, I believe this has put Telstra in a position to generate sufficient free cash flow in the coming years to maintain its 16 cents per share fully franked dividend. After which, I’m optimistic that it won’t be long until the company returns to growth at long last. For now, based on the latest Telstra share price, it offers investors an attractive fully franked 4.6% dividend yield.

More reading

• 3 safe and strong ASX dividend shares to buy during the pandemic
• Why I would buy Telstra and these ASX dividend shares
• These ASX dividend shares will help you beat low interest rates
• a2 Milk and 1 other quality ASX share to buy right now
• ASX 200 Weekly Wrap: Rocketing BNPL shares fail to stop ASX 200 slide

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended AVENTUS RE UNIT. 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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After a strong start to the week, the S&P/ASX 200 Index (ASX: XJO) gave back some of its gains and dropped notably lower on Tuesday. The benchmark index fell 0.6% to 5,941.1 points.

Will the market be able to bounce back on Tuesday? Here are five things to watch:

ASX 200 to rebound.

It looks set to be a positive day of trade for the ASX 200 index on Wednesday after a very strong night of trade on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 30 points or 0.5% higher. In the United States the Dow Jones rose 2.1%, the S&P 500 climbed 1.3%, and the Nasdaq pushed 0.9% higher. Easing coronavirus cases in Florida and California appears to have given investor sentiment a boost.

Oil prices rise.

Energy producers Beach Energy Ltd (ASX: BPT) and Oil Search Limited (ASX: OSH) could be positive performers on Wednesday after oil prices pushed higher. According to Bloomberg, the WTI crude oil price has risen 1% to US$40.49 a barrel and the Brent crude oil price climbed 0.7% to US$43.05 a barrel. Oil prices rose after OPEC and its allies revealed that they cut production by more than agreed in June.

Gold price largely flat.

Gold miners such as Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could have a subdued day of trade after a flat night of trade for the gold price. According to CNBC, the spot gold price is ever so slightly higher at US$1,812.50 an ounce. Coronavirus concerns has helped drive the precious metal beyond US$1,800 an ounce this month.

Woodside asset review.

The Woodside Petroleum Limited (ASX: WPL) share price could come under pressure on Wednesday after the energy producer announced billions of dollars of impairments. According to the release, Woodside expects to recognise non-cash, post-tax impairment losses of US$3.92 billion with its first half results. This comprises $2.76 billion for oil and gas properties and $1.16 billion for exploration and evaluation assets.

Collins Foods goes ex-dividend.

The Collins Foods Ltd (ASX: CKF) share price is likely to drop lower this morning when it trades ex-dividend for its final dividend. Eligible shareholders of the KFC and Taco Bell restaurant operator can now look forward to being paid its fully franked 10.5 cents per share dividend later this month on 30 July 2020.

More reading

• ASX 200 drops 0.6% today, Afterpay share price down 7%
• Is the Coles share price still attractive after it surged to a record high today?
• Investor in your 30s? Buy these cheap ASX shares
• Top brokers pick the latest ASX small cap stocks to buy today
• Macquarie picks ASX stocks that can deliver positive earnings surprises next month

Motley Fool contributor James Mickleboro owns shares of Collins Foods Limited. The Motley Fool Australia has recommended Collins Foods 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 Coventry Group Ltd. (ASX: CYG) share price is up more than 17% today after the industrial group delivered a strong fourth quarter trading update. Sales increased 22.3% in FY20 compared to FY19 including acquisitions, or 4.7% if acquisitions are excluded. 

What does Coventry Group do? 

Coventry Group provides industrial solutions to the mining, construction, and manufacturing sectors. The company is behind a range of fastening systems, cabinet hardware systems, hydraulics, lubricants, fire suppression, and refueling projects. The Coventry Group share price collapsed in March, falling from over a dollar to 47 cents. The share price has yet to recover to previous highs, however today’s announcement has helped. 

What did Coventry Group announce? 

Coventry Group gave an update on its performance, which was better than expected. The Fluid Systems division saw sales increase 15.2% in FY20 including acquisitions, or 8.5% excluding acquisitions. Growth is being driven by the strong value proposition and activity in the mining and resources sector. The company’s Trade Distribution division saw a 27.3% increase in sales in FY20 including acquisitions, or 2% excluding acquisitions. 

Impact of COVID-19

COVID-19 meant the company had to suspend operations in New Zealand for a period of 23 days, however operations have since re-commenced. Sales have continued to perform to expectations as have sales at the Australian operations. Coventry Group is focused on managing the financial health and stability of the group as well as undertaking prudent cash management. 

Net debt at 30 June 2020 was -$3.3 million, an improvement on the -$10.9 million debt at 31 March 2020. Coventry Group is taking action to reduce inventory levels and manage operating costs to improve its cash position. The company is currently unable to estimate the potential impacts of COVID-19 on FY21 earnings. 

What is the outlook for the Coventry Group share price? 

Coventry Group reports that activity in its major end markets (commercial construction, infrastructure and mining) has remained solid to date. Nonetheless, it has warned that there is a high level of uncertainty surrounding the scale and duration of COVID-19 and its impact on these markets. Despite the uncertainty, Coventry Group is confident in its strategic plan and believes it is operating in markets that will enable it to navigate the situation and take advantage of opportunities as they arise. The Coventry Group share price closed the day at 68 cents which is still around 39% lower than it’s pre-pandemic high in February.

More reading

• Got $3,000? Here are 3 great ASX shares to buy
• 3 exciting ASX tech shares to buy and hold for a decade
• ASX 200 drops 0.6% today, Afterpay share price down 7%
• 3 reasons I’m betting big on the Xero share price
• Is the Coles share price still attractive after it surged to a record high today?

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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Do you have $3,000 to invest into ASX shares? There are some great businesses out there that could be worth a spot in your portfolio.

It’s impossible to say which direction the share market will go next. Crystal balls are in short supply!

But there is a bit more uncertainty at the moment than a few weeks ago. The Victorian COVID-19 outbreak continues to spread and there now appears to be an outbreak in New South Wales as well. In the US some businesses are being shut again with thousands of new confirmed cases in places like California, Texas and Florida.

Will the share market continue to climb a wall of worry? Or will new restrictions spook investors? Only time will tell.

Whatever happens next, I think investors will be well served by choosing businesses with compelling futures. Here are three great ASX shares to buy:

City Chic Collective Ltd (ASX: CCX)

The City Chic share price could be volatile over the next six months, but I think that this ASX share has a very compelling outlook for a 5-year investment horizon.

It’s a fashion retail company which specialises in plus size clothing for women. The main brand is City Chic which has a retail store network across Australia and New Zealand of over 90 outlets. It also has marketplace and wholesale partnerships with major US retails like Macys and Nordstrom. City Chic also has a wholesale business with European and UK partners like ASOS.

City Chic sold a high level of product online in pre-COVID-19 times. Near the end of May the company said that its online sales grew by 57% whilst its retail outlets were closed. I thought this was impressive considering how much the company already sold online. 

I like the ASX share’s plan to try to become a world-leader of plus-size clothing. It has made smart acquisitions with ‘Avenue’, which targets value-conscious women, and ‘Hips & Curves’ which is an intimates brand. There is also the potential of other acquisitions to grow its business and global customer base.

After today’s drop, the City Chic share price is trading at 21x FY22’s estimated earnings.

Magellan Global Trust (ASX: MGG)

This listed investment trust (LIT) tries to run a portfolio that can do well during good times and bad. At the end of June 2020, Magellan Global Trust’s net performance since inception in October 2017 showed returns of 11.4% per annum, outperforming its global benchmark by 1.2% per annum.

The ASX share has both defensive and growth positions in its portfolio, so I think it’s well suited for whatever happens next. At the moment its largest positions are: Alibaba, Alphabet, Atmos Energy, Microsoft, Tencent, Facebook, Visa, Mastercard, Reckitt Benckiser and Novartis.

The LIT aims for a distribution yield of 4% and it has a cash position of 18%. I think it would suit any investor’s portfolio for the long-term. At the current Magellan Global Trust share price, it’s trading at a 3% discount to its net asset value (NAV).

Bubs Australia Ltd (ASX: BUB)

The Bubs share price hasn’t taken off recently like other ASX growth shares. I guess Bubs doesn’t excite investors because it’s not a technology stock.

There’s plenty to get excited about with Bubs though. The business reported impressive growth in the FY20 half-year result. In the quarter ended 31 March 2020, Bubs revealed revenue of $19.7 million – this was up 67% on the prior corresponding period and up 36% on the previous quarter. In that same quarter, Bubs’ infant formula revenue increased by 137%.

I think that Bubs is worth watching for several reasons. It’s growing its profit margins, it is now operating cashflow positive and it is expanding its overseas distribution footprint.

In five years time I think Bubs could be a much bigger business if it keeps growing at a good double-digit rate.

Foolish takeaway

I believe that each of these ASX shares has a great future. I’d definitely be happy to invest $1,000 in each of them at today’s prices. I think Bubs has the best chance of generating big returns, but Magellan Global Trust is invested in some very high quality businesses.

More reading

• 3 ASX shares to buy before earnings season
• 3 ASX shares to buy for the next decade
• Bubs and 1 other exciting small cap ASX share to buy
• My ASX share for the week
• 3 ASX shares that I’d invest $1,000 into EVERY month

Motley Fool contributor Tristan Harrison owns shares of MAGLOBTRST UNITS. The Motley Fool Australia owns shares of and has recommended BUBS AUST 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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If you’re a fan of buy and hold investing and are on the lookout for a few long term investments, then you might want to take a look at the ASX tech shares listed below.

Especially after a pullback in many of their share prices on Tuesday brought them down to even more attractive levels.

Here’s why I think these ASX tech shares could be top buy and hold options:

Altium Limited (ASX: ALU)

I think this award-winning printed circuit board (PCB) design software provider could be a great buy and hold option. Altium has been growing at a rapid rate over the last few years thanks to the growing popularity of its software with product designers and the proliferation of electronic devices globally. The good news is that with the Internet of Things market still accelerating and the company recently launching its new Altium 365 product, subscriber numbers look set to continue their impressive rise in the coming years once the pandemic passes. I expect this to drive strong earnings growth as its scales.

IDP Education Ltd (ASX: IEL)

IDP Education is a leading provider of international student placement services and English language testing services. Although its near term performance is likely to be impacted greatly by the pandemic, I expect it to rebound strongly once the crisis passes. In addition to this, I believe it has a very positive long term outlook due to its sizeable addressable opportunity, strong market position, and growing software-as-a-service business. This could make it worth taking advantage of the IDP Education share price weakness to pick up shares.

NEXTDC Ltd (ASX: NXT)

A final option to consider buying and holding is NEXTDC. I believe the data centre operator is well-placed to capitalise on the cloud computing boom. According to global technology research firm Gartner, it has forecast that 80% of all organisations will shift their workloads to third-party data centres by 2025. I expect this to lead to increasing demand for its innovative data centre outsourcing solutions, which should support solid earnings growth as the company scales.

More reading

• ASX 200 drops 0.6% today, Afterpay share price down 7%
• Investor in your 30s? Buy these cheap ASX shares
• Pointerra share price soars 77% on $2.5 million placement to tech entrepreneur
• Why Afterpay, Altium, Northern Star, & Pushpay shares are sinking lower
• ASX 200 down 0.5%: Altium sales update, Afterpay tumbles, Breville shoots higher

James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Altium and Idp Education Pty Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) fell by 0.6% today, dropping back to 5,941 points.

Plenty of ASX shares were brought back down to Earth today. The number of COVID-19 cases in the south east of Australia continues to grow.

Afterpay Ltd (ASX: APT) share price falls 7.2%

The ASX 200 buy now, pay later share suffered a heavy selloff today. It finished the day at $66.55. This is still higher than the $66 price than co-founders Anthony Eisen and Nicholas Molnar sold their shares at.

Afterpay recently raised $650 million through a fully underwritten institutional placement to strengthen its balance sheet and accelerate growth.

It’s now undertaking a share purchase plan to raise approximately $150 million.

Altium Limited (ASX: ALU) share price falls 3.6%

The electronic PCB software business announced a revenue update to the market today.

The ASX 200 share announced that in FY20 its worldwide revenue grew by 10% to US$189 million and worldwide sales grew by 10% to US$194 million.

Altium also reported a 14% increased in new Altium Designer seats sold and it also saw record growth of 17% in the subscription base to more than 50,000 subscribers.

The ASX tech share finished FY20 with US$90 million of cash.

Altium CEO Mr Aram Mirkazemi said: “While COVID-19 prevented us from reaching our long standing aspirational goal of $200 million in revenue, conditions surrounding COVID-19 have dramatically accelerated our movement towards market dominance and the implementation of our transformative agenda for the industry.”

The new cloud platform called Altium 365 now has over 2,500 businesses and almost 5,000 active users on the platform.

Altium is also working on its digital sales capabilities and it’s still aiming for 100,000 subscribers by 2025.

Pushpay Holdings Ltd (ASX: PPH) share selloff

The Pushpay share price dropped 10.8% today. There was a selldown of shares by its largest shareholder.

The Huljich family entered into a block trade agreement yesterday with JP Morgan and UBS to sell 25% of their shares. The family is expected to still be the largest shareholder after the sale with a combined stake of 43.2 million shares and Peter Huljich will remain on the Pushpay board with Christopher Huljich continuing to act as his alternate director.

The shares were sold for NZ$8.60 per share. This amounted to NZ$123.85 million.

Peter Huljich said: “The outlook for Pushpay remains positive. We look forward to continuing to support the company as it seeks to deliver upon its strategy of becoming the preferred provider of mission-critical software to the US faith sector. The Huljich family confirms that it does not have any current intention to sell further shares in Pushpay and has provided an undertaking to the underwriters not to sell further shares in Pushpay until after Pushpay’s interim results are announced on the NZX and ASX.”

Woodside Petroleum Limited (ASX: WPL) announces write off

After the market had shut for the day the company announced that it has undertaken a review of the carrying value of its assets as of 30 June 2020.

The ASX 200 resources giant expects to recognise US$3.92 billion of post-tax impairments in its 30 June 2020 half year result.

That total comprises of two elements. The first part is $2.76 billion for oil and gas properties. The second part is $1.16 billion for exploration and evaluation assets.

Woodside also expects to include a post-tax onerous contract provision for the Corpus Christi LNG sale and purchase agreement of US$447 million.

About 80% of the impairments are due to the significant and immediate reduction in oil and natural gas prices assumed up to 2025. There is also increased uncertainty due to the COVID-19 pandemic, macroeconomic factors and increased risks of higher carbon pricing.

More reading

• 3 exciting ASX tech shares to buy and hold for a decade
• Is the Coles share price still attractive after it surged to a record high today?
• Investor in your 30s? Buy these cheap ASX shares
• Top brokers pick the latest ASX small cap stocks to buy today
• Which ASX shares will benefit from the second lockdown?

Tristan Harrison owns shares of Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Altium and PUSHPAY FPO NZX. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended PUSHPAY FPO NZX. 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 Xero Limited (ASX: XRO) share price has risen 11% so far in 2020 which, if I’m honest, is a little surprising given the negative effect the coronavirus is having on small businesses.

However, I think Xero still has excellent long-term prospects as the world turns ever more digital. There are three reasons I’m betting big on Xero today:

1. Xero is a ‘first mover’ in an important, emerging industry

Being a first mover in an important, emerging industry is one of Motley Fool co-founder David Gardner’s six traits of a ‘rule breaker’ investment. Successful first movers have a head start in building a competitive advantage which is essential to long-term success.

Xero was a pioneer of cloud-based accounting software, thanks to founder Rod Drury, and has taken that lead and run with it. The company now dominates in Australia and New Zealand with more than 1.3 million subscribers. I believe Xero’s early learnings about how to adapt and scale to new geographies are strong foundations for its continued growth into new countries.

2. Xero has a strong switching cost moat

A switching cost moat is a competitive advantage that makes it hard for customers to change to a competing product. One way Xero does this is by winning over accountants – the people who look after our tax. If my accountant tells me to subscribe to Xero, because that’s how she manages my tax, then that’s what I’ll use.

In addition, Xero’s software becomes a core part of the daily operations of the businesses it serves. It can be a daunting and time consuming task to shift to a competitor. This creates strong customer retention giving Xero valuable pricing power.

3. I think Xero has a significant growth runway

If 2020 has taught us anything, it’s that software is eating the world more quickly than ever. Yet it feels like accounting and tax industries have been slow to the dinner table. This will change as countries like the United Kingdom increasingly push to ‘make tax digital’ and I think Xero will be perfectly placed to keep growing.

I do expect subscriber growth to slow in the next 12 months as small companies battle the scourge that is COVID-19. However, I think the Xero share price will continue to compound growth masterfully over the next decade.

Foolish takeaway

My thesis for owning Xero shares centres around it being an early mover with a strong economic moat in an important, emerging industry. The company may hit some speed bumps over the next 12 months, but I think it has excellent long-term prospects.

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Regan Pearson owns shares of Xero.

You can follow him on Twitter @Regan_Invests.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. 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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