Tag: Motley Fool Australia

If you’re lucky enough to have $50,000 in a savings account and no immediate use for it, then I think you should consider investing it into the share market with a long term view.

This is because you could turn these funds into a life-changing sum thanks to a combination of time and compound interest.

How is this possible?

As of the end of 2019, the Australian share market had provided investors with an average annual return of 9.5% over the last 30 years.

While we may not have started 2020 in a positive fashion, I remain confident that the local share market will deliver a similar level of return over the next three decades.

If this proves to the case, then a $50,000 investment could grow materially over the period.

For example, if you were to invest the $50,000 into the share market and earn the same return, you would have ~$125,000 in 10 years, ~$310,000 in 20 years, and then ~$760,000 in 30 years. That’s all from just a single investment.

If you’re happy with this potential return, then you could simply look to invest in an exchange traded fund (ETF) that tracks the S&P/ASX 200 Index (ASX: XJO). The BetaShares Australia 200 ETF (ASX: A200) allows investors to do this.

Another option is the Vanguard Australian Shares Index ETF (ASX: VAS), which gives investors exposure to the 300 shares listed on the S&P/ASX 300 index.

What if you beat the market?

Now, imagine if you could outperform the share market by a small margin each year.

Instead of an average annual return of 9.5%, what would happen if you achieved a return of 11.5% per annum?

With this level of return, your $50,000 investment in 2020 would be worth ~$150,000 in 10 years, ~$440,000 in 20 years, and a massive ~$1.3 million in 30 years.

While beating the market is hard, it is possible. Shares like REA Group Limited (ASX: REA) and ResMed Inc. (ASX: RMD) have consistently beaten the market over the last 15 years and appear well-positioned to continue this trend over the next decade.

The key is identifying companies with strong business models, positive long term outlooks, and competitive advantages.

More reading

• 3 high quality ASX blue chip shares to buy in June
• 3 founder-led ASX shares to buy for strong long-term returns
• 3 investing secrets for success with ASX shares
• ASX 200 investor in your 40s? 3 shares to buy now
• I don’t normally buy ETFs, but I would buy these 2

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

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The BHP Group Ltd (ASX: BHP) share price has had a rollercoaster start to 2020. Shares in the Aussie iron ore miner are down 9.02% in 2020 but are still managing to outperform.

For context, the S&P/ASX 200 Index (ASX: XJO) has slumped 12.70% from where it began the year.

The BHP share price has started to gain some momentum in recent weeks. It’s currently the largest ASX 200 share by market capitalisation and is valued at $165.5 billion.

But with all that’s happening in the global and domestic economy, is BHP a cheap share to buy right now?

Why the BHP share price could be cheap today

I think it’s fair to say I’ve never been a huge resources sector investor. I am bullish on the future of renewable energy and the role that graphite, manganese and aluminium can play in that future.

However, ASX resources shares can be tough to value. Anything that relies on commodity prices as the basis for its value is likely to be volatile.

We’ve seen the BHP share price fall as low as $24.05 on 13 March before rebounding strongly to its current $35.41 valuation. That’s good news for shareholders who managed to buy the dip but is the current price a bargain?

Iron ore prices are starting to rebound which is positive for BHP earnings. The group’s shares are currently yielding 6.02% but there’s no guarantees this will be maintained by the August earnings season.

I think the potential for an infrastructure boom is a big plus. If governments around the world look to infrastructure for stimulus, I’d expect the iron ore price to surge.

This could have a knock-on effect for the BHP share price and send it back towards its 52-week high of $42.33.

Foolish takeaway

There’s no such thing as a safe bet in ASX 200 shares and this is especially true at the moment. However, the BHP share price could be a solid large-cap with upside potential to help boost a diversified portfolio beyond 2020.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• This embattled ASX 200 company could be the next M&A target
• ASX 200 rises 0.3%, Zip rockets higher
• Why Coles and Woolworths shares were flat in May
• 3 long-term impacts of near-zero interest rates

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.

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Are you looking to add a few ASX blue chip shares to your portfolio in June? The good news is there are plenty of quality options to choose from right now.

To narrow things down, I’ve picked out three ASX blue chip shares which I believe offer compelling risk/rewards. They are as follows:

Goodman Group (ASX: GMG)

The first ASX blue chip share to consider buying is Goodman Group. I think the integrated commercial and industrial property group is a great option due to the strength and positive outlook of its portfolio. This is largely due to its exposure to industries benefiting from structural tailwinds like ecommerce. I expect these assets to be in demand for a long time to come and underpin solid earnings and distribution growth over the next decade.

ResMed Inc. (ASX: RMD)

ResMed is another ASX blue chip share which I would buy today. I think the medical device company is a great buy and hold option due to the proliferation of sleep apnoea. Education around this sleep disorder is increasing and looks likely to lead to greater numbers of diagnoses over next decade. This should mean that demand for ResMed’s industry-leading sleep treatment solutions continues to grow and drives strong earnings growth

SEEK Limited (ASX: SEK)

A final ASX blue chip share to consider buying is SEEK. I’m a big fan of the job listings company due to its market-leading ANZ business and its rapidly growing China-based Zhaopin business. While a lot of investor focus is on its ANZ business, I would argue that the real star is Zhaopin. In the first half it contributed 47.8% of total revenue. This compares to the ANZ business, which accounts for 25.6% of its revenue. Given how lucrative the China market is, I believe Zhaopin will underpin strong growth for many years to come once the crisis passes.

More reading

• How to become a millionaire by investing in ASX shares
• 3 founder-led ASX shares to buy for strong long-term returns
• ASX 200 investor in your 40s? 3 shares to buy now
• How you can get very rich with ASX 200 shares
• 10 quality ASX shares to buy in June

Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia has recommended ResMed Inc. and SEEK 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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This year the pandemic has led to a large number of dividend cuts, suspensions, and cancellations.

While this is disappointing, I believe there are plenty of opportunities for income investors that can afford to be patient.

Two ASX dividend shares that I believe would be great buy and hold options are listed below:

Commonwealth Bank of Australia (ASX: CBA)

The first ASX dividend share to consider buying is Commonwealth Bank. Although they have rebounded strongly from their lows, the shares of Australia’s largest bank are still down materially from their 52-week high. This has been driven by concerns over the future economic damage caused by the pandemic.

While the pandemic will certainly have an impact on the economy and bad debts, I’m optimistic that stimulus and a swifter than expected reopening could mean the damage is not as great as first feared. As a result, I feel the worst could be behind Commonwealth Bank now. And although I suspect a dividend cut to ~$3.70 per share is coming next year, I’m increasingly confident this is the bottom of the cycle. This dividend equates to a fully franked 5.8% FY 2021 yield.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

Another ASX dividend share to consider buying with a long term view is Sydney Airport. The airport operator’s shares have been hit hard during the pandemic for obvious reasons. However, with domestic tourism expected to start its recovery in the coming months and international tourism to follow in 2021, I don’t think it will be long until a growing number of travellers are passing through its terminals again.

It will take time before passenger numbers return to normal levels. However, I’m optimistic that things will be close to normal by the end of 2022. I expect it to be a similar case for its dividends over the next couple of years. I wouldn’t expect one to be paid this year, but in FY 2021 I estimate a 29 cents per share dividend and in FY 2022 I feel a 37 cents per share dividend could be possible. This represents yields of 4.9% and 6.25%, respectively.

More reading

• Why Coles and Woolworths shares were flat in May
• Smash low interest rates with these ASX dividend shares
• How to value the big four ASX banks
• How bankable are the big four ASX bank shares in 2020?
• This ASX fintech share is up 489% since March

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

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The market may be trading notably lower this year because of the pandemic, but that hasn’t held back all shares.

Three ASX tech shares that have been smashing the market in 2020 are listed below. Here’s why they are on fire this year:

The Afterpay Ltd (ASX: APT) share price has been a standout performer this year with a sizeable 61.7% gain. Investors have been buying the payments company’s shares after its strong sales and customer growth continued during the pandemic. In addition to this, the arrival of WeChat owner Tencent Holdings as a substantial shareholder gave Afterpay’s shares a major lift. Investors appear optimistic the ~US$500 billion Chinese conglomerate will help the company expand into Asia in the future.

The NEXTDC Ltd (ASX: NXT) share price has been a strong performer with a 38% gain year to date. The catalyst for this has been a series of positive updates by the data centre operator. Those updates have revealed major contract wins and increasing demand for capacity within its world class centres. This appears to have been driven partly by the pandemic accelerating the shift to the cloud through the work from home initiative.

The Pushpay Holdings Ltd (ASX: PPH) share price has been a fantastic performer in 2020 with a whopping 85% gain. Investors have been scrambling to buy the donor management platform provider’s shares after the release of its full year results for FY 2020. Pushpay revealed that demand for its services has been growing very strongly, even during the pandemic. This led to the company reporting a 1,506% increase in full year EBITDAF to US$25.1 million. Pleasingly, management expects its strong growth to continue in FY 2021. It has forecast EBITDAF growth of between 91.2% and 107% this year. But it certainly isn’t resting on its laurels. It is targeting a 50% share of the medium to large church market over the long term. This represents a US$1 billion revenue opportunity, which is materially more than FY 2020’s operating revenue of US$127.5 million.

More reading

• Where should you invest $1,000 in ASX shares?
• These ASX shares were among the best performers in May, surpassing the ASX 200
• The 3 ASX tech stocks that helped this fund manager outperform in May
• 3 investing secrets for success with ASX shares
• 5 things to watch on the ASX 200 on Tuesday

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

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It was another bumpy day for the S&P/ASX 200 Index (ASX: XJO) on Tuesday, but it ended on a high. The benchmark index climbed 0.3% to 5,835.1 points.

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

ASX 200 expected to rise.

It looks set to be another positive day of trade for the ASX 200 on Wednesday. According to the latest SPI futures, the benchmark index is poised to rise 32 points or 0.55% at the open. This follows another strong night of trade on Wall Street. The Dow Jones rose 1.05%, the S&P 500 climbed 0.8%, and the Nasdaq index pushed 0.6% higher.

Australian first quarter GDP.

Late this morning the Australian Bureau of Statistics will release first quarter GDP. According to the economics team at Westpac Banking Corp (ASX: WBC), it expects Australian GDP to have fallen by 0.7% during the quarter. It believes there is a risk that output fell as shutdowns took place during March. The market consensus is for a 0.3% decline for the quarter.

Oil prices jump.

Energy shares such as Beach Energy Ltd (ASX: BPT) and Oil Search Limited (ASX: OSH) could be on the rise today after oil prices jumped higher overnight. According to Bloomberg, the WTI crude oil price stormed 4.25% higher to US$36.95 a barrel and the Brent crude oil price pushed 3.6% higher to US$39.70 a barrel. Traders were buying oil ahead of the upcoming OPEC+ meeting.

Gold price drops lower.

It could be another tough day for gold miners including Evolution Mining Ltd (ASX: EVN) and St Barbara Ltd (ASX: SBM) after the gold price dropped lower again. According to CNBC, the spot gold price fell 0.95% to US$1,733.70 an ounce. The price of the precious metal tumbled after Wall Street began betting on a successful economic restart.

BHP and Rio Tinto rated as buys.

The shares of BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) could be on the rise today after Goldman Sachs reaffirmed its buy rating on both mining giants. And in response to higher iron ore forecasts, the broker has lifted its price targets on both companies. Goldman has a $37.80 price target on BHP’s shares and a $101.10 price target on Rio Tinto’s shares.

More reading

• This embattled ASX 200 company could be the next M&A target
• ASX 200 rises 0.3%, Zip rockets higher
• Why Coles and Woolworths shares were flat in May
• 3 long-term impacts of near-zero interest rates
• 3 things ASX investors need to know about the RBA’s rate decision today

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. 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 5 things to watch on the ASX 200 on Wednesday appeared first on Motley Fool Australia.

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If you’re looking for strong returns over the next decade, then I think the three ASX shares listed below could be worth considering.

I believe all three ASX shares are well-placed to be market-beaters in the 2020s. Here’s why:

Bubs Australia Ltd (ASX: BUB)

Bubs is an infant formula and baby food company. It has been growing its sales at a rapid rate in recent years thanks to its expanding distribution footprint and increasing demand in Asia. Given how demand continues to grow, particularly in China, I believe there will be more strong sales growth to over the coming years. And with its operations now becoming profitable, I expect its earnings to grow at a rapid rate as it scales.

Freedom Foods Group Ltd (ASX: FNP)

Freedom Foods is a diversified food company with a focus on healthy eating. Its shares have come under significant pressure over the last few trading days after a surprisingly bad trading update. A number of the company’s channels have been struggling during the pandemic and look set to weigh heavily on its full year results. While this is disappointing, I believe the selloff has created a buying opportunity. Especially considering how these headwinds are transient and will soon ease now that restrictions are lifting. In light of this, I feel now could be an opportune time to make a patient buy and hold investment.

Jumbo Interactive (ASX: JIN)

Another share which I believe could grow strongly over the next decade is Jumbo. It is an online lottery ticket seller and the operator of the Oz Lotteries website. This year the company’s financial performance will take a hit because of its investment in growth opportunities. But these investments in its Jumbo software-as-a-service platform certainly appear worthwhile and look set to underpin years of strong growth. Once again, I think this makes Jumbo a great buy and hold option.

More reading

• Why the Bubs share price is up 65% in 2 months
• 2 cheap ASX 200 shares to buy right now
• Is the a2 Milk share price too high to buy?
• Top brokers are urging you to buy these ASX shares today
• Why a2 Milk, Freedom Foods, Scentre, & TPG Telecom are dropping lower

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 and recommends Jumbo Interactive Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BUBS AUST FPO. The Motley Fool Australia has recommended BUBS AUST FPO, Freedom Foods Group Limited, and Jumbo Interactive 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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Despite its strong form over the last couple of months, the S&P/ASX 200 Index (ASX: XJO) is still trading around 19% lower than its February highs.

While this is disappointing, this isn’t a bad result compared to some shares on the index.

The Flight Centre Travel Group Ltd (ASX: FLT) share price has been a particularly poor performer this year. The travel agent’s shares are down 69% from their 52-week high.

Why is the Flight Centre share price down 69% from its high?

Investors have been selling the travel agent’s shares due to the impact the pandemic has had on the global travel market.

For example, during April the company’s total transaction value (TTV) was tracking at approximately 5% to 10% of normal levels.

The good news, though, is that Flight Centre has been cutting its costs materially to combat this.

Last month management revealed that it was making strong progress towards reducing its global cost base down to its $65 million per month target. This should mean the company has more than enough liquidity to ride out the storm.

Is the Flight Centre share price a bargain buy?

While Flight Centre could prove to be a good long term investment, I wouldn’t be in a rush to invest.

This is because, although I’m optimistic that domestic tourism will start its recovery in the coming months, it will take some time before the local travel market returns to normal.

Furthermore, it will take even longer for international tourism to return to normal levels.

In light of this, I think the company has a tough couple of years ahead of it. As such, I wouldn’t expect its profits to return to previous levels any sooner than FY 2022, but possibly later.

For the same reasons, I’m not in a rush to buy Webjet Limited (ASX: WEB) shares either just yet.

More reading

• Why the price of these ASX travel shares soared over 30% since mid-May
• 3 ASX 200 shares to watch this week
• 5 ASX 200 winners and 3 losers from last week
• The Webjet share price jumped 35% in May: Is it too late to invest?
• ASX retail shares best placed to benefit from wall of industry bankruptcies

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

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Want to know where to invest $1,000 into ASX shares?

The ASX has performed strongly since that initial coronavirus share market sell-off. Some share performances have been too strong in my opinion, so I’d leave those ASX shares to one side.

Investing $1,000 of your hard-earned money is an important job. You don’t want to throw it away on the wrong investments. Only go for the best ASX ideas. 

Here is a growth idea and a dividend idea:

ASX growth share: Pushpay Holdings Ltd (ASX: PPH)

I think Pushpay is one of the most promising ASX shares. It’s an electronic donation business that’s currently focused on the large and medium churches in the US. This is such a large sector that Pushpay thinks this is a $1 billion revenue opportunity.

The ongoing coronavirus pandemic is terrible. But Pushpay is helping churches through this. The Pushpay technology enables churches to livestream to their congregations. Electronically donating is obviously also on the rise in a period of social distancing.

Pushpay is expecting that earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) to approximately double over the course of FY21. That would be a very strong result from the ASX share. And that’s just one year. It’s expecting to achieve higher gross margins over time. 

I’m not expecting Pushpay to become a major player in anything other than the US church sector. But if it could grow into other donation areas, that would further increase its growth potential.

ASX dividend share: Brickworks Limited (ASX: BKW)

I think Brickworks is an undervalued ASX dividend share. It owns a large amount of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares which provides reliable earnings and growing dividends

Brickworks also owns a 50% stake in an industrial property trust along with Goodman Group (ASX: GMG). Industrial properties should be in even more demand due to the rapid shift to ecommerce due to the coronavirus.

Most people would know Brickworks as a building products business. It’s certainly tough to be in construction right now. But there is plenty of talk of government support for the sector. And demand for construction will return in the future.

In the meantime Brickworks is making use of the shutdowns to accelerate its plans in the US and it has closed one of its plants.

Brickworks is trading cheaply compared to its asset value. It hasn’t decreased its dividend for over 40 years and currently offers a grossed-up dividend yield of 5.2%.

Foolish takeaway

I think that both of these ASX shares have a strong potential to deliver very good returns over the next few years. Over the next five years I believe that Pushpay could deliver very impressive earnings growth. But Brickworks could provide a very solid dividend as well.

More reading

• ASX 200 rises 0.3%, Zip rockets higher
• Why Amaysim, Bingo, Brickworks, & BlueScope are pushing higher today
• Is Pushpay a millionaire maker share?
• I think these 2 ASX 200 shares will beat the market
• These 5 exciting small cap ASX tech shares rose by up to 70% in May

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, PUSHPAY FPO NZX, 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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The Boral Limited (ASX: BLD) share price surged for the second day on rumours that it may be a takeover target.

Shares in the building materials group jumped 6.6% to $3.54 on Tuesday – making it the third best performer on the S&P/ASX 200 Index (Index:^AXJO) after the Perenti Global Ltd (ASX: PRN) and Domain Holdings Australia Ltd (ASX: DHG) share price.

Corporate interest in Boral

The big jump in Boral, which puts its two-day gain to nearly 14%, puzzled many before rumours were published in the Australian Financial Review pointing to a large buyer.

It’s speculated that Kerry Stokes’ Seven Group Holdings Ltd (ASX: SVW) has been a keen buyer of the stock on Friday when 150 million Boral shares changed hands. That’s equivalent to 12% of Boral.

We should know soon if Seven Group is behind the frenzy as it will need to lodge a substantial holder’s notice with the ASX this week – assuming the rumours are true.

Why Seven Group might be interested in Boral

Such a move makes strategic sense. First, Seven Group has a track record of buying businesses, such as construction equipment rental company Coats Hire.

Boral will allow the group to expand vertically into the infrastructure construction sector by providing both materials and equipment.

Seven Group is tipped to win work on the Snowy Hydro 2.0 project, the Western Sydney Airport and WestConnex extensions, according to the AFR.

Wounded animal

Boral is underperforming the market after a series of management missteps that culminated in its chief executive Mike King announcing his exit in August.

Not only is its share price in the doldrums, which makes it an opportunistic target, but its effectively leaderless. All the more enticing for any would be acquirer.

But a full takeover isn’t a sure thing.

Next move may not be a takeover

Boral’s troublesome US business doesn’t quite fit into Seven Group’s portfolio and Boral is facing a class action lawsuit over an accounting scandal involving the group’s US windows business.

Any new owner of Boral would be liable to pay damages if the court rules against the Boral.

So, this means that Seven Group may be buying itself a seat at the table in any carve-up of Boral’s assets.

Boral is under pressure to consider a radical restructure that would involve divesting assets.

Foolish takeaway

I have picked Boral as an ideal tax-loss selling candidate a week ago, before the corporate action was revealed.

This doesn’t change my dim view of Boral as I don’t recommend investors buy shares solely based on takeover hopes.

I rather stick to better quality names in the industry like James Hardie Industries plc (ASX: JHX) and CSR Limited (ASX: CSR).

Further, these stocks are better placed to benefit from the federal government’s new housing grants, which are expected to be announced this week.

More reading

• ASX 200 rises 0.3%, Zip rockets higher
• Why Coles and Woolworths shares were flat in May
• 3 long-term impacts of near-zero interest rates
• 3 things ASX investors need to know about the RBA’s rate decision today
• These ASX shares were among the best performers in May, surpassing the ASX 200

Motley Fool contributor Brendon Lau owns shares of James Hardie Industries plc. Connect with me on Twitter @brenlau.

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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