Tag: Motley Fool Australia

The Woolworths Group Ltd (ASX: WOW) share price is trading flat for 2020 and could be a potential bargain for long-term investors, in my view.

Despite experiencing unprecedented demand during the coronavirus pandemic, the supermarket giant’s share price has struggled to gain traction as costs mount.

Rising costs blocking surging sales

Earlier this week, Woolworths released a trading update that detailed the company’s 4th quarter performance to date. Woolworths reported food sales in Australia were up 8.6% for the quarter, while sales in New Zealand jumped more than 15%. Sales at Big W also surged 27.8% in the 10 weeks to 14 June as shoppers returned, while the company’s Endeavour drinks business saw sales grow another 21% for the same period.

However, despite continued record growth in sales during the pandemic, Woolworths has also seen a jump in costs. As a result, the company revised its earnings before interest and tax to a range between $3.2 billion and $3.25 billion, below analyst estimates of $3.32 billion.

Woolworths cited $275 million in extra costs due to precautionary procedures imposed by the pandemic such as more cleaning, labour and extra warehouse space. In addition, the company plans to spend approximately $780 million on 2 automated distribution centres in Sydney and also revealed $500 million in underpaid wages that have added to costs.

Analysts mixed on outlook

A recent article in the Australian Financial Review highlighted the mixed consensus among equity analysts on the future of the Woolworths share price. According to the article, analysts from Goldman Sachs revised their net profit target for 2020 down by 6.4%, while also lowering their share price target for Woolworths to $35.90.

Analysts from broker UBS also estimated that Woolworths will see a 5% to 6% fall in earnings between 2020 and 2022. However, despite the forecasted fall in earnings, analysts believe that the supermarket giant will emerge from the pandemic stronger and retained a ‘buy’ recommendation on the company.

Should you buy?

The Woolworths share price opened the year at around $36 dollars and despite volatility finds itself trading around the same price in late June. The coronavirus pandemic saw unprecedented demand and also changed the shopping behaviour of many consumers. As a result, despite the potential windfall, Woolworths has had to invest heavily in adapting to this new consumer behaviour.

Recently, renewed predictions of a ‘second wave’ of coronavirus infections have reignited fears amongst consumers. This has resulted in some of the panic buying that was documented earlier this year, forcing Woolworths and other supermarkets to impose buying limits on certain items. In the short-term, panic buying could continue to fuel growth in sales.

In my opinion, Woolworths could be a bargain buy for the long-term is the company’s investment in streamlined supply-chains and better online services, both of which could see the supermarket giant adapt faster to changing consumer behaviours.  

More reading

• You don’t have to time the market to get rich with ASX shares
• ASX 200 finishes higher, Afterpay hits new record
• The latest ASX 200 stocks to be slapped with a broker downgrade
• This top fund manager believes dividend yields are going to 0%. Where should you invest?
• Top brokers name 3 ASX 200 shares to buy today

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of 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.

The post Is the Woolworths share price a bargain? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3dx9T1R

The Accent Group Ltd (ASX: AX1) share price is surging today, up 10.29% at the time of writing. Accent shares opened at $1.41 this morning after closing at $1.36 yesterday, but have surged to $1.50 a share in afternoon trading. The shares are now up more than 170% since the lows of 56 cents we saw in March.

Why the Accent share price is galloping higher

The catalyst for today’s move appears to be an ASX release from the company this morning before the market opened. In this release, Accent gave notice that it is expecting FY20 earnings before interest, tax, depreciation and amortisation (EBITDA) to be “around 10% above” the $108.9 million that was seen in FY19.

The company also reported that as of the week ending 21 June, total FY20 sales are sitting at $923 million.

Pleasingly for Accent, digital sales for the company between April and June 2020 were up 150%. As Accent closed all of their physical stores on 27 March, reopening on 11 May in Australia and 22 May in New Zealand, these numbers are very encouraging for shareholders. The company also reported digital sales made up 23% of total sales in the month of June so far (up to 21 June).

Also noted were strong sales in New Zealand, Western Australia, South Australia, Queensland and regional areas. These areas have apparently rebounded much stronger than Sydney and Melbourne metropolitan sales.

Accent Group CEO, Daniel Agostinelli had this to say on the numbers:

“The strong trading performance over the last 2 months driven by digital has been well ahead of expectations. It is clear that there has been a seismic and most likely enduring shift in consumer behaviour. With 18 websites and our leading digital capability, Accent Group is capitalising on this trend. Through this period Accent has attracted many new customers online who have never shopped with us before. We will continue to drive digital growth as the number one priority in our company.”

Accent also praised the positive impact of the government’s JobKeeper program throughout the coronavirus situation. The program enabled Accent to scale its staff down and back up efficiently during the lockdown period.

Despite today’s positive share price movements, Accent shares are still 18% below the levels they started 2020 at and around 30% its February highs.

More reading

• ASX retailers beware! Amazon.com is gearing up for its next major attack
• Why Accent, CSL, Kogan, & Redbubble shares are pushing higher
• Here are 3 Australian share market trends to watch this week
• Why these ASX retail shares surged over 25% in the past 2 weeks

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

The post Why the Accent Group share price has surged 10% today appeared first on Motley Fool Australia.

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

It’s been a bad morning for ASX shares today as the S&P/ASX 200 Index (INDEXASX: XJO) has fallen 1.9% lower to 5,851.4 points.

It can be hard to keep a cool head while both domestic and international share markets are crashing lower. However, I like to think of today’s drop as a discount sale on some of my favourite companies.

Here are a few ASX companies that I’ve got my eye on if we see another share market crash in 2020.

ASX shares I’d like to buy in the next market crash

Transurban Group (ASX: TCL) is one blue-chip share at the top of my list.

Transurban is one of the world’s largest infrastructure investors with an extensive portfolio of toll roads across Australia and North America.

Despite its share price slumping in the recent bear market, there could be a silver lining for Transurban. The coronavirus restrictions have forced a rethink of commuting which could see more Aussies turn to toll roads in 2020.

If we see another COVID-19-related share market crash, I think the Transurban share price could be caught up in it. If there’s a tidy discount on offer, I might buy-in if I think it’s at a bargain.

But Transurban isn’t the only ASX share I’d have my eye on in a share market crash. While Transurban might be a speculative play, buying AGL Energy Limited (ASX: AGL) could be a good defensive option.

The Aussie energy generator and retailer could see its earnings hold up better than some in 2020. The energy sector is generally non-cyclical, given the demand for energy is largely uncorrelated with the state of the economy.

While I think the AGL share price is unlikely to rocket higher in 2020, it could be a good option to buy in a share market crash. Of course, it’s worth investing in all ASX shares with a long-term view, but AGL could be a solid buy.

It already boasts a strong market share in the Aussie energy market and is one of the leading investors in renewable energy. If you’re bullish on the role of renewables in Australia for the long-term then maybe AGL is worth a look.

More reading

• Is the Transurban share price a good buy right now?
• ASX retailers beware! Amazon.com is gearing up for its next major attack
• Can 5G help push the Telstra share price higher by 2021?
• Qantas share price on watch as it launches a $2bn cap raise
• You don’t have to time the market to get rich with ASX shares

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

The post Transurban Group and 1 other ASX share I’d buy in another share market crash appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2Z1ftV6

The Tesoro Resources Ltd (ASX: TSO) share price is storming higher today as investors react to promising assay results.

At the time of writing, Tesoro shares have jumped 15.87% to 7.3 cents apiece after surging by as much as 26.98% in early morning trade.

Tesoro Resources is a gold explorer with a strategy of acquiring, exploring and developing mining projects in the Coastal Cordillera region of Chile.

Tesoro’s cornerstone project is its 70%-owned El Zorro Gold Project. The project covers more than 10,000 hectares and is located in northern Chile. Tesoro has the rights to acquire up to 80% of the El Zorro project.

What’s moving the Tesoro share price?

This morning, Tesoro announced it has received surface assay results for controlled outcrop channel sampling conducted at the Buzzard Prospect at El Zorro.

According to the release, the sampling has identified a large gold-bearing vein system over an area approximately 1,100 metres long and 750 metres wide. Individual veins exhibit gold mineralisation for over 250 metres of strike.

Significant results include:

• 3 metres at 5.23 grams per tonne (g/t) gold;
• 6 metres at 7.06g/t gold;
• 1 metre at 2.55g/t gold; and
• 3 metres at 1.16g/t gold.

“The early stage results from Buzzard further demonstrate the potential of the El Zorro gold system with gold now identified over 5km of strike at multiple prospects,” said managing director, Zeff Reeves.

“The Buzzard vein system is extensive, and these results have highlighted large-scale potential, which will require additional work to further understand,” Mr Reeves added.

Tesoro has now received final assays for 200 samples related to first pass channel and rock chip sampling from the Buzzard Prospect. 

The company advised that additional work is required to further delineate surface gold mineralisation at Buzzard. This will involve follow up mapping, sampling, and trenching in order to delineate potential drill targets.

Ternera drilling

The Buzzard Prospect is located around 2 kilometres south of the main Ternera Prospect.

Tesoro noted today it has nearly completed the drill planning and preparation for an infill and extensional drill program at Ternera. Accordingly, two drill rigs are being mobilised and drill pads are currently being installed.

The program, scheduled to commence in July, is designed to further define and expand the Ternera deposit. 

With a share price of 7.3 at the time of writing, Tesoro’s market capitalisation currently stands at around $32 million. If you’d rather stick to investing in larger and more liquid shares, check out the top ASX growth shares in the report below.

More reading

• Are these small cap ASX tech shares future stars?
• 2 ASX tech shares to buy and hold beyond 2025
• 3 top international ASX shares for growth and income
• 3 quality ASX shares offering shareholders generous dividends
• Why the Scentre share price could rise 88% in 2020

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 Tesoro share price jumps 16% as sampling identifies major gold-bearing vein system appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2YtR6jR

The oil price fell again overnight. So far this week it has lost 5.8%. This fall has sent ripples through the Australian share market and the world’s oil companies. The market has been very optimistic about the return of fuel demand. Nevertheless, we are still a long way from a return to normal demand. In addition, the natural gas market has also seen constriction in pricing due to a number of factors. 

As always, this has inadvertently created some really strong buying opportunities for investors.

Why is the oil price falling?

U.S. crude oil inventories currently sit at 540.7 million barrels. This is higher than the 5-year average for this time of year and a resumption in demand levels is far slower than anticipated. The US Energy Information Administration has announced a build in crude inventories by 1.2 million barrels for the week ending 12 June. In addition, a 1.4-million-barrel increase for the week ending 19 June. 

Within the US, a major market for gasoline and distillate, fears exist for a second wave of the coronavirus. However, it is uncertain whether it will attempt at a full shutdown again. Regardless, the resumption of international air travel, a major user, is still a long way off. Today’s announcement of the layoff of 6,000 workers by Qantas Airways Limited (ASX: QAN) underlines that point.

Aussie oil companies

All 4 major Australian oil and gas producers have seen their share prices fall from last Friday’s close. In particular Oil Search Limited (ASX: OSH) has slid by 9.43%. Oil Search has been doing a tremendous job fighting for survival in the current economy.

It has already cut its capital expenditure by 40%, yet it remains exposed due to its net debt of $2.9 billion. In a recent retail capital raising it was not able to fill all of its share purchases. The company raised $79.5 million out of an expected $80 million. The last reported breakeven costs for Oil Search were $32 per barrel of oil equivalent (BOE). This is a means of measuring liquefied natural gas (LNG) and oil.

Woodside Petroleum Limited (ASX: WPL) has seen its share price fall by 4.9% thus far, Origin Energy Ltd (ASX: ORG) by 5.7%, and Santos Ltd (ASX: STO) share price has fallen by 5.5%.

While I like all 3 of these companies, I lean towards Origin Energy under the current conditions.

Origin is targeting a breakeven cost of <US$24 BOE in its H1 earnings report. The company has agreed to acquire a 20% stake in Octopus Energy in the UK for $507 million. This includes exclusive Australian access to the Octopus software, Kraken. This will extend its competitive cost position, with targeted cost savings of $70–80 million by FY22 and $100–150 million by FY24.

Origin is currently trading at a price to earnings (P/E) ratio of 10.1 and its share price is still 31% down year to date. 

Foolish takeaway

I think the Origin share price is an absolute bargain today. The recent falls due to the sliding oil price have made it even more attractive. Unlike the other companies mentioned, Origin is both a producer and a retailer. The company is totally focussed on reducing breakeven costs and has taken innovative steps in this area. While the oil and LNG prices are likely to be depressed for the foreseeable future, Origin is well-placed to operate in a low margin environment. 

More reading

• ASX 200 down 1.8%: CSL announces new acquisition, Qantas to raise $1.9bn
• Why Evolution, IDP Education, Oil Search, & Webjet shares are dropping lower
• Qantas share price on watch as it launches a $2bn cap raise
• 5 things to watch on the ASX 200 on Thursday
• This top fund manager believes dividend yields are going to 0%. Where should you invest?

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.

The post Oil price fall creates buying opportunities appeared first on Motley Fool Australia.

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

The Bapcor Ltd (ASX: BAP) share price has tumbled lower on Thursday despite the release of a positive trading update. The announcement, which was released prior to the market’s open on Thursday morning, included updated profit guidance for the 2020 financial year. At the time of writing, the Bapcor share price was down 2.38% to $5.75 following the news.

What was included in the announcement?

Bapcor announced that the impact of coronavirus restrictions on its business were not as severe as originally anticipated. The company had experienced higher than expected demand, especially across its retail and Burson Trade segments in Australia. Additionally, most of Bapcor’s other businesses were recovering more quickly than anticipated and were returning to the level of demand seen prior to the pandemic.  

According to the announcement, Bapcor’s retail segment experienced strong demand in May and June. Same store sales for Autobarn increased over 45% when compared with the same period in 2019. This came after same store sales fell by 3% in April. Bapcor reported that this sales growth was experienced across both company-owned and franchised stores. For the full year to June 2020, Bapcor estimates that Autobarn’s same store sales will increase by around 8%.

The company further reported that Burson Trade experienced strong demand across May and June. Its same store sales growth is expected to be around 10% up on the year prior. This follows a 10% year-on-year fall in same store sales for April. For the full year, the company expects Burson same store sales growth to be around 5%.

The segments of Bapcor that were most heavily affected by coronavirus were New Zealand, Thailand, and specialist wholesale. However, the company reported that these segments are also now recovering from the impacts of coronavirus restrictions.

According to Bapcor, the current strong demand in retail and Burson Trade includes an element of stimulus-induced discretionary spending. 

Bapcor’s outlook

Following strong performance over the past two months, Bapcor predicted that net profit after tax for the 2020 financial year would be in the range of $84 – $88 million. This prediction was subject to normal, year-end audit procedures. It also excludes significant items relating to major acquisitions as well as transition costs associated with the company’s new distribution centre in Melbourne.

The company also announced “Future demand is anticipated to moderate as we enter the new financial year in an environment of economic uncertainty and as government stimulus reduces”.

About the Bapcor share price

The Bapcor share price is up 101% from its 52-week low of $2.85. However, it has fallen 10% since the beginning of the year. So why hasn’t the automotive giant’s share price risen on the back of today’s largely positive news from the company? The Bapcor share price did actually rally in early trade today, reaching a high of $5.94. This was followed by a sharp fall and then an additional brief rally before a gradual tapering off to its current price of $5.75 (at the time of writing). My opinion is that today’s announcement, whilst positive overall, was pretty much in line with investors’ expectations. And because the wider market is falling lower today, the news from Bapcor was not startling enough to garner sufficient buying to offset the general selloff.  

More reading

• Australian businesses are running out of cash
• Bapcor and 1 other quality ASX share to add to your portfolio
• Coronavirus second wave potential could drive investment portfolio changes
• 3 long-term ASX 200 shares I’d buy right now
• Top fund manager reveals some of the best ASX shares to own

Motley Fool contributor Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bapcor. 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 Bapcor share price falls despite positive update appeared first on Motley Fool Australia.

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

On Wednesday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three ASX 200 shares that have just been given sell ratings by brokers are listed below.

Here’s why these brokers are bearish on them:

IGO Ltd (ASX: IGO)

According to a note out of Ord Minnett, its analysts have resumed coverage on this nickel miner’s shares with a sell rating and $3.70 price target. The broker made the move largely on valuation grounds. It feels its shares are expensive at this level and could come under significant pressure if its guidance for FY 2021 disappoints. The IGO share price is currently trading notably higher than this price target at $4.92.

Magellan Financial Group Ltd (ASX: MFG)

A note out of Credit Suisse reveals that its analysts have retained their underperform rating and $47.00 price target on this fund manager’s shares. It continues to have a problem with its valuation and notes that its shares are the most expensive under coverage in the sector. And while its funds have performed positively, it doesn’t believe this is enough to justify the premium its shares are trading at. Magellan’s shares are changing hands for $56.95 this afternoon.

Sonic Healthcare Limited (ASX: SHL)

Analysts at UBS have retained their sell rating and lifted the price target on this healthcare company’s shares to $26.75 following its trading update. According to the note, the broker has lifted its forecasts to account for a better than expected second half. Nevertheless, this isn’t enough to force a change of rating and UBS continues with its sell rating. Sonic’s shares are trading at $30.19 at the time of writing.

More reading

• 5 things to watch on the ASX 200 on Thursday
• ASX 200 down 0.2%: Afterpay hits record high, TPG Telecom merger vote
• Why Afterpay, APA, Evolution, & Sonic shares are storming higher
• Sonic Healthcare share price pushes higher on FY 2020 guidance update
• Renewed US-China trade war puts these ASX 200 stocks in the firing line

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

The post Top brokers name 3 ASX shares to sell right now appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3g0wbed

The Transurban Group (ASX: TCL) share price was hit hard during the early phase of the coronavirus pandemic. Its share price declined from $16.33 on 11 February to $10.50 on 20 March.

Since then its share price has regained over half of those losses and is currently trading at $14.15.

Easing of coronavirus restrictions has led to a progressive recovery in traffic on its tollways in local markets.

So, does the Transurban share price offer good value to investors right now?

Traffic volumes begin to recover

Earlier this week, Transurban reported that it has been witnessing a progressive recovery in traffic on its toll networks across Australia. This positive trend began in mid-April, in line with the staged lifting of government lockdown restrictions, as the number of active coronavirus cases gradually dropped.

Prior to this, there has had been a significant decline in traffic numbers from early March due to COVID-19 restrictions.

Toll road traffic, however, has been recovering much more slowly in Transurban’s North American market, due to harsher lockdown restrictions.

Transurban also acknowledged that traffic levels on its toll roads will remain highly sensitive to any further government action.

Just in the last few days, the Victorian government has announced that it may re-introduce even stricter lockdown measures in selected areas of Melbourne. This is due to a worrying recent trend of double-digit coronavirus infections across the past week. This recent surge in new cases indicates that Australia still has a long path ahead to fully contain the virus.

Strong balance sheet remains  

Transurban also revealed earlier this week that it remains in a strong liquidity position. Sufficient funds remain available to meet any capital requirements that may arise before mid next year. This also places the toll road operator in a position to take advantage of any investment opportunities that may arise.

Transurban also declared a final dividend payment for this financial year of 16 cents per share. This brings its total FY20 dividend distribution to 47 cents per share.

Is the Transurban share price in the buy zone?

With the Transurban share price still well down on where it was before the coronavirus pandemic hit, I think now offers a reasonable buying opportunity for patient investors with a long-term investment horizon. Traffic volumes should eventually get back to normal.

Transurban owns a virtual monopoly on the toll roads in Australia’s 2 largest cities; Sydney and Melbourne and have an expanding overseas presence. I believe it remains well-placed to capitalise on a growing population in these locations over the next 5–10 years.

More reading

• The latest ASX 200 stocks to be slapped with a broker downgrade
• Why AMP, Qantas, Qube, & Transurban shares are dropping lower
• My 3 high-yield ASX dividend shares to buy now
• Forget term deposits! These ASX dividend shares are better
• ASX 200 finishes flat, ASX travel shares drop

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

The post Is the Transurban share price a good buy right now? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2Bb4Wi2

The retail sector isn’t spared from the sharp market sell-off today. But Amazon.com will give them something extra to sweat about as it prepares a major assault on the industry.

The S&P/ASX 200 Index (Index:^AXJO) tumbled 1.5% in late morning trade as fears of a second spike in COVID-19 cases dragged on sentiment.

Most consumer discretionary shares on the ASX fell in sympathy and news that Amazon.com is looking to aggressively expand in Australia is adding pressure.

Aggressive expansion

The US online shopping giant is planning on setting up one of the nation’s biggest warehouses in Western Sydney and searching for a mega facility in Melbourne, according to the Australian Financial Review.

Amazon.com is undoubtedly capitalising on the big shift to online shopping brought on by the coronavirus lockdown.

While Amazon’s entry into Australia three years ago hasn’t posed much of a threat to local retailers, at least not in my opinion, this may be about to change.

Good time to attack

There’s also no better time to go on the offence when the sector is getting hit by the economic fallout from the pandemic.

The AFR reports that Amazon will occupy a 190,000 square meter multi-level fulfilment centre at Goodman Group’s (ASX: GMG) Oakdale West Estate in Kemps Creek.

Amazon is also said to be hunting for additional warehouse space up to 80,000 square meters in Melbourne.

It was only two weeks ago that Amazon announced plans for a new warehouse in Brisbane on another site owned by Goodman.

What’s also noteworthy is that Amazon’s 2019 sales nearly doubled to $562 million in 2019 from $292 million the year before, and the AFR believes 2020 will be an even bigger year.

The ASX stocks also benefiting from COVID-19

But it isn’t only Amazon that’s benefitting from the big shift to online shopping. Our home-grown mini-Amazon Kogan.com Ltd (ASX: KGN) is also reaping the spoils from the crisis.

There’s a host of other retailers that are similarly benefitting from the structural change. The Redbubble Ltd (ASX: RBL) share price surged nearly 30% after reporting a jump in online sales for its print-on-demand products.

The Accent Group Ltd (ASX: AX1) share price is another noteworthy outperformer today. Shares in the footwear retailer jumped 10% on the back of a positive trading update.

Others in the sector that have benefitted from the stay-at-home thematic include Bunnings and Officeworks owner Wesfarmers Ltd (ASX: WES).

Let’s also not forget electronics and furniture retailer Harvey Norman Holdings Limited (ASX: HVN) and kitchen appliance maker Breville Group Ltd (ASX: BRG).

More reading

• Can 5G help push the Telstra share price higher by 2021?
• Redbubble share price rockets 40% on bumper Q4 sales growth
• Why Accent, CSL, Kogan, & Redbubble shares are pushing higher
• Qantas share price on watch as it launches a $2bn cap raise
• You don’t have to time the market to get rich with ASX shares

Motley Fool contributor Brendon Lau owns shares of Breville Group Ltd. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended Accent Group and REDBUBBLE 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 ASX retailers beware! Amazon.com is gearing up for its next major attack appeared first on Motley Fool Australia.

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

The Telstra Corporation Ltd (ASX: TLS) share price has dropped significantly since mid-February, falling from $3.89 on 11 February to $3.14 at the time of writing, a decline of 19%.

A number of companies on the S&P/ASX 200 Index (ASX: XJO), have regained a significant proportion of their early phase coronavirus losses since March. However, the Telstra share price saw its downward trend continue until the end of April, falling to $2.99. Since then, Telstra shares have only recovered slightly.

So, can the launch of 5G services drive the Telstra share price higher?

Telstra must go beyond its T22 strategy

Telstra was the undisputed king of the Australian telco market for several decades. It owned the national fixed line network for broadband and voice, and therefore was able to set the price that it charged to other telcos using its network. This flowed through to high margins and high company profits. 

Australia’s National Broadband Network (NBN) has changed all that.

Telstra no longer owns the national network. Australia’s largest telco now operates on a level playing field with other telcos such as Optus, TPG Telecom Ltd (ASX: TPM) and Vocus Group Ltd (ASX: VOC).

In a March market update, Telstra commented that it is on track to achieve most of its T22 strategy goals. This includes reducing underlying fixed costs by $2.5 billion annually by the end of FY22. This strategy will help it evolve into a leaner, more efficient telco provider in a new era of Australian telecommunications.

However, I believe that Telstra must go further than just cost-cutting and restructuring if it is to grow its business over the longer term.

Launching new 5G services is a key way that Telstra can achieve this.

Why 5G could be the game changer for Telstra

By offering wireless mobile broadband via its own 5G network, this will enable Telstra to bypass the NBN.  Telstra will also be able to obtain higher profit margins.

In late May, Telstra reached a significant milestone in its 5G rollout, will 5G coverage switched on in selected areas of 47 cities and larger regional towns across Australia.

Telstra’s 5G network has reached speeds of over 700 Mbps – that’s 7 times the current speed of the 4G network. It’s also faster than the plans nearly of all existing NBN customers. It is also significantly faster than its main 5G rival Optus, which currently only offers maximum speeds of 400 Mb/s.

Can 5G lift the Telstra share price higher?

5G mobile broadband access is unlikely to ever fully replace NBN’s fixed broadband access. However, it could see Telstra potentially expand its mobile subscriber market share over the next few years. This could flow through to higher revenue, higher profitability and potentially a higher share price.

However, with a full 5G launch not expected until later this year or early next year, I don’t anticipate any positive impact on Telstra’s share price until well into 2021.

More reading

• ASX retailers beware! Amazon.com is gearing up for its next major attack
• Qantas share price on watch as it launches a $2bn cap raise
• You don’t have to time the market to get rich with ASX shares
• Could one of these ASX shares be ‘the next Afterpay’?
• 3 star ASX shares to buy for the rest of 2020

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

The post Can 5G help push the Telstra share price higher by 2021? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3hZ59pk