Tag: Motley Fool Australia

When hunting for a good dividend yield most people invariably invest in large caps or blue chip stocks. This makes sense in a rational world. Large caps are often less likely to disappear and are most likely to pay a reliable dividend.

However, if you are willing to take some risk and do the homework, then there are a lot of great opportunities for yields larger than 10%. In a higher-risk investment like this, I would restrict the commitment to $1,000, potentially split between the below 2 companies. That is because $500 is the minimum initial investment level on the ASX.

Mosaic Brands Ltd (ASX: MOZ)

I think this company is one of the real hidden gems on the ASX. Mosaic is a fashion retailer that owns a number of brands like Noni B, Rockmans, and W.Lane among others. The company lost its way for a while there and has experienced its fair share of ups and downs. However, it had a change of management in 2014 and has seen very impressive results from that point.

At its current price Mosaic has a trailing 12 month (TTM) dividend yield of 20.4%. It sells at a price to earnings ratio (P/E) of 6.3. In its FY19 report, the company reported sales just shy of 10% for its online presence. During lockdown, the company reported in a COVID-19 update an increase in online sales of 80% equivalent to the previous corresponding period of the year prior. 

Risks

Mosaic is likely to post a large EBITDA loss this FY and is hoping to return to profitability in FY21. Dividends are currently deferred and may not resume until H1FY21. The company’s position is precarious. If this goes well it will see a capital increase and a dividend yield of up to 20% on today’s price. If it goes badly you will lose $500.

Navigator Global Investments Ltd (ASX: NGI)

Navigator is the ASX-listed parent of alternative investment manager, Lighthouse Investment Partners, LLC (‘Lighthouse’), based in the United States. The company currently has approximately $12 billion in assets under management. 

Over 5 years the company has been able to achieve an average return on equity of 14.38%. This means about $14 in earnings for every $100 in net assets. This is a profitable figure. In terms of the company’s return on capital employed, Navigator has a 2 year average of 28.7%. So not only is this company very profitable it is also very efficient at making money.

Risks

The primary risks faced by Navigator Global right now is client redemptions. During the pandemic and as we move into a recession, the company’s clients in the US and beyond are likely to redeem some funds. The company is currently selling at a P/E of 5.32. Its share price is down by 57% year to date due, in large, to the coronavirus pandemic outbreak. 

Foolish takeaway

This investment strategy, if successful, will earn a dividend yield of around 19%. This is the reality of investing. If you are able to withstand the risk, then there are relatively large benefits. However, you must do your homework first. Make sure you have a very clear understanding of the risk. And lastly, make sure that you and your finances can take the downside.

More reading

• Why the Afterpay share price is up 20% in June
• Why Domino’s share price is smashing the market
• Down 15% in 2020! Why I like the Domain share price today
• A great ASX small-cap share for your watchlist
• Are these ASX 200 shares dirt cheap right now?

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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My investing strategy allows me to keep a percentage of my shares in higher risk investments. Often, this means looking for ASX small-cap or mid-cap or shares that will compound well over time.  I tend to do a lot of analysis as I do not like to lose money. But then, who does?

While the share prices of many large-cap companies have already returned to their pre-pandemic levels, there are still a number of ASX small-cap shares that remain attractively priced. Here are my thoughts on one of them.

ASX small-cap retail

Discretionary retail companies have been among the hardest hit by the lockdown. Unlike the travel sector, however, there are already green shoots of growth emerging for discretionary retail spending.

Michael Hill International Ltd (ASX: MHJ) is a business familiar to most people. It operates in the $4 billion jewellery market in Australia. The company currently has around 301 stores globally and, in addition to Australia, has operations across New Zealand and Canada. 

In January, Citi rated the company as a buy and placed a target price of 80 cents per share on the Aussie jeweller. Its shares are currently trading at less than half this. In February, the company reported increases in same store sales for all stores across Australia and New Zealand. It also showed a willingness to close underperforming stores by closing down nine during H1FY20. 

Total revenue for the half was up by 4.4% versus the previous corresponding period. However, the company’s gross margin fell due to foreign exchange rates and gold prices.

Pandemic trading

Sales for Michael Hill collapsed in March when the lockdowns began with the company reporting an 11.9% reduction in sales across the group. At the same time, the YTD revenue across the company managed to increase by 0.6% due to strong performance prior to March. 

The ASX small cap saw its online sales increase dramatically during lockdowns, largely due to new digital sales technologies the company introduced in response to the pandemic. In fact, digital sales for Michael Hill during the week of late April and early May broke a new record for the company, outperforming a prior record digital sales week from Christmas 2019. This has resulted in a more focused effort by the company to increase online sales and customer acquisition moving forward. 

Michael Hill also remains focused on reducing its costs of doing business with a very lean goal of eliminating all non-essential expenditure.

The jewellery market

There is no doubt the jewellery sector is highly competitive across all three of Michael Hill’s geographic markets. In addition, fast fashion companies like Lovisa Holdings Ltd (ASX: LOV) are often competing for similar customers. As we move into a recessionary period, consumers are likely to have less discretionary income. Furthermore, Michael Hill may see its costs rise as the pandemic impacts its supply chain.

Foolish takeaway

Like many other companies that have adapted to the changing conditions as a result of the pandemic, Michael Hill has benefitted from an increase in digital sales. I believe continued focus in this area will counter the impacts of a general move away from mall shopping. Whilst I do not think this company will provide explosive, short-term growth, I do think this ASX small-cap share will continue to compound at a reasonable rate over the next 3 – 5 years.

More reading

• Coronavirus second wave potential could drive investment portfolio changes
• Here are 3 Australian share market trends to watch this week
• Short-sellers are stepping up their attack against these popular ASX shares
• Why the Lovisa share price is at risk of falling further over the coming weeks
• Leading brokers name 3 ASX shares to sell today

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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Investors have witnessed some very dramatic share price movements over the past few months as the market continues to respond to the coronavirus pandemic.

Fortunately, this has provided some interesting opportunities for investors to take a closer look at. Here are two to consider:

Aristocrat Leisure Limited (ASX: ALL)

This gaming technology company’s shares have fallen heavily this year and are trading 35% below their 52-week high. Investors have been selling the pokie machine manufacturer’s shares after casinos were closed because of the pandemic. While a pullback in its share price is not unwarranted, I believe the size of the pullback has been severely overdone. Especially given how Aristocrat’s digital business is cushioning the blow.

For example, during the first half the digital business reported an 18.5% increase in revenue to US$695.5 million. This was driven by 7.3 million daily active users spending an average of 50 U.S. cents per day. I’m confident that new releases, lockdowns, and increased mobile gaming will drive further digital growth in the second half and beyond. This could put Aristocrat in a position to accelerate its earnings growth once the crisis passes and casinos reopen. As a result, I think its shares are good value at 20x estimated FY 2021 earnings.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

The Sydney Airport share price has fallen 41% from its 52-week high. Investors have been selling the airport operator’s shares this year after the coronavirus pandemic practically brought its operations to a standstill. Once again, while some of this selling has not been unwarranted, I believe the size of its decline is overdone and has created a buying opportunity.

Although the current situation in Victoria has thrown a spanner into the works, I’m optimistic that the domestic tourism market will recover in 2021. After which, in 2022 I suspect international tourism will be recovering strongly. I expect this to lead to a dividend of 29 cents per share in 2021 and then ~37 cents per share in 2022. This implies yield of 5.3% and 6.7%, which I feel could make it well worth considering a patient investment in Sydney Airport’s shares.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 drops 1.5% on elevated COVID-19 fears
• Not sure about the big four banks? Buy these ASX dividend shares instead
• The latest ASX recommendation changes by top brokers
• ABS reveals which industries (and ASX shares) may rebound hard after COVID-19

Motley Fool contributor James Mickleboro 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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On Monday the S&P/ASX 200 Index (ASX: XJO) started the week deep in the red. The benchmark index fell a disappointing 1.5% to 5,815 points.

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

ASX 200 set to rebound.

The ASX 200 looks set to rebound strongly on Tuesday. According to the latest SPI futures, the benchmark index is expected to open the day 73 points or 1.25% higher. This follows a positive start to the week on Wall Street, which saw the Dow Jones jump 2.3%, the S&P 500 climb 1.5%, and the Nasdaq index rise 1.2%.

Oil prices recover.

Energy producers including Oil Search Limited (ASX: OSH) and Woodside Petroleum Limited (ASX: WPL) could be on the rise today after oil prices recovered. According to Bloomberg, the WTI crude oil price is up 3% to US$39.65 a barrel and the Brent crude oil price is up 1.7% to US$41.70 a barrel. Improving economic data gave oil prices a lift.

Gold price rises.

Gold miners such as Evolution Mining Ltd (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) will be on watch on Tuesday after the gold price edged higher. According to CNBC, the spot gold price rose 0.2% to US$1,783.70 an ounce. The precious metal is nearing a multi-year high amid concerns over rising numbers of coronavirus cases.

TPG Telecom-Vodafone hits ASX board.

TPG Telecom Ltd (ASX: TPM) and Hutchison Telecommunications (Aus) Ltd (ASX: HTA) shares were suspended and delisted after the market close on Monday. The merged entity will list on the ASX boards at 11:30am this morning under the name and ticker – TPG Telecom Limited (ASX: TPG). Its shares will initially trade on a deferred settlement basis. TPG’s spin-off, Tuas Limited (XASX: TUA), will also commence trade later this morning.

Fisher & Paykel Healthcare named as a buy.

The Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) share price could be going higher from here according to one leading broker. Following the release of its strong full year result on Monday, Goldman Sachs has retained its buy rating and lifted its price target by 22% to $33.90. It has also suggested that its FY 2021 guidance is conservative.

More reading

• Are these ASX 200 shares dirt cheap right now?
• ASX 200 drops 1.5% on elevated COVID-19 fears
• The latest ASX recommendation changes by top brokers
• 3 star ASX 200 shares for all types of investors
• Broker survey points to more upside for JB Hi-Fi and these ASX stocks

Motley Fool contributor James Mickleboro 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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Because of all the deferments and cancellations, estimating the average dividend yield of the Australian share market is tricky at the moment.

However, traditionally, the local share market would provide investors with an average yield of approximately 4% each year. And while this is very attractive in comparison to term deposits, you don’t have to settle for that.

Listed below are two top dividend shares which offer investors higher than normal yields. Here’s why I would buy them for income this week:

Rio Tinto Limited (ASX: RIO)

I think this mining giant would be a good option for income investors right now. Thanks to its strong balance sheet, sky high iron ore prices, improving copper prices, and its world class and low cost operations, I believe Rio Tinto is likely to return high levels of free cash flow to shareholders in FY 2020 and FY 2021.

At present, I conservatively estimate that the company’s shares offer a forward fully franked dividend yield of at least 5%. But it is worth noting that some analysts are even more bullish and are forecasting much greater dividends.  

Rural Funds Group (ASX: RFF)

A second high yield ASX dividend share to consider buying right now is Rural Funds. It is a real estate property trust which owns a portfolio of agricultural assets across Australia. I’m a big fan of the company due to its high quality and diverse portfolio of assets and their ultra-long tenancy agreements.

The latter agreements also include rental indexation, which is underpinning consistent rental income and distribution growth. For example, next year Rural Funds has already provided guidance for a 4% increase in its distribution. This will bring its distribution to 11.28 cents per unit, which equates to a very generous forward 5.8% distribution yield.

More reading

• ASX 200 Weekly Wrap: ASX retreats as confidence wanes
• The best placed ASX stocks for the August reporting season
• These ASX dividend shares will help you beat low interest rates
• 4 top ASX dividend shares you should never sell
• How I’d build a $100,000 portfolio for ASX dividend shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. 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 growth investor on the lookout for some new additions in July, then you might want to consider the three ASX shares listed below.

I believe all three have the potential to generate strong returns for investors in the future. Here’s why I would be a buyer of their shares:

Bravura Solutions Ltd (ASX: BVS)

The first growth share to look at is Bravura Solutions. It is a growing financial technology company which offers a number of solutions to the wealth management and funds administration industries. The key product in its portfolio that I’m most positive on, is the Sonata wealth management platform. This next generation wealth management platform has been a key driver of the company’s growth over the last few years. I expect more of the same in the future thanks to it sizeable market opportunity. This should be supported by recent acquisitions that have bolstered its offering and opened it up to new markets.

PolyNovo Ltd (ASX: PNV)

I think this exciting medical device company could be a growth share to buy. It is the company behind the impressive NovoSorb technology. NovoSorb is a biodegradable material that can aid the repair of bone fractures and damaged cartilage, and in skin grafts. I think PolyNovo’s NovoSorb Biodegradable Temporising Matrix (BTM) product, which was developed at CSIRO, could be a key driver of growth in the coming years. It is a wound dressing intended to treat full-thickness wounds and burns and has a sizeable $1.5 billion market opportunity. In addition to this, management is looking to extend NovoSorb’s use into hernia and breast treatment markets. If successful, it would add an additional $6 billion to its addressable market.

REA Group Limited (ASX: REA)

A final growth share to consider buying is REA Group. I think the property listings company is well-positioned for long term growth thanks to its leadership position and the resilience of its business model. The latter was evident during the third quarter when a 7% drop in listings volumes didn’t stop REA Group from growing its earnings. The company posted a 1% increase in revenue to $199.8 million and an 8% lift in operating earnings to $119.6 million. And while trading conditions are likely to remain tough in the near term, I expect its earnings growth to accelerate once the pandemic passes. I think this makes it worth being patient with its shares.

More reading

• Why De Grey, Fisher & Paykel Healthcare, Perseus, & PolyNovo shares are charging higher
• Up 2,700% in 5 years: can the a2 Milk share price continue to climb?
• 10 high quality ASX shares to buy in FY 2021
• Where to invest $5,000 into ASX shares in July
• 3 top ASX shares to buy for growth investors in July

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

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My ASX share for the week (and the long-term) at today’s price is Bubs Australia Ltd (ASX: BUB).

I think it has a very exciting future. At a share price of $0.93 it has a market capitalisation of around half a billion dollars.

Overview of Bubs

Bubs describes itself as Australia’s only vertically integrated producer of goat milk formula, with an exclusive milk supply from Australia’s largest milking goat herd.

In December 2017, Bubs Australia acquired NuLac Foods, Australia’s largest producer of goat milk products, including CapriLac, a leader in goat milk, powder and yoghurt, and Coach House Dairy, a premium range of Jersey milk products. The acquisition guaranteed exclusive sustainable supply of locally sourced goat milk from Australia’s largest herd of milking goats, with existing capacity to produce over six million litres of milk annually.

Bubs can be described as vertically integrated because last year it acquired Deloraine. At the time it was one of only 15 licensed canning facilities in Australia that was allowed to import into China under regulatory requirements administered by State Administration for Market Regulation (SAMR).

Why I think Bubs is a strong pick for the next 5+ years

There are several reasons why I think Bubs is one of the best ASX growth shares right now:

Control of supply chain

Having control of your supply chain can be important for consumer goods businesses. The more steps and businesses there are between production and the end customer, the more margin that is lost by the company.

Customers can have full confidence in Bubs’ products because they know Bubs is responsible from the farm all the way to the finished product.

International expansion

I think international growth is one of the most important factors for many ASX shares to beat the market over the long-term.

Australia can support very large businesses. Just look at Commonwealth Bank of Australia (ASX: CBA), Wesfarmers Ltd (ASX: WES) and Telstra Corporation Ltd (ASX: TLS).

But Australia only has a population of just over 25 million people. Asia has a much larger population and therefore a much bigger total addressable market. ASX shares that can tap that market successfully can do very well. 

Bubs is targeting Asian growth right now. Bubs may expand to other countries in the future such as the US like A2 Milk Company Ltd (ASX: A2M) has done, but China and Vietnam alone are producing good results for Bubs.

Revenue growth and growing gross profit margin

Chinese revenue rose by 104% in the last quarter. ‘Other market’ revenue rose almost 20 times compared to the prior corresponding period and represented 12% of gross sales in the quarter. Asia is very important for the company’s medium-term growth plans. But Australian revenue actually grew by 34%, so domestic sales are going very well too.

The quarter to 31 March 2020 showed overall quarterly revenue of $19.7 million for the ASX share. This was a 67% uplift from the prior corresponding period and 36% growth on the previous quarter. Infant formula sales increased by 137%. These are impressive numbers.

In the FY20 half-year result Bubs revealed that its gross margin improved from 19% to 24%. This is a significant improvement and shows that Bubs is very scalable as it generates more revenue.

Capable management

I think Bubs’ management has done a really good job to grow the ASX share into what it is today. It has made a number of smart strategic decisions which improve the quality of the businesses.

The focus on growing its distribution footprint will help grow revenue further in the coming years. It’s sold across a variety of different retailers like Alibaba’s Tmall and Beingmate, Woolworths Group Ltd (ASX: WOW), Coles Group Limited (ASX: COL), Baby Bunting Group Ltd (ASX: BBN) and Chemist Warehouse.

Foolish takeaway

I’m not sure how big Bubs can become. But I think it has plenty of room for growth. The rising profit margin and rocketing revenue growth tells me it can become a very profitable business over the next few years. I’d be very happy to load up on shares for the next five years (or more) at the current share price.

More reading

• Do you have $1k to invest? Buy 1 of these ASX shares
• Are you in your 20s? Here’s why I would buy these quality ASX shares
• 3 top ASX growth shares to buy for FY21
• 10 high quality ASX shares to buy in FY 2021
• Where to invest $5,000 into ASX shares in July

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 BUBS AUST FPO. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of A2 Milk, COLESGROUP DEF SET, and Wesfarmers Limited. The Motley Fool Australia 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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The S&P/ASX 200 Index (ASX: XJO) fell 1.5% today as investors fears increased about the continuing growing COVID-19 cases.

In Victoria there was an additional 75 new positive COVID-19 cases. The state is now considering local lockdowns and it’s undertaking a testing blitz in several suburbs.

Here are some of the highlights from the ASX 200 today:

Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) reports solid growth

The healthcare business released its FY20 report today. It’s one of the ASX businesses involved in helping patients who are suffering due to COVID-19.

The ASX 200 business reported operating revenue of NZ$1.26 billion, up 18% compared to FY19. This represented growth of 14% in constant currency terms.

Management said that the increase of revenue was largely driven by growth in the use of Optiflow (nasal high flow therapy), demand for products to treat COVID-19 patients and strong hospital hardware sales throughout the course of the year.

Net profit after tax was NZ$287.3 million, up 37% on the previous year, or 30% in constant currency. However, excluding the impact from tax changes, being the R&D tax credit and building tax depreciation, net profit after tax grew by 23% in constant currency terms.

Whilst revenue growth was strong, there was one downside. The gross margin decreased by 73 basis points to 66.1%, primarily driven by additional air freight costs required to acquire the increased supply of raw materials and expedite finished goods to customers. There was also additional start-up costs of the company’s second Mexico manufacturing facility.

The board declared a final dividend of 15.5 cents per share, an increase 15% compared to last year. This brings the total dividend to 27.5 cents per share, an increase of 18% on last year.

In FY21 the ASX 200 company is guiding revenue to be approximately NZ$1.48 billion and net profit of between NZ$325 million to NZ$340 million.

The Fisher & Paykel Healthcare share price rose almost 7% today.

Jumbo Interactive Ltd (ASX: JIN) share price drops 13%

Lottery reseller business Jumbo suffered a selloff today as the new agreement with Tabcorp Holdings Limited (ASX: TAH) was announced.

The new deal is a 10-year term which extends the current expiry by approximately seven years.

A fixed extension fee of $15 million is payable by Jumbo to Tabcorp upon commencement.

But there is also a service fee payable on the ticket subscription price. It starts at 1.5% in FY21, then it increases to 2.5% in FY22, rises again to 3.5% in FY23 and is scheduled to reach 4.65% after that. For FY21 to FY23, where the value of subscriptions is in excess of $400 million for each applicable financial year, Jumbo will pay a service fee of 4.65% on the value in excess of $400 million.

The share price of ASX 200 business Tabcorp went up 0.9% today.

More bids for renewable energy business Infigen Energy Ltd (ASX: IFN)

There were more bids announced for wind farm business Infigen today.

UAC Energy increased its bid to $0.86 per share and also declared its offer wholly unconditional. However, Iberdrola Australia then outbid UAC Energy again, increasing its offer to $0.89 per share.

The share price rose 3.4% to $0.92, which may suggest investors are expecting further bids.

Other large ASX 200 share price movements from today

At the red end of the ASX there were several large declines. The NRW Holdings Limited (ASX: NWH) fell just over 10%, the WiseTech Global Ltd (ASX: WTC) share price dropped 8.6%, the Mesoblast Limited (ASX: MSB) share price dropped almost 7% and the Virgin Money UK PLC (ASX: VUK) share price fell 6.6%.

At the positive end of the ASX, some of the other positive movements aside from Fisher & Paykel Healthcare were: the Evolution Mining Ltd (ASX: EVN) share price went up 4.1%, the Silver Lake Resources Limited. (ASX: SLR) share price increased almost 3% and the Nearmap Ltd (ASX: NEA) share price climbed 2.8%.

More reading

• The latest ASX recommendation changes by top brokers
• 3 star ASX 200 shares for all types of investors
• Broker survey points to more upside for JB Hi-Fi and these ASX stocks
• ASX 200 drops 1.15%: Fisher & Paykel Healthcare impresses, big four banks tumble
• Why De Grey, Fisher & Paykel Healthcare, Perseus, & PolyNovo shares are charging higher

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 Nearmap Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive Limited. The Motley Fool Australia owns shares of WiseTech Global. The Motley Fool Australia has recommended Nearmap Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Centaurus Metals Limited (ASX: CTM) share price is charging higher today after the company delivered a maiden JORC 2012 mineral resource estimate (MRE) for its nickel-sulphide project in Brazil.

At the time of writing, Centaurus Metals shares have jumped 32.84% to trade at 44.5 cents apiece. This rise takes the company’s current market capitalisation to around $116 million.

About Centaurus Metals

Centaurus is an exploration company focused on the development of its wholly-owned Jaguar Nickel-Sulphide Project located in the Carajás Mineral Province in Brazil.

The company acquired the Jaguar Project from global mining giant Vale S.A. in September 2019. Vale completed a historical non-JORC MRE in 2010, which comprised 40.4 million tonnes at 0.78% nickel for a total of 315,000 tonnes of contained nickel.

Additionally, Centaurus holds the development-ready Jambreiro Iron Ore Project, which is located in south-east Brazil. It is a fully permitted, wholly-owned project that is licensed for 3 million metric tonnes per year of production.

Why is the Centaurus Metals share price surging? 

This morning, Centaurus announced a maiden JORC 2012 indicated and inferred MRE of 48 million tonnes at 1.08% nickel for a total of 517,500 tonnes of contained nickel for its Jaguar Project.

What’s more, this maiden MRE includes a higher-grade component of 20.6 million tonnes, grading 1.56% nickel for 321,400 tonnes of contained nickel. The company noted that this provides an “outstanding” platform from which to commence scoping and development studies.

This maiden MRE is based on more than 65,000 metres of diamond drilling, including 218 diamond drill holes.

“This is a phenomenal starting point confirming Jaguar’s status as a new globally-significant nickel sulphide project,” said managing director Darren Gordon.

“With a maiden Resource containing more than 500,000 tonnes of nickel, this is already one of the largest near-surface undeveloped nickel sulphide projects in the world and, as a maiden JORC Resource number, we believe it is up there with some of the best initial JORC Resources ever published by an ASX-listed junior,” Mr Gordon added.

Centaurus pointed out that Jaguar is unique in the nickel-sulphide space as the high-grade mineralisation comes almost to surface and continues at depth. Around 80% of the nickel metal in the maiden MRE sits less than 200 metres from the surface, which the company believes demonstrates the strong open pitiable potential of the project.

What now?

The maiden JORC MRE for the Jaguar Project covers the six Jaguar deposits and two Onça deposits. Since drilling commenced in November 2019, the company has drilled and successfully intersected high-grade nickel sulphides at three of the Jaguar deposits (south, central and north), as well as both Onça deposits.

Centaurus is yet to commence drilling at the Jaguar West or Jaguar North-East deposits, however, drilling is planned in the second half of 2020.

Additionally, the company will undertake step-out drilling at Jaguar in the second half of 2020 to test deeper high-grade underground targets and strike extensions of the known deposits.

In-fill drilling is already in progress, with two diamond rigs operating on day-shift only and a third rig on standby. The company plans to ramp-up back to three rigs on double-shift and mobilise a reverse circulation rig in the third quarter of 2020. This is part of its strategy to unlock the full potential of the Jaguar Project as quickly as possible.

“This multi-pronged approach should ensure that we can continue to grow the resource as we advance this exceptional project towards development,” Mr Gordon said.

Closing out his comments, Mr Gordon stated: “We also expect to complete a Scoping Study and deliver a further Resource upgrade this year, providing shareholders with strong news flow over the coming months.”

More reading

• Do you have $1k to invest? Buy 1 of these ASX shares
• Not sure about the big four banks? Buy these ASX dividend shares instead
• The latest ASX recommendation changes by top brokers
• ABS reveals which industries (and ASX shares) may rebound hard after COVID-19
• 3 exciting small cap ASX shares to add to your watchlist

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

The post Centaurus Metals share price soars 33% on maiden JORC mineral resource appeared first on Motley Fool Australia.

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Investing $1,000 is an important choice. Delaying spending and saving instead is a praiseworthy decision. But what ASX shares are you meant to choose?

Aussies should want their money to work as hard as it can to grow their wealth for the long-term.

Vanguard Australian Shares Index ETF (ASX: VAS) isn’t a terrible choice. It has low costs and (normally) a decent dividend yield. However, a large percentage of it is invested in the big four ASX banks of Westpac Banking Corp (ASX: WBC) and its peers.

I think Aussie investors can do better for their portfolio than that. Here are three ideas:

Share 1: BetaShares Global Sustainability Leaders ETF (ASX: ETHI)

I believe there are several exchange-traded funds (ETFs) that Aussies can buy that would provide better returns than the Vanguard Australian Shares Index ETF over the long-term.

This ETF is invested in around 200 international climate change leaders (as measured by their relative carbon efficiency) and they “are not materially engaged in activities deemed inconsistent with responsible investment considerations”.

Its top 10 exposures are: Apple, Mastercard, Visa, Nvidia, Home Depot, Adobe, Paypal, Toyota, Netflix and ASML. As you can see, it has excluded some of the biggest businesses in the world like Facebook, Alphabet and Microsoft.

But the returns of the ETF haven’t been hampered by the lack of those big names. At the end of May 2020 it had returned 33% over the prior 12 months. Over the past three years it had returned 19.75% per annum. Since inception in January 2017 it had returned 21.2% per annum. I think those are compelling returns. Plus, those returns are after fees. The ETF charges 0.59% per annum, which is good value considering there are ethical screens for the shares involved.

With this ETF I like that you get great international diversification, strong returns and it can align your investments with your values, if that’s what you’re aiming for.

Share 2: PM Capital Global Opportunities Fund Ltd (ASX: PGF)

At a share price of $0.89 I think listed investment company (LIC) PM Capital Global Opportunities Fund looks really good value.

The job of a LIC is to invest in shares on your behalf. PM Capital Global Opportunities looks to invest in good value non-ASX shares. The strengthening Aussie dollar makes this a good time to invest in overseas shares.

PM Capital Global Opportunities is invested in shares like Visa, KKR & Co and Siemens. It has a diversified portfolio and it is able to short shares, where it can make money if share prices go down. At the end of May, 8.2% of its portfolio was in short positions.

I think it looks great value right now because the share price is valued at a 24% discount to the pre-tax net tangible assets (NTA) at 19 June 2020. The NTA has probably reduced since then, but a 20% discount would still be great value in my opinion.

Share 3: Bubs Australia Ltd (ASX: BUB)

At a share price of $0.92 I think this ASX share looks increasingly good long-term value.

If you look at today’s revenue versus the market capitalisation then Bubs doesn’t look exciting. But as investors we need to think where businesses might be in a few years from now.

Bubs is growing at a very fast pace. In the quarter to 31 March 2020 it generated record quarterly revenue of $19.8 million – this was growth of 67% compared to the prior corresponding period and it represented growth of 36% compared to the previous quarter.

I think there’s plenty more growth in store for the goat milk infant formula business. Asia is a very large market that Bubs is targeting. Vietnam and China growth alone could turn Bubs into a much larger business. Also, Bubs’ profit margins are growing as it benefits from the economies of scale effect. 

The fact that Bubs recently turned cashflow positive is a very good step for a business in the current COVID-19 circumstances. I think Bubs is definitely one ASX share to watch over the next five years.

Foolish takeaway

I’d be happy to invest $1,000 into one of the above ASX shares. Indeed, at these prices I’d be happy to invest a lot more than just $1,000. The short-term may be volatile, but I think all three shares can beat the ASX index over the long-term at the current prices.

More reading

• Are you in your 20s? Here’s why I would buy these quality ASX shares
• 3 top ASX growth shares to buy for FY21
• 10 high quality ASX shares to buy in FY 2021
• Where to invest $5,000 into ASX shares in July
• 3 top ASX shares to buy for growth investors in July

Tristan Harrison owns shares of PM Capital Global Opportunities Fund Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BUBS AUST FPO. The Motley Fool Australia 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.

The post Do you have $1k to invest? Buy 1 of these ASX shares appeared first on Motley Fool Australia.

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