Tag: Motley Fool Australia

  • 3 safe and strong ASX dividend shares for retirees to buy

    couple of retirement age embracing

    If you’re a retiree looking to invest in dividend shares, then I think the three listed below would be great options.

    This is because, despite these uncertain times, these companies look well-placed to continue paying their dividends as normal. Here’s why I would buy them for income:

    BWP Trust (ASX: BWP)

    I think BWP is a safe and strong dividend share to buy. I really like the real estate investment trust due to the quality of its portfolio and the fact that the majority of its properties are leased to home improvement giant Bunnings Warehouse. I believe Bunnings is one of the best retailers in the country and the risk of store closures and rental defaults is extremely low. Combined with periodic rental increases, I believe BWP is well-positioned to deliver consistent income and distribution growth over the next decade. At present I estimate that its units offer a forward 4.8% yield.

    Rural Funds Group (ASX: RFF)

    Another dividend share which I think is a safe option for income investors is Rural Funds. Thanks to the quality of its portfolio and its long term tenancy agreements, I believe this agriculture-focused property group is well-positioned to continue growing its distribution during the pandemic and beyond. In fact, Rural Funds recently reaffirmed its distribution guidance of 10.85 cents per share in FY 2020 and then 11.28 cents per share in FY 2021. This equates to yields of 5.4% and 5.65%, respectively.

    Telstra Corporation Ltd (ASX: TLS)

    A final safe and strong option to consider buying is Telstra. I think the telco giant is a great option for income investors due to its generous yield and defensive qualities. The latter has been on display for all to see in FY 2020, with Telstra one of only a handful of companies that has been able to reaffirm its guidance during the pandemic. I believe this guidance means the company will be able to maintain its 16 cents per share dividend this year. This equates to a fully franked 5% dividend yield. 

    3 “Double Down” Stocks To Ride The Bull Market

    Motley Fool resident tech stock expert Dr. Anirban Mahanti has stumbled upon three under-the-radar stock picks he believes could be some of the greatest discoveries of his investing career.

    He’s so confident in their future prospects that he has issued “double down” buy alerts on each of these three stocks to members of his Motley Fool Extreme Opportunities stock picking service.

    *Extreme Opportunities returns as of June 5th 2020

    More reading

    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 and 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.

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  • ASX 200 finishes higher, Woolworths gives update

    ASX 200

    The S&P/ASX 200 Index (ASX: XJO) rose by 0.2% today to 5,954 points.

    Earlier in the day there were fears that a potential trade deal between the US and China was off the table. But President Trump soon confirmed on Twitter that wasn’t the case.

    Woolworths Group Ltd (ASX: WOW) profit hasn’t grown like its sales

    Woolworths announced a number of things today in an update to the market. The Woolworths share price declined around 0.75%.

    The ASX 200 supermarket business said that for FY20 it expects to report earnings before interest and tax (EBIT) (post AASB 16 and before significant items) of between $3.2 billion to $3.25 billion. On a comparable basis, FY19’s EBIT was $3.29 billion.

    A sizeable part of the disappointing EBIT was the fact that the hotels division is still losing money due to COVID-19 restrictions. FY20 Hotels EBIT is expected to be $160 million to $170 million, compared to $355 million in FY19.

    The FY20 fourth quarter sales growth for the ASX 200 business was more impressive. In the 10 weeks to 14 June 2020, Australian food sales grew by 8.6%, New Zealand food sales grew by 15.1%, Big W sales grew by 27.8% and Endeavour Drinks sales grew by 21.4%.

    Woolworths plans to transform its NSW grocery supply chain network by developing an automated regional distribution centre and a semi-automated national distribution centre at Moorebank Logistics Park in Sydney. Woolworths will invest $700 million to $780 million in the technology and fitout of the two distribution centres over the next four years and it has signed an initial lease term of 20 years with Qube Holdings Ltd (ASX: QUB). The Qube share price went up 7.8% today.

    The decision to carry out this supply chain investment will result in a one-off pre-tax cost of $176 million. This will be counted as a significant item in FY20. The other significant items for FY20 include $230 million for Endeavour Group transformation costs and $185 million for salaried store team member remediation.

    Western Areas Ltd (ASX: WSA) share price surges

    The share price of ASX 200 resource business Western Areas jumped 16%.

    Western Areas announced today it had some highly encouraging results from the first diamond drill hole at the Sahara prospect within the Western Gawler Project in South Australia. It has intersected over 200m of nickel and copper bearing sulphides.

    There is an average of 2% to 5% of sulphide content across the entire intrusive body.

    Western Areas managing director Dan Lougher said: “This is an excellent result from our first drill hole at the Sahara prospect, intercepting broad widths of nickel and copper bearing mineralisation. We keenly await the assay results, but it is already clear from what we have seen in the drill core, that we have a significant exploration result that merits immediate follow up work.”

    Cromwell Property Group (ASX: CMW) share price rises 8%

    The Cromwell share price rose 8% to $0.94 today as news came of a proportional takeover offer from large shareholder ARA Asset Management.

    ARA has made an off-market offer to acquire 29% of all Cromwell shares not currently owned by ARA for $0.90 per stapled security.

    The ASX 200 share’s leadership has advised shareholders to take no action, stating that the offer was unsolicited and opportunistic in nature.

    The offer is a 3.4% premium to the last closing price of $0.87. It’s also a 9.8% premium to the 30-day volume weighted average price of $0.82.

    AMP Limited (ASX: AMP) finally deliver some good news

    Embattled ASX 200 financial services business AMO announced today that the sale of AMP Life to Resolution Life has received all regulatory approvals and confirmed it expects the transaction to complete after the market closes on 30 June 2020.

    AMP said it will provide an update to the market on 1 July 2020.

    The AMP share price rose by around 8% today.

    Challenger Ltd (ASX: CGF) share price drops almost 10%

    The ASX 200 annuity business came back to trade after completing the institutional part of its capital raising.

    The 55 million new shares were raised at a price of $4.89 per share. This was an 8.1% discount to the last traded price. The placement was “significantly oversubscribed”.

    Managing director and CEO Richard Howes said: “We are very pleased with the strong support shown by institutional shareholders for Challenger’s commitment to maintaining a strong capital position while at the same time providing flexibility to enhance earnings.

    “This raise supports the business to remain strongly capitalised through this period of ongoing market uncertainty.”

    5 stocks under $5

    We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.

    And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

    *Extreme Opportunities returns as of June 5th 2020

    More reading

    Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger Limited. 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.

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  • Why the Strategic Elements share price surged 18% higher today

    The Strategic Elements Ltd (ASX: SOR) share price was a standout performer on the market today as investors reacted to multiple patent application filings.

    After jumping as much as 41.82% in morning trade, Strategic Elements shares finished 18.18% higher at 6.5 cents apiece.

    Strategic Elements is an ASX-listed pooled development fund, which is a Federal Government program designed to increase investment into Australian small and medium-size enterprises by providing tax incentives.

    Strategic Elements operates as a ‘venture builder’, where it generates ventures and projects from combining teams of scientists or innovators in the technology or resources sectors.

    What did Strategic Elements announce?

    This morning, Strategic Elements announced it has filed three patents over autonomous robotics technology being developed by one of its subsidiaries, Stealth Technologies.

    Stealth Technologies is an artificial intelligence and robotics company that develops advanced solutions in autonomous driving and robotic automation.

    Notably, Stealth has been collaborating with the US$100 billion industrial conglomerate Honeywell to develop an autonomous robotic security vehicle for the correctional justice sector.

    According to today’s release, Stealth’s use of 3D printing technologies is enabling the rapid advancement of intellectual property and prototyping.

    Two of the patent applications announced today cover low-cost solutions developed by Stealth that reportedly increase reliability and mitigate against system failures in autonomous robotic vehicles.

    The third patent application covers robots designed to automate perimeter security intrusion detection systems.

    Strategic Elements believes the intellectual property covered by these patents has potential commercial use in security, mining and agriculture.

    About the Honeywell collaboration

    Stealth Technologies’ agreement with Honeywell was announced in September 2019. It will see Stealth collaborate exclusively with Honeywell to develop and pursue opportunities for autonomous robotic vehicles for a term of 12 months.

    This collaboration has led to the development of an autonomous security vehicle (ASV) for the correctional sector. The vehicle has been designed for rugged and remote environments, is fully electric, and is able to operate autonomously all day and night.

    Final validation and acceptance testing for the ASV will begin in Q3 2020. Meanwhile, Stealth is investigating the potential use of the ASV in other applications.

    Under the agreement with Honeywell, Stealth can market the ASV independently to sectors such as transport, energy, defence, government, and utilities.

    After today’s rise, Strategic Elements has a current market capitalisation of around $19 million. If you’d rather invest in much larger and more liquid companies, check out the top ASX growth shares in the free report below.

    3 “Double Down” Stocks To Ride The Bull Market

    Motley Fool resident tech stock expert Dr. Anirban Mahanti has stumbled upon three under-the-radar stock picks he believes could be some of the greatest discoveries of his investing career.

    He’s so confident in their future prospects that he has issued “double down” buy alerts on each of these three stocks to members of his Motley Fool Extreme Opportunities stock picking service.

    *Extreme Opportunities returns as of June 5th 2020

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    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.

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  • Invest like Warren Buffett by buying and holding these ASX 200 shares

    warren buffett

    One of the most successful investors in history has been Warren Buffett.

    He has managed to beat the market over countless decades thanks to some reasonably simple investment strategies.

    One of these is buying shares and holding onto them for long periods of time and only selling them if the investment thesis is broken.

    The good news is that this strategy is easy to replicate and there are plenty of candidates for investors to choose from on the Australian share market. 

    Two shares that I think are perfect to build your wealth with are listed below. Here’s why I think they are great buy and hold options:

    Altium Limited (ASX: ALU)

    Altium is the software company behind the Altium Designer platform. This is an award-winning printed circuit board design software platform which has been experiencing very strong demand thanks to the rapidly growing Internet of Things market. Unfortunately, the pandemic has disrupted its growth in FY 2020, but I’m confident this is just a short term headwind which will ease in the coming months.

    In light of this and the forecast growth of the Internet of Things market, I believe Altium is well-positioned for strong long term growth. Especially given that its other businesses, such as Octopart and Nexus, also have the potential to grow strongly over the next decade. This could make it well worth taking advantage of the recent pullback in its share price to invest at more attractive price.

    CSL Limited (ASX: CSL)

    Another share to consider as a buy and hold option is CSL. I think the biotherapeutics giant is the highest quality company on the local share market due to its world class CSL Behring and Seqirus businesses and their portfolio of life-saving therapies and vaccines.

    Another reason I’m a big fan of CSL is its high level of investment in research and development (R&D). The company consistently invests somewhere in the region of 10% of its sales into R&D activities. This has been a successful strategy which has cemented its position as an industry leader and filled its pipeline with a number of therapies that have the potential to generate billions of dollars of sales over the next decade.

    And here are more quality shares which could be great buy and hold options…

    5 ASX stocks under $5

    One trick to potentially generating life-changing wealth from the stock market is to buy early-stage growth companies when their share prices still look dirt cheap.

    Motley Fool’s resident tech stock expert Dr. Anirban Mahanti has identified 5 stocks he thinks are screaming buys. And you can buy them now for less than $5 a share!

    *Extreme Opportunities returns as of June 5th 2020

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

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  • ASX stock of the day: Smartpay share price jumps 18% on FY20 results

    The Smartpay Holdings Ltd (ASX: SMP) share price is up 18% today after the EFTPOS provider released its FY20 results. Smartpay saw a 34% increase in revenue over the year as a result of strong growth in Australia. 

    What does Smartpay do? 

    Smartpay is the largest independently owned and operated EFTPOS provider in Australasia. Having operating in Australia for nearly 10 years, Smartpay has supplied over 35,000 EFTPOS machines to over 25,000 merchants across Australia and New Zealand. 

    Smartpay offers merchants a flat rate for MasterCard, Visa, Alipay, and WeChat pay transactions. Terminal rental fees are waived when merchants process a sufficient value of transactions each month. Merchants are offered a choice of flat rates or automated surcharging so they know charges to expect. 

    What did Smartpay report?

    Smartpay reported full year revenue of $28.3 million, a 34% increase on FY19. The key driver of revenue growth was strong growth in Australian acquiring revenues, which grew by 275% to $9.5 million. This was a result of a significant increase in the Australian terminal fleet, which grew from 2,200 at the start of the period to more than 4,600 at 31 March 2020. 

    Monthly acquiring revenues grew from $0.5 million a month to $1 million a month (pre-COVID). In addition to growth in terminal and transaction numbers, Smartpay also saw a steady increase in gross margin per terminal as it refined its pricing and product mix through the year. 

    Earnings before interest tax depreciation and amortisation (EBITDA) grew 15% in FY20 to $7.4 million. The lower EBITDA growth rate compared to revenue represents the investment of additional resources into the Australian business. The company reported a loss after tax of $4.4 million, which was largely attributable to non-cash costs related to the valuation of convertible notes on issue. 

    What’s next for Smartpay?

    Smartpay reports that the cash impacts of COVID-19 have been largely offset thanks to government assistance packages and reductions in its cost base. Transaction volumes have recovered as restrictions have eased and are back to around 95% of pre-COVID levels in Australia. 

    The proposed sale of Smartpay’s NZ business was terminated as a result of COVID-19, leaving the company without the expected capital inflow. As a result, Smartpay conducted a capital raise last month. Funds will be used to pursue the company’s growth strategy and significantly reduce debt. Smartpay is expecting a strong performance in the remaining 3 quarters of the financial year. 

    3 “Double Down” stocks to ride the bull market higher

    Motley Fool resident tech stock expert Dr. Anirban Mahanti has identified three stocks he thinks can ride the bull market even higher, potentially supercharging your wealth in 2020 and beyond.

    Doc Mahanti likes them so much he has issued “double down” buy alerts on all three stocks to members of his Motley Fool Extreme Opportunities stock picking service.

    *Extreme Opportunities returns as of June 5th 2020

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

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  • Where to invest $500 into ASX shares right now

    business leader making money

    If you are looking to invest $500 into the share market, I believe you should be thinking long term.

    This is largely because brokerage costs (which are usually around ~$10 a trade) will eat into your profits if you are constantly buying and selling shares.

    With that in mind, here are three top ASX shares which I think could be great options for a $500 investment:

    Kogan.com Ltd (ASX: KGN)

    A first option for that $500 investment could be this growing ecommerce company. I believe Kogan has the potential to grow materially in the local market thanks to the shift to online shopping, which appears to have accelerated because of the pandemic. At present only ~10% of consumer spending is made online, but this is likely to grow materially over the next couple of decades. With this tailwind in its sails and acquisitions in its sights, the future looks bright for Kogan.

    Nearmap Ltd (ASX: NEA)

    Another ASX share to consider investing $500 into is Nearmap. It is an aerial imagery technology and location data company with operations in the ANZ and North American markets. Although its performance has been a bit shaky over the last 12 months due to customer churn, I remain very confident in its future. This is due to the quality of its software and its strong position in a fragmented market worth an estimated $2.9 billion per year. In addition to this, it has the option to increase its addressable market by expanding into other territories in the future.

    Pushpay Holdings Ltd (ASX: PPH)

    A third option to consider investing $500 into is this donor management platform provider. Pushpay has been growing its sales at a very strong rate in recent years and look well-positioned to continue this trend in the coming years. The company recently revealed that it is targeting a 50% share of the medium and large church market in the future. This represents a US$1 billion revenue opportunity for Pushpay, which is materially more than the US$127.5 million operating revenue it recorded in FY 2020. I believe it will get there and, thanks to operating leverage, I expect its earnings to grow at an even quicker rate.

    And here are more exciting shares which could be stars of the future…

    5 stocks under $5

    We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.

    And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

    *Extreme Opportunities returns as of June 5th 2020

    More reading

    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 Nearmap Ltd. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd and PUSHPAY FPO NZX. 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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  • 2 ASX shares I plan to hold til I’m 100

    Hold forever ASX shares

    I believe investing in ASX shares should be about long-term decisions. I think the best holding period is ‘forever’, if it makes sense to hold that long.

    There aren’t many shares on the ASX that I think you could actually commit to holding for many decades.

    But there are at least two in my portfolio that I plan to hold until I’m 100:

    Share 1: Rural Funds Group (ASX: RFF)

    Rural Funds is an agricultural real estate investment trust (REIT) with its portfolio spread across almond orchards, vineyards, macadamias, cattle and cotton.

    I like the diversification, it lowers the risks if one particular sector has a tough time. The farms are also spread across different states and climactic conditions. I think the recent drought and fires have shown why it’s important to have farms dotted across the country.

    Farmland has been a useful asset for many centuries. I believe it will continue to be a good asset at least until I’m 100.

    The ASX share is steadily increasing its cash net rental profit per unit for shareholders, this measure is called adjusted funds from operations (AFFO). In FY18 Rural Funds made 12.7 cents of AFFO per unit, in FY19 AFFO grew to 13.3 cents and in FY20 AFFO is expected to be 13.50 cents.

    It’s this AFFO growth that allows management to confidently predict that Rural Funds can grow the distribution by 4% each year. In FY20 Rural Funds is expecting to retain around 20% of its AFFO to re-invest back into its farms. I think a payout ratio of 80% is very healthy for a REIT. 

    Investing in productivity improvements is one of the main ways that Rural Funds is growing its AFFO. The tenant gets a better farm after the investment and Rural Funds gets higher rental income with a better valuation for the farm.

    Rural Funds has high-quality tenants like Select Harvests Limited (ASX: SHV), Treasury Wine Estates Ltd (ASX: TWE) and Olam. Rural Funds has rental indexation built into all of its rental contracts that either have a fixed 2.5% annual increased or it’s linked to CPI inflation, plus market reviews. I think steady income growth is very attractive in the current COVID-19-affected economy.

    Share 2: Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

    I think Soul Patts is a great ASX share. It has been listed on the ASX since 1903, it’s one of the oldest Australian businesses around.

    I don’t know what the long-term future holds for any particular industry like telecommunications businesses, banks or supermarkets. But an investment house has the flexibility to change its investments time goes on. In theory, Soul Patts should be able to stay relevant to the economy whatever happens in the future as its investments shift to new opportunities.

    Soul Patts’ current investment portfolio has an attractive longer-term future in my opinion. Some of its current larger investments include Brickworks Limited (ASX: BKW), TPG Telecom Ltd (ASX: TPM), Palla Pharma Ltd (ASX: PAL), Clover Corporation Limited (ASX: CLV) and Magellan Financial Group Ltd (ASX: MFG).

    The management team at Soul Patts invest within the business for the long-term. I think that makes it much easier to think long-term about Soul Patts itself.

    The ASX share is progressively becoming more diversified as it invests into new sectors. For example, it recently invested into luxury retirement living and agriculture. Soul Patts is now looking to invest into regional data centres. I like these new target areas. 

    I think Soul Patts is capable of producing solid long-term returns. It pays a growing dividend which is funded entirely from the investment income it receives, less the operating expenses. This means all the capital growth of the portfolio is retained inside Soul Patts. The net regular operating cashflow that isn’t paid out can also be re-invested for more long-term growth.

    Foolish takeaway

    I plan to own both of these shares in my portfolio for an extremely long time to come. I think Soul Patts is the ultimate ultra-long-term ASX share because it’s diversified and it can change its positions over time.

    5 stocks under $5

    We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.

    And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

    *Extreme Opportunities returns as of June 5th 2020

    More reading

    Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, RURALFUNDS STAPLED, Treasury Wine Estates Limited, and Washington H. Soul Pattinson and Company 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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  • Fund managers have been buying these ASX shares

    Franking credits

    I like to keep an eye on substantial shareholder notices. This is because these notices give you an idea of which shares large investors, asset managers, and investment funds are buying or selling.

    Two notices that have caught my eye today are summarised below. Here’s what these fund managers have been buying:

    Mach7 Technologies Ltd (ASX: M7T)

    A notice of initial substantial holder reveals that Australian Ethical Investment Limited (ASX: AEF) has been building a position in this medical imaging data management solutions provider this year. According to the notice, after picking up just over 2.1 million shares last week, the ethical fund manager now owns a total of 11,857,136 Mach7 shares. This equates to a 5.45% stake in the company.

    Australian Ethical Investments appears to have been pleased with Mach7’s decision to acquire Client Outlook earlier this month. Client Outlook is a leading provider of an enterprise image viewing technology called eUnity. Management notes that this acquisition expands its addressable market from US$0.75 billion to US$2.75 billion.

    McPherson’s Ltd (ASX: MCP)

    A notice of change of interests of substantial holder shows that Challenger Ltd (ASX: CGF) has been buying more of this beauty and household products company’s shares. It has added a total of 1,135,019 shares to its holding in June, bringing its total interest to 6,502,799 shares. This equates to a total stake of 6.06%.

    McPherson’s shares are only trading at a small discount to their 52-week high, which appears to indicate that Challenger is confident in the company’s future. It may even believe that the company could outperform expectations in FY 2020. In April, McPherson’s released a trading update which revealed that it had experienced strong demand for many of its products during the pandemic.

    And here are more quality shares which I think fund managers could be buying…

    5 stocks under $5

    We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.

    And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

    *Extreme Opportunities returns as of June 5th 2020

    More reading

    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 Australian Ethical Investment Ltd. and MACH7 FPO. The Motley Fool Australia owns shares of and has recommended Challenger Limited. The Motley Fool Australia has recommended Australian Ethical Investment 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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  • Why James Hardie is a favourite buy among leading brokers

    The James Hardie Industries plc (ASX: JHX) share price dipped today after yesterday’s big run. This may be a good time to be buying as it’s a hot favourite among brokers.

    Shares in the building materials group eased 0.5% to $28.49 in the last hour of trade as the stock consolidated its 7% plus surge on Monday after reporting a strong quarterly result.

    In my mind, James Hardie stands a head taller than its peers like Boral Limited (ASX: BLD) as it’s a better quality stock in almost every regard.

    This can be seen by what brokers are saying about James Hardie following its results. Just about every one of them has come out to reiterate their “buy” recommendation on the stock.

    Price target upgrade

    Goldman Sachs is impressed with the company’s strong operating performance, particularly in its US business.

    The broker lifted its price target by 5.3% on the stock to $34.38 a share and reiterated its “buy” rating on the stock.

    Credit Suisse upgraded its 12-month price target on the stock to $30.90 from $27.00 a share as the group’s volumes, margins and sales growth were ahead of expectations.

    Management increased its forecast profit margin to between 27% and 29% from 22% to 27%.

    The broker thinks that there is limited opportunity for negative surprises in James Hardie’s margin upgrade from “uncontrollable costs”.

    Growing stronger for longer

    UBS calls James Hardie “a clear standout” and believes the stock still offers value despite its recent outperformance.

    “In our view, JHX’s performance through the depths of COVID-19 supports rising long term expectations for volumes [primary demand growth] and margins,” said the broker.

    It said in the medium- to long-term, primary demand growth (PDG) will be supported by home owners going ahead with exterior remodelling work once restrictions ease and a return to strong housing activity. The record low interest rate environment and good demand for low dense living are supporting factors.

    The broker increased its price target by $3 to $34 a share and it repeated its “buy” call on the stock.

    Further upside for the James Hardie share price

    JP Morgan is another to reaffirm its “overweight” call on the stock even though it’s yet to adjust its price target of $28.20 a share.

    “A key highlight was management’s comment that primary demand growth (PDG) in the US is tracking ‘well ahead of 7%’,” said the broker.

    “We’ve yet to factor today’s update into our model but, if we were to increase PDG to 8% and EBIT margins to 27% in the US, our FY21 EPS would move to 83cps, implying a P/E of 23x.”

    While a price-earnings (P/E) of 23 times may sound fully valued to some and is inline with the industrials sector, JP Morgan pointed out that James Hardie trades at a 30% premium on average over the past seven years.

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    Motley Fool contributor Brendon Lau owns shares of James Hardie Industries plc. 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 Why James Hardie is a favourite buy among leading brokers appeared first on Motley Fool Australia.

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  • These ASX retail shares are lockdown winners

    online retail shopping

    Australian retail spending rebounded in May, rising a record 16.3% following a 17.8% fall in April. Sales had previously jumped 8.5% in March due to stockpiling and panic buying. The May rise was the largest in the 38 years of collected data. 

    Initial figures from the Australian Bureau of Statistics indicates turnover in household goods was 30% higher in May 2020 than May 2019. Household goods retailing has been one of the more resilient sectors during the coronavirus pandemic, falling a mere 0.1% in April. ASX retailers operating in this space have benefitted from consumers spending increased time at home.

    Let’s take a look at how these retailers and the overall ASX retail shares are performing. 

    Adairs Ltd (ASX: ADH)

    The Adairs share price has recovered strongly and is up 362% from its March low. Adairs is an omnichannel home furnishings retailer operating 160 stores in Australia and New Zealand as well as online. The company sells bedroom furniture, manchester, homewares and children’s furnishings. 

    Last week Adairs reported that despite the closure of stores during the lockdown period, store sales have increased over the year to date, while online sales have boomed. Physical stores reported 3.5% sales growth for the year to date, despite store closures during lockdown across Australia and New Zealand. Online sales are up by 64% year to date, and 92.6% in 2H FY20 to date (being the 24 weeks to 14 June). 

    This brings total like-for-like sales growth to 15.7% for the financial year to date and 27.4% for the second half. Adairs is definitely benefitting from people spending more time at home. Consumers are choosing to upgrade their home furnishings and purchasing things like bed linen, new pillows and decorations. 

    Adairs purchased online home and living products retailer Mocka last year. The acquisition created a larger, more diversified business with increased exposure to the online channel. Pleasingly, Mocka also recorded 52.1% sales growth in the second half to date, with 100% of sales online. 

    Temple & Webster Group Ltd (ASX: TPW)

    Temple & Webster is Australia’s largest e-commerce company in the furniture and homewares market. The retailer has benefited both from the move towards online shopping and consumer efforts to upgrade living spaces. 

    The company has continued to trade strongly in the second half with revenue growing by 90% compared to the prior corresponding period. The result was driven by strong growth in April and May as customers turned to online to fulfil furniture and homewares needs. This trend has continued in June with revenue tracking at +100% on the prior corresponding period. 

    In FY20 (to 31 May) Temple & Webster has seen year to date revenue increase 68% to $151.7 million. EBITDA is up 668% to $7.1 million, while active customer numbers have increased 68% to 440,257. The company is cash-flow positive and has a capital-light business model with a debt-free balance sheet. 

    Temple & Webster is well placed to take advantage of the structural shift to online in the furniture and homewares market. CEO and Co-Founder Mark Coulter said: “We remain bullish about the longer-term shift from offline to online driven by changing consumer preferences and demographics. Customers are experiencing the benefits of our channel, including range, convenience, and value.” 

    Nick Scali Limited (ASX: NCK)

    The Nick Scali share price is up nearly 130% from its March low, having surged strongly last week on the back of its latest sales figures. Prior to the pandemic, the furniture retailer sold predominantly through physical stores, importing some 5,000 containers of furniture per year. 

    As a result of the pandemic, Nick Scali has enhanced its digital offering, allowing customers to purchase its entire range of products online. The retailer closed showrooms on 30 March 2020 and began reopening in April, with all stores open by the end of the month. Since reopening, all showrooms have traded strongly with positive sales order growth. 

    Customer activity rebounded significantly in May and the first half of June. Sales orders over May and June are expected to be up 54% on the prior corresponding period. This surge has been driven by the easing of restrictions and consumer spending toward furnishings and homewares. 

    Nick Scali has benefitted from people spending more time at home. As a result, consumers are choosing to upgrade their domestic environments with new furniture and accessories. Given the current increase in sales orders, Nick Scali expects sales growth of 30% in Q1 FY21 which will underwrite profit growth for 1H FY21. 

    Nick Scali has forecast strong profit growth in the second half. It predicts net profit after tax (NPAT) to be up 15% to 20% on 2H FY19. Full-year revenue is expected to be in the range of $260 million to $263 million. The retailer is expecting full-year underlying NPAT of $39 million to $40 million. 

    Kogan.com Ltd (ASX: KGN)

    Kogan has been one of the strongest retail performers over the pandemic. The Kogan share price has gone from strength to strength, increasing 261% from its March low and surpassing previous highs. In April and May Kogan’s gross sales increased 103% year on year. This drove a 132.9% increase in gross profit across the period. 

    Kogan added 126,00 active customers in May, growing active customer numbers to 2,074,000 at the end of the month. Adjusted EBITDA grew by 219.3% across April and May, with financial year to date adjusted EBITDA up by more than 50%. The company had cash of $58.6 million at the end of May with its debt facility drawn to $26 million. 

    Earlier this month Kogan launched a $100 million capital raising at an offer price of $11.45 per share. Funds will be used to increase financial flexibility, giving the ability to act quickly on accretive opportunities, expand the customer base, and enhance the operating model. Of course, Kogan is not just an online retailer – it also offers services including insurance, internet, mobile, and energy. 

    Alongside the above ASX retail shares, Kogan has benefitted from a spike in sales due to lockdowns while many bricks and mortar stores were forced to close. The long-term shift to digital which has been accelerated by current events is also in the retailer’s favour. 

    For more shares to consider adding to your portfolio, take a look at our Fool report below.

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    The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia has recommended Temple & Webster Group 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.

    The post These ASX retail shares are lockdown winners appeared first on Motley Fool Australia.

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