Tag: Motley Fool Australia

The AVITA Therapeutics Inc (ASX: AVH) share price will be on watch on Friday after the release of its fourth quarter update.

How did AVITA perform in the fourth quarter?

For the fourth quarter of FY 2020, the regenerative medicine company delivered total global revenue of US$3.88 million.

This was driven almost entirely by its U.S. RECELL System sales of US$3.79 million. This was broadly flat on the global revenue of US$3.94 million and U.S. RECELL System sales of US$3.78 million it generated in the third quarter.

For the full year, total revenue was approximately US$14.32 million. This was an increase of US$8.78 million or 160% over FY 2019’s sales. U.S. RECELL System sales contributed approximately US$13.79 million, an increase of US$9.39 million or 213% year on year.

At the end of the quarter, AVITA had a cash balance of approximately US$73.84 million. This was a decrease of US$5.92 million or 7.4% from the end of the third quarter. This reduction includes costs of more than US$1 million relating to its redomiciliation to the United States and its preparation for U.S. GAAP compliance.

“Most challenging commercial conditions.”

AVITA Therapeutics’ Chief Executive Officer, Dr. Mike Perry, was pleased with the company’s performance after facing the “most challenging commercial conditions” since the launch of the RECELL System.

He said: “We are pleased with our fourth quarter results given the challenges and limited patient and facility access that we have experienced with the onset of the COVID-19 pandemic.”

“Like many others, this quarter we witnessed the most challenging commercial conditions since the RECELL System was launched in the U.S. in early 2019. While burns are not considered elective procedures, the incidence of burns was not immune to the impact of COVID-19 as nationwide protective (executive) orders drove a reduction in accidents resulting in burn injuries,” he added.

Dr Perry concluded: “Despite the tough macro environment, the clear benefits of the RECELL System including shortened length of hospital stays, together with less invasive and fewer surgeries, continues to resonate with hospitals, physicians, and patients, which is reflected in our results this quarter.”

Outlook.

Dr. Mike Perry appears cautiously optimistic on the future.

He commented: “As with many companies in the current pandemic environment, it is difficult to predict revenue and procedural volume over the coming months, but we are pleased with current utilization rates and our physician commitment.”

The company also highlighted a large number of opportunities it is pursuing for the RECELL System. This includes its use in treating vitiligo, the outpatient burn market, and an expansion into Japan.

More reading

• 3 innovative ASX shares to buy
• Why Avita, Brickworks, Fisher & Paykel Healthcare, & WiseTech Global are tumbling lower
• ASX stock of the day: Avita Therapeutics share price climbs 8.4% as company redomiciles
• ASX 200 up again, ASX retailers make big gains

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 Avita Medical Limited. The Motley Fool Australia has recommended Avita Medical 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 Jameson Resources Limited (ASX: JAL) share price rocketed up by 13.33% on Thursday after a bankable feasibility study (BFS) on its Crown Mountain project forecast a pre-tax net present value (NPV) of US$376 million and an internal rate of return (IRR) of 36.4%.

Jameson Resources has two coking coal projects in Western Canada: the 1.7Mtpa clean coal operation, Crown Mountain, located in the Elk Valley in southeastern British Columbia, and another project in the Peace River region of British Columbia.

What were the details of the bankable feasibility study?

The BFS on the company’s Crown Mountain project demonstrated that over the project’s 15-year mine life it will produce an average of 86% of premium low volume high coking coal, which combusts at lower temperatures. In addition, 14% Pulverised Coal Injection coal (PCI), this is injected directly into blast furnaces without an intermediate coking phase.

The BFS reaffirms the robust economics of the project. First, the amount of waste removal required before extracting the coal is low, giving it a low strip ratio. Second, the project can operate at competitive operating costs through one of three deep water ports on the west coast of British Columbia.

The low life of mine costs are helped by ready availability of a skilled labour force without the requirements of having to build camp infrastructure, and excellent local vendor support.

Furthermore, there are opportunities to extend the life of mine through additional exploration, as well as opportunities to optimise the production. If the company undertakes either of these options it will increase the NPV and IRR of the investment. 

Some of the production optimisation options include increased utilisation of processing plant hours via optimised maintenance, low cost Chinese steel sourcing to reduce construction costs, and further evaluation of contract mining to extract the coal.

Jameson Resources is currently considering all options presented to determine the level of funding required. The current BFS proposes an owner-operator model, requiring purchase or lease of heavy mobile assets and all facilities. 

The company is considering various sources of funding. These include equity, debt, the use of contractors (to reduce overall pre-production capital requirements) and pre-paid offtake from the project.

About the Jameson Resources share price

The Jameson Resources share price jumped by 13.33% in Thursday’s trading to close at 17 cents per share, valuing the company at $44.84 million. Jameson Resources shares are down around 10%, year to date, and 20.93% down on this time last year. 

More reading

• Bellevue share price on watch due to project acceleration
• AVITA Therapeutics share price on watch after Q4 update
• Zip share price surges 30% in a week. Are we calling bubble yet?
• 2 quality ETFs I’d buy today
• RPMGlobal share price up following acquisition of mining software company

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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The Zip Co Ltd (ASX: Z1P) share price surged 10.38% yesterday in another massive day for ASX payments shares. Zip shares closed at $6.07 on Wednesday but exploded to $6.70 at market close yesterday afternoon.

Yesterday’s incredible move means that the Zip share price is now up around 31% since 29 June, just over a week ago.

BNPL, Zip shares rocket ever higher

Zip isn’t the only ASX company making moves in the buy now, pay later (BNPL) space. Other ASX payments shares were also driving ASX investors into a frenzy yesterday. Sezzle Inc (ASX: SZL) shares shot up a stupendous 42% just yesterday, whilst Splitit Ltd (ASX: SPT) shares have doubled over the past month.

Zip’s arch-rival Afterpay Ltd (ASX: APT) has also been leaving investors giddy. Fresh from its short-but-sweet capital raising, Afterpay shares were up more than 12% yesterday and hit a share price above $74 in intraday trade. Like Zip, Afterpay is also up around 30% since 29 June. Happy New Financial Year indeed!

BNPL shares have attracted many growth and momentum investors since the S&P/ASX 200 Index (ASX: XJO) market low was hit on 23 March this year. On that day, Zip shares bottomed out at $1.05 and Afterpay at $8.01. That means anyone lucky enough to pick up Zip or Afterpay shares on that day would today be looking at a 538% and 826% gain, respectively, on yesterday’s share prices.

Are we in a payments bubble?

It’s hard to see these sorts of share price movements and not think we are now in ‘bubble territory’. Of course, bubbles are usually only completely evident after the inevitable ‘pop’.

So, what do we know right now about ASX payments shares? Yes, they are in a powerful tailwind of shifting consumer preferences. Yes, they are all growing fast (some more than others).

But we don’t know how this sector is going to look in 10 years’ time. Could Zip bulldoze Afterpay? Could Afterpay buy out Openpay Group Ltd (ASX: OPY)? It’s very early days in this space, and right now the market is treating every payment company like they have already achieved domination. I’m sure at least one of the companies named in this article will be a lot larger and a lot more dominant in this field in a decade’s time. But I’m equally certain that not all of them will be.

Foolish takeaway

If you’re absolutely convinced that one of these companies has what it takes to win this game, by all means, continue to invest according to your bullish thesis. But if you’re not sure, perhaps it would be wise to stay on the sidelines and watch this space for now. Missing out on a winner is tough, but losing permanent capital on a failed investment thesis is a lot tougher.

More reading

• Is the Woolworths share price a buy?
• 5 things to watch on the ASX 200 on Friday
• ASX 200 rises 0.6% today, Afterpay share price hits $75
• Why the Saracen share price has soared over 80% higher in the first half of 2020
• The embattled ASX 200 stocks that could deliver a dividend surprise

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 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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Exchange-traded funds (ETFs) are a great way to quickly invest into a group of businesses.

Some ETFs have quality business holdings but not much diversification of industry like Betashares Global Cybersecurity ETF (ASX: HACK). Other ones may have acceptable diversification but don’t offer strong growth potential like BetaShares Australia 200 ETF (ASX: A200) (due to the high exposure to large ASX banks).

I think the below two ETFs offer a good combination of growth and diversification:

iShares Global 100 ETF (ASX: IOO)

The biggest businesses in the world didn’t become the largest by having a poor product or having rubbish financials.

This ETF is invested in the biggest 100 businesses in the world. These businesses have spent many years, or many decades, at the top of their industry.

Big businesses have strong economic moats, robust balance sheets and enviable brand power. A good way to think about how strong the moat of a business is how much you’d have to spend building your own business to beat that company. Could you beat Microsoft’s dominance with $10 billion? Or even $100 billion? Google (Alphabet), one of the world’s best tech businesses, has to offer its office products for free to get people to use them over Microsoft.

Here are some of the biggest holdings within the ETF today: Microsoft, Apple, Amazon, Alphabet, Johnson & Johnson, Proctor & Gamble, JPMorgan Chase and Intel.

There are plenty of large non-US holdings like Nestle, Roche, Samsung, Novartis, Toyota and Astrazeneca.

As you can see, there’s a diverse group of businesses within the ETF. But it has a large allocation to information technology at 28.2%, much higher than the next highest exposure of 15% to consumer discretionary. IT businesses are some of the brightest share prospects because of how the world is going increasingly technological. Tech shares also usually have high profit margins.

Over the past year this ETF has returned 11.80% per annum. The ETF has been around a fairly long time so we can view its longer-term performance – over the past 10 years it has returned an average of 12.57% per annum.

I think this ETF is a great investment option and its management fee is just 0.40% per annum.

BetaShares Global Quality Leaders ETF (ASX: QLTY)

This ETF tracks an index that consists of 150 international shares outside of Australia that have ranked highly for quality.

What does ‘quality’ mean? Shares are ranked using a combination of factors – return on equity (ROE), debt to capital, cash flow generation ability and earning stability.

When you look at businesses through multiple quality screens you will likely end up with a high quality list of shares. The best of the best. Focusing on quality hopefully means producing better long-term returns than other global share benchmarks.

As of this week, the biggest holdings within the ETF are: Adobe, Nvidia, Apple, Accenture, Intuit, Facebook, Vertex Pharmaceuticals, L’Oreal and Alphabet (Google).

This ETF also has a large allocation to IT, the sector had a 34% weighting at the end of May 2020. Healthcare had a 23.6% allocation, consumer discretionary had a 11.3% weighting and industrials had an 11% weighting.

Has it managed to outperform? Well the ETF isn’t that old yet, so we can only look at a short time frame. Over the past year it has made a net return of 18.45%, that’s after the 0.35% management fee. Vanguard MSCI Index International Shares ETF (ASX: VGS) has returned 5.24% over the past year. BetaShares Global Quality Leaders ETF shows a strong return after the COVID-19 pandemic and recovery. 

Foolish takeaway

I really like both of these ETFs. They are the type of investments that could be your only investment holding for many years and perform well. Or they could be used to add high-quality diversification to your existing portfolio.

Out of the two options I’d probably go for BetaShares Global Quality Leaders ETF. Its holdings are high quality, it has a slightly lower management fee than the iShares Global 100 ETF and it owns more shares which should give better diversification.

More reading

• These 3 ASX ETFs are yet to recover from the market crash
• Have $1,000? You should pick one of these 8 ASX shares

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of BETA CYBER ETF UNITS. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF. 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 RPMGlobal Holdings Ltd (ASX: RUL) share price closed trading yesterday up by 3.09% to $1.00, following the announcement of an acquisition by the company.

What was the acquisition?

According to the announcement, RPMGlobal will acquire 100% of Revolution Mining Software, a private company based in Canada. Revolution Mining Software has more than 6 years experience developing and selling its flagship ‘Schedule Optimisation Tool’, which is a mine scheduling optimisation software solution for tier one miners.  

The tool emerged following research from the non-profit organisation Mining Innovation, Rehabilitation and Applied Research Corporation (MIRARCO). The organisation is based at Laurentian University in Canada and has a reputation for solving complicated mining industry problems. 

According to the announcement, the software is the only strategic financial optimisation tool for underground mines that enables planners to improve productivity and profitability by optimising the net present value (NPV) of the mine schedule.

Commenting on the acquisition, RPMGlobal CEO and managing director Richard Mathews stated:

We are very pleased to have concluded negotiations to to acquire Revolution Mining Software and are really looking forward to welcoming Lorrie and the rest of the Revolution team into the RPM family. We will invest in their industry leading scheduling optimisation tools to deliver innovative solutions that add real value to our customers.

RPM was born from the understanding that mine planning needs to be built on sounds economics and the Revolution Mining product strategy is completely aligned with that core value.

Following the transaction, all of Revolution Mining Software’s employees will move into the RPMGlobal business.

The transaction will be paid for with RPMGlobal’s existing cash reserves and consists of an upfront payment of CAD$500,000, along with a 2 year earn-out agreement. The acquisition is set to be finalised on 31 July 2020.

About the RPMGlobal share price

RPMGlobal has been listed on the ASX since 2008. It is a provider of mining software solutions, advisory services and professional development to the mining industry. RPMGlobal has worked with mining companies in 125 different countries over the last 50 years. 

Last week, RPMGlobal announced that it expects to finish the 2020 financial year with a total contracted value of software subscriptions of $34.5 million. The company also announced that its recurring revenue from software subscriptions was $12.7 million per year.

In the first half of the 2020 financial year, RPMGlobal had revenue of $41.1 million, a 5% decline on the same period in 2019.

The RPMGlobal share price is up 92.3% from its 52 week low of $0.52. It has returned 17.65% since the beginning of the year. The RPMGlobal share price is up 66.67% since this time last year.

More reading

• Zip share price surges 30% in a week. Are we calling bubble yet?
• 2 quality ETFs I’d buy today
• Is the Woolworths share price a buy?
• 5 things to watch on the ASX 200 on Friday
• Why Domino’s and Nanosonics shares could be fantastic buy and hold options

Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of RungePincockMinarco Limited. The Motley Fool Australia has recommended RungePincockMinarco 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 Woolworths Group Ltd (ASX: WOW) share price has increased by 11% in the past year. The Woolworths share price gain has significantly outperformed the S&P/ASX 200 Index (ASX: XJO), which has seen a 11% fall over the same period.

Woolworths Group owns the largest supermarket in Australia by market share, along with a number of other businesses including Big W, ALH Group and Endeavour Group Limited, which consists of Dan Murphy’s, BWS, Cellarmasters and Langton’s. 

Here’s a closer look at the current supermarket landscape, and whether the Woolworths share price is a buy.

The rise of Aldi

According to Roy Morgan’s Fresh Food and Grocery Report, Woolworths has a 32.9% market share compared to Coles Group Ltd (ASX: COL)‘s 26.6% share. However, Aldi’s market share is rapidly rising.

Commenting on the breakdown, Roy Morgan CEO Michele Levine stated:

Aldi has increased its market share from 6.7% in 2011, to 12.4% today. While it is still a fair way behind Australia’s two supermarket giants, to put this growth in perspective, Aldi is now approaching half of the market share held by Coles Group.

Aldi’s 12.4% market share puts it at a approximately a third of Woolworths’ market share – growth that must be concerning for Woolworths and Coles.

Financial performance

In its recent trading update released 23 June 2020, Woolworths announced Q4 sales growth to date in its supermarkets in Australia and NZ was up 8.6% and 15.1%, respectively. At that time, Big W and Endeavour drinks sales growth in Q4 had also risen by 27.8% and 21.4%, respectively. In addition, Woolworths highlighted it expects to report earnings before interest and tax of between $3,200 million and $3,250 million, however, this is subject to finalisation and before significant items are taken into account.

The strong sales growth has helped give the share price a boost. However, the sales growth experienced this year could be from the panic buying that is taking place and only be over the short term.   

Furthermore, the group is looking to decrease supply chain costs in the business by developing automated distribution centres in Moorebank Logistics Park, Sydney. This is expected to cost $700–$780 million in technology and fitout over the next 4 years. While this addresses costs in the business, my concern is around whether the sales growth Woolworths has experienced is sustainable over the long term, in what is a very competitive landscape.

Foolish takeaway 

In my view, Woolworths’ market-leading position in the supermarket space could be eroded by the likes of retail giant Aldi over the long term. While groceries are essential items, consumers are offered many choices.

At the current Woolworths share price of $38.21, I personally believe that an investment in the tech space could offer more income and growth over the long term.

More reading

• Zip share price surges 30% in a week. Are we calling bubble yet?
• 5 things to watch on the ASX 200 on Friday
• ASX 200 rises 0.6% today, Afterpay share price hits $75
• Why the Saracen share price has soared over 80% higher in the first half of 2020
• The embattled ASX 200 stocks that could deliver a dividend surprise

Motley Fool contributor Matthew Donald has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths 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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On Thursday the S&P/ASX 200 Index (ASX: XJO) returned to form and charged higher. The benchmark index climbed 0.6% to 5,955.5 points.

Will the market be able to build on this on Thursday? Here are five things to watch:

ASX 200 expected to slide.

Weakness on Wall Street overnight looks likely to weigh on the ASX 200 index on Friday. According to the latest SPI futures, the ASX 200 is expected to open the day 0.5% or 28 points lower this morning. Overnight the Dow Jones sank 1.4%, the S&P 500 dropped 0.55%, and the Nasdaq defied the rest with a 0.5% gain.

Tech shares on watch.

It could be a good day of trade for Afterpay Ltd (ASX: APT) and other tech shares after their U.S. counterparts charged higher overnight. Investors were piling into tech shares again, leading to the Nasdaq index racing to a new record high. Tech behemoth Amazon was the star of the show, rising 3.3% to an all-time high. It now has a market capitalisation comfortably above US$1.5 trillion.

Oil prices sink.

Energy producers such as Oil Search Limited (ASX: OSH) and Santos Ltd (ASX: STO) are likely to come under pressure on Friday after a pullback in oil prices. According to Bloomberg, the WTI crude oil price has fallen 3.3% to US$39.54 a barrel and the Brent crude oil price dropped 2.2% to US$42.33 a barrel. Traders appear concerned that a spike in coronavirus cases could impact oil demand.

Gold price rally runs out of steam.

Gold miners Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could end the week in a subdued fashion after the gold price softened. According to CNBC, the spot gold price fell 0.75% to US$1,807.30 an ounce. Investors appear to have been taking profit after some strong gains by the precious metal.

Evolution and Regis downgraded.

Also on watch today will be gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL). This morning analysts at Goldman Sachs downgraded their shares to sell ratings on valuation grounds. The broker has a $4.60 price target on Evolution shares and a $4.10 price target on Regis shares. This is notably lower than where their shares trade today.

More reading

• ASX 200 rises 0.6% today, Afterpay share price hits $75
• Why the Saracen share price has soared over 80% higher in the first half of 2020
• The embattled ASX 200 stocks that could deliver a dividend surprise
• Is the Telstra share price a buy?
• Afterpay share price jumps 14% to new record high

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T 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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I’m a big fan of buy and hold investing and feel very fortunate to have such a large number of quality companies with positive long term outlooks at my disposal on the Australian share market.

Two top ASX shares that I think would be fantastic buy and hold investments are listed below. Here’s why I would snap them up today:

Domino’s Pizza Enterprises Ltd (ASX: DMP)

I think this pizza chain operator would be a great buy and hold investment option. Although the company has thousands of stores across Europe, the ANZ region, and Japan, it has no plans to stop its expansion any time soon.

Management intends to grow its global store network by 7% to 9% per annum for the next 3 to 5 years. It is also targeting same store sales growth of 3% to 6% per annum over the same period. If it delivers on both these targets, it should lead to solid profit growth over the medium term.

Nanosonics Ltd (ASX: NAN)

Another quality buy and hold option for investors to consider is Nanosonics. At present the infection prevention specialist generates all its revenue from its trophon EPR disinfection system for ultrasound probes. While this product still has a long runway for growth, the company is intending to diversify its offering in the near future with several new product launches.

Not a lot is known about these secretive new products, other than they are targeting unmet needs and the first product has a similar market opportunity to the trophon EPR product. If these products are a success, then the company’s earnings growth could be explosive over the 2020s. In light of this, I think there’s a very strong chance that the Nanosonics share price will smash the market over the next decade.

More reading

• Why it’s time to rotate out of JB Hi-Fi share price and these popular ASX stocks: Macquarie
• Goldman Sachs names the ASX retail shares to buy and the ones to avoid
• Why I would buy Nanosonics and these ASX growth shares
• Why Adbri, Domino’s, Event, & Viva Energy shares are dropping lower
• 3 innovative ASX shares to buy

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 Domino’s Pizza Enterprises Limited and Nanosonics 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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Luckily in this low interest rate environment, there are a good number of dividend shares offering attractive yields.

Three top dividend shares that I would buy right now are listed below. Here’s why I like them:

Dicker Data Ltd (ASX: DDR)

The first dividend share to consider buying is Dicker Data. It is a wholesale distributor of computer hardware and software which has continued its positive form in FY 2020 despite the pandemic. At the start of the month it released a half year update and revealed unaudited first half revenue of $1 billion and net profit before tax of $40 million. This was an increase of 18.3% and 25%, respectively, on the prior corresponding period. Management appears confident this strong form will continue. So much so, it has guided to a 31% increase in its dividend this year. This will bring it to 35.5 cents per share, which equates to a fully franked 4.8% yield based on the current Dicker Data share price.

Fortescue Metals Group Limited (ASX: FMG)

Another dividend share to consider buying is Fortescue Metals. I think it could be a top option right now thanks to sky high iron ore prices. The combination of its low costs, higher grades, and strong prices appear to have left the miner well-placed to generate bumper free cash flows from its Pilbara operations in FY 2020 and FY 2021. I expect the majority of these funds to be returned to investors through dividends. Based on the current Fortescue share price, I estimate that it offers a forward fully franked dividend of ~6%.

Wesfarmers Ltd (ASX: WES)

A final dividend share to consider buying is Wesfarmers. I think it would be a good option for income investors due to its portfolio of strong businesses. This is particularly the case for the Bunnings business, which looks well-placed for growth thanks to its high quality business model and government stimulus. And given how it is Wesfarmers’ biggest contributor to earnings, this bodes well for the company’s overall performance. In addition, Wesfarmers’ hefty cash balance should be supportive of potential earnings accretive M&A activity in the near future. All in all, based on the current Wesfarmers share price, I estimate that it offers a fully franked 3.4% FY 2021 dividend yield.

More reading

• Broker tips on how to invest for the August ASX reporting season
• 3 dependable, blue chip ASX shares for uncertain times
• Why it’s time to rotate out of JB Hi-Fi share price and these popular ASX stocks: Macquarie
• Goldman Sachs names the ASX retail shares to buy and the ones to avoid
• My bull and bear case for the ASX share market

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

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The S&P/ASX 200 Index (ASX: XJO) rose by 0.6% today to 5,956 points.

Melbourne entered its first day of a return to lockdowns with another day of well over 100 confirmed cases in Victoria. There were 165 cases reported today.

Afterpay Ltd (ASX: APT) share price steals the show

The Afterpay share price finished the day up 11.4% to $73.50 today. At one point the share price went just over $75.

Afterpay has seen a huge rise in its share price since the March 2020 COVID-19 selloff.

The cause of today’s share price jump appears to be broker Morgan Stanley increasing its share price target for the ASX share to $101. Continued strong underlying sales growth and good credit quality were the two main catalysts for the upgrade.

The buy now, pay later business recently completed a $650 million institutional capital raising which gives the ASX 200 business a war chest to go for more growth.

Rio Tinto Limited (ASX: RIO) plans to shut its New Zealand smelter

Rio Tinto has announced that it is going to start planning for the wind-down of operations and eventual closer of its New Zealand Aluminium Smelters (NZAS) after concluding its strategic review. The Rio Tinto share price rose 3.3% today.

The NZAS business is no longer viable because of high energy costs and a challenging short to medium term aluminium outlook.

In 2019 the smelter made an underlying loss of NZ$46 million. The energy costs it is paying are some of the highest in the industry globally. NZAS has given Meridian Energy Ltd (ASX: NEZ) notice to terminate the power contract, which will end in August 2021 when the wind-down of operations is expected to complete.

The ASX 200 miner tried to secure a cheaper power contract but it wasn’t able to find a solution.

Alf Barrios, the Rio Tinto aluminium chief executive, said: “We recognise the decision to wind-down operations at NZAS will have a significant impact on employees, the community and our customers.

“It is not a decision we have made lightly and without significant careful consideration. It is very unfortunate and we could not find a solution with out partners to secure a power price reduction aimed at making NZAS a financially viable business.”

NZAS employs around 1,000 people directly and also supports a further 1,600 indirect jobs.

Treasury Wine Estates Ltd (ASX: TWE) disappoints

The ASX 200 winemaker updated the market and said its earnings before interest, tax and SGARA (EBITS) is expected to be between $530 million to $540 million, reflecting the impact of the COVID-19 pandemic, which has had a significant impact on the company’s trading performance across all geographies in the second half of FY20.

FY20 EBITS has declined approximately 21% for the overall company, with regional declines of approximately 14% in Asia, 37% in the Americas, 16% in Australia and New Zealand and 18% in EMEA.

At the end of FY20 Treasury Wine Estates had cash on hand of approximately $448 million and uncommitted debt facilities of $920 million, providing total liquidity of $1.4 billion. This liquidity position will allow the company to continue with its long-term dividend policy of a payout ratio between 55% to 70% of net profit after tax.

The company is working on lowering its cost base and is also considering divesting some of its wine brands.

Pointsbet Holdings Ltd (ASX: PBH) share price climbs 11%

Pointsbet had another exciting day after announcing another partnership.

It has signed a deal with Betmakers Technology Group Ltd (ASX: BET) to offer fixed odds betting on horseracing in New Jersey after Betmakers secured an exclusive 10-year agreement with New Jersey Thoroughbred Horsemen Association and Darby Development LLC, the operator of the Monmouth racetrack.

The Betmakers Technology share price rose by almost 8% today in reaction to the news. 

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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Pointsbet Holdings Ltd. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Pointsbet Holdings 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.

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