Tag: Motley Fool Australia

The Red 5 Limited (ASX: RED) share price is cratering today. Red 5 shares are down a staggering 35.22% at the time of writing to 22 cents a share after closing yesterday at 34 cents a share.

Red 5 is an ASX gold miner that operates the Darlot and King of the Hills gold mines in the Eastern Goldfields region of Western Australia. Today’s share price move will be very disappointing for the company, considering it was just included in the All Ordinaries Index (ASX: XAO) 2 days ago. The drop puts Red 5 towards the bottom of the company’s 52-week range of 16–40 cents per share.

Why the Red 5 share price is tanking today

The catalyst for this dramatic share price move appears to be an ASX release that the company put out before market open this morning. In this release, Red 5 management listed a number of concerns investors are clearly reacting to today.

Firstly, the company is planning to “scale down” underground ore production at its King of the Hills mine over the second half of 2020 in order to commence open pit ming at its recently acquired Great Western project.

Secondly, Red 5 is reporting that it is expecting substantially reduced gold production from its Darlot mine in the quarter ending 30 June 2020 due to malfunctioning equipment and higher dilution of gold ore than was originally expected. According to the release:

A recent crusher breakdown has resulted in lost production of ~3,200oz which, together with lower than forecast average mining grades as a result of dilution, has resulted in production for the June 2020 Quarter of ~21,000 oz (compared with guidance of 26,000 – 30,000 oz). FY20 production is expected to be ~93,000 oz (compared with guidance of 98,000 – 102,000 oz).

The company reports that as of June 2020, the mine is back to full production capacity.

Red 5 managing director mark Williams had this to say about the release today:

While we are disappointed that Darlot production has again been impacted in the short term due to the issues outlined in this release, we are confident that the measures implemented will stabilise production and improve predictability to put us on track to achieve our FY21 forecast.

This FY21 forecast is an expected 90,000–98,000 ounces of gold at an all-in sustaining cost of $1,830–$2,030 an ounce. At the time of writing, the gold price is $2,552.50 in Australian dollars, or US$1,772.

More reading

• ASX 200 Weekly Wrap: ASX back in the green
• Splitit share price rockets 33% on new Mastercard deal
• ASX 200 Weekly Wrap: ASX bears take control as market volatility returns
• 2 crazy cheap ASX 200 shares you could still buy
• Flight Centre share price and other ASX 200 travel shares look set to continue rising

Motley Fool contributor Sebastian Bowen 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 S&P/ASX 200 Index (ASX: XJO) is having a bit of a Goldilocks day and can’t seem to decide whether it thinks ASX shares are too hot, too cold or just right. After open, we saw a surge, followed by a dip and now (at the time of writing) we are sitting pretty flat at 5,978 points.

Regardless of what the ASX 200 does today or tomorrow, there are signs some investors are worried about the current level of the ASX share market, particularly given the ongoing issues surrounding coronavirus and its economic impact around the world.

So if the ASX 200 does crash again, for whatever reason, how would you respond?

Well, personally, I’ll be buying more shares. Here are 3 ASX shares I have my eye on for if the markets tank again in 2020:

An ASX healthcare leader

CSL Limited (ASX: CSL) is one of the top shares on my watchlist for if the ASX 200 tumbles again. I was watching CSL shares like a hawk through the March crash, but the price didn’t really get down to a level I thought was a bargain. Alas, the market rebounded and here we are today. Whilst I don’t think CSL will be able to continue growing at its previous breakneck speeds, I still think this company will make a top, long-term investment. It’s a global leader in the blood medicines and vaccinations space and has an unrivalled Research and Development department.

An ASX dividend beast

WAM Research Limited (ASX: WAX) is a dividend-focused listed investment company (LIC) that I already own shares in. This LIC is still offering a robust starting yield of 7.2% today (with full franking) but during the March crash, the WAM Research share price dropped to 93 cents. At that level, the shares would have offered a starting yield of more than 10%. At those prices, I think WAM Research was a no-brainer for a top income investment. I certainly won’t be wasting a second opportunity to buy shares at those levels if it was presented again.

A payments growth share

Zip Co Ltd (ASX: Z1P) is a buy now, pay later (BNPL) provider that has also seen a strong recovery since the March crash. Back then, Zip shares dipped as low as $1.05 — a long way from their current price of $5.97 (at the time of writing). This may be a volatile share to own, but I couldn’t resist picking up some Zip shares if we retested those levels on the ASX again in 2020.

More reading

• Is the share market facing another February 2020 moment?
• Can the Newcrest share price crest to new highs?
• Here’s why I think the Link share price has a huge growth opportunity ahead
• The CBA share price is down 13% this year. Is it a cheap buy?
• Why the CSR share price is falling today

Sebastian Bowen owns shares of WAM Research Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and ZIPCOLTD FPO. 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 Appen Ltd (ASX: APX) share price has been a strong performer again on Wednesday.

At one point today the shares of the global leader in the development of high-quality, human-annotated training data for machine learning and artificial intelligence were up over 5% to a record high of $35.56.

When Appen’s shares hit that level, it meant they were up 60% since the start of the year.

Why is the Appen share price at a record high?

Investors have been buying Appen’s shares this year after the release of a strong full year result and positive guidance for FY 2020 in February.

In respect to the latter, the company is expecting to deliver underlying EBITDA in the range of $125 million to $130 million this year. This represents a 23.8% to 28.7% increase on FY 2019’s underlying EBITDA of $101 million.

Pleasingly, since February, Appen has been able to reaffirm this guidance twice despite the pandemic. The first time was in the middle of April and the second time was as recently as the end of May at its annual general meeting.

This is quite the opposite of fellow market darling Altium Limited (ASX: ALU), which has made a series of gentle downgrades to its guidance this year because of the pandemic.

How is Appen performing?

At its annual general meeting, Appen spoke positively about current market conditions. And although it notes that there has been a global slowdown in digital ad spending, this has had a minimal impact on its major customers to date.

In fact, demand for its services has been growing strongly. So much so, year-to-date revenue (including any orders in hand for delivery to customers) came to $350 million as of May.

Appen revealed that year-to-date revenue as at May 2020, including any orders in hand for delivery to customers, amounted to around $350 million. This compares favourably with its total revenue of $536 million for the 12 months to 31 December 2019.

It also advised that it is continuing to strengthen its market position through continued investment in technology. It expects this to support it long-term growth trajectory.

Should you invest?

Although its shares are certainly not cheap at 40x estimated FY 2021 earnings, I still see value in them for long term-focused investors.

This is due to the expected growth of the artificial intelligence and machine learning markets and its important position inside them.

I expect demand for its services to increase materially over the next decade and underpin strong earnings growth that ultimately justifies the premium its shares trade at today.

More reading

• These 5 ASX shares were last week’s top performers
• ASX 200 Weekly Wrap: ASX back in the green
• Are these small cap ASX tech shares the next Afterpay or Appen?
• Where to invest $10,000 into ASX shares next week
• How to become a millionaire in 25 years with $20 a day

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 Altium. The Motley Fool Australia owns shares of Appen 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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Is the share market facing another February 2020 moment? COVID-19 infection numbers continue to rise across the world, yet shares keep climbing.

Back in February 2020, COVID-19 was still in its early days of spreading across the world. Italy still only had a few hundred confirmed cases and the US only had a handful of cases. Outside of China, there were only a few thousand confirmed global cases.

But the trajectory of the infection then was clear – it was rising rapidly. That’s what caused the February 2020 market selloff to start.

But the infection trend has been good for quite a while in Europe, North America and Australia, infection numbers were falling. The improving situation was one of the main reasons why the share market has performed so well. The NASDAQ has actually reached a new all-time high, though the S&P/ASX 200 Index (ASX: XJO) hasn’t fully recovered yet.  

But now things are going the wrong way. There are cases of community transmission in Victoria. There are several states in the US like Texas and California which are seeing record new cases as well as record hospitalisations. Countries like Germany, Portugal, South Korea and others are seeing rising numbers again after restrictions were lifted.

What happens if things get worse again?

The OECD has warned that GDP will fall by 6.3% in Australia if there is a return of lockdowns. Thankfully only Victoria is thinking about lockdowns at the moment, most of the other states are free of COVID-19.

The OECD has also made a prediction that the OECD unemployment rate will reach 10% with little recovery of jobs in 2021 if there’s a second save of global infections. World GDP will drop 7.6% in 2020 if that happens. If there isn’t a second wave, unemployment will only reach 9.2% and GDP will drop 6% this year.

There are two clear potential scenarios. To me, it seems like investors are investing as though there aren’t going to be any other major COVID-19 disruptions this year. There are still huge outbreaks going on in places like Brazil and India. These two countries alone are meaningful contributors to the global economy.

Why I think the share market is acting like February 2020

For some reason it took the market a while to realise how much damage COVID-19 was going to do to the global economy and to confidence. Don’t get me wrong, areas of the world like Vietnam, New Zealand, Taiwan and most of Australia are now in a robust position. Borders are closed and citizens largely know how to act to avoid spreading the virus.

But I wouldn’t bet on the US implementing another widespread lockdown again despite the resurgent infection numbers. Who knows what will happen with the share market if COVID-19 is still prevalent around the time of the election?

What I think this means for shares

Just like in February 2020, I don’t think investors are fully taking into account how infectious or damaging COVID-19 is.

I think are some shares that have justifiably performed well over the past three months. Pushpay Holdings Ltd (ASX: PPH), A2 Milk Company Ltd (ASX: A2M), Bubs Australia Ltd (ASX: BUB), Fisher & Paykel Healthcare Corp Ltd (ASX: FPH), Ansell Limited (ASX: ANN) are some of the names I’d be happy to buy if the share market sold off again because I don’t believe their earnings would fall (much).

However, there are other businesses which I think would be at risk of a share price decline because investors may be too optimistic about the situation. And governments may not throw more money at citizens again. 

But don’t become too bearish. No-one knows what the share market will do next, so it’s best not to spend too much time trying to predict things. Investing is a long-term endeavour, it’s not just about what happens in 2020. I plan to keep investing every month into the best opportunities that I can see because of the long-term growth potential. Don’t forget that healthcare teams around the world are trying to find treatments and develop vaccines. A healthcare breakthrough could be very beneficial to people’s risk appetite. 

Some of the shares that could be a good idea to protect against another market fall are MFF Capital Investments Ltd (ASX: MFF) due to its large cash position and Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) for its defensive investments.

More reading

• 3 ASX shares I’d buy if the market crashes again
• This top fund manager believes dividend yields are going to 0%. Where should you invest?
• Can the Newcrest share price crest to new highs?
• Here’s why I think the Link share price has a huge growth opportunity ahead
• The CBA share price is down 13% this year. Is it a cheap buy?

Motley Fool contributor Tristan Harrison owns shares of Magellan Flagship Fund Ltd and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended BUBS AUST FPO, PUSHPAY FPO NZX, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended Ansell 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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In a media release today, Allan Gray Chief Investment Officer, Simon Mawhinney made a prediction for ASX share dividend yields.

He said the yields for the majority of ASX listed companies could soon be zero or near zero. According to the release, “Allan Gray is progressing on the basis that dividend yields will be close to zero in the near future for the majority of ASX-listed companies.”

The fund manager also stated that APRA had written to banks and insurers in April requesting a reduction in dividends.

This has likely contributed to the dividend cuts from Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC),  Australia and New Zealand Banking GrpLtd (ASX: ANZ) and National Australia Bank Ltd. (ASX; NAB). CommBank, Westpac and ANZ have suspended their dividends entirely while NAB has cut its dividend significantly.

The diamonds in the rough

However, not all news regarding ASX share prospects was negative in the release. The fund manager pointed out that some companies have benefited from the wave of events brought on by the coronavirus and were in a position to lift their dividends. The examples provided included Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL). These staples have benefited from both panic buying and the coronavirus shutdowns. 

Additionally, the fund manager pointed out there is a significant gap between defensive shares cyclical shares. For instance, healthcare and utilities versus materials and banks. According to the release, the April market rally saw defensive companies that had performed well prior to COVID-19 favoured against cyclical companies. If the announcement is correct, this disparity will not continue.

Mr Mahwinney said:

“This divergence can’t continue indefinitely and it is important not to forget what might already be priced into cyclical company share prices. Everything has a price and a momentum shift into cyclically-depressed shares seems well overdue”.

An example of a defensive company fitting this description is Ansell Limited (ASX: ANN). Ansell rallied close to pre-coronavirus prices in April and has since reached new record highs. 

If the fund manager is correct, cyclical companies that may rally include BHP Group Ltd (ASX: BHP), Woodside Petroleum Limited (ASX: WPL) and Bank of Queensland Limited (ASX: BOQ). Each are now trading at significantly lower share prices than sold for prior to the coronavirus pandemic.  

The opportunities

The release also spoke to ASX share opportunities, “Despite earnings and dividend headwinds, we believe investors with a firm focus on the fundamentals and the long term will benefit from mispricing opportunities currently in the market.

“These opportunities are in those companies that typically have strong balance sheets and excellent asset bases, but which can be bought at extremely depressed prices given earnings headwinds”.

One example of a company that may meet Simon Mawhinney ‘s dividend opportunity suggestion is Treasury Wine Estates Ltd (ASX: TWE). Treasury Wine has a strong balance sheet and an excellent asset base of high-quality brands. Currently, the Treasury Wine share price is significantly depressed and it is down 44% from its 52-week high of $19.47. While Treasury earnings could face headwinds from the coronavirus, we can likely see its yield recover in the long term.

More reading

• The CBA share price is down 13% this year. Is it a cheap buy?
• Top brokers name 3 ASX 200 shares to buy today
• Is the Woolworths share price a secret buy?
• My 3 high-yield ASX dividend shares to buy now
• Coronavirus second wave potential could drive investment portfolio changes

Motley Fool contributor Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. The Motley Fool Australia has recommended Ansell 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 Newcrest Mining Limited (ASX: NCM) share price is trading at $31.14 at the time of writing, which is down around 30% from its all-time high seen in November 2010. During the same period, the S&P/ASX 200 Index (ASX: XJO) is up more than 20%. However, the ASX gold miner has been closing the performance gap and has outperformed the ASX 200 by almost 15% over the last 52 weeks.

Can the Newcrest share price continue to outperform and climb back to its all-time highs?

Enter the knight in golden armour

Central banks globally had expanded their balance sheets at an unprecedented pace following the global financial crisis (GFC). They had only barely managed to start reducing them when COVID-19 struck. Now the pace of balance sheet expansion makes the GFC run look like a child’s play.

So, what has this got to do with Newcrest? A lot. Like all mining companies, its financial performance is directly linked to the price of the product it mines and sells – gold. And gold is an asset with strong linkages to inflation as it is considered an inflation-hedge. So, if the central bank balance sheet expansions lead to an uptick in inflation, gold price would be going up as well.

However, contrary to what many expected, central bank actions, post-GFC, have not led to any inflation spike, to date. In fact, what we have seen is quite the opposite. Inflation has continuously fallen the world over. So, could this time be different?

In my opinion, yes, because of the following reasons:

• To deal with the massive socio-economic disruption caused by COVID-19, governments the world over have also entered the fray aggressively with their fiscal policies. We might soon see their central banks directly monetising the government debt. If that were to happen, inflation would soon be knocking at our doors.
• During the GFC, the bailouts had been passed through banks and large corporates. Directly or indirectly, much of that ended up being invested in assets like equities and property, which caused asset price inflation across the globe. During the current COVID-19 crisis, many of the bailouts have resulted in funds directly reaching the public at large. Their expenditure pattern is going to be different and largely on consumables like daily essentials. This might cause inflation to show up at retail level instead of in asset markets like it did during the GFC.
• COVID-19 has caused severe supply chain disruptions and I believe we are yet to see its impact fully in our daily lives. Sharp reduction in demand because of global lockdowns and pre-COVID inventory is not going to last forever. I believe supply will not be able to keep up with demand (even a reduced demand) as the lockdowns ease. And a higher demand than supply scenario will see a rise in inflation as customers bid up the prices of goods and services.

If inflation were to raise its head, one of the most direct beneficiaries would be gold and gold mining companies like Newcrest.

This golden sword cuts both ways

Even if it is deflation and not inflation that we get down the road, deflation is bound to adversely impact asset prices including equities down the line. And gold also happens to be a safe-haven asset – it generally rises in price when equity markets are falling. For instance, in the week ending 12 June, the Newcrest share price rose by 3.6%, while the ASX 200 declined by 2.5%, resulting in an outperformance of 6.1%.

Apart from the above 2 scenarios, gold also does well during periods of geo-political uncertainty. Geo-political fault lines are coming under increased pressure at various points globally and any flare up would be good for gold and Newcrest shares.

Thus, an investment in a gold mining company like Newcrest could do well under multiple scenarios and provide your investment portfolio with much-needed genuine diversification. Its current market capitalisation is $25.41 billion. Newcrest shares are trading at a price-to-earnings ratio of 29.32 with a dividend yield of 1.05%.

More reading

• Here’s why I think the Link share price has a huge growth opportunity ahead
• The CBA share price is down 13% this year. Is it a cheap buy?
• Why the CSR share price is falling today
• Bull market! Avoid these 3 ASX mistakes if you don’t want to lose money
• Top brokers name 3 ASX 200 shares to buy today

Motley Fool contributor Arpan Ranka 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 Afterpay Ltd (ASX: APT) share price has hit yet another all-time high today, breaching the $62 mark for the first time ever and printing a new record at $62.33.

It’s been a truly incredible run for Afterpay shares over the past 3 months. Exactly 3 months and 1 day ago, Afterpay had just closed at $8.90 per share. Today, any investors who were lucky enough to pick up the company’s shares at that time would be sitting on a 600% gain as at this morning’s new high watermark. Not bad for 3 months work.

Why the Afterpay share price is hitting the roof today

Afterpay has been in investors’ good books ever since the company revealed that use of its platform has exploded during the coronavirus pandemic and associated economic shutdowns. When the COVID-19 crisis began, investors initially feared the buy now, pay later (BNPL) leader would be swamped with a wave of defaults and credit crunches. Exactly the opposite has occurred, which has resulted in Afterpay’s massive market re-rating over the past 3 months.

But Afterpay’s share price is now far above the levels it was commanding even before the coronavirus pandemic hit. So what’s new?

Well, this morning the company announced that Clearpay (Afterpay’s United Kingdom business) now has over 1 million active customers after just one year in the market. It also told us that its new UK customers are using the BNPL platform more than 8 times per year on average. That compares very well with the 6 times per year its United States customers were using Afterpay in its first year of American operations.

Still time to buy Afterpay shares?

No doubt there will be investors (this writer included) watching the Afterpay share price’s performance with just a twinge of FOMO (fear of missing out). But is there still a case for a buy today, given the stock’s recent run?

Well, it depends on your outlook for this company. Right now, Afterpay is being valued at approximately $16.1 billion. If you think Afterpay has what it takes to go up against the behemoths in this space – US companies like Visa, Mastercard and American Express – then its shares are still cheap. Remember, Visa has a market capitalisation of approximately US$421.5 billion, Mastercard US$308 billion and Amex US$80 billion.

Having said that, there is still a big ‘if’. Conversely, if you’re not that confident, then perhaps the current Afterpay share price isn’t one you should be buying into. It’s still very hard in my view to value Afterpay as it’s not yet profitable. So keep that in mind when you’re looking at its current share price. Afterpay has also displayed significant volatility in the past, so you might still get a chance to buy in when the company isn’t at record highs.

But at the end of the day, it’s your call.

More reading

• Bull market! Avoid these 3 ASX mistakes if you don’t want to lose money
• How to get rich by investing in ASX shares
• ASX 200 down 0.2%: Afterpay hits record high, TPG Telecom merger vote
• Why Afterpay, APA, Evolution, & Sonic shares are storming higher
• Coronavirus second wave potential could drive investment portfolio changes

Sebastian Bowen owns shares of American Express, Mastercard, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Mastercard and Visa. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Mastercard. 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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Shares in the IT service management powerhouse Link Administration Holdings Limited (ASX: LNK) have continued their resurgence this week to $4.34 at the time of writing. This is a substantial improvement from when this company bottomed out at $2.64 midway through March, in conjunction with the broader S&P/ASX 200 Index (ASX: XJO).

While Link has obviously staged an impressive comeback in recent months, here’s a few of the tailwinds I believe are favouring a further rise in its share price moving forward.

Operations resilient during COVID-19

Many investors would likely be aware of this company due to Link Market Services. This online administrative platform allows shareholders to update their company communications preferences, enable dividend payments or reinvestment plans and, most invaluably at this time of year, assists at tax time!

Although the Link share price may have been hammered due to COVID-19, the majority of Link’s operations themselves remain unaffected due to the company’s profound online presence.

As Link confirmed in its presentation to the Macquarie Investor Conference last month, more than 80% of its workforce had seamlessly transitioned to working remotely throughout the pandemic. Link reports this transition allowed it to service its clients at a time of high market volatility and regulatory change.

In addition to its operational resilience to COVID-19, Link has benefitted from the tailwind of greater than 80% of its revenues being recurring in nature. This is due to the fact that large financial institutions and other blue-chip companies deeply rely on the administrative services Link provides.

Overall, this sustainable revenue model will likely benefit the company’s cash flow in FY20, despite the volatile economic environment. It’s a positive sign to shareholders and prospective investors alike that Link’s financial performance is highly resilient and performing at optimal levels.

Long-term tailwinds

While Link looks well-situated to meet market expectations in the short-term, I am bullish on the company to grow in the medium to long-term for 2 key reasons.

The first of these is the health pandemic’s impact on company general meetings. Section 250N of the Corporations Act (2001) mandates that every public company must hold an AGM at least once in each calendar year.

Although this requirement has been temporarily put on hold by the Australian Securities & Investments Commission, AGMs aren’t going anywhere anytime soon. Having said this, after COVID-19, the traditional AGM where hundreds of shareholders congregate may be considered a thing of the past.

Link believes that the virtual AGM is the way of the future. According to the company’s Macquarie Investor Conference presentation, they had already confirmed 25 virtual AGMs in May 2020, and are anticipating demand for this service to further increase.

This could become an additional avenue for earnings for Link over the longer term, particularly as their complementary position as an administrative service provider makes them – or competitor Computershare Ltd (ASX: CPU) – the obvious choices for public companies looking to conduct a virtual AGM.

We will have to wait until Link reports its FY20 earnings later this year to see just how many companies are opting for its virtual AGM service, but I think this is a revenue ‘freebie’ that may not be reflected in the current share price.

Secondly, I see a lot of upside for Link’s 44.2% exposure to the PEXA platform in the coming years. The Property Exchange Australia, known as PEXA, is the leading online conveyancing platform that allows users to complete the exchange of property when buying or selling land.

PEXA is the new era of property exchange, with the industry aiming to work towards a 100% online system while leaving behind the archaic use of paper land certificates to signify property ownership.

The platform claims to have already completed over 5.3 million property transactions since its inception, and states such as South Australia have already mandated the use of PEXA from August 2020.

Rumours have also circulated that PEXA may look to conduct an initial public offering in 2021, with reports by the Australian Financial Review estimating the platform to be valued at as much as $2 billion.

Link’s maintenance of a sizeable stake in the PEXA network bodes well for the company’s future earnings growth over the next couple of years. A confirmed IPO of PEXA would undoubtedly see a dramatic boost to Link’s share price, but even without an IPO I think the gradual shift toward property e-conveyancing tremendously benefits Link’s investment in the PEXA platform.

Foolish takeaway

Despite all the challenges thrown at it in 2020, Link seems to have positioned itself strongly, with its recurring revenue and capacity to provide companies with niche yet essential administrative services. I also think great opportunities lie in PEXA and virtual AGMs, and this company appears to be in pole position to benefit from these tailwinds.

More reading

• Can the Newcrest share price crest to new highs?
• The CBA share price is down 13% this year. Is it a cheap buy?
• Why the CSR share price is falling today
• Bull market! Avoid these 3 ASX mistakes if you don’t want to lose money
• Top brokers name 3 ASX 200 shares to buy today

Toby Thomas owns shares of Link Administration Holdings Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Link Administration Holdings Ltd. The Motley Fool Australia has recommended Link Administration 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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The TPG Telecom Ltd (ASX: TPM) share price is pushing higher on Wednesday after shareholders voted in favour of its merger with Vodafone Australia.

At the time of writing the telecommunications company’s shares are up 0.5% to $9.03.

What happened at its scheme meeting?

This morning TPG Telecom held its scheme meeting and shareholders were given the opportunity to vote on a few matters.

The first was of course the proposed merger with Vodafone Australia. That merger will see TPG shareholders own 49.9% of the merged company, with the balance held by Vodafone shareholders.

Management notes that the merger brings together two highly complementary businesses to create a leading integrated, full-service telecommunications company with a comprehensive portfolio of fixed and mobile products for consumers, SMEs, and enterprises.

It will also combine their network infrastructure and enable the merged company to deliver better services and more competitive value propositions. It expects this to make it a more formidable competitor to the likes of Telstra Corporation Ltd (ASX: TLS) and Optus.

According to the AFR, shareholders voted overwhelmingly in favour of the merger, with 99.68% of proxies giving the merger their blessing.

What else were TPG shareholders voting on?

In addition to the merger, TPG shareholders were voting on a special dividend, which is expected to be in the region of 49 cents to 52 cents per share.

Unsurprisingly, shareholders have voted in favour of this dividend. They have also done the same for its plan to spin off its Singapore business, which will then be listed on the Australian share market as Tuas Limited.

What now?

This was the final true hurdle for TPG and Vodafone Australia to overcome.

The scheme will now go back to the courts to be signed off and approved on Friday, before finally going to ASIC. This puts the companies on track to complete their merger on 13 July.

More reading

• ASX 200 down 0.2%: Afterpay hits record high, TPG Telecom merger vote
• Why I think the Telstra share price could hit $4 in 2020
• Top fund manager reveals some of the best ASX shares to own
• 3 ASX 200 shares to buy for income and growth
• Why I think Telstra shares are a strong buy

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. 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 TPG Telecom share price higher after shareholders approve Vodafone Australia merger appeared first on Motley Fool Australia.

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The Commonwealth Bank of Australia (ASX: CBA) share price has rocketed higher in recent months but is down 13.6% this year.

That means the ASX bank share is underperforming the S&P/ASX 200 Index (ASX: XJO) which has slumped 10.9% lower in 2020.

So, is the CBA share price a steal at $69.03 per share or should you hold off buying?

Is the CBA share price a cheap buy in 2020?

It’s fair to say 2020 has been a pretty wild ride for CBA shareholders.

The Aussie bank share hit a new 52-week high of $91.05 per share in February before slumping to a 52-week low of $53.44 in the March’s bear market.

Investors were spooked by the potential impacts of the coronavirus pandemic on the Aussie banks.

Many felt that the shutdown would strain businesses and households, leading to more home loan defaults and write-downs.

That hasn’t turned out to be the case, partly due to better-than-expected public health outcomes and huge government stimulus.

So, where does that leave the CBA share price in terms of value?

At its current $69.03 per share, I don’t think CBA is either cheap or expensive. Where the ASX bank share is headed from here I think really depends on how fast the economic recovery is.

If we see a ‘V’ or ‘W’ shaped recovery, the CBA share price could approach its 52-week high again by the end of the year.

If the economy bounces back strongly, that means lower unemployment and strong debt serviceability from businesses.

There are also a couple of measures which could translate to higher earnings for the Aussie bank.

For instance, CBA automatically cut its mortgages to minimum repayments in March. That helped ease the economic burden on many households but it may also prolong the repayment period, meaning more interest income in the long-run.

Foolish takeaway

I don’t know where the CBA share price will go from its current level but I think I’m 50-50 on buying right now.

I would like to see evidence of economic recovery before investing in the ASX bank share. That could mean strong wage and employment figures or even the August earnings season.

Until then, I’ll be a close observer to see if there are more buying opportunities in the current market.

More reading

• Why the CSR share price is falling today
• Bull market! Avoid these 3 ASX mistakes if you don’t want to lose money
• Top brokers name 3 ASX 200 shares to buy today
• ASX 200 down 0.2%: Afterpay hits record high, TPG Telecom merger vote
• Is the Woolworths share price a secret buy?

Motley Fool contributor Ken Hall 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 The CBA share price is down 13% this year. Is it a cheap buy? appeared first on Motley Fool Australia.

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