Tag: Motley Fool Australia

So much for ‘sell in May and go away’.

May turned out to be a stellar month for the S&P/ASX 200 Index (ASX: XJO) and the broader ASX share market.

Over the month, the ASX 200 returned 4.2%. This is around half of the total return you can typically expect from ASX 200 shares over a year. Not bad!

But of course, some shares fared better than others during the month, outperforming the ASX 200. And some blue chips, like the big four banks, did exceptionally well. Others, like Telstra Corporation Ltd (ASX: TLS) and Woolworths Group Ltd (ASX: WOW), did relatively poorly.

So here are some of the best performing ASX shares over the month of May

Afterpay Ltd (ASX: APT)

By any metric possible, the Afterpay share price had a phenomenal month in May. Afterpay started the month at $31.20 and finished it at $47.41. This delivered the buy-now-pay-later (BNPL) giant a monthly gain of 52%. This ASX 200 stock also hit a new all-time high of $50.01 during May.

Afterpay shares are now over 400% higher than the lows we saw in March, proving once again how treacherous betting against this volatile company can be.

Zip Co Ltd (ASX: Z1P)

Another ASX payments company, Zip had an even better month in May than Afterpay. Zip Co shares started off the month at $2.39 and finished up at $3.75 – a rise of 56.9%. Like Afterpay, investors’ concerns that BNPL companies would be inundated with defaults has proven to be largely unfounded.

It’s probably very good timing for the company to announce a trading halt and a capital acquisition program, which it did yesterday.

Fortescue Metals Group Limited (ASX: FMG)

Fortescue Metals is another ASX 200 company that had a fantastic month during May. Its shares were up over 16% by the end of the month. This preceded the printing of another new, all-time high of $14.88 per share today.

A rising iron ore price, partly caused by production issues in Brazil throughout May, was the main driver of the rising Fortescue share price. Iron ore is now at a multi-year high at close to US$100 per tonne. If this price holds up for the rest of the year, I think we can expect the Fortescue share price to do the same.

Webjet Limited (ASX: WEB)

Here we have another ASX 200 company that pulled a rabbit out of its hat in May with a 35.3% increase in its share price for the month.

Webjet, as an ASX travel stock, was smashed in March as travel restrictions were implemented. But rumours of a possible ‘trans-Tasman bubble’ that will allow travel between Australia and New Zealand in the near future has partially restored investors’ confidence in the company. Even so, this ASX 200 share remains nearly 60% lower than its 2020 highs.

More reading

• 3 things ASX investors need to know about the RBA’s rate decision today
• Zip Co share price rockets 44% higher on U.S. expansion news
• Could Goldman Sachs’ 2020 predictions for the US share market spell the end of the ASX 200s remarkable rise?
• The 3 ASX tech stocks that helped this fund manager outperform in May
• 3 investing secrets for success with ASX shares

Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Telstra Limited and Webjet Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO and 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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As my colleague pointed out in this article several years ago, listed founder-led companies have historically outperformed the rest of the market by some distance.

There are a number of factors that are potentially behind this phenomenon, but I think Ben Horowitz from venture capital firm Andreessen Horowitz sums it up best.

When explaining why Andreessen Horowitz prefers to invest in companies that are founder-led, Mr Horowitz said:

“Founding CEOs naturally take a long view of their companies. The company is their life’s work. Their emotional commitment exceeds their equity stake. Their goal from the start is to build something significant. They instinctively know that big product cycles come from investment and that even the biggest product cycles will eventually fade.”

Mr Horowitz added: “Professional CEOs, on the other hand, tend to be driven by relatively shorter-term goals. They are paid in terms of stock options that vest over 4 years and cash bonuses for quarterly and yearly performance.”

This is seen as a big negative, as it takes time to innovate.

“Investments in innovation do not pay out in the current quarter. Typically, they don’t even pay out in the current year. If you care about your bonus this year, you are directly incented not to make investments in new inventions as you will incur the expense, but reap no profits,” he explained.

Given the success that Andreessen Horowitz has had investing in founder-led companies, it’s hard to argue against this.

The venture capital firm made early investments in the likes of Facebook, Slack, Instagram, and Airbnb.

Are there founder-led companies on the ASX?

There are actually a decent number of founder-led companies on the Australian share market for investors to choose from.

I like the look of Kogan.com Ltd (ASX: KGN) as a long term investment. The ecommerce company, which is led by Ruslan Kogan, looks like a big winner from the shift to online shopping.

Another option to consider is Dicker Data Ltd (ASX: DDR). The leading computer hardware and software company was founded by David Dicker and Fiona Brown. It has been going from strength to strength in recent years and shows no sign of stopping. Mr Dicker remains the company’s CEO, whereas Brown sits on the board.

A final founder-led company which I would invest in is ResMed Inc. (ASX: RMD). The sleep treatment focused medical device company has been an exceptionally strong performer over the last decade thanks to the growing demand for its products and software.

ResMed founder Peter Farrell is the Chairman of the company and his son, Mick Farrell, has been the Chief Executive Officer since 2013.

More reading

• The 3 ASX tech stocks that helped this fund manager outperform in May
• ASX 200 investor in your 40s? 3 shares to buy now
• These ASX shares just zoomed to multi-year highs
• Buy these ASX growth shares for monster returns
• Real wealth from 3 roaring mid caps in May

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited and Kogan.com ltd. The Motley Fool Australia has recommended 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 Zip Co Ltd (ASX: Z1P) share price has returned from its trading halt and rocketed higher this afternoon.

At one stage the payments company’s shares were up as much as 44% to $5.40.

They have since pulled back a touch, but are still up a sizeable 36.5% to $5.12.

Why is the Zip Co share price rocketing higher?

Investors have been fighting to get hold of the shares of the Afterpay Ltd (ASX: APT) rival after it revealed that it has entered into an agreement to acquire the remaining shares in New York-based buy now pay later provider QuadPay.

According to the release, the company has agreed an all-scrip deal. This will see QuadPay stockholders entitled to receive up to a maximum of approximately 119 million Zip shares, which will represent the equivalent of 23.3% of the issued share capital of Zip at completion.

This implies an enterprise value of approximately US$269 million or A$403 million, but will be accretive for Zip on both a total transactions volume (TTV) and revenue basis.

Management notes that the QuadPay acquisition builds on its global strategy and believes it is a compelling investment proposition for shareholders.

This is because QuadPay is one of the leading buy now pay later platforms in the United States – the world’s largest retail market, which is estimated to be worth US$5 trillion per year.

The company also notes that this acquisition will turn Zip into one of the world’s leading global buy now pay later players. 

If the acquisition completes, the company will have operations across the world in five countries (Australia, New Zealand, United States, United Kingdom, and South Africa). It will also have combined annualised TTV of $3 billion, annualised revenue of $250 million, 3.5 million customers, and 26,200 merchants.

Convertibles notes.

In addition to this, the company has entered into an agreement with CVI Investments, Inc., an affiliate of Susquehanna International, to raise up to $200 million by way of the issue of convertible notes and the exercise of warrants.

The convertible notes have an initial conversion price of $5.5328, which is a 47.7% premium to its last close price.

These funds will be used to help accelerate Zip’s growth in the United States and other core markets.

Zip CEO and Co-Founder, Larry Diamond commented: “We are delighted and excited to have the QuadPay team join the Zip family. As a strategic investor in the business, we have spent considerable time with the founders, Adam and Brad, and share a united vision of disrupting the outdated credit card with a digital, and fairer alternative.”

“The US is a critical part of our global strategy and vital as merchants increasingly look for a global payments solution. We have been impressed by QuadPay’s continued innovation. They were first to market with a virtual card solution in the BNPL space and have continued to evolve and innovate their offering. We look forward to this exciting new chapter in the Zip journey,” he added.

Shareholders will be able to vote on the acquisition and convertible notes at an extraordinary general meeting. Should they be given the go-ahead, management expects to complete both in the first quarter of FY 2021.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Why the Zip Co share price rocketed 57% higher in May
• This ASX fintech share is up 489% since March
• Real wealth from 3 roaring mid caps in May
• 4 ASX fintech shares to make you rich

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 ZIPCOLTD FPO. 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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Is the CSL Limited (ASX: CSL) share price a buy?

In the initial stages of the coronavirus share market sell off the CSL share price remained strong in Australian dollar terms as the US dollar strengthened.

But over the past week the CSL share price has actually fallen by 7% despite the share market strengthening.

CSL was seen as a bastion of safety with its healthcare services. It’s the number one in global plasma therapies and the number two for flu vaccines. Those are essential services. 

That’s why the CSL share price didn’t drop anywhere near as much as shares like National Australia Bank Ltd (ASX: NAB) or Qantas Airways Limited (ASX: QAN).

But we saw the Australian dollar weaken to as low as $0.57 compared to the US dollar during March 2020. The Aussie dollar has since strengthened to $0.68. That makes a big difference when looking at CSL’s earnings which are reported (and a large portion is generated) in US dollars.

CSL recently announced new debt facilities to strengthen its debt profile.

Is it a good time to buy CSL at this share price?

The healthcare giant is aiming for a net profit in FY20 of between US$2.11 billion to US$2.17 billion. This would be another solid result after years of impressive growth already. The company continues to invest heavily into research and development to ensure that it continues to produce the new needed products for people. New treatments could make a big difference to the world. It’s one of many businesses looking to find a coronavirus treatment. 

I think it makes a lot of sense to invest in CSL when the Australian dollar is so strong. It’s certainly not cheap, so I wouldn’t want to buy a lot. But I’d be willing to be some today.

More reading

• Why I would buy these ASX 200 blue chip shares in June
• In your 50s? Here are the 2 best ASX 200 shares to buy now
• Why Austal, CSL, Fortescue, & Star shares are charging higher today
• 5 ASX 200 winners and 3 losers from last week
• ASX 200 Weekly Wrap: Surging bank shares push ASX toward 6,000

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of 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.

The post Is the CSL share price a buy? appeared first on Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) is relatively flat today after a week of solid gains – up 0.21% at the time of writing to 5,831.3 points. If you’ve been watching the progress of the ASX 200 over the last month, you might be getting excited. That elusive 6,000-point threshold seems tantalisingly close at these levels.

As is normally the case, our market rally is being mirrored over in the United States of America. Since 23 March 2020, the S&P 500 Index (which measures the performance of the 500 largest companies in America) has rallied over 36%. The ASX 200 has rallied by over 28% since the same day (coincidentally the market bottom for both indexes).

An ‘unloved but welcome’ share market rally?

But according to MarketWatch, analysts from US investment banking giant, Goldman Sachs are calling this an “unloved but welcome” share market rally. Goldman’s analysts have set a ‘target’ for the S&P 500 of 3,000 points by the end of the year.

This morning (our time), the S&P 500 closed at 3,055.73 points. This means Goldman is assuming the markets stay more or less flat at these levels for the rest of the year.

So how does Goldman Sachs justify this semi-bearish target? The analysts describe the recent rally we’ve just experienced as a “remarkable journey”. But it’s also one they see as most likely stopping due to “numerous medical, economic and political risks dot the investment landscape”.

They postulate that “in the near-term, the index could move to 3,200 but any bumps in the road to economic reopening or further political risks could send the index to 2,750”.

As such, Goldman’s analysts are predicting that the US share market rally has already priced in a strong economic recovery.  Thus, the fulfilment of this prediction will not result in markedly higher share prices, rather providing “validation” of the current levels.

What would this mean for ASX shares?

As I alluded to earlier, the ASX 200 is more connected to the S&P 500 and the broader US markets than many investors realise. If Goldman Sachs’ predictions turn out to be accurate, I think it’s a reasonable conclusion to make that the ASX 200 will also be relatively flat for the rest of the year, as most of the concerns Goldman has can be translated effectively to the ASX 200 as well.

But, of course, successful investing isn’t about trying to predict where the markets will be in six month’s time in my view. It’s about finding high-quality companies at great prices that you can hold as long-term investments. Whether or not Goldman Sachs’ analysis is a means to this end is up to you!

More reading

• The 3 ASX tech stocks that helped this fund manager outperform in May
• Is the a2 Milk share price too high to buy?
• ASX 200 investor in your 40s? 3 shares to buy now
• ASX 200 down 0.1%: Big four banks drag ASX lower ahead of RBA meeting
• Is the Newcrest Mining share price a buy?

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 Decmil Group Limited (ASX: DCG) share price has been cut in half today after shares resumed trading on the ASX for the first time since mid-May.

Decmil offers a range of services to the Australian resources, infrastructure, transport and energy sectors, specialising in engineering, construction, and maintenance. 

The company has a blue-chip customer base across its core markets, which includes big ASX names like BHP Group Ltd (ASX: BHP), Woodside Petroleum Limited (ASX: WPL) and Origin Energy Ltd (ASX: ORG).

Why the Decmil share price has been cut in half

At the end of last month, Decmil announced a $50 million equity raising to strengthen its balance sheet and provide working capital to fund its pipeline of opportunities.

The equity raising is being undertaken via a pro-rata entitlement offer on the basis of 4.2 new shares for every 1 existing share – at an issue price of 5 cents per share. This represents a 75% discount to Decmil’s last trading price of 20 cents per share on 18 May.

As a result, Decmil shares were punished when they were reinstated to official quotation this morning. As part of being reinstated, Decmil announced the successful completion of the bookbuild for the institutional component of its equity raising.

The company received $30 million of commitments during the institutional bookbuild, along with commitments to partially underwrite up to ~$11 million of the retail component.

Decmil will issue around 600 million ordinary shares under the institutional offer. These shares are expected to commence trading on Wednesday, 10 June 2020.

With the retail entitlement offer being partially underwritten, the equity raising will raise a minimum of $41 million and a maximum of approximately $50 million.

The retail offer is expected to open on Friday, 5 June 2020 and close on Wednesday, 17 June 2020.

Management commentary

Commenting on the rationale behind the equity raising last week, CEO Dickie Dique said:

“Decmil had some significant challenges as we entered 2020, including a tight balance sheet. This capital raising addresses that issue and will set us up well to continue pursuing and delivering profitable new contract opportunities”.

“With a reset balance sheet, ongoing contract wins and a refreshed structure, Decmil will be well placed to continue our business turnaround. We also expect that significant infrastructure spending in Australia over the next few years will further drive this turnaround and return Decmil to robust profitability and strong shareholder returns,” he added.

At the time of writing, the Decmil share price is sitting 50% lower for the day at 10 cents per share after plunging 62.5% at the open.

More reading

• 3 founder-led ASX shares to buy for strong long-term returns
• Zip Co share price rockets 44% higher on U.S. expansion news
• Is the CSL share price a buy?
• Could Goldman Sachs’ 2020 predictions for the US share market spell the end of the ASX 200s remarkable rise?
• The 3 ASX tech stocks that helped this fund manager outperform in May

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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The performance of ASX shares last month defied the market adage of selling in May. But there’s one fund manager whose smile is bigger than most.

This is listed investment manager Monash Absolute Investment Company Ltd (ASX: MA1) as it reported a 12.8% gain in the value of its portfolio in May, which is nearly double the gain on the S&P/ASX 200 Index (Index:^AXJO).

There are a few factors that pumped up the fund’s alpha (performance above the wider market), but its managers credit three ASX tech stocks for doing more of the heavy lifting.

Firing the afterburner

One was the Afterpay Ltd (ASX: APT) share price, which surged 52% last month on the back of two announcements.

The buy now, pay later darling attracted a large investment from China tech titan Tencent Holdings Ltd, which quelled doubts about Afterpay’s outlook and valuation.

Afterpay then surprised the market by announcing it hit five million active customers in the US – a 30% to 40% increase over its weekly run rate from January to February.

However, in a sign that the Afterpay share price may be close to fair value, the fund sold some of its holdings although it said Afterpay remains one of its largest holdings.

Good buy

The second stock that made a big contribution to Monash’s big month was the Kogan.com Ltd (ASX: KGN) share price.

The online retailer’s stock jumped 41% in May as it was one of the few that benefited from the COVID-19 lockdown that drove people to shop on the web.

“We had sold out of Kogan in late February on COVID-19 concerns about its supply chain. The stock subsequently fell and rebounded,” said the fund manager.

“Once it was clear to us there [sic] supply chain issues were limited we bought back into the stock.

“A week after we rebuilt our position it had a positive business update and the stock price continued run.  It ran all the way through May too and we started to take profits.”

The fund manager completely sold out of the stock after making around 50% profit.

Paying off

Another stock that Monash did well out of was EML Payments Ltd (ASX: EML) share price, which jumped 30% that month.

The fund sold some of its holdings before the payment solutions group withdrew earnings guidance due to the coronavirus turmoil even though it said business trends remained favourable.

“With EML however, we managed to rebuild our position close to that low point, in mid-March,” said the fund manager.

“A strong rally started soon after when EML announced a renegotiated outcome for its PFS acquisition, resulting in a strong capital position. A further business update later in May was well received by the market.”

Monash sold a modest amount of shares in EML to control its portfolio weighting.

More reading

• 3 founder-led ASX shares to buy for strong long-term returns
• Could Goldman Sachs’ 2020 predictions for the US share market spell the end of the ASX 200s remarkable rise?
• 3 investing secrets for success with ASX shares
• Is the a2 Milk share price too high to buy?
• ASX 200 investor in your 40s? 3 shares to buy now

Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Emerchants Limited. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Emerchants 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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Investing is one of those disciplines you may never truly master. Even the great Warren Buffett has (and does) make mistakes. All we can hope is to learn from our mistakes and get a little better each day.

As part of my own journey, I like to study what works for the world’s best investors like Buffett and what doesn’t. So here are three investing ‘secrets to success’ I’ve observed experts using which I try and implement into my investing style.

Secret 1: Be your own person

One of the downsides to the rise of the internet is how many different opinions are accessible and can influence your own. For every good idea you have, you can be sure there are ten articles that will completely shoot you down.

Not letting these get in the way of a good high-conviction idea you have is a secret to success. Remember, Afterpay Ltd (ASX: APT) was under $9 a share just two months ago and many said it was done as a company. Today, it’s over $47 a share.

2) Don’t trade your profits away

For some reason, popular culture often paints successful investors as traders – jumping in and out of shares a hundred times a day. This couldn’t be further from the truth in my view. In contrast, the most successful investors I’ve observed (like Warren Buffett and Charlie Munger) seem very happy to not do a whole lot most of the time.

Instead, they wait for once-in-a-decade opportunities to buy the companies they like at the right price. Buffett himself was said to want to own Coca-Cola shares ever since he was a child. But he waited until 1987 (when he was 57 years old) to buy his first tranche. Now that’s patience.

3) Most investors are better off buying the index

Here at the Motley Fool, we think anyone with the right attitude and decent experience can outperform the market over time and get awesome returns. But the sad truth is, most retail investors (and many professional fund managers) simply don’t. As such, these investors would have been better off just buying an index fund like the Vanguard Australian Shares Index ETF (ASX: VAS).

I’m not saying that everyone should just give up and ‘buy the index’. But it’s a sobering statistic that any investor who wants to become successful should always keep in mind.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Why the Zip Co share price rocketed 57% higher in May
• 3 top Warren Buffett quotes to start your week right
• I don’t normally buy ETFs, but I would buy these 2
• This ASX fintech share is up 489% since March

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. 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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The A2 Milk Company Ltd (ASX: A2M) share price has been one of the standout performers on the S&P/ASX 200 Index (ASX: XJO) during the coronavirus crisis. 

Despite a bit of a push back during May, the company’s share price has risen strongly since the end of January. Sitting at $14.51 only 4 months ago, a2 Milk’s shares are now trading at $17.26 at the time of writing. These gains also follow on from a strong share price rally throughout last November.

Is the a2 Milk share price still a buy?

Strong growth during the March quarter

Let’s first take a recap on a2 Milk’s recent financial and operational performance.

In a trading update in late April, a2 Milk outlined that it has continued to see strong growth since late February, across all regions.

Revenue for the March quarter was in fact, above expectations. The coronavirus pandemic saw many consumers stock up a2 Milk’s products, especially through online and reseller channels.

In particular, demand for its infant nutrition products sold in China and Australia has been very strong.

EBITDA margin predicted to exceed expectations

In addition, higher levels of marketing investment in China and the USA will hopefully pay off for a2 Milk. Both these markets still offer huge growth potential.

This investment is likely to help deliver higher overall revenue growth across key regions during FY 2020. It is also likely to lift a2 Milk’s full year EBITDA margin above the range it advised in February.

It is now predicted to be between 31% to 32%, assisted partly by favourable currency exchange rate movements.

A very healthy result, if it can be achieved.

Is it too late to buy shares in a2 Milk at today’s price?

a2 Milk has been among the top performing shares on the ASX since it listed back in 2015.

The company has cleverly evolved into a highly trusted and recognised brand, renowned for its quality. a2 Milk is now also a very profitable business, after initially running at a loss.

I see no reason why the a2 Milk success story can’t continue, driven by very strong growth opportunities in North America and China.

However, the a2 Milk share price is now definitely looking at bit pricey.

Furthermore, the coronavirus crisis has added some uncertainty regarding earnings growth over the short term with the possibility that both supply chains and consumer demand will be impacted. This could bring about further share price volatility for a2.

Having said that, I still think the company represents a reasonably good buy and hold option for investors with a long-term investment horizon.

I prefer it over other infant formula providers such as Bubs Australia Ltd (ASX: BUB) and Nuchev Ltd (ASX: NUC).

Over the next 5 years I think a2 Milk will continue to be a strong performer and that this is likely to translate to above average share price growth.

More reading

• ASX 200 investor in your 40s? 3 shares to buy now
• ASX 200 down 0.1%: Big four banks drag ASX lower ahead of RBA meeting
• Is the Newcrest Mining share price a buy?
• Is the NAB share price cheap today?
• The big oil price recovery and bounce in ASX oil stocks are bringing out the bears

Phil Harpur owns shares of A2 Milk. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BUBS AUST FPO. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended BUBS AUST FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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

Here’s why these brokers are bearish on these ASX 200 shares:

Costa Group Holdings Ltd (ASX: CGC)

According to a note out of the Macquarie equities desk, its analysts have retained their underperform rating but lifted the price target on this horticulture company’s shares to $2.87. The broker felt that Costa’s annual general meeting update last week was reasonably mixed. And while there were positives in respect to demand and pricing, it wasn’t enough to warrant a change in rating by the broker. The Costa share price is trading at $3.15 this afternoon.

Lovisa Holdings Ltd (ASX: LOV)

Analysts at Citi have downgraded this jewellery retailer’s shares to a sell rating and cut the price target on them to $5.85. According to the note, the broker believes the recovery in the Lovisa share price over the last couple of months has been overdone. Especially as it believes Lovisa could fall short of consensus earnings estimates over the medium term. This is due to changing consumer preferences, lower shopping centre traffic, and a slowdown in its store network expansion. Lovisa shares are changing hands at $7.80 on Tuesday.

Vicinity Centres (ASX: VCX)

A note out of Morgan Stanley reveals that its analysts have retained their underweight rating and $1.25 price target on this shopping centre operator’s shares. This follows the company’s announcement of a $1.2 billion placement and the cancellation of its final dividend. Outside this, it fears that Vicinity’s rent rates will fall heavily due to the pandemic and weigh on its income. The Vicinity share price is trading at $1.55 this afternoon.

More reading

• Why Evolution, Iress, Pro Medicus, & Vicinity shares are dropping lower
• ASX 200 down 0.1%: Big four banks drag ASX lower ahead of RBA meeting
• The latest ASX 200 stocks to be upgraded by top brokers
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COSTA GRP 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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